In fiscal 2011 (FY11), productivity growth for 19 major publicly held lab instrument and product companies (see table, page 6) slowed to 2.6%, compared with 4.7% in fiscal 2010. The slower growth, as measured by average sales per employee, was due to a jump in employment as a result of acquisitions and investments in emerging markets. For the 19 firms, the total number of employees increased 5.7% in FY11, compared with 2.9% in FY10. However, acquisitions, along with higher demand in developing nations and product introductions, also elevated revenue growth. For the same companies, currency-neutral sales climbed 8.4% in US dollars in FY11, compared with 7.7% growth in FY10.

Despite the slower productivity growth, the average sales per employee improved to $302,647 in FY11 from $295,055 in FY10, with 14 of the 19 companies reporting higher productivity. Productivity growth was also driven by the strong revenue growth, including acquisitions and restructuring efforts that reduced R&D, manufacturing and sales personnel in developed regions.

IBO’s calculations are based on FY11 employment and currency-neutral sales figures in US dollars. Sales growth for international companies is calculated at FY11 exchange rates.

Uncertainty regarding academic and government funding for research in the US and Europe and slower life science revenue growth for a number of companies in the second half of 2011 triggered restructuring activities at Illumina, Life Technologies, Thermo Fisher Scientific, QIAGEN and Affymetrix.

Despite the negative impact of lower research funding, both Illumina and Life Technologies achieved double-digit productivity growth in FY11 as a result of restructuring activities and demand for next-generation sequencing products. Illumina increased productivity by 11.6% in FY11 and recorded the highest sales-to-employee ratio of $479,789 among US firms in the table. Illumina has had the highest sales-to-employee ratio in IBO’s productivity tables for the last three years. Following revenue declines in the second half of FY11, the company initiated a restructuring plan in the fourth quarter 2011 to lower its workforce by roughly 8%, or 200 employees, and consolidate excess facility space (see IBO 10/31/11). Nonetheless, the company grew its head count by 4.8% due to increased R&D and sales personnel designated for the MiSeq systems.

Life Technologies expanded its sales-per-employee ratio by 10.0% in FY11 due to restructuring efforts. The company closed six manufacturing facilities and consolidated several sales offices. The company achieved $17 million in cost savings during the second half of the year, which included an undisclosed number of layoffs. In FY11, Life Technologies reduced its workforce by 5.5%. A majority of the layoffs were in the US, as the company’s workforce outside the US climbed 13% to 4,350 to make up 42% of the total. In emerging markets, Life Technologies bolstered resources to improve its distribution network and build up a direct sales force. The company also opened new distribution facilities (see IBO 4/15/11, 9/15/11). At the end of 2011, the company reported nearly 900 employees in the greater China area, which includes mainland China, Taiwan and Hong Kong.

Despite the acquisitions of Dionex (see IBO 12/15/10) and Phadia (see IBO 5/31/11), which had approximately 1,600 and 1,500 employees in fiscal 2010, respectively, Thermo managed to increase productivity by 1.0% in FY11 due to restructuring and operational improvements. The company also benefited from higher pricing, manufacturing efficiencies and expanded low-cost manufacturing in China, Mexico and Eastern Europe. FY11 revenues from low-cost manufacturing countries amounted to $600 million, or 11% of sales. The company consolidated 12 manufacturing facilities, saved $75 million due to process improvements and saved $70 million from global sourcing. Thermo’s Laboratory Products and Services, Analytical Technologies and Specialty Diagnostics segments terminated 940, 460 and 80 employees, respectively. However, Thermo also made investments in emerging markets (see IBO 3/15/11, 8/15/11).

Unlike Illumina, Life Technologies and Thermo, both Affymetrix and QIAGEN recorded productivity declines in FY11 despite restructuring measures. Affymetrix’s productivity fell 10.0% despite organizational changes and a 4.4% decline in head count, largely due to a 13.9% decline in sales. The company cut its R&D staff by about 20% and closed its Oakmead facility in California. As part of the restructuring, Affymetrix realigned its operations into three business units.

QIAGEN’s productivity fell 4.7% in FY11 due to a sizable workforce increase and slower academic and pharmaceutical demand. Due to the slowdown, the company implemented restructuring initiatives in the fourth quarter 2011 to reduce its workforce by 8%–10% (see IBO 11/30/11). These activities are expected to generate $50 million in cost savings. Despite head count reductions, the firm’s total number of employees grew by 351 people, or by 10% of its workforce, due to acquisitions (see IBO 4/15/11, 6/15/11) and expansion into emerging markets. The company purchased Cellestis, which had roughly 80 employees. QIAGEN’s sales staff grew by 207 employees to account for 39% of total head count. Production and marketing head count rose 10% and 12% to represent 23% and 12% of its workforce, respectively. Total head count grew by 351 workers. However, revenue growth increased only 4.7% or 2.1% organically.

