Markets and Market Position
Tecan is the market leader in laboratory automation. The Company provides the life science research and the diagnostics industry with laboratory instruments and comprehensive automation solutions. Tecan also offers solutions for various applied markets such as forensics, the food industry, crop research, the cosmetic industry and veterinary applications. Automation solutions include instruments, software packages, numerous configurable modules and special application expertise as well as regulatory and quality consulting, service and consumables.
Tecan’s solutions automate all types of repetitive work steps in the laboratory and make procedures more precise, more efficient and safer. They also pipette the smallest volumes of different fluids with optimum precision. By automating these work steps, laboratories can significantly increase the volume of samples they process, obtain test results sooner and ensure reproducible output. The instruments can also perform necessary work overnight without supervision, allowing laboratory personnel to evaluate the results or continue with the next steps upon returning the following morning. Tecan also offers a wide range of detection devices. This includes analytical devices such as microplate readers and microarray systems, which analyze reactions on a microtiter plate or a microarray, as well as washers, which perform the washing and purification operations of a test procedure. In the summer of 2014, Tecan acquired IBL International, a leading supplier of microtiter plate-based immunoassays. IBL International has one of the widest ranges of specialty diagnostic tests for use in research and routine diagnostics.
The Company serves some customers directly, but is also a leader in developing and manufacturing OEM instruments and components that are distributed by partner companies under their own names. The Tecan Group can count on two strong pillars in the Life Sciences Business (end-customer business) and Partnering Business (OEM business) segments. The majority of end-users come from the diagnostics market, accounting for around 60% of total sales. The needs of the diagnostics market are largely addressed via the OEM sales channel and, to a smaller extent, via the end-customer business. Tecan serves the life science research sector and the various applied markets largely under its own brand using its internal sales and service organization. Its segment-specific strategies for sustained profitable growth allow the Company to drive forward customer projects via both business models. Group-wide functions are combined in the Development & Operations division to better unlock synergies in research, development, procurement and production across different locations.
Tecan benefitting from various megatrends
Megatrends are long-term transformation processes that embody far-reaching social and technological changes. The markets in which Tecan is active are positively influenced by a number of megatrends. Tecan has focused its corporate strategy accordingly and will thus be in a position to obtain significant benefits from these transformation processes.
Megatrends | Positive effects on Tecan |
Population growth and the aging population | Many diseases, such as cancer and cardiovascular diseases, are more prevalent in old age. Around the world, significant sums are being invested in the development of innovative drugs to improve treatments. The total volume of diagnostic tests that enable diseases to be identified is increasing and more tests are being carried out per person. As many diseases are being treated with increasing success, the progression of these diseases can be observed over a longer time span. Tecan benefits from the increased demand for automated solutions both in life-science research and in the field of diagnostics. |
High levels of investment in healthcare and life science research in emerging markets | Growing levels of prosperity mean that the demand in the area of healthcare is rising continuously. China, for instance, is now the world’s fourth largest healthcare market, although its spending per capita is only a fraction of that in many western industrialized countries. Hundreds of new hospitals are being built each year and the government is investing large sums in university research. Tecan supplies important automation solutions to upgrade laboratory infrastructure and is investing in its own marketing and service organization to serve more customers directly. |
Development of targeted pharmaceuticals and use of companion diagnostics | The growing use of personalized medicine means that the biomolecular constitutions of individual patients are increasingly taken into account, allowing targeted drugs to be deployed. Tecan supports research into characteristic biological features (biomarkers) and the development of new active ingredients with automation solutions. Tecan solutions are also being used in companion diagnostics. |
An explosion of knowledge in the field of biological correlations and molecular processes – using these findings in applied markets | Life science research is coming up with new findings at an ever quicker pace. These are being increasingly used not only in drug development and human diagnostics, but also in numerous applied markets. Some examples: In forensics, criminals are being convicted based on DNA profiling. The same techniques and procedures used in human diagnostics are being In the area of foodstuffs, impurities are not tolerated and genetic modifications must be declared. In these laboratories too, state-of-the-art automation solutions from Tecan improve efficiency. |
Market trends and structure
Tecan’s two main markets are diagnostics and life science research.
The volume of the diagnostics market exceeds USD 40 billion and is growing at an annual rate of 3% to 5%. Diagnostics companies obtain the majority of their sales, around 80%, from reagent sales, while instruments generate around 20% of sales. In the instruments market segment, Tecan primarily supplies diagnostics companies with automation solutions via its Partnering Business segment. Then the customers market them with their own reagents and as a total solution to institutions such as hospitals, large diagnostic laboratories and blood banks. In its Life Sciences Business segment, Tecan distributes open automation platforms, which are used, for example, by clinical laboratories for ELISA-based protocols to investigate infectious diseases in blood samples. These laboratories are able to obtain the reagents from a variety of suppliers. Tecan was not traditionally involved in the reagent segment of the diagnostics market and made the first step in this direction with the acquisition of IBL International in the summer of 2014.
The life science research market is comparable to the diagnostics market in size and average annual growth rate. However, there is a difference in its market structure; some two-thirds of sales come from instruments and only a third from reagents. Laboratory automation, a field in which Tecan is active, forms part of the instruments market segment and has a market volume of over USD 2 billion.
Brand management
Tecan is a leading brand in laboratory automation. It stands for quality, innovation and reliability. These are decisive success factors for building up and strengthening a brand in this sector on a sustainable basis. A carefully selected and nurtured portfolio of several brands is of prime importance to Tecan and is a necessity if it is to differentiate itself from its competitors. The Company’s most important brand is the Tecan umbrella brand, followed by various brand names for product platforms. IBL International, acquired in the summer of 2014, is currently being continued as part of the Tecan Group under its own brand, with the addition of the statement “a Tecan Group Company”. Key to the success of the brand are employees who actively embody the values of the Tecan brand.
