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www.gene2drug.com 1 COMPETING IN A CHANGED MARKET: Competitive Strategies in an Era of Consolidation & Disruptive Technologies MULTI-SPONSOR RESEARCH PROSPECTUS www.gene2drug.com

Playing to win in the life science tools market

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For the last year, clients have repeatedly been asking us similar questions: - What's the outlook for life science funding? - What's the impact of large mergers on the competitive environment? - Are the ways scientists purchase products changing? - Do new technologies represent a threat or an opportunity? BioInformatics LLC has decided to answer these questions in our latest multi-sponsor research report, Competitive Strategies in an Era of Consolidation & Disruptive Technologies. We will undertake a comprehensive assessment of the current state of the global life science through extensive interviews with market participants, industry observers, procurement specialists and a survey of more than a thousand scientific customers from all market segments.

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Page 1: Playing to win in the life science tools market

www.gene2drug.com 1

Competing in a Changed market:

Competitive Strategies in an Era of Consolidation & Disruptive Technologies

M U L T I - S P O N S O R R E S E A R C H P R O S P E C T U S

www.gene2drug.com

Page 2: Playing to win in the life science tools market

M U L T I - S P O N S O R R E S E A R C H P R O S P E C T U S

www.gene2drug.com 2

Competing in a Changed market: Competitive Strategies in an Era of Consolidation & Disruptive Technologies

BioInformatics LLC, the leading research and advisory firm serving the life

science tools market, will conduct an unprecedented analysis of competitive

strategies in an era of flat growth, Thermo Fisher Scientific’s acquisition of Life

Technologies, other mergers, and disruptive technologies. This prospectus

highlights the objectives and methodology of the research effort and the

analysis and actionable strategies that will be delivered in the final report.

The Situation The life science tools market has been in a near constant state of flux over

the past five years as established companies have merged or been acquired,

new companies are founded, and emerging technologies (such as next

generation sequencing) disrupt long established markets and create new

opportunities. All of this change is layered over constrained research funding

in the United States and Europe and increased levels of life science spending

and investment in Asia.

This market turbulence came to a head when in April 2013 Thermo Fisher

Scientific (TMO) announced that it planned to acquire Life Technologies (LIFE)

in a $13.6 billion transaction. On February 3, 2014, the deal closed and a $17

billion company focused on the life sciences emerged. Completion of the

transaction followed the receipt of all the required regulatory approvals and

included the sale of the cell culture (sera and media), gene modulation and

magnetic beads businesses to GE Healthcare for $1.07 billion. This constant

state of disruption can be confusing for customers, challenging for the

merging companies, and (if played appropriately) moments of opportunity for

competitors.

“There have been so

many acquisitions

in the last couple of

years that I don’t

really care who

owns who as long as

my products don’t

change.”

- Customer commenting on a recent transaction

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Now what? Life science tools companies have had a year to determine how to compete

in this new market that is dominated by one very large competitor with

enhanced scale, impressive channel access, and the breadth and depth

of capabilities to meet customer needs in research, specialty diagnostics

and applied markets. Mergers are one way for companies to respond to

external market conditions that reward scale, size and cost-effectiveness. The

prevailing question that this report seeks to answer is: How should life science

tools companies compete in this new market environment?

n Should other suppliers merge in response to this acquisition?

n Will competitors retreat from peripheral markets in order to defend core

markets?

n Will there be more alliances among competitors?

n How can smaller life science companies bring new technologies to

market?

n If major players move aggressively into personalized medicine/clinical

diagnostics are there openings for suppliers who remain focused on basic

research?

In light of these questions, which business strategies might be implemented?

For example:

n “Attack” Strategy: Attack newly merged entities when they are distracted by

their mergers’ turmoil and confusion.

n “Magnet” Strategy: Create a “magnet strategy” to attract and hire your

merging competitors’ best people while their companies are in a state of

merger shock.

n “Threat” Strategy: Use the threat to your firm’s survival to jump-start

internal change.

n “Alliance” Strategy: Use multiple alliances, networks, licensing, or joint

ventures—instead of mergers—to fuel growth.

n “Fast-track M&A” Strategy: Plan and execute your firm’s fast-track mergers

and acquisitions to acquire new technology, increase channel access or

extend product lines.

“Customer service

got worse when Life

Technologies bought

up Molecular Probes,

GIBCO, etc. Fisher

customer service has

always been poor. The

combination of the

two is depressing to

contemplate.”