Besides Illumina, FEI was the only other US company in the table to show currency-neutral sales per employee of more than $400,000. FEI also recorded the highest percentage change in productivity in FY11 among firms in the table, as its productivity jumped 13.0% to $400,817. The company reported 26.8% sales growth. FEI’s total head count rose 12.2%, as the company boosted its R&D staff by 15% to 398 and its service personnel by 11% to 577.

Similar to Thermo, productivity for Sigma-Aldrich, Bruker, Oxford Instruments and PerkinElmer was impacted by acquisitions. In FY11, productivity for Bruker Scientific Instruments climbed 8.4%. Sales increased 20.5%, including 12.1% growth from acquisitions (see IBO 1/5/11, 2/28/11, 9/15/11). Bruker’s workforce grew by 600 people due to acquisitions and investments in emerging markets (see IBO 7/15/11). Sigma-Aldrich’s head count grew 5.2% in FY11, and included 200 employees from the purchase of Vetec Quimica Fina (see IBO 5/31/11). However, sales grew at a faster pace, rising 6.6%. As a result, productivity improved 1.3%.

Oxford Instruments’ sales for the fiscal year ending March 31 grew 28.9% (see page 12), including 13.5% growth from acquisitions and strong organic sales. However, the company’s workforce expanded by 338 employees, including 262 employees from acquisitions (see IBO 6/15/11, 11/15/11). The increase was also attributed to a 29% increase in R&D. Forty-four percent of FY12 sales were from products developed or acquired in the last three years. In local currency, productivity rose 5.2% to £184,205.

PerkinElmer recorded a 5.0% decline in productivity in FY11 due to eight acquisitions (see IBO 2/15/11, 3/31/11, 5/15/11, 5/31/11, 8/15/11), including Caliper Life Sciences (see IBO 9/15/11), which had roughly $150 million in revenues and 460 employees. In FY11, the company added 1,000 employees to its workforce. To improve operating costs, PerkinElmer initiated restructuring plans in the second and fourth quarters 2011, resulting in the termination of 72 and 114 employees, respectively. The company also transferred manufacturing of certain instrumentation product lines from Connecticut to Singapore and the UK.

Like Oxford Instruments, other European firms recorded productivity gains. Eppendorf and Analytik Jena boosted productivity by 4.2% and 6.4% to €192,321 and €118,611 in native currencies, respectively. Eppendorf reduced its workforce by 12 employees due to the divestiture of non-core assets in North America. However, the company added jobs primarily in Asia for sales and marketing, but also in Europe. Biotage’s productivity rose 8.7% to SEK 1,713,785 in native currency. Tecan increased productivity by 6.7% to CHF 373,337 in native currency. The company added resources for sales and marketing to establish a direct sales force in Asia and increased R&D personnel 28.7% to 260. In FY11, Tecan’s currency-neutral sales climbed 11.5%.

Aside from Affymetrix, PerkinElmer and QIAGEN, two other companies showed productivity declines in FY11. Among companies in the table, Sequenom experienced the largest productivity decline due to a 61.2% rise in its workforce, related to the launch of its noninvasive proprietary MaterniT21 test. Harvard Bioscience recorded a 2.6% decline in productivity, as sales slipped 0.9% on a currency-neutral basis, but it benefited from an acquisition (see IBO 7/15/11) and restructuring at Coulbourn Instruments and Hoefer.

 Company                                Curr.Neu.Sales   #of Employees   Empl.Chg.   Curr.Neu.Rev.   Productivity 

                                         per Employee                     2010–11     Chg. 2009–10   Chg. 2010–11

 Affymetrix                               $305,685          875            -4.4%          -13.9%         -10.0%

 Analytik Jena (Analy. Inst., Life Sci.)  $164,738          687             1.6%            8.2%           6.4%

 Biotage AB                               $264,066          270            -0.7%            7.9%           8.7%

 Bruker (BSI)                             $262,017        6,000            11.1%           20.5%           8.4%

 Eppendorf                                $267,113        2,610            -0.5%            3.7%           4.2%

 FEI                                      $400,817        2,006            12.2%           26.8%          13.0%

 Fluidigm                                 $179,351          239            16.0%           27.7%          10.1%

 Harvard Bioscience                       $270,811          396             1.8%           -0.9%          -2.6%

 Illumina                                 $479,789        2,200             4.8%           16.9%          11.6%

 Life Technologies                        $358,940       10,400            -5.5%            4.0%          10.0%

 Luminex                                  $300,226          614            18.3%           30.2%          10.1%

 Oxford Instruments                       $292,388        1,836            22.6%           28.9%           5.2%

 PerkinElmer                              $261,164        7,200            16.1%           10.3%          -5.0%

 QIAGEN                                   $289,033        3,938             9.8%            4.7%          -4.7%

 Sequenom                                 $146,353          382            61.2%           17.8%         -26.9%

 Sigma-Aldrich                            $291,683        8,300             5.2%            6.6%           1.3%

 Tecan                                    $419,479        1,107             4.5%           11.5%           6.7%

 Thermo Fisher Scientific                 $292,879       39,300             5.6%            6.7%           1.0%

 Waters                                   $317,970        5,672             5.4%            9.7%           4.1%