Laboratory Costs (are we getting screwed?)

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.

Invitrogen 716 million
Sigma Aldrich 1 billion
Applied Biosystems 1.15 billion
Biorad 741 million
Millipore 810 million
Perkin Elmer 724 million
Thermo Fisher 3.8 billion WOW!

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…

9 responses to “Laboratory Costs (are we getting screwed?)

  1. Amen, JP. FYI, for large ticket items, haggling can definitely be productive. Case in point: my lab spends about 15K$ on serum/year since we work with primary cells quite a lot. When I started my lab, I went with the vendor that my postdoc lab used out of a desire to make the lab functional as quickly as possible. However, when the time came up to renew my serum order, I shopped around and found that other vendors were MUCH more reasonable. I contact my current vendor and showed them the prices and they dropped their price 50$/BOTTLE in response. That is a huge savings for me and was worth spending an hour to research different companies. I dislike doing this kind of price shopping, but for major expense categories, it’s probably a good idea if you care about your budget.

  2. My totally uneducated guess is that the biotech/pharmaceutical industries are putting more $$ into these companies than academia, so NIH cuts aren’t going to hurt them that much.

    Even though I worked in a well-funded academic lab, we were pretty frugal, and everything we did was on such a small scale that cost wasn’t a huge issue. Now that I’m at a biotech, we spend WAY more money than I could have imagined in academia. Time=money in industry, and if I get more data faster, we will spend the money to get it done. I don’t think Invitrogen or any of the companies you listed are worried about going out of business.

    BugDoc is right about the haggling. Our facilities guy is a master negotiator–last year we basically got a $100K plate reader for FREE after he worked his magic on Perkin Elmer. You just have to learn how to work the sales reps.

  3. I will be starting my own lab in the next year and this worries me much more now than when I am spending my current PIs money. Once its yours to worry about I think I will get very frugal. I just hope the lab next to me has plenty of supplies and unlocked doors to I can “borrow” plenty of tubes, tips and media!

  4. Thanks for the Iowa Ab link–that’s good to know. There’s also a neuro-specific one that might be relevant for you:

    Seems like NIH is at least a little aware that our constant purchases from monopolistic companies do not improve our finances.

  5. There’s also a neuro-specific one that might be relevant for you:

    Holy Cow! You just saved me a few hundred bucks on 3 antibodies I was about to buy ($35 for 100ug of purified antibody is a killer price). I had no idea neuromab existed. Thanks!!

  6. No prob. You can repay in beer next SfN :)

  7. Well I just moved up to Canada. I found a company called D-MARK Biosciences that gave me great pricing on PCR supplies and plastics. I don’t know if they can ship back to the U.S., but for me, I’m saving a good amount money, since our operating funds here are much smaller than what we used to get from the NIH.

  8. Pingback: Where to get some good deals on lab stuff « JUNIORPROF

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