- Customer discussing concerns about the

potential for problems following a merger.

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n “Composite” Strategy: Create a composite strategy by using two or more of

the above strategies simultaneously to maximize growth and profitability.

The purpose of this study is to take the pulse of the life science ecosystem

to discern the effects of recent mergers, overall low growth, and disruptive

technologies on suppliers and customers.

Research Objectivesn Understand if and how competitors are adjusting their business strategies

in light of recent transactions and current market conditions (e.g., pharma

consolidation).

n Ascertain how customers perceive the current life science research

landscape—suppliers, channel access, research funding, research initiatives

(e.g., BRAIN Initiative), science policy (e.g., translational research), and their

adoption of new technology.

n Present strategies for competing successfully in the turbulent

life science market.

“Optogenetics is an

upcoming avenue in

neuroscience. It is

effectively being used

in the study of brain

stroke and epilepsy.

It is a valuable tool

as it provides a way

to manipulate brain

functions externally

using a beam of laser

light and observe

changes rapidly.

It also has high

translational potential

to be applied in the

clinic and will surely

prove beneficial to

patients.”

- Research scientist discussing an emerging

technique that may be a new market opportunity.

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ADVANTAGE OF MULTI-SPONSOR RESEARCH Mega-mergers tend to weed out marginal competitors and create

opportunities for those astute enough to know what is happening around

them. Multi-sponsor market research enables companies to quickly gain

competitive advantage through insights that support strategic decision-

making—at a fraction of the cost of a custom research project. Multi-sponsor

research is the concept of sharing the costs and the results with a select

group of market participants at a significant discount months before the

results are released for general sale.

Start-Up Time BioInformatics LLC has a multidisciplinary team of scientists, industry veterans and market research experts who will begin work upon receipt of your Sponsorship Agreement.

Expertise BioInformatics LLC has unmatched expertise in the life science market and has delivered market studies to more than 500 unique firms.

Objectivity BioInformatics LLC multi-sponsor research projects are unbiased and provide a fresh perspective on your strategies.

Efficiency There is no need for pre-publication sponsors to disrupt their routine activities. BioInformatics LLC will perform all aspects of the research and deliver the final report within the required timeframe.

Cost Control To commission a private study of similar scale and scope would cost approximately $80,000 to $100,000 USD.

“Genome engineering

with Zn-nucleases,

TALENs or CRISPR-

Cas9 systems—allows

genetic research at

the organismal level

with unprecedented

precision.”

- Customer speculating about the ground-

breaking technology they will adopt in 2014.

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RESEARCH METHODOLOGY

Open Source IntelligenceWe will conduct an extensive review of recent analyst calls, reports and

industry news to document changes in strategy, personnel, acquisitions,

partnerships or alliances that might reflect a competitive response to the

Thermo Fisher Scientific acquisition of Life Technologies. Research will also

be conducted to establish a framework by which to categorize the business

strategies employed by various life science suppliers to reveal industry trends.

Market ParticipantsBioInformatics LLC will conduct dozens of private, off-the-record in-depth

interviews with senior executives, marketing and product managers and

sales people to understand how life sciences suppliers are reacting to the

acquisition of Life Technologies by Thermo Fisher Scientific and how the

presence of this new competitor has affected their business strategies and

corporate performance. From the perspective of those actively competing in

all segments of the life science market, we will uncover the opportunities or

threats to their business in light of this transaction. We will also explore how

market participants view emerging technologies and applied markets as a

path to growth.

* At no time will BioInformatics LLC ask a respondent to disclose any information that he/she

declares is proprietary and/or confidential and, in fact, will explicitly explain to said individual

that he/she is only being asked to provide more general information or insight, and their

opinions on market evolution and competitor activity.

“Federally funded

biomedical research

is critical to address

our nation’s health

needs by providing

novel therapies

that lower the cost

and duration of

treatments for major

diseases (including

cardiovascular

disease, cancer,

diabetes), and

developing new

point-of-care

diagnostic tools that

will transform the

practice of medicine

over the next decade.”

- Translational research scientist telling

BioInformatics LLC about the long-term implications

associated with short-term budget battles.

