Consumable vs. Instrument, the Creative Tension in Diagnostics Technology

By Juan F. Roman

You know how the diagnostics industry relies on the “razor blade” model: give the instrument for free and make the profit with the consumable. The gross profit in consumables is often more than 90% and absorbs the expensive cost of developing the instrument and the assays, as well as the lengthy laboratory and clinical trials.

So human nature makes us look first at the “blue chip”: the expensive instrument should be designed first and focus the development effort. Then you get on with the design of the consumable, after the instrument is almost done, as the +90% gross profit is so large that will absorb any inefficiencies in the design of the consumable.

What happens often is that you are landed with a consumable that will give you grief for years to come, eroding the profit for the life cycle of the diagnostics solution.

To avoid this and maximize return and manufacturability, the cartridge should be driving early on the architecture of the instrument, to make sure the cartridge is robust, easy to use, low cost, and manufacturable. And you should make sure the instrument fits around that.

So the solution is to bring the consumable experts early on, giving them a clear voice in the design process, negotiating with them (with their expertise, actually) the design compromises of the instrument to ensure you have a diagnostics solution profitable and manufacturable for years to come.