CXO

Chemdex Corporation takes biotech procurement online

The procurement market is expected to explode in 2000, and Chemdex is ready to light the fuse. In this corporate profile, we examine how Chemdex provides online procurement for the ever-expanding biotechnology market.


The rising demand for research equipment and chemicals puts online procurement company Chemdex right in the middle of a growing multi-billion dollar industry. Chemdex Corporation, a Silicon Valley company, provides Web-procurement for the life sciences industry, which includes pharmaceutical, healthcare and biotechnology companies, as well as universities and research institutions. Customers can access Chemdex’s online marketplace, search for specific products, order, track, and pay online.

By automating the purchasing process from requisition to payment, Chemdex delivers an easy-to-use online marketplace that helps cut costs, helping it maintain a competitive edge. Chemdex’s online marketplace includes nearly a million products from more than 120 suppliers including lab supplies and equipment, chemicals, and reagents (such as antibodies, enzymes, and organic and inorganic chemicals). Chemdex was named #25 in Information Week’s “Top 100 E-business Innovators” and was one of Upside’s 1999 “hot companies.” The high praise comes with a good reason. Chemdex is one of the leaders in procurement, which is expected to be one of the most explosive growth areas of the Internet in 2000.

Chemdex filed an IPO this past summer and currently has approximately 100 employees. A key to Chemdex’s growth is developing strong loyalty from customers and win-win relationships with vendors and suppliers. Current customers include Roche Palo Alto, Rhône-Poulenc Rorer, SmithKline Beecham, Elan Pharmaceuticals, University of California at San Francisco, Genentec, and the Massachusetts Biotechnology Council (MBC).
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The market
Because of a marked increase in scientific research, the market for medical and laboratory products can be as much as $12 million in North America and $143 billion worldwide. Deloitte Consulting foresees a tremendous increase in B2B e-commerce , and expects procurement to be a huge part of that increase for 90 percent of large, global businesses. In total agreement is the Boston Consulting Group (BCG), which estimates that B2B will be a $2.8 trillion market by 2003, and that Web-based procurement will grow by 80 to 90 percent a year until then.

While Chemdex’s focus is on biotechnological industries, pharmaceutical industries, and research universities, the company is also expanding into related healthcare industries. Chemdex’s competition includes Medibuy.com, Neoforma, Baxter, Fisher Scientific, Beckman Coulter, and Sybron International.

Strategic advantage
Web-based procurement replaces time-consuming manual ordering through paper catalogs and phone calls. Chemdex’s streamlined procurement cycle has many advantages including quicker delivery, lower costs, the ability to provide customer-specific pricing, rapidly updated product information, ERP integration, a streamlined supply chain, a single point of contact for order tracking and fulfillment, and increased customer control over the procurement process.

In order to be competitive, Chemdex has been busy establishing alliances with multiple suppliers and manufacturers, developing Web-based databases for product and customer data, and developing loyal customers. Chemdex has actively aligned itself with several large partners, including:
  • Ariba
  • Concur Technologies, Inc.
  • IBM Global Services
  • Massachusetts Biotechnology Council (MBC)
  • SAP
  • Sun-Netscape Alliance

The company also has partnerships with VWR Scientific Products Corporation, one of the industry's largest distributors, and the Biotechnology Industry Organization (BIO), the world's largest biotech industry trade organization.

Financial information
Chemdex earned $112 million from its July 1999 IPO. The day of its launch, Chemdex's stock price rose from its opening price of $15 to nearly $35. For the quarter ending June 30, just prior to the IPO, Chemdex lost $12.5 million with $2.9 million in sales. The company continued to report losses in 3Q 1999.

Management team
  • David P. Perry, President, CEO and co-founder
  • Pierre V. Samec, chief information officer
  • Robin A. Abrams, chief operating officer
  • James G. Stewart, chief financial officer
  • Martha D. Greer, vice president, marketing
  • Thomas P. Kudrycki, vice president, engineering
  • Derek McCall, vice president, special projects
  • Robert W. Perreault, vice president, professional services
  • James S. Wambach, vice president, worldwide sales operations
  • David A. Weber, vice president, supplier relations
1500 Plymouth Street
Mountain View, CA 94043
Tel: (650) 567 8900
Fax: (650) 567 8950
http://www.chemdex.com
What others are saying about Chemdex
“Get ready for chemical warfare. Two key players are emerging as electronic-commerce middlemen whose goal is to match thousands of chemical and laboratory-supply manufacturers with research labs, product development firms, and other buyers across North America. Chemdex (Nasdaq: CMDX), which went public in July, announced plans to acquire Promedix.com, an online middleman for specialty medical equipment and supplies. …The deal is expected to close by year-end.”

“Chemdex expands as competition heats up,” by Tom Davey, Redherring.com, September 22, 1999.

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