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CustomersWe will survey approximately 1,000 life science customers in the United

States, Europe and Asia to gauge their overall reaction to the merger and

the uncertain funding environment. The customers to be surveyed will

encompass all segments of the market in which the major participants are

actively competing. We will probe how mergers have affected product

availability, ordering, sales, delivery, performance and support. In addition,

we will determine whether recent mergers have had any impact on customer

access to other brands through both the customer survey and interviews

with Purchasing Agents at key accounts. Customers will be asked which new

approaches they believe will most likely affect their research and how these

developments will impact their budgets and buying behavior.

Market ObserversThe opinions of leading market luminaries will provide color and context to the

data. From notable Board members, company founders, investors, strategy

consultants, branding experts, and marketing agencies, these observations

will provide unique insight as to what actions life science suppliers might take

to best compete and thrive.

“…Research, especially

in genomics, is

changing too quickly

to purchase needed

materials on guessing

plan with an unknown

budget. We need to be

able to respond to the

changing market and

research landscape in

an efficient manner in

order to maximize the

effect of our scarce (in

agriculture) research

dollars…”

- Scientist discussing the disconnect between technological innovation and budget uncertainty.

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ANALYSIS & REPORTING Our experienced team of industry veterans and professional market

researchers will continually assess incoming information throughout the

duration of this study—comparing, corroborating and challenging information

as it is received. Constant crosschecking of information validates the data

and enables us to highlight trends in the market’s competitive dynamics

that forecast change. In the final weeks of the study, the team will finalize

an analytical framework by which the different strategies employed by key

players will be compared and contrasted. We will analyze the data and

insights from all sources and produce a thorough and comprehensive report

with actionable recommendations.

“When research

budgets comes into

effect, the basic

research which ‘seems’

to have nothing to do

with human benefits,

are the ones that are

most likely to be cut

(e.g., evolutionary

biology, systems

biology). Meanwhile,

the NIH is trying to

push some grand

cooperated research

on human brain. The

fact is we need novel

theories and tools,

which do not yet exist,

to deal with problems

with such complexity.

These theories and

tools could only be

derived from intensive

basic research.”

- University scientist telling BioInformatics LLC about

their concerns about 2014 research funding.

Open Source Intelligence

News Articles

Press Releases

Analyst Reports

Investor Presentations

Public Statements

Regulatory Filings

Customers

Purchasing Agents

Principal Investigators

Lab Managers

Staff Scientists

Market Observers

Industry Veterans

Strategy Consultants

Marketing Experts

Sales Strategists

Market Analysts

Market Participants

Corporate Executives

Marketing & Sales Managers

Product Managers

Sales Reps

Actionable

Competitive

Strategies

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“Training a good

research scientist

takes 10-15 years. The

flat research budget

over the last several

years has greatly

reduced the number

of talented students

entering research,

and force many

established scientists

to close their labs.”

- Clinical scientist commenting on the long

term effect of budget cuts.

The final report will consist of the following sections:

Section 1: Executive summary and overview

Section 2: Competitor strategies and market analysis

Section 3: Customer perceptions and experiences

Section 4: Competitive response and strategy recommendations

Section 5: Study methodology

Section 6: Additional data analysis, including verbatim comments from

customers

SECTION 1

©2013 BioInformatics LLC www.gene2drug.com US-1

We estimate that life science R&D funding in the United States will be approximately $135.1 billion in 2014.

n Private industry is the largest source of life science R&D funding,

investing approximately $92.6 billion

n Includes pharmaceutical and biotechnology firms, agricultural

biotechnology, medical devices, diagnostics, etc.

n Also includes life science venture capital

n Federal government is the second largest source of life science

R&D funding overall, however the largest single source of funding

for academic research labs

n Estimated life science R&D funding will be $32.6 billion*

(selected agencies including NIH, CDC, FDA, USDA, DOD

medical research and NSF; used FY2013 budget estimates)

n Institutional funding and other sources including:

n State/local governments

n Non-profit associations and institutes

Sources: AAAS Research and Development FY2014 report, 2014 Global R&D Funding Forecast, sponsored by Battelle and R&D Magazine, December 2013, and NSF Higher Education Research and Development Survey, 2011.

U.S. Overview

Industry $92.60

Federal Government*

$32.61

Institutional Funding and Other Sources

$9.86

MajOR FUnDing SOURceS OF 2014 U.S. LiFe Science R&D (in biLLiOnS)

Sample page from a recent multi-sponsor report.

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“The use of genome

wide and exome

sequencing of

individual patient’s

tumors to determine

the specific defect(s)

and mutations that

are expressed in the

cancer, to understand

the individual cancer

drivers, and to use

chemotherapy,

targeted therapy,

microRNA treatment

and emerging

treatments of cancer

together to get the

best outcome for each

patient.”

