2008 winning presentation mit

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Rationalizing ABgene and MatrixLines in Liquid Handling Business

David Follette, Mike Irwin, Chad Sailer, PaulWitinski, Chris Lin

Massachusetts Institute of Technology

November 8, 2008



Executive summary

• Inorganic growth has increased complexity,generating potential savings through SKUreduction

Strategiccontext

• High overlap in ABgene and Matrix products; low

2

re un ancy w nuncOperationalsituation

• Rationalize SKUs by gradually eliminating ABgeneproduct design

• Transition to ABMatrix brand globally

Proposedsolution



Agenda

• Strategic context

• Current operational situation

• Rationalization strategy

• Implementation/challenges andtakeaways

3



Acquisitions have resulted in growth, butadded complexity

12.0

70

1.1 1.2

37

60%

70%

80%

90%

100%

4Note: Revenues are for full year 2007, Inventory on hand and # of SKUS are at year-end 2007

3.3

5.0

149

11.4

0%

10%

20%

30%

40%

50%

Revenue ($M) Inventory on hand (K) SKUs

nunc

Matrix

Abgene



Currently, similar products are being shippedacross the ocean at substantial time & cost

28 days

Matrix shipped to UK

5

28 days

ABgene shipped to US

Distribution center

Manufacturing facility

Legend



Agenda





6



ABgene and Matrix have highly overlappingproduct portfolios

97% 98% 98%100%

Matrix

Percentage of Matrix with a

corresponding ABgene product

85%

97% 98%100%

ABgene

Percentage of ABgene with a

corresponding Matrix product

0%

25%

50%

75%

SKU Units Revenue

7Note: Only tubes included

0%

25%

50%

75%

SKU Units Revenue



Matrix and ABgene have similar distributionstrategies; ~90% TFS controlled

80%

100%

% of sales by channel

0%

20%

40%

60%

Matrix ABgene

Distributor

TFS-owned partner

Direct

8



Despite some hurdles, ABgene and Matrixcould largely be substituted for one another

• Product mix• Channel mix

• Raw materials

Factors suggestinghigh similarity

Factors suggestinglow similarity

• Unique branding (esp.ABgene)

• Integration with

• Compete for samecustomers

9

time

High probability of successfully integrating

ABgene and Matrix product portfolios



nunc is very different, and should not beconsidered part of SKU rationalization

• Used in high density, very low temperatureapplications

• Low volume customers with specific needs

End customeruse

• Sold only through distribution channelsDistribution

10

Rationalizing nunc SKUs would likely hurt

sales due to customer attrition

• Built as a honeycomb, not rack, systemProductfeatures



Matrix has the highest gross margin of allthe 3 brands

60%

70%

80%

Gross margin by brand (2007)

26.9%

68.7%

34.2%

0%

10%

20%

30%

40%

ABgene Matrix nunc

11



Agenda





12



Key goals of rationalization strategy

• Move to common architecture on ABgene and Matrixto reduce redundancy

• Leverage strengths of existing brands

• End wasteful shipping across ocean

• Leave nunc alone

13



Key components of solution

•Migration of ABgene designs to Matrixdesigns

•Introduce new ABMatrix brand to lobal

1

2

market

14



Standardized designs implementedgradually, driving $3M/year of savings

• Three year phased implementation

-Standardize tube manufacturing system

-Set Matrix design as the standard

-Work closely with customers throughout process

• UK manufacturing to match US (Matrix) manufacturing

-

15

Leverage ABgene name and Matrix design

manufacturing to drive $3M savings

• End with 119 fewer SKU’s due to redundant ABgenedesigns

• Pass through manufacturing savings onto customers



Customer impact of migration to Matrix designwhile maintaining ABgene brand strength

Highly automated, $100Mpharma in Bristol, UK,

ABgene user

• Pass through savings• Eventual transition to

ABMatrix

1

2

16

Small cancer researchstartup in Munich,Germany, ABgene user

Regional branch of majorFrench biotech firm, locatedin Columbus, Ohio usingABgene like its parentcompany

• No impact due to lowautomation

• Pass through savings• Eventual transition toABMatrix

3



Financial impact is significant

• Safety stockreduction: $188k

One-time savings

• Safety stockreduction: $21k

• Elimination of

Ongoing savings

• Minimal impact totop-line revenue

Revenue impact

17

transit costs:$145k

• Manufacturingsavings: up to $3M

Total 3 year savings of $0.7-$4M, with little

to no impact to revenue



Agenda





18



Implementation timeline is a phasedapproach

Year 2 Year 3Year 1

• Design migrationcomplete

• Complete

• Design migrationcontinues

• Lower number of -

• Introduce unifiedglobal brand(ABMatrix)

19

SKUs

• All products soldunder singleABMatrix brand

shipments

• Continue to honordeclining need of old SKUs

customers torationalized SKUs

• Continue to honorcurrent customers’

old SKU needs for 3years



Risks and mitigations

• Customer pushback on design

changes

Risks

• Phased implementation plan

• Pass on portion of savings tocustomers

Mitigation

20

• Manufacturing productivitydoes not meet targets

• Proven in US

• Best practice sharing w/ USsite

• Lose revenue with brandtransition through customerattrition

• Pass on portion of savings tocustomers



Change and risks fit with TFS core values

Integrity

Innovation

• Honor commitments to customers whosespecific product needs span several years

• Take calculated risks duringimplementation to capitalize on significant

21

Intensity

Involvement

opportunities

• Focus on desire to streamline productoffering to achieve higher standards of

efficiency

• Encourage communication between

regions, functions, and customers



Key takeaways

• ABgene and Matrix merge into ABMatrix toleverage relative strengths of each brand

• After 3 years of phased implementation,. - .

• Good for customers, good for core values,

and good for bottom line

22



Q&A

23

2008 winning presentation mit

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