Originally Published MX March/April
2002
TOPSPIN
Partnering to Create a New Market Opportunity
In challenging markets, strategic partnerships can offer breakthrough opportunities.
Carl W. Apfelbach
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Carl
W. Apfelbach is CEO of ChromaVision Medical Systems Inc. (San Juan Capistrano,
CA).
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For a variety of
reasons, healthcare institutions can be slow to adopt new technologies that
dramatically alter standard professional practices. Overcoming such resistance
to accelerate market penetration and acceptance can be a major challenge—especially
for a start-up company with a small direct-sales force and ambitious sales goals.
One strategy is to form a business partnership that brings the technology into
the mainstream more quickly and benefits both the partners and the customers
they serve. This approach was recently employed by my company, ChromaVision
Medical Systems Inc. (San Juan Capistrano, CA), to market its Automated Cellular
Imaging System (ACIS), a medical device that combines automated microscopy and
computerized image analysis to detect, count, and classify cells of clinical
interest based on color, size, and shape.
The ACIS responds to the established need for standardization and quantification
in immunohistochemistry (IHC) testing. The system assists pathologists by providing
increased accuracy, precision, and reproducibility for slide-based analyses.
Such analyses are expected to become even more important in the future, as many
of the targeted oncology therapies now under development will rely on identification
of specific cell behaviors to qualify patients for treatment. Clients in clinical
and research settings are currently using ACIS to perform oncology-related tests—such
as those for HER2, estrogen receptors, and progesterone receptors—as well
as other types of tissue and cell analyses.
The Adoption Dilemma
The first sites to adopt the ACIS technology were academic settings and high-volume
reference laboratories. Community pathology practices also expressed interest
in the system, which would enable them to conduct a greater volume of IHC testing
in-house. Such pathologists recognized that improvements in their expertise
were being limited by reviewing low volumes of cases and spreading the work
among multiple pathologists. Adopting the system would permit them to improve
quality control and recapture revenue that would otherwise go to reference laboratories.
Yet such practices often were not large enough to warrant the purchase of a
full ACIS setup. To expand the adoption of its technology into such community
practices, ChromaVision needed a creative method of meeting market needs while
overcoming the obstacle of low-volume use.
A solution came by way of ChromaVision's relationship with a key client and
early adopter of the ACIS technology, US Labs Inc. (Irvine, CA), an anatomic
pathology reference laboratory specializing in cancer diagnostics. US Labs has
a full-service staff of medical, scientific, and technical specialists, and
offers a comprehensive menu of testing in histology, cytology, immunohistochemistry,
flow cytometry, and molecular genetics. Founded in 1996 as a West Coast regional
reference laboratory, US Labs has grown rapidly to become a national, diversified
cancer diagnostics service company. The company acquired its first ACIS instrument
in November 2000 to assist its pathologists in quantitative analysis of tumor
markers in breast cancer.
A major factor in the growth of US Labs among pathologist clients has been its
stated mission "to support physicians and not to compete with them."
This market vision has also proved to be a key factor in the suitability of
US Labs as a strategic partner.
How the Partnership Works
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In the comarketing program developed by ChromaVision Medical Systems (San Juan Capistrano, CA) and US Labs (Irvine, CA), the flow of patient specimens and scanned immunohistochemistry images emphasizes the role of community pathologists, who are the ultimate customers for workstation versions of ChromaVision’s Automated Cellular Imaging System.
(click to enlarge.) |
Senior management
at both ChromaVision and US Labs soon recognized that there was a way for each
company to grow its business while enabling community pathologists to meet the
needs of oncologists and patients with expert analysis, local interpretation,
graphic reporting, and personal consultation. By dividing the components of
IHC testing between the local pathologist and the reference laboratory, each
party could perform critical components of the analyses and share appropriately
in the revenue.
US Labs had expertise and efficiencies in slide preparation and had standardized
its immunostaining regimen with reagents and protocols optimized for image analysis.
The company also had excess capacity on its full ACIS setup for automated scanning
and image capture. ChromaVision configured a workstation version of the ACIS,
which included the software tools required for remote analysis and results reporting
by the community pathologist. Specimens and archived images could be transported
via US Labs' courier network and express mail.
By combining the staining, scanning, and logistics services of US Labs with
the workstation analysis capability of community pathologists, a new market
opportunity was created. The new approach created a hybrid process that would
bring quantitation and expert analysis to small-volume pathology practices.
For the partner companies, the perceived mutual benefits of the program included
increased awareness and expanded revenue opportunities. The arrangement also
helped to differentiate US Labs as an innovative partner with the pathologist,
not a competitor—a philosophy that ChromaVision strongly shares.
Evaluating Partner Qualities
Senior management of both ChromaVision and US Labs recognized the value of establishing
a partnership. Nevertheless, each company carefully evaluated the other before
entering into the pilot program. The following five key elements, important
in this partnership, can guide others in choosing a marketing and operations
partner.
- Mutually beneficial relationship with anticipated economic benefits to each partner.
- Operational synergy with complementary capabilities.
- Shared vision with few potential areas of conflict.
- Commitment to customer service and shared responsibility for customer satisfaction.
- Consistent, consolidated message to employees, prospects, and customers.
Only after company
leaders were assured that the two companies were a good match on each of these
elements was it decided to move ahead with the program.
Executives at other companies who are considering such a partnership would be
well advised to devise a similar checklist of key elements. Items on the list
should represent at least the minimum achievements that each company would expect
from entering into the partnership.
