San Diego’s Assay Depot Creates Private e-Commerce Sites for Pfizer, Other Big Pharmas

7/12/11Follow @bvbigelow

Entrepreneurs are often advised to stay nimble during the startup years of a new venture, so they can quickly change direction as new business opportunities present themselves. But San Diego’s Assay Depot could qualify as a case study in agility.

The venture that began five years ago as a clinical research organization (CRO) dramatically changed its business plan after CEO Kevin Lustig realized the web-based technology his co-founders had created to process customer orders represented a better business opportunity. “Our first pivot was to build an Amazon.com for the pharmaceutical industry,” Lustig said. Since then, Assay Depot has focused its business on operating an online marketplace where hundreds of CROs list the laboratory services they offer, enabling individual scientists and small biotechs to order “end-to-end” pre-clinical research services.

Now Assay Depot has pivoted again, less dramatically this time, by developing a private version of its online marketplace of laboratory services for Pfizer (NYSE: PFE), the New York-based pharmaceutical giant. The private online exchange is intended solely for Pfizer’s internal use, enabling thousands of Pfizer scientists to order specialized laboratory services directly from Pfizer’s in-house list of preferred venders, as well as hundreds of independent CROs offering their services through Assay Depot’s public marketplace.

Kevin Lustig

The new system, called Pfizer’s Scientific Services Marketplace, began operating at the end of June, Lustig says. Assay Depot, which built and hosts the system, is now working on similar projects with at least three other global pharmaceutical giants, which Lustig says he is contractually prohibited from identifying.

Lustig says Pfizer initiated the project as part of the company’s broader initiative to cut an estimated $3 billion from its $9 billion R&D budget.

In an e-mail yesterday, Pfizer’s Senior Director-Scientific Services, Eric Shobe, says: “The driver for Pfizer’s Scientific Services Marketplace is access and innovation. The broader pharmaceutical research services marketplace is loaded with innovative capabilities that can often be difficult to access, considering the complexity of the services and supply base. So to streamline this process for our researchers, we use the marketplace to fully utilize internal and external capabilities.”

Lustig says Assay Depot’s work for big pharma began at a scientific conference, when a senior Pfizer executive said he wanted the San Diego startup to develop a version of its public marketplace that would just list the lab services Pfizer provides its own scientists. In Lustig’s words, the executive told him, “We offer about 1,000 different services around the world, but our own scientists don’t know what we’ve got. I want you to create a private version just for us.”

Lustig maintains that Assay Depot’s Web 2.0 technology offers a huge cost saving for the pharmaceutical industry by centralizing laboratory research services, empowering rank-and-file scientists, and providing a platform that makes outsourcing more competitive. “Until now, the Big Pharmas were having to go to conferences to find venders” that specialized in certain research areas, Lustig says. “This provides a way for venders to push their information into the system.”

The Pfizer system also will display venders who have registered through Assay Depot’s public marketplace, so the price of services provided by independent CROs outside of Pfizer are displayed along with the same services offered by Pfizer-preferred CROs.

“We believe if a [pharmaceutical] company really embraced this concept that we can take 25 percent off their bottom-line costs,” Lustig says. He also contends that a private marketplace like Pfizer’s can increase the odds a drug-development program will succeed because Assay Depot has added key features inspired by popular consumer sites. A Yelp-like feature, for example, allows Pfizer scientists to use a five-star ranking system to rate CROs and their services. A Facebook-like feature enables scientists to share their experiences concerning different venders and different technologies through a “mini-blog” linked to specific services, such as “antibody-dependant protein conjugation” and “recombinant protein purification.”

“We’ve tried to take all the best features of consumer sites and apply them to the pharmaceutical industry,” Lustig says, “and it’s amazing to us that nobody has done it before.”

Assay Depot pre-qualifies CROs for its website by requiring them to sign a master services agreement, confidentiality forms, and other documents when they register to list their services. That makes it easier for rank-and-file scientists to directly outsource key services, Lustig says. He maintains that getting a master services agreement signed with prospective CROs is “the single biggest bottleneck” in drug development today.

“What our system does is put within the fingertips of any scientist anyplace the ability to do anything, any complex series of services—without getting hung up with a vice president for procurement” Lustig says.

If you are a CRO, Lustig says, you can use Assay Depot as a central source for providing information to scientists throughout the pharmaceutical industry. Assay Depot provides most of its services to CROs at no cost, Lustig says. Pharma customers pay the company a monthly license fee.

“Everybody’s going around saying the business model for biotech and pharma is broken,” Lustig says. “Everybody says the industry needs a new paradigm, and we think we’ve created it.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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