Bergerac Systems the Challenge of Backward Integration

4196 words 17 pages
rP os t
4381

DECEMBER 14, 2011

DAVID A. GARVIN
SUNRU YONG

Introduction

op yo Bergerac Systems:
The Challenge of Backward Integration

In July 2010, Ian Wyckoff, CEO of Bergerac Systems, scribbled a few notes about his latest meeting with a group of veterinarians. These were his customers, and they provided direct feedback on their latest experiences with Bergerac’s diagnostic instruments for animal care. The feedback was always valuable, although on this visit it was not entirely positive.

tC

The customer feedback was fresh in Wyckoff’s mind as he returned to the proposal he had started reviewing that morning. It summarized the “make vs. buy” analysis for OmniVue cartridges conducted by his director of
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accounted for over 86 million cats and 78 million dogs. Second, the trend of pet “humanization” had increased owners’ willingness to pay. More pet owners were empty-nesters, single, or childless, and increasingly they viewed their animals less as backyard inhabitants and more as family members. In fact, surveys showed that more than two-thirds of owners thought of their pets as family or children.
These owners were more invested in the welfare of their animals, spending more on premium grooming services and organic pet food, for example. This trend also affected spending for veterinary care, with owners willing to spend more for screening, wellness programs, and expensive procedures to prolong life.

op yo A third factor in growth occurred on the supply side: an increase in the sophistication and availability of veterinary care. Technology transfer from the human side of the healthcare industry had gained momentum in the 1990s. This led to better equipment, a broader range of treatments and procedures, and more veterinary specialists to meet the demands of owners committed to the best possible care for their pets. Practices that offered a fuller range of veterinary services delivered better patient care and generated more revenue per client.

The Market Shift to In-Clinic Diagnostic Equipment

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One aspect of the change in available veterinary care was

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