To strengthen its brand identity, Tecan introduced a uniform image for the various product platforms in 2014. The Fluent liquid-handling platform introduced in 2014 and the Spark detection platform introduced at the start of 2015 are linked by the graphic element of a characteristic gray curve. Individual modules also carry the new industrial design and are therefore easily identifiable as Tecan products. In addition, the individual product names are also underlined by a red arc under the text. The branding of the established Freedom EVO platform was also harmonized with the new product design, which emphasizes the continued importance of this very popular platform.
Preparations for an extensive branding project were undertaken in the year under review, and the project itself was launched at the start of 2015. The Tecan brand will be extensively examined and evaluated as part of the project. If necessary, Tecan will review and amend its brand management strategy, taking into account the respective positioning of both business segments and the acquisition of IBL International in the year under review and further possible acquisitions in the coming years.
Customer satisfaction and customer loyalty are also key factors for a strong brand. The Company regularly measures customer satisfaction and is strongly committed to maintaining it at a high level and further improving it. As a result, Tecan is recommended by its customers and the positive perception of the brand is continually increased. In 2012, an external market research institute measured and evaluated customer loyalty and satisfaction as part of a comprehensive analysis. Compared with the 2009 results, Tecan was able to maintain its very high level and, in some categories, further improve it. Factors that were seen as particular strengths of Tecan include quality, reliability and flexibility in configuration. Tecan’s consumables were also evaluated as being of above-average quality. Tecan’s status as the top corporate brand in the industry was confirmed. Customers rated Tecan as considerably better than its competitors, and it is seen as a very strong brand with a rate of recommendation that is significantly higher than the average for the industry.
Tecan undertakes a variety of brand management activities involving product marketing and advertising in specialist circles and beyond. These offer added value for different partners and play a role in strengthening and improving awareness of the Tecan brand. For example, Tecan organizes specialist symposia, supports various science prizes as a sponsor and presents the Tecan Award, a prize that is given to innovative customers.
Patents and protection of intellectual property
Tecan makes above-average investments in research and development to maintain and reinforce its position as market leader. In the year under review, such expenditure amounted to 9.9% of sales. Protecting its intellectual property is of major importance in ensuring that the development of new products and technologies gives the Company a sustainable advantage in the market. Tecan registers patents on relevant developments for the most important markets in a timely manner. The Company has several hundred patents in various patent families. Once again, numerous new patents were granted in the year under review.
Patents strengthen Tecan’s competitive position in a variety of products and applications. Numerous patents were also registered for the newly developed platforms in both product lines, the Fluent liquid handling platform and the Spark reader platform, some of which have already been granted. These patent registrations relate to a variety of basic inventions in the fields of both hardware and software that were made during the development of the platforms.
For example, the Fluent liquid handling platform’s patented Dynamic Deck™ has a modular structure over several levels and offers an extremely high processing capacity. This can be achieved because the platform’s work surface can be assembled from modular table-top elements, rather than a fixed surface. This enables the rapid, problem-free exchange of the individual elements to adapt the work process to specific applications for short periods. All of the additional devices required for work processes, e.g. cell-based applications, such as incubators, microplate readers and washers, can be flexibly integrated into a single, fully automated platform. If required, additional working levels can be added above or below the main working level and equipped with additional table-top elements.
During the development of Fluent, important inventions were also made in other areas and registered as patents. These made it possible to further increase the security, reliability and reproducibility of data offered by Fluent. The patented Adaptive Signal Technology™ precisely detects even small volumes enabling accurate monitoring of liquid, allowing for the use of smaller reagent and sample volumes for significant cost savings.
An overview of the various patents has been published on the Company’s website. The overall strategy to protect intellectual property includes patents, trademark registrations of the names of product platforms, registering designs to protect Tecan products from copycat products and protecting individual graphic software elements by means of design rights and trademark rights.
Core competences
Tecan’s success is based on core competences that the Company has systematically acquired and expanded over the years. Tecan’s core competence is the automation of complex processes in life-science research laboratories and in the strictly regulated diagnostics market. This overall competence is made possible by core competences in individual aspects of an application’s typical processes. In robotics, Tecan is the market leader in the automation of very diverse repetitive work steps that have to be conducted in laboratories. Its core competences cover both instruments and the software packages needed for their operation. The Company is an expert at handling various test formats, from microtiter plates through test tubes. Tecan offers a wide-ranging portfolio of different modules to automate applications and work processes, such as examining DNA or cells. To enable the entire workflow to be automated, Tecan also integrates third-party devices. Customers benefit from the enormous application know-how of Tecan' specialists, even in strictly regulated areas such as clinical diagnostics.
Tecan has particular expertise in liquid handling and detection. Liquid handling involves the high-precision handling of fluids, even in the smallest quantities. This process includes the aspiration and dispensing of liquids with differing physical and chemical properties, such as reagents and blood (both whole blood and serum). The quantities of fluid involved can range from milliliters to microliters. Tecan also has the necessary sensor technology to monitor processes, for example to ascertain whether a liquid transfer has actually taken place. One of the Company’s particular competences is the ability to make these often highly complex processes easy to perform through user-friendly software with an intuitive user interface.
In the area of detection, Tecan specializes in analytical devices that use a variety of optical methods to detect reactions in a test procedure, such as the binding of an antibody to a target molecule. This may be done using fluorescence, luminescence or absorption techniques, for example. Tecan also uses patented technologies here to lower the detection limit or reduce diffused light and thereby increase the sensitivity. Tecan detection instruments are able to process varying wavelengths quickly and flexibly, even in parallel.