NIH funding is tight and has been for the past couple of years. By all accounts the situation continues to get worse. All around me there are people forced to make tough decisions about cutting costs as their grants expire and don’t get renewed or they go through submission after submission trying to get funding. Cost cutting decisions often come in two flavors, lay off workers or cut back substantially on purchases. Laying off employees is tough on everyone. Often times the people that have to be let go are well-trained producers for the lab that have years of valuable experience. Once they are let go, chances are they won’t be coming back to the lab once the funding comes back up. Cutting back on consumables and/or equipment buys is also a hard decision to make. This often means not being able to do experiments that are important for the lab and the end result can be a decrease in competitiveness for funding. This brings me to my question — are lab consumables and equipment priced appropriately? Do these prices bear any resemblance to free market economic principles?
DrugMonkey mentions a bit of a scuffle between some big tag vendors at EB2008. Eric then mentions sales for big ticket items and the crunch that might or might not be on in these big companies to continue to make money in the present funding environment. Anyone that has ever picked up a scientific vendor’s catalog knows that big ticket items cost big ticket cash. Moreover, little things, like antibodies (for a nice comparison ever checked out Iowa Hybridoma Bank prices), drugs and even basics like glassware can put a big dent in your budget in no time at all.
Since I’m starting a lab now I have become very well acquainted with vendor pricing and have been quite shocked to learn that things I can buy at the local appliance store or even at Target cost 3-4 times more from the vendor (yeah Fisher, I’m looking at you). Now, I know that we get the old academic discount but it still doesn’t make the prices competitive. This would be fine if I could just run out and buy what I need from whoever has the best price but that’s not how it always works. You see, many, if not most, of us have a contract in place with a certain big vendor (Fisher, VWR, etc.) that makes them our preferred vendor. We can work around this but it takes considerable effort and the time lost to paperwork and the like often ends up canceling out the price difference. Is that really free market competition?
All of this got me thinking… How are all these companies that I buy my lab consumables and equipment from doing financially in these NIH funding strapped times? First a disclaimer. I’m no economist so if I’ve made a mistake in reading these numbers correct me. I also realize that NIH/NSF funded labs are not the only groups buying products from these companies. I don’t even know if we are their best customers, but I imagine that we are. So here is a list of companies that I buy from regularly with their 2007 gross profits.
Color me surprised. These numbers tell me that flat or declining NIH funding levels don’t matter at all for the bottom line of these companies. Perhaps they put pressure on the sales force but I’d take Thermo Fisher’s 2007 gross profit any day of the week. So, what’s up with all of this? 1) Are NIH funding levels just-good-enough to keep the wackaloons happy? 2) Are we paying too much for the products we use to advance publicly funded science? 3) Do we have any recourse to get these prices in line with current funding levels? My answers are 1) Yes 2) Yes and 3) not sure, but I’m thinking…