- Pharmaceutical customer on how microRNA is

driving their drug discovery program.

SECTION 1

©2013 BioInformatics LLC www.gene2drug.com US-2

Growth in biotechnology firms has been offset by restructuring in large pharmaceutical firms; overall headcount and R&D spend is little changed over the past five years.

Domestic R&D spenD by phRmA membeR compAnies 2001 to 2012 (in millions)

U.s. private industry Funding

$23,502

$25,665$27,065

$29,556$30,969

$33,968

$36,608$35,571 $35,356

$40,688

$36,374 $36,810

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Domestic R&D Spend by PhRMA Member Companies 2001 to 2012 (in millions)

Sources: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership Survey, 2013 and www.chinabiotoday.com/downloads/20120313#sthash.TfxVtLUv.dpuf.

• As represented by PhRMA member companies growth in domestic R&D has increased 0.6% since 2007, the year before the Great Recession

• Big pharma increasingly looks to partner with academic researchers to accelerate drug discovery to bolster shrinking pipelines and reduce costs

• In 2012, PhRMA members spent approximately 76% of their R&D dollars in the United States

• Increased levels of R&D activity are shifting to Asia, to China and India in particular, to take advantage of lower costs and a scientifically adept workforce

Sample page from a recent multi-sponsor report.

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BUDGET & TIMING Since 1994, BioInformatics LLC has been providing market insights and fact-

based consulting to life science suppliers to help them make better business

decisions. Our multi-faceted approach to research has been developed over

20 years and is based on knowing how to reach the people who know what

you want to know. By asking the right people the right questions we develop

a composite point of view. We are objective and unbiased in how we interpret

the differing perspectives of market participants and scientific customers.

What we offer is the reaction time needed to develop and implement

strategic initiatives. What clients receive from this multi-sponsor research is

greater confidence in the accuracy of your market assumptions, and better

intelligence on competitor activity and customer behavior. To learn more,

please visit www.gene2drug.com.

These fees are calculated based on the nature and the scope of the project,

the level of detail, the objectives and the relative difficulty of obtaining

the information. The delivery of the final report will mark the end of this

assignment.

Task Timing

Due date for signed agreement June 23, 2014

Report delivered August 15, 2014

Total $15,000 USD per sponsor

BioInformatics LLC

provides critical

market intelligence

to leading companies

serving the life

science, medical

and pharmaceutical

industries. We

support clients across

the entire market

spectrum—from

scientific research

to diagnostics

and therapeutics—

providing high-level

management with

market insights.

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Engagement TermsFor this engagement, BioInformatics LLC billing procedures are as follows:

n 50% of the total engagement cost is due upon receipt of your signed

Authorization Letter.

n Balance due upon receipt of the final report.

n The delivery dates and fees contained in this prospectus will remain in

effect until June 23, 2014.

n A minimum of six (6) companies must participate or BioInformatics LLC

reserves the right to cancel the project. If BioInformatics LLC cancels the

project, sponsor fees will be refunded.

n Sponsors will have exclusive access to the report for 90 days before it is

released for general sale.

Questions/Comments

Robin Rothrock, Ph.D. Director of Publications BioInformatics LLC 703.778.3080 x 25 [email protected]

For more information

about BioInformatics’

product and service

offerings, please visit

our website at

www.gene2drug.com,

call 703.778.3080

x22, or email

g.thompson@

gene2drug.com

Deadline for

Sponsorship:

June 23, 2014

Greg Thompson, M.S., M.B.A.Director, Business Development BioInformatics LLC703.778.3080 [email protected]

Zach French Marketing Manager BioInformatics LLC 703.778.3080 x 19 [email protected]

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M U L T I - S P O N S O R R E S E A R C H A U T H O R I z A T I O N

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Please remit to: BioInformatics, LLC 2111 Wilson BoulevardSuite 250Arlington, Virginia 22201703.778.3081 fax

nYes, my company wishes to participate as a pre-publication sponsor of

BioInformatics’ study: Competing in a Changed Market: Competitive Strategies in

an Era of Consolidation & Disruptive Technologies

I understand that the budget for this project is $15,000 including expenses, for delivery

of the final report on or about August 15, 2014.

A non-refundable payment of $7,500 is due from each Sponsor before the start of the project.

The balance of $7,500 is due upon delivery of the final report.

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