Lab supply pricing is a bit of a good news/bad news situation right now. The good news? After a few rocky years, inflation is slowing and lab supply MSLPs (Manufacturer Suggested List Price) are stabilizing. The bad news? Despite stabilization, pricing trends show that distributor list prices are continuing to rise. The very good news? Lab supply marketplaces, such as ZAGENO, provide a way to shop smarter in the face of the paradoxical pricing trends by leveraging the powers of price transparency and competitive bidding.
Note on this article’s data source: As the leading lab supply marketplace, ZAGENO serves as the Amazon of the life sciences industry, covering 5,300+ brands and 40 million+ different product SKUs. The breadth and depth of products offered provides ZAGENO with unique insights into best practices and changing market conditions, which can empower R&D to make informed lab supply purchases that enable both resource optimization and scientific choice.
Lab supplier pricing trends, 2022 Q2 – 2023 Q1
1. Inflation: MSLPs stabilize, while distributor list prices continue to increase
Coming out of the pandemic, prices increased across the board, not just in the life science supply and capital expenditure (CAPEX) worlds. Wholesale costs rose rapidly, with multiple price increases occurring within short timeframes as suppliers struggled to source raw materials as well as manage their huge price fluctuations.
AT THE MANUFACTURER LEVEL: In the past year, manufacturers have gained better supply chain control and access to raw materials, as well as experienced softened demand, translating into slowdowns in price increases and steadier MSLPs.
AT THE DISTRIBUTOR LEVEL: Despite steadier MSLPs, global distributors have not followed suit. ZAGENO’s data shows ongoing distributor list price increases, further widening margins between MSLPs and distributor list prices.
Manufacturers List Price versus Distributors List Price
from 2022 Q2 to 2023 Q1
2. Ship costs: Increases to ship have also begun to normalize
While shipping costs have not fallen in the past year, this is not unusual due to the nature of the supply chain industry. However, ZAGENO has seen the substantial shipping cost increases characteristic of the past several years slow down significantly.
Just as manufacturer price increases have stabilized, so have ship cost increases. This is due to carriers better handling demand and volume, suppliers shipping goods in an orderly manner, and the overall effect of volume becoming more predictable and easier to manage across the network.
Ship Costs from 2022 Q2 to 2023 Q1
3. Discounting: Global distributor markups growing compared to discounts offered
The gap between suggested retail prices and manufacturer suggested retail prices is widening. For example, a globally preferred distributor lists a product at a certain price and then offers a customer-specific “discount” of, on average, 29%.
While this creates the perception of discount, further investigation shows that the MSLP is actually 39% less than the distributor’s list price, showing a true remaining price difference of 10% between distributor and manufacturer.
As inflation slows, discounting is not transparent
Despite the rate at which MSLP and ship costs are stabilizing, ZAGENO has not seen a corresponding slowdown in distributor-suggested retail prices or consistent increase in “discounts” offered by the distributor. The result is an increasing price gap, meaning that lab supply purchasers must proceed with caution when shopping based on price.
How a lab supply marketplace addresses the supplier pricing trend paradox
When subscribing to ZAGENO, there are instant savings opportunities available for commonly used products. A ZAGENO study found that clients are able to save an average of 19% simply by using the marketplace to compare product list prices across suppliers before purchasing, using competitive bidding to triangulate varying list prices, markups, and discounts. ZAGENO’s subscription-based service provides price transparency and lifts the curtain on pricing models, while also offering customers the ability to maintain their own previously negotiated discounts with suppliers.
Operating a lab supply marketplace enables ZAGENO to produce this first-of-its-kind analysis for the life sciences industry, with more insightful trend data to follow, such as supplier performance and market share trends.
Did you know that you and your purchasing teams can start shopping smarter for lab supplies within days? Contact us to see ZAGENO in action, visit us at www.zageno.com/marketplace-access.
