Productivity growth for 22 major publicly held laboratory instrument and product companies (see table, page 3) more than doubled in fiscal 2008. Productivity for the companies, as measured by average sales in US dollars per employee, increased 10.1%, up from a 5.4% growth in fiscal 2007, according to IBO’s analysis. Excluding the eight companies for which currency translations were used, productivity rose 9.8%, compared to a 6.0% increase the year before.

For the 22 companies in the table, the employee growth rate slowed by 840 basis points to 1.0% last fiscal year, while revenue growth in US dollars was lower by 410 basis points at 11.2%. Accordingly, the productivity rate improved 470 basis points to 10.1%, while sales per employee jumped to $304,863 from $276,908.

IBO’s calculations are based on fiscal 2008 employment and sales figures in US dollars for 22 instrument and laboratory product firms, as well as Oxford Instruments, for which fiscal 2009 ended March 31 results are used.

Nine companies posted double-digit increases in productivity, led by PerkinElmer, with a 25.3% increase. PerkinElmer’s 2008 revenues grew 13.8%, including 4% and 2% growth from acquisitions and foreign-exchange rates, respectively, but head count declined by 800 employees. During the year, the company acquired four businesses (see IBO 12/31/07, 3/31/08, 12/15/08) and approved plans to divest its Photonics and Photoflash, which were classified as discontinued operations. In addition, PerkinElmer shut down certain cellular, proteomics and genomics businesses (see IBO 2/28/09), as well as the ViaCyte and Cellular Therapy Technology units acquired from Pediatrix. The company reported $6.6 million in pre-tax restructuring charges for its Life and Analytical Sciences unit in 2008.

Along with PerkinElmer, Luminex and Oxford Instruments, when calculated in local currency, also posted productivity gains of more than 20% last fiscal year. Luminex was able to reverse a 13.8% decline in productivity in fiscal 2007 related to acquisition activity and infrastructure investments. In both years, Luminex’s revenues improved more than 30%.

Oxford Instruments’ 24.7% growth in productivity resulted from 17.0% sales growth in local currency, including 19.1% and 5.9% respective growth from currency transactions and acquisitions, and restructuring. Oxford Instruments acquired two companies (see IBO 7/31/07, 12/15/07), but also divested two businesses (see IBO 4/15/08, 12/15/08). The company reorganized its NanoScience business, affecting 50 employees. Then, in February, in response to economic conditions, the company announced plans to close two sites and additional streamlining that will eventually result in a 15% reduction of its workforce, or 230 employees (see IBO 3/31/09).

For 10 of the companies in the table, fiscal 2008 sales increased in double digits. However, only five of these companies increased head count by a double-digit percentage. Agilent Bio-Analytical Measurement (BAM) and Illumina welcomed the greatest number of new hires in fiscal 2008, adding 500 and 495 employees, respectively. The companies’ expansions overseas and entrances into new markets and technologies drove workforce additions. Agilent BAM acquired six companies in fiscal 2008 (see IBO 11/15/07, 3/15/08, 6/30/08 and 7/15/08). Illumina expanded R&D, service, sales and marketing, and manufacturing infrastructure globally. In 2009, the company expects to add between 400 and 500 employees.

Sales in US dollars declined for four of the 22 companies in fiscal 2008. Nonetheless, eight companies reported lower employee levels, while three companies kept head counts unchanged. Workforce reductions were led by PerkinElmer, followed by Oxford Instruments, which decreased its workforce by 96 employees.

In general, reductions in workforce were reported by companies undergoing restructuring or coping with declining sales. Like Oxford Instruments, Affymetrix, Applied Biosystems and Caliper Life Sciences each restructured operations last year, aiming to reduce costs and improve profitability.

Affymetrix extended restructuring steps last year, as it sought to reduce costs and reconfigure its product lines. Affymetrix transferred the majority of its probe-array production to its plant in Singapore. The company also announced plans to close its facilities in West Sacramento and South San Francisco, reducing its number of manufacturing sites from five to three, noting that new manufacturing techniques require less space. The company also initiated plans to outsource distribution and instrument manufacturing. In addition, the company reduced its R&D and sales and marketing workforce.

However, Affymetrix also added new staff. During the year, Affymetrix acquired USB (see IBO 12/31/07), adding approximately 100 employees, and in December 2008, it completed its acquisition of Panomics (see IBO 11/15/08), adding an undisclosed number of employees. The net loss was 12 employees last year. However, declining revenue curtailed productivity gains, resulting in the only drop in productivity among companies in the table. (Sales figure excludes a one-time litigation payment.)

Caliper Life Sciences more than doubled its growth in productivity last year. The company consolidated its California operations, affecting 33 employees. In addition, the company divested two product lines (see IBO 10/31/08, 3/15/09), which included the transfer of 23 employees to SOTAX. In addition, Caliper restructured its business units, eliminating some senior management positions (see IBO 2/28/09). The company estimates it will be positive EBITDA in the fourth quarter and next year. In total, the company reduced its head count by 54 positions. On a pro forma basis, excluding the divested product lines, revenues climbed 6.7%, while productivity jumped 18.5%

Applied Biosystems reduced head count in the fiscal year ended June 30, 2008 due to a strategic realignment and, in the fourth quarter, in preparation for its merger with Invitrogen (see IBO 11/30/08). In the fiscal first quarter, Applied Biosystems recorded severance costs for 41 employees. Severance payments for 32 employees were reported in the fiscal fourth quarter, primarily in connection with the company’s LC/MS joint venture with MDS Sciex. In total, the company’s workforce declined by 57 employees in fiscal 2008.