When evaluating whether the prospective partners are a good match according
to their list of key elements, it may be necessary to define certain terms in
greater detail (e.g., the level of economic benefits expected; how responsibilities
will be shared). Accomplishing this step early in the partnership discussions
can help company leaders to decide whether further discussions are warranted,
and may identify areas where careful negotiation will be necessary.
What Went Right?
Both companies realized that unless their efforts were well coordinated in advance,
chances for success would be limited. Preparatory work conducted by the partners
resulted in considerable success in the following three key areas.
Customer Support. Advance preparation to support the hoped-for growth
of new clients required a multidisciplinary team effort from field service,
technical support, and sales and marketing staff. For its part, ChromaVision
geared up to manufacture and install full systems (including microscopes) and
workstations (without microscopes) in locations across the country.
As part of this effort, two separate training programs were developed. For pathologists
and histotechnologists at US Labs, a two-day, comprehensive course was designed
to detail ACIS slide preparation, data entry, scanning, analysis, and archiving
functions. For pathologists using workstations, a separate on-site training
program was created. In addition, US Labs created a new-client kit to ensure
that specimens would be appropriately prepared and labeled for ACIS analysis
and to help customers clearly identify the procedures to be performed on those
specimens.
Customer Acquisition. Sales representatives from both companies were
eager to try joint marketing, envisioning new workstation placements for ChromaVision
and reference laboratory revenues for US Labs. To ensure that each company's
reps were familiar with the other's products and services, the companies jointly
participated in regional sales meetings and exchanged collateral materials as
well as sales contact information.
Thus prepared, the partners' sales representatives were then ready to begin
making calls in territories nationwide. More than 30 representatives participated
in joint calls with prospects and existing clients. The reps found receptive
audiences, and the first workstation client sent specimens to US Labs less than
30 days after the program's introduction.
Quality Control Procedures. Anticipating problems that might arise during
the transitional period of the program, the companies' written contract defined
processes to ensure quality control and optimize result reporting.
As part of the contract, for instance, US Labs agreed to standardize procedures
for reagent preparation and specimen staining. To ensure that this commitment
was achieved, such specimen-handling procedures were subjected to 100% review
during an initial period. Any deviation from the established regimen would trigger
an alert, and periodic inspections were conducted to maintain quality standards.
Quality control issues were also anticipated for workstation users. To eliminate
such difficulties, technical services staff assisted clients in performing crossover
studies from their previous testing methods and ensuring that they had adequate
experience using the workstation.
Initializing the program required considerable management effort and staff support.
Success was achieved, however, because both partners remained committed to the
process and proceeded with positive attitudes to find solutions to any problems
that arose.
Meeting the Challenges
As might be expected when entities begin to operate in tandem, there were inherent
difficulties in melding the two companies' differing cultures, sales and marketing
strategies, and the myriad of customs that become engrained in companies, small
or large. One factor that worked to the advantage of both partners was geography.
Since the companies are located less than 10 miles apart, it was possible to
get a rapid response when a need was expressed by either party.
Daily challenges were met by focusing on the common goal of client satisfaction.
ChromaVision diverted staff with image analysis expertise from internal projects,
making the success of the new program top priority.
At US Labs, accessioning and specimen processing were temporarily disrupted
by the need to identify samples from many unique sources—some requiring
only limited services—until a separate path was established for those samples.
In response, US Labs assigned additional labor during the initial period to
ensure that turnaround times were met and client satisfaction was achieved.
Success Metrics
During the course of the six-month pilot program, ChromaVision received contracts
for 10 full systems. US Labs ordered the systems to accommodate its own clients'
testing and to add the tests from new workstation clients. The program's joint
sales calls generated 45 new clients for US Labs and ChromaVision.
Meanwhile, 40 ACIS workstations were placed with community pathologists. These
placements helped ChromaVision to achieve revenue goals, expand utilization,
and accelerate acceptance of its technology. They represent the company's initial
success in penetrating small-volume accounts that were not considered prospects
for purchasing full systems.
US Labs has gained additional revenues from performing staining and scanning
for workstation clients. The company acknowledges that the program is contributing
to its market differentiation by enabling it to promote its ability to achieve
standardization and quantification of IHC testing.
The program has also furthered the partners' joint mission of becoming true
partners with the community pathologist. Such pathologists have realized economic
benefit from the program by recapturing reimbursement revenue for the professional
component of performing ACIS-assisted IHC analysis.
However, the ultimate benefactors of the partnership are patients who are being
treated with more-appropriate therapies because of the enhanced accuracy, precision,
and reproducibility of testing assisted by the ACIS technology.
Future Plans
Now that procedures are in place and the program is operating successfully,
the partners are beginning to plan enhancements for the information technology
aspects of the program. One such enhancement will include networking US Labs'
multiple ACIS systems, which will enable the company's pathologists to access
cases from any workstation. The partners are also working to develop an ACIS
interface to the laboratory information system at US Labs, thereby facilitating
the reporting of results in a graphic format.
Also under development for the benefit of workstation clients is a means of
transmitting images via an Intranet/Internet site. This enhancement will eliminate
the need to deliver taped images using traditional transportation services.
The success of the partnership has prompted the utilization of image analysis
on assays that are currently performed manually, such as those for lymphoid
markers. The partners are in the process of validating a line of reagents optimized
for image analysis and branded under the ChromaVision name.
Comarketing efforts are continuing with preparation of new collateral materials
for sales presentations to further the success of this continually evolving
partnership.
Copyright ©2002 MX
