Analysis of Value Creation and Value Capture in Market

Advances in microfluidics in the last two decade have created a tremendous technological value which is shaping genomics; drug discovery; proteomics; and point-of-care diagnostics. The positive impact has resulted in faster analysis time, increased throughput and reduced cost amongst other important benefits. Yet, the life sciences end-users and the microfluidics players themselves are far from fully capturing the value. Author's own observation based on the experience at a leading genomics research institute, where multiple efforts to implement microfluidics technologies hardly succeeded, supports this fact. The failure to fully capture value has serious implications for the vendors developing microfluidics and the researchers employing these technologies. What are the reasons for this failure? What could be done to increase the value capture? Using well-established management frameworks, such as, s-curve, adopter's distribution model, the thesis studied the nature of value creation and value capture. Survey was used to quantify the impact and the diffusion and adoption of microfluidics technologies, as the respective indicators of value creation and value capture. The data support the insight obtained from the conceptual frameworks that microfluidics is still an immature technology. It also shows that immature technology is the primary reason for lack of full value capture rather than the lack of killer application or niche market commonly reported reasons in the literature. As an immature technology, microfluidics is thus far still only in the hands of users who are innovators and early adopters the academic laboratories and the research institutes. The application segments which have seen the most value capture are Genomics and Point-of-care diagnostics. The application segment which has seen the least value capture is Drug discovery. This thesis concludes with the recommendations for short and long term strategies for increasing value capture and accelerating the adoption of microfluidics. Thesis Supervisors: Michael A. M. Davies, Senior Lecturer, Engineering Systems Division Todd Thorsen, PhD, Technical Staff, Lincoln Laboratory Noubar Afeyan, PhD, Senior Lecturer, Sloan School of Management This page has been intentionally left blank 1 Microfluidics Market 1.1 Overview of Market Size The tremendous potential of microfluidics technologies is driving the growth of microfluidics market. According to (Gomez 2008), the size of the market for life sciences application reached $750 million in 2004. The market is expected to grow at a compounded annual growth rate of 13% to over $2 billion by 2010. (Gomez 2008) also states that the number of patents linked to microfluidics platform increased from under 25 in 1998 to over 350 in 2004. Based on the strategic analysis of biochips market in 2006 by Frost and Sullivan, the number of literature articles citing microfluidics technologies increased by an order of magnitude from about 10 in 1998 to about 740 in 2005 (Figure 1). The analysis predicted that the number will continue to increase in future as users follow proven experimental protocols employing microfluidics technologies. Total Microfluidics/Lab-on-a-chip Market: Literature Citations (U.S.), 1997-2005 800 350 700 300 700e 600 250 e 200 500 400--150 00100 100 50 0 -10