Qiagen’s mission is to enable its customers to achieve outstanding success and breakthroughs in life sciences, applied testing, pharma, and molecular diagnostics, all in keeping with its goal of making improvements in life possible.
Qiagen is a provider of molecular sample and assay technologies. The company operates two reportable business segments:
In the 1980s Metin Colpan was working in the field of genetics technology. At the time extracting DNA from bacteria or human/animal tissue cells was a difficult process – it could even be dangerous, as it required the usage of toxic chemicals. However, large quantities of pure DNA were necessary supplies for the growing biotechnology sector, which was spurred by the human genome project.
In 1983 Colpan completed a Ph.D. in Chemical Engineering at Germany’s University of Darmstadt. His thesis described the need for new ways to extract pure nucleic acids from cells; specifically, it discussed silica resin-based anion exchangers, a new technology that could do the job more quickly and safely. He was far into the development of the new method, and applied for a U.S. patent.
Colpan then visited various local pharmaceutical firms such as Bayer and Roche to see if he could get funding to implement his solution. However, he found no success. Things changed in 1984 when he met with Moshe Alafi, one of the earliest investors in biotech pioneers such as Amgen and Biogen. Impressed by the pitch, he wrote a letter of commitment, enabling Colpan to raise $3 million.
Partnering with three scientists, Colpan founded Qiagen, the first venture capital-supported German firm. It developed Colpans Anion-Exchange Resin, and in 1986 it unveiled its first ready-to-use plasmid kit, which provided all equipment and materials necessary for a nucleic acid cleansing process. Unfortunately, the company faced a hostile climate towards genetic research in Germany.
Facing financial failure, Qiagen responded by promoting its offering to the U.S. market, which was progressing nicely in biotechnology. The company limited its focus, avoiding end-products such as gene therapies and drugs, and focusing on tools (what it callled “picks and shovels“). It also began working closely with customers, allowing it to identify the latest trends in industry research.
The next few years saw several milestones. Qiagen experienced a rebound, and by the end of 1991 it was profitable with $10 million in sales. In 1995 it introduced a line of “BioRobot“ workstations that automated several steps in DNA purification, saving researchers time. By 1996 it had become a leading player in its product niche. That same year, the firm went public, listing itself on the NASDAQ.
Business model of Qiagen
Qiagen has a niche market business model, with a specialized customer segment. The company targets its offerings at organizations involved in work with molecular technologies; its four main customer groups are as follows:
- Molecular Diagnostics – Healthcare providers involved in areas such as Prevention, Personalized Healthcare, Disease Profiling, and Point of Need testing
- Applied Testing – Industry and government clients who utilize molecular technologies in areas such as forensics, food safety testing, and veterinary diagnostics
- Pharma – Biotech and pharmaceutical firms that conduct molecular testing for drug discovery, clinical development, and translational medicine efforts
- Academia – Researchers who investigate disease pathways and mechanisms, and in certain cases use their findings to develop drug targets and/or associated products
In 2015, the Molecular Diagnostics segment accounted for 50% of company revenues, with the other 50% split up among the other groups.
Qiagen offers four primary value propositions: innovation, accessibility, risk reduction, and brand/status.
The company has embraced innovation from the outset, revolutionizing molecular biology. It introduced the first “Plasmid Kit”, which decreased the amount of time necessary for plasmid (DNA molecules from bacteria) preparation from 2-3 days to two hours. Furthermore, its automated systems enable customers to transform raw biological samples into valuable information.
The company creates accessibility by offering a wide variety of options. It has acquired numerous firms over the years, adding several new capabilities to its portfolio. Its products now have a number of applications, including life science research, veterinary and food safety, forensics, infectious diseases, and personalized healthcare. This advantage broadens its customer base.
The company reduces risk by maintaining several quality and safety standards. It utilizes the Globally Harmonized System (GHS), which regulates the labeling and classification of chemicals on material Safety Data Sheets (SDS) and product labels. It has also eaned Quality Management System certificates for the following standards:
- EN ISO 9001:2008
- ISO 13485: 2003 CMDCAS
- EN ISO 13485: 2012
- EC Directive 98/79/EC
The company has established a powerful brand as a result of its success. It operates in more than 35 sites in over 25 countries. Its offers over 500 core products to more than 500,000 customers in over 130 countries. It estimates that over one billion biological samples have been analyzed or prepared using its technologies in labs worldwide. Lastly, Qiagen has won many honors, including “Top Employer 2015 in Germany” by the Top Employers Institute, the Life Science Industry Award for the best Nucleic Acid Purification and Separation Products (2011), the “Best Innovator” Award from A.T. Kearney and WirtschaftsWoche (2011), the 2010 Health & Wellness Trailblazer Award from the Alliance for Workplace Excellence, and the “Company of the Year“ Award from ACQ Magazine (2008).
Qiagen’s main channel is its direct sales and marketing team, which operates in offices worldwide; it also acquires customers through its website. The company promotes its offering through its social media pages, publications such as catalogs, scientific seminars, direct marketing campaigns, personalized electronic newsletters, advertising, and attendance of trade shows and conferences.
Qiagen’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website features a wide variety of self-help resources, including videos, webinars, virtual demos, instrument user manuals, application/protocol sheets, product documentation, product selection guides, kit handbooks, certificates of analysis, and answers to frequently asked questions.
Despite this orientation, there is a personal assistance component. Qiagen maintains a technical service support offering that enables current and potential clients to ask questions and provide feedback to M.Sc. and Ph.D. scientists at the firm. Customers may use phone or e-mail.
Qiagen’s business model entails designing, developing, and manufacturing molecular sample and assay technologies.
Qiagen utilizes suppliers for components and raw materials (chemicals, biologics, plastics, and raw separation media). The company has established several partnerships and license agreements with private firms, research institutions, and non-governmental organizations worldwide. Its collaborations with private firms include the development of integrated solutions with top manufacturers in the pharmaceutical and diagnostics sectors for mutual benefit. Qiagen’s specific partners include Tokai Pharmaceuticals and Array BioPharma.
Qiagen’s main resources are its human resources. They include over 1,000 employees in the research and development department who work in nine centers of excellence on three continents. They also include experienced sales and marketing staff, many of whom are scientists with degrees in molecular biology or similar areas. Lastly, the company places a high priority on intellectual property, with over 1,270 issued patents and over 900 pending patent applications.
Qiagen has a value-driven structure, aiming to provide a premium proposition through frequent enhancements to its product offerings. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing, research/development, and administration, all fixed costs.
Qiagen has one revenue stream: the revenues it generates from sales of its sample and assay technologies. Pricing for its products varies greatly – for example, the cost of DNA preparation kits can range from a few hundred to several thousand dollars.