Have you considered rental?
26 Apr 2012 by Evoluted New Media
Laboratory News takes a look at the benefits of renting rather than purchasing equipment for modern research operation
Laboratory automation is now well established as a successful and cost effective method of improving many laboratory operations. Over the last decade automated systems have become ever more functional and reliable, allowing research to advance quickly and efficiently to new areas of interest.
One obstacle that still remains is the capital required to purchase and support this high end instrumentation. The problem is obviously more acute for the smaller operations, but even the big pharmaceutical companies, once prolific buyers of such equipment now seek to reduce operating costs. Two of the biggest considerations prior to purchase are initial cost and the often overlooked maintenance and support costs. If we look at these independently the complexities of the issues are even more apparent.
Depreciation aside, the purchase cost is an easily tangible figure which can be factored within any capital expenditure budget. Include depreciation back into the equation and once again we find that there are complications. When assessing the requirement for purchase, most organisations will assess the overall lifespan of the system and combine this with the target deprivation curve. The interesting aspect when using this method is the complete omission of usage as a calculating factor. Research by its very nature evolves and unlike the production environments which seek to operate highly scheduled “just in time” operations, the targets and goals of today may be incomparable to those in five, two or even one years.
Another compounding factor arises through the rapid but continued changes observable within the large pharmaceutical companies. For nearly a decade we have witnessed the repeated merger and downsize of numerous medium and large sized pharmaceuticals, culminating over the last two years in a rather frenzied termination of facilities and staff. Although this drive to create right sized organisations has been at times ruthless, it has brought about change. The requirement for research has not disbanded, it is simply being transferred to the smaller and leaner organisations that specialise in their own fields i.e. contract research operations (CRO’s). The curious outcome of which, results in the small and mid-sized companies now driving the competition to operate more intuitively.
How can this be achieved? One obvious way would be to introduce automation into the laboratory, but this can give rise to self-contained issues. The question now becomes how can a small CRO grow and compete with larger companies, whilst managing a challenging financial market? The answer is to change the way that equipment is sourced.
Most instrument manufacturers operate solely within a sales environment, with a few offering lease purchase through third parties, but there are now a few companies which offer straight rental. These companies offer a truly flexible service and vastly different to the OEM sales. Unlike OEM’s, the equipment is not supplied new and does not include a warranty period or construction to exact requirements.
To appreciate the full benefits of what it does offer, we need to look at the whole cost to own, cost to operate package. With a rental model the customers would supply the operator with a list of process requirements which will be used to generate a solution for the customer. Whilst some may instantly form the opinion that this will be restrictive when compared to a configured purchase, the overall cost and output quality have to be the key indicator. It also allows for a more flexible model, with rental periods typically being available from one month to one year. This is particularly advantageous for CRO’s who secure smaller contracts that will be completed in a few months. The rental cost is simply factored into the project costing’s and effectively passed to the original contracting party. All associated costs are kept to a minimum as the equipment only initiates a cost whilst in use. Once the process has been completed, the instrument is returned. The rental companies also organise and manage the service of the instrument, so there is no need to dedicate any personnel to managing these aspects.
As an example of the advantage, consider that we are able to purchase an instrument or rent it. If we were to remove cost as a consideration, the obvious choice would be to buy the system outright? We can also remove service and associated costs for the first year, as we would expect to receive a warranty period with our instrument. However what would happen if we were now offered the chance to bid for an additional contract, but our equipment does not have either the throughput or capability to manage. The options would be to seek further funding for an additional purchase, or process using another method. If we had utilised the rental option we could simply rent an additional machine, or a different one capable of the work. Once the service costs are reintroduced, the purchase option is visibly less cost effective. As an outline guide you would expect to rent a system for five years continuously, before it would be more cost effective to purchase. There are also some much less tangible benefits, such as space and inventory management.
Overall the positive aspects of a rental model heavily outweigh the negative ones and give a whole new demographic of companies options that were simply not previously available. The key change factor is making the breaking of current default methods of equipment sourcing.
The Author David Reed Managing Director of Flexible Lab Solutions
