Becton Dickinson & Company:

VACUTAINER Systems Division

Nina Cowley
Zach Evans
Sean Zemek

The Beginning
Maxwell W. Becton and Fairleigh S.
Dickinson met on a sales trip in 1897.
Months later, they decided to go into
business together, sealing their
partnership with a handshake. They
named their medical device import
company Becton, Dickinson and
Company.

Product Breakdown
Becton Dickinson (BD) manufactured:
Medical
Diagnostic
Industrial safety products

For:
Health care professionals
Medical research institutions
Medical industry
General public

Business Segments

B e c t o n D ic k in s o n
B u s in e s s S e g m e n ts
L a b o ra to ry

I n d u s t r ia l S a f e ty

M e d ic a l P r o d u c ts

Medical Products Division

B e c t o n D ic k in s o n
M e d ic a l P r o d u c t s S e g m e n t
N e e d le s , s y r in g e s a n d
d ia b e t ic p r o d u c ts

P h a r m a c e u t ic a l
s y s te m s

V A C U T A IN E R b lo o d
c o lle c t io n s y s t e m s

Becton Dickinson VACUTAINER

Systems (BDVS)
Formed as a business unit in 1980
Consisted of three main products

Venous blood collection tubes and needles

sold under the VACUTAINER name (70%
of sales)
Capillary blood collection tubes and lancets
sold under the MICROTAINER name
Microbiology tubes and specimen collector
systems

BDVS Segment Facts

1984 sales were $90 million
Each product group accounted for 33%
of operating income
Pioneer in converting market to
evacuated tubes
Estimated 80% market share in U.S.

Market Trends
7,000 hospitals performed 70% of all blood tests in
1985
700 commercial labs performed 25% of all blood
tests
5% of all blood tests performed in non-hospital
health care centers
Market had seen a decline in hospital blood testing
between 1983 & 1985
Projected that by 1990, 40% of blood testing would
be done in commercial labs and physician offices

Market Trends (cont.)

Shifting purchasing patterns
Chief lab technician historically asked for
certain brands
Professional purchasing agents are now
making decisions
VERY price sensitive

Market Trends (cont.)

Cost-containment pressures in health
care markets have forced:
Reduction in use of hospitals for blood
testing
Continued cost shaving within facilities by
often choosing lowest-cost supplier
Reduction in employment within healthcare
industries

BDVS & APG

BDVS is main supplier of blood
collection products to APG-member
hospitals
APG has announced beginning of
single-supplier purchasing for blood
collection products
APG is negotiating with BDVS as well
as competitors

BDVS & APG (cont.)

Major issues are:
Pricing and terms for BDVS major
products
Use of distributors
APGs request for BDVS to manufacture
private-label products

What is the problem?

What is the best price and distribution
strategy for BDVS in a market that is
experiencing such dramatic changes?

What are the alternatives?

Target the growing physician market that
includes surgicenters, emergency
centers, diagnostic centers, and
physician's offices
Accelerate new product development
and quality standards while maintaining
the current distribution model
Reject APGs private label, pricing and
distributor affiliation requirements
Partner (or merge) with APG

Target Growing Markets

Pros
Untapped market,
high growth
potential
Potential for new
product
introductions

Cons
Lower
prices/margins,
compete on price
Currently only 5%
of entire market
Different type of
sales approach

Product Development/Quality
Pros
Market/product
innovator
Maintain good
distributor
relationships
Premium pricing
for higher quality

Cons
High R&D costs
Increased risk
associated with
new products

Reject APGs Requirements

Pros
Cons
Loss of significant
Maintain brand
identity/awareness market share &
revenues
Maintain good
Inflexible image
distributor
to other
relationships
purchasing
Maintain control
groups

Partner with APG

Pros
Maintain significant
source of market
share & revenues
Economies of scale
through higher
volume
Flexible image
Potential for
inclusion of
additional products

Cons
Low price/margins
Loss of control
Strained distributor
relationships
Same concessions
demanded by other
purchasing groups

Becton Dickinson Today

2002 Revenue: $4,033,069,000
2002 Net Income: $479,982,000
Generates close to 50 percent of
revenue outside of the U.S.
Marketed in the U.S. through distributors
and directly to end users
Marketed in the internationally through
distributors, sales reps and, in some
markets, directly to end users

Becton Dickinson Today (cont.)

BD manufactures and sells:

Medical supplies
Devices
Laboratory equipment
Diagnostic products.

BD serves:

Healthcare institutions
Life science researchers
Clinical laboratories
Industry
General public

Becton Dickinson Today (cont.)

Company is broken down into three
main business segments:
BD Biosciences
BD Diagnostics (the VACUTAINER line is a
part of this segment)
BD Medical

VACUTAINER Systems Today

VACUTAINER product line broken into
five subcategories:
Venous Collection
Capillary Collection
Urine Collection
Critical Care Collection
Molecular Diagnostics

The end.