Cybio AG, Biotage AB and OI also reported workforce reductions. Cybio AG’s sales fell 11.9% in local currency and the company reduced its workforce by 20 employees. Cybio AG also divested one business (see IBO 11/15/08). The decline in both sales and employees enabled the company to record a 0.5% increase in productivity calculated in local currency. Biotage AB divested its Biosystems business in 2008 (see IBO 10/15/08), transferring the unit’s 37 employees to QIAGEN. In local currency, Biotage’s 2008 revenues were flat at 0.3%, but its workforce contracted 2.3%. OI recovered from a sales decline in 2007 and reduced its head count to near 2006 levels. As a result, the company reversed its productivity losses of fiscal 2007 to post a double-digit gain in 2008.

Revenues grew in double digits for 11 companies in the table in fiscal 2008 when calculated in local currencies. This includes 23.1% sales growth for Analytik Jena AG Instruments, 18.6% growth for Eppendorf AG, 17.0% growth for Oxford Instruments and 14.4% growth for Genetix. Three of these companies also recorded double-digit growth in productivity when calculated in local currency: Oxford Instruments (24.7%), Eppendorf AG (14.6%) and Genetix (13.8%). FOSS A/S’s productivity increased 2.7%, while Tecan’s productivity declined 5.6% in local currency.

Eppendorf AG and Genetix’s productivity increases benefited from acquisitions completed in fiscal 2007 ((see IBO 11/30/06, 7/15/07) due to additional synergies and sales growth. Eppendorf AG’s acquisition of New Brunswick Scientific contributed 22% growth to the company’s 27.3% revenue increase last year, according to the company’s calculations. Genetix gained from product and marketing synergies. In local currency, the company reported 14% revenue growth, while adding only one employee.

Operational and business changes in 2008 at Bruker and Varian affected each company’s productivity gains. In February 2008, Bruker closed its acquisition of BioSpin (see IBO 12/15/07), the largest acquisition completed in fiscal 2008 by any company in the table. Typically, acquisitions hurt sales-per-employee growth in the first year, but boost productivity in following years. This pattern appears to be true with BioSpin. Although the acquisition closed early in the year and revenue growth outpaced increases in Bruker’s head count, productivity gains were modest at only 3.6%, compared to 14.1% in the prior year. The company implemented restructuring and cost reduction programs in August as well as in the fourth quarter, including the closure of certain operations in the Netherlands, which affected 30 employees. As with other companies in the table, changes in foreign-exchange rates affected Bruker’s productivity growth. Excluding foreign-exchange rates, which added 3.4% to 2008 revenue growth, Bruker’s productivity declined 0.2%.

Changes in manufacturing strategy and double-digit sales growth benefited Varian’s productivity last fiscal year. The company expanded its outsourced manufacturing to lower-cost regions and consolidated operations. GC and LC manufacturing moved to Singapore and Malaysia, where the company is working with contract manufacturers Flextronics and Benchmark. In conjunction, Varian closed its facility in Boston, Massachusetts, and is in the process of closing other smaller facilities. As such, the company reduced its workforce by roughly 160 people. However, due to a hiring spree in the first quarter to increase it sales and marketing efforts in faster-growing economies, Varian ended the year with no change in the number of employees.

Applied Biosystems showed the highest level of productivity in fiscal 2008 with $431,143 in sales per employee, followed by Agilent and Illumina, with $417,273 and $373,193 in sales per employee, respectively. Also generating sales per employee of more than $300,000 in US dollars last year were Alpha Innotech, Waters and Tecan.

Company Sales per Employee # of Employees Empl. Chg. 2008–09 Rev. Chg. 2008–09 Productivity Chg. 2008–09

Affymetrix $283,909 1,128 -1.1% -13.8% -12.8%

Agilent Technologies (BAM)$417,273 5,500 10.0% 14.5% 4.1%

Alpha Innotech $320,164 55 0.0% 14.9% 14.9%

Analytik Jena AG (Instr.) $147,799 536 12.1% 37.8% 22.9%

Applied Biosystems $431,143 5,160 -1.1% 6.3% 7.4%

Biotage AB $200,229 292 -2.3% -0.6% 1.8%

Bruker $251,614 4,400 3.5% 7.2% 3.6%

Caliper Life Sciences $251,061 489 -9.9% 6.7% 18.5%

Cybio $171,831 142 -12.3% -5.6% 7.7%

Dionex $279,451 1,351 13.2% 15.4% 1.9%

Eppendorf AG $243,376 2,479 3.5% 27.3% 23.0%

FOSS A/S $250,181 1,158 0.4% 10.7% 10.3%

Genetix $263,403 181 0.6% 4.1% 3.5%

Harvard Bioscience $279,521 315 2.3% 5.6% 3.2%

Illumina $373,193 1,536 47.6% 56.3% 5.9%

Luminex $271,997 384 12.0% 39.2% 24.4%

O.I. Corporation $189,340 153 -5.6% 6.8% 13.0%

Oxford Instruments $241,546 1,449 -6.2% -0.8% 5.7%

PerkinElmer $245,253 7,900 -9.2% 13.8% 25.3%

Tecan $328,557 1,116 1.3% 6.2% 4.8%

Varian $259,615 3,900 0.0% 10.0% 10.0%

Waters $315,020 5,000 0.0% 6.9% 6.9%

Chart: Average Sales per Employee of 22 Selected Instrument Companies

2006 2007 2008

Sales/Employee Average 262.7118132 276.9083479 304.8634815