Scientist.com wants to remodel how pharmaceutical companies and outsourced researchers and suppliers do business.
The provider of e-commerce technology has developed customized web portals for 14 pharmaceutical organizations—including such names as Pfizer, Novartis and Bayer—where their scientists can interact with and do business with scientists and suppliers of laboratory materials at other approved organizations. “We create a white-label, highly configurable marketplace for each client,” says CEO and founder Kevin Lustig.
Scientist.com also operates app.scientist.com as a public marketplace where scientists and suppliers of scientific supplies can interact and do business. All of the marketplaces it develops run on the same technology platform, Lustig says.
Overall, Scientist.com fosters interactions and commerce between scientists and more than 2,000 suppliers of laboratory supplies and research services. In each case, transactions are highly personalized to the needs of each project that scientists are working on, Lustig says. “Nothing is off-the-shelf,” he says.
Demand for such online interactions is growing quickly, he says.
This year, Scientist.com is on pace to reach $80 million to $100 million in the gross merchandise value of transactions between buyers and sellers on the marketplaces it has developed, Lustig says. That’s up from roughly $40 million in sales in 2016, and $12 million in 2015, he adds. In four years from now, Lustig says he expects his company could process $1 billion in transaction volume.
But Scientist.com hasn’t always been so successful. “We are an overnight success 10 years in making,” Lustig says.
The company hit rock bottom twice since its founding a decade ago as it struggled to find its niche and an operating model that works, he says. But now Scientist.com is not only growing its own revenue, it is raising significant venture capital—$24 million in the last two months alone.
Two things have changed since the company, initially known as Assay Depot, launched in 2008 as an online marketplace technology platform for academic researchers and big pharma companies to connect and arrange service exchanges, Lustig says. The biotech industry itself is beginning a big shift towards outsourcing more research services, and Scientist.com has revamped its business model to resemble the formats of e-commerce marketplaces run by giants like Alibaba Group and Amazon.com Inc.
Scientist.com initially tried charging pharmaceutical companies $250,000 annually to access its marketplace platform, which led to almost-break-even revenue, Lustig recalls. It then charged usage fees only to the suppliers of scientific products and services. Neither model led to strong growth, Lustig says.
Then in 2015, Scientist.com went fully e-commerce with the model it uses today: The platform is entirely free for both big pharma companies and research suppliers to use, including access to all the legal services and expert scientist consultations. Scientist.com takes a 5% cut of each sale when a supplier of products or research services finalizes a deal with a buyer.
With its new business model, Scientist.com has signed up 13 drug companies and the National Institutes of Health, with more client projects in the works, Lustig says. On the other end are hundreds of research suppliers—able to provide everything from a piece of DNA to a molecular tweezer or a full-blown antibody test—located all over the globe.
Scientist.com helps drug companies cut costs by providing side-by-side quotes from research suppliers, Lustig says. Outside of a marketplace, these quotes frequently vary by up to 10-fold—where one supplier will ask $10,000 for a service, another will charge $100,000.
With the competitiveness of the e-marketplace, however, Lustig says companies that took more than one quote last year saved on average 26%, or about $8,000, for every order. One big pharmaceutical company, he notes, bumped that to 45% on average for all its compound syntheses (custom-built chemicals) by requiring all its scientists to get at least three quotes for each order on the marketplace before committing.
There are also savings in time. Once a company and a supplier have agreed on the terms of service, they simply need to check a box at checkout to agree to one of the pre-made legal agreements Scientist.com provides, and the research can begin immediately, Lustig says. This process can otherwise take several months, he adds.
Scientist.com also includes a free service called “research concierge,” through which a team of PhD and other field experts oversee the entire process of creating a successful purchase order, making sure a buyer requests the appropriate materials from the right supplier.
In addition, its portals come with the ability of buyers to route their pending purchases for approval by supervisors, helping buyers and sellers comply with government regulations regarding authorized sales of pharmaceutical and related products. “Until a pending purchase gets final approval, the purchase button does not show up” on a marketplace, Lustig says.
Paul Stone, a partner at 5AM Ventures, one of Scientist.com’s financial backers, says its marketplace platform is designed with several attributes that help to streamline commerce transactions for complex scientific projects. “Research organizations of pharmaceutical companies, biotech start-ups ,and academic and research institutes can get near instant access to thousands of the latest research technologies and services,” he says. “The marketplace saves researchers time, reduces costs, promotes access to innovation and ensures regulatory compliance.”
Despite these perks, the biggest challenge remains getting scientists to use the site, Lustig says. For decades, pharmaceutical companies have built out their own massive procurement departments, with internal experts assigned to setting up and managing a trading platform for purchasing products from approved suppliers. The result, Lustig says, has been that many of their scientists and procurement managers are entrenched in the old procurement processes, usually calling up a single familiar vendor to request a quote whenever they need something.
To attract pharma companies, Scientist.com is working to roll out marketplace features to generate more interest from scientists in a particular supplier, Lustig says. Scientist.com now features Scientist Spotlight and Supplier Spotlight, videos of scientists and suppliers explaining their work on marketplaces. It also features an Innovation Hub that explains and highlights the latest tools and technologies available to biotech researchers, and how the researchers have used them in innovative ways.
So far, these efforts to grab the attention of scientists seem to be working: the Innovation Hub’s email newsletter, “Top Eight Innovations of the Month,” has a 70% open rate, compared with a 10% open rate for other news that Scientist.com distributes, Lustig says.
“Scientists listen to other scientists,” he says. “So that is the approach that will work.”
And with the increasing attention of more scientists, Scientist.com can bank on continued growth.
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Amy Dusto is a Chicago-based freelance writer.Favorite