Case Beckton Dickinson

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Becton Dickenson & Company: VACUTAINER® Systems Division (Condensed)

Company Background
Beckton Dickinson is a medical corporation that manufactures medical, diagnostic, and industrial safety products for health care professionals, medical research institutions, industry, and the general public. The corporation was founded in 1897 by Maxwell W. Becton and Fairleigh S. Dickinson. That year they sold their first product a Lauer-all-glass syringe. In 1904 the company acquired the Philadelphia Surgical Company. It was the first company that specifically built for the production of syringes, thermometers, and hypodermic needles. In 1947 Joseph Kleiner developed the Evacutainer, a device to draw blood through a needle into a test tube using a vacuum, which evolved to become the Vacutainer Blood Collection System. In the 1950’s BD expanded internationally to Canada, Mexico, France, and Brazil. In 1962 the company went public and in 1970 appeared in the Fortune 500 list.

Becton Dickinson has 3 business segments: Laboratory, Industrial Safety, and Medical Products. The Medical Products division was further subdivided into: -needles, syringes, and diabetic products
-pharmaceutical systems
-Vacutainer blood collection systems

The blood collection systems division had 3 major product groups. Firstly, venous blood collection systems which consisted of a needle and a vacuum tube for collecting blood from a patient’s veins. These tubes were coated with reagents to preserve integrity of the specimen. Evacuated-tube blood collection was considered superior to the needle-and-syringe method which was outdated. In the U.S. 1005 of venous blood collection was done with evacuated-tube collection and BD had an 80% market share. BD used the brand name Vacutainer. Secondly, Capillary blood collected systems which consisted of a lancet for pricking the patient’s finger and a tube for collecting blood. The brand name that BD used was Microtainer. Lastly, Microbiology systems which provide a sterile environment for transferring blood specimens from the collection to the testing site. These were all marketed under the Vacutainer brand name.

Facts & Figures
In 1984 Becton Dickinson sold $1.127 billion of goods, with 75% of the sales coming from the U.S. The blood collection division had sales of $90 million in 1984. BD had a market share of 80% in evacuated tubes and 30% in needles.

Industry Background
Blood collection products were mostly used in 3 types of institutions: hospitals, commercial laboratories, and nonhospital health care centers. Hospitals were the largest users with 7,000 U.S. hospitals performing 70% of the blood tests. The 1,800 largest hospitals accounted for 50% of the market for medical equipment. Different hospitals had different purchasing processes and these processes determined who BD had to talk to. BD also talked to the bench people, the lab technicians who had to work with their products. In most hospitals medical supplies accounted for 10% to 15% of the total costs and the logistics of these supplies accounted for an additional 10% to 15%. Blood collection products usually accounted for less than 5% of the total supplies that a hospital purchased. The number of tubes and needles a hospital bought depended on the size of the hospital and could range anywhere from 40 to 1700 cases annually. Another big purchaser of blood collection systems were the commercial lab. In 1985, 700 labs performed 25% of the blood tests in the U.S. Some larger national labs with 15 to 20 locations purchased their supplies centrally. The purchasing processes in the commercial labs were usually similar to the processes in the hospital. The commercial labs were however more cost conscious as they had to compete with each other on price. The last big purchaser of blood collection systems were nonhospital health care centers. These accounted for 5% of the blood tests that were performed. But market trends...
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