In fiscal 2009, productivity growth for 21 major publicly held lab instrument and product companies fell 2.9%, compared to a 9.3% gain in fiscal 2008. The decline in productivity, as measured by average sales in US dollars per employee, was attributed to the economic slowdown, strengthening of the US dollar, business expansion into new markets and for R&D.

For the 21 companies (see table, page 3), revenue growth in US dollars declined 1.3% in fiscal 2009, compared to 10.2% growth in fiscal 2008, while employee growth rate doubled to 1.6%. As a result, average sales per employee fell to $262,134 from $269,837. However, excluding currency, revenue growth for the companies improved 0.7% and productivity dipped only 0.9% to $267,707.

IBO’s calculations are based on fiscal 2009 employment and sales figures in US dollars for 20 instrument and lab product firms, as well as Oxford Instruments, for which fiscal 2010 ended March 31 results are used. Revenue growth for non-US companies are calculated at constant exchange rates.

Among the companies in the table, Illumina had the highest average sales-per-employee ratio of $374,129. Also generating productivity of more than $300,000 per employee in US dollars in fiscal 2009 were Life Technologies, Caliper Life Sciences, Affymetrix and Tecan. Each company is a provider of life science research products.

In terms of productivity, consumables companies appeared to have an advantage last year. Companies with large consumables businesses, such as Millipore, Caliper, QIAGEN, Eppendorf AG and Illumina, were less impacted by the economic slowdown, resulting in higher productivity than instrument companies. In fact, Caliper, Illumina and Eppendorf were the only companies in the table to record higher productivity growth for each of their last three fiscal years.

Only seven companies reported productivity growth last fiscal year, including four which grew in double digits. Biotage AB recorded the largest productivity increase, climbing 21.9%, or 8.8% on a currency-neutral basis. The company transferred US operations to its UK facility and contract manufactures, leading to a workforce reduction of 16.1%, or 47 employees. Biotage’s 2.3% revenue growth included 11% growth from currency.

Oxford Instruments recorded productivity improvements of 17.9%, benefiting from currency and a reorganization. The company completed its fiscal 2009 restructuring program, which included the consolidation of US and European manufacturing and distribution operations. Head count declined by 190 employees, or 13.1%. Revenues grew 2.4%, but declined 4.6% excluding currency. Excluding currency, productivity rose 9.8%.

Eppendorf’s productivity also benefited from currency effects, but to a lesser extent. In 2009, revenues climbed 5.6%, including 2.3% growth from currency. Eppendorf reduced manufacturing positions in North America, but supplemented sales and marketing personnel, primarily in Asia Pacific and Germany, adding 23 employees, or less than 1% of its workforce. As a result, productivity grew 4.6%, or 2.3% excluding currency.

Excluding currency, 12 companies improved productivity, but only two showed double-digit growth. Caliper’s productivity jumped 18.6%, or 19.9% on a currency-neutral basis. Productivity benefited from the divestment of noncore product lines and businesses, including the sale of its research services operations (see IBO 12/15/09). As a result, the company’s workforce fell by 18.0%, or 142 employees. Including divested businesses, revenue growth fell 2.7%, or 1.7% on a currency-neutral basis. Excluding them, 2009 revenues grew 7.4%.

Affymetrix also reported double-digit productivity growth on a currency-neutral basis last year. The company reversed a 13.8% decline in productivity in fiscal 2008 through restructuring activities. Affymetrix consolidated its US reagent-manufacturing facilities, transferred probe array manufacturing to Singapore and outsourced instrument manufacturing. These actions resulted in a workforce reduction of 139 employees, or 12.3%, while revenues improved 2.1%, or 0.7% excluding currency. As a result, Affymetrix’s productivity grew 16.5%, or 14.9% excluding currency.

Sigma-Aldrich reported a productivity gain last year of 4.1% on a currency-neutral basis. The company closed five manufacturing sites in the US and Europe, impacting roughly 200 employees, and initiated a voluntary retirement program that affected 90 employees. In total, the company’s head count declined by 492 employees or 2.3%. Revenues declined 2.4%, but gained 1.7% excluding currency.

Other companies, such as Illumina, Luminex and QIAGEN NV, improved productivity via double-digit organic revenue growth. Illumina posted a 16.2% jump in revenues last year. However, the company increased its workforce by 16.0%, expanding international operations and R&D. As a result, productivity growth was limited to 0.3%.

Similarly, Luminex’s productivity rose 1.5% as revenue and employee increased 15.5% and 13.8%, respectively. In 2009, R&D, and sales, general and administrative personnel grew 14% and 18%, respectively, primarily for product development, including regulatory clearance, quality control, and expansion in China and Japan.

QIAGEN also boosted revenue growth by double digits. Its revenue climbed 13.1%, or 12.5% organically. Currency reduced revenue growth by 3.4%, and acquisitions contributed 4.0% growth. The company added 454 employees, or 14.9% of its workforce, primarily for R&D. The number of R&D employees jumped 31.9% to account for 20% of its workforce.

Acquisitions also affected Millipore, which recorded a 2.8% increase in productivity on a currency-neutral basis. Including acquisitions, Millipore’s revenues grew 3.3%, 6.3% excluding currency. Head count expanded 3.4%, primarily for R&D. The remaining two companies that improved productivity on a currency-neutral basis were Tecan and Dionex, which recorded 0.3% and 1.3% growth, respectively.

Nine of the 21 companies experienced productivity declines on a currency-natural basis, including three that showed double-digit decreases. Despite a workforce reduction of 17.6%, or 27 employees, OI sustained the largest productivity loss, with a 16.5% decrease. The company’s revenues slumped 31.3% due to weak demand for GCs. Sequenom and FOSS A/S sustained productivity declines of 14.9% and 12.1%, resulting from 19.7% and 12.7% decreases in revenues, respectively. Sequenom also shrank its workforce, including the lay off of 30 people, 12% of its employees, in its Genetic Analysis business in April 2009.

Aside from OI, Sequenom and FOSS, Varian also experienced a double-digit revenue decline last fiscal year. Its productivity fell 20.3%, or 17.7% on a currency-neutral basis. The company was negatively impacted by lower instrument sales and the impeding Agilent acquisition (see IBO 7/31/09). In fiscal 2009, Varian consolidated its operations in Northern California and increased outsourcing, leading to a reduction of 400 employees, or 10.3% of its workforce. Varian’s productivity fell 11.2%, or 8.3% excluding currency.

Waters and PerkinElmer also showed sizable productivity losses last year due to weak sales. Waters’s revenues contracted 4.9%, 3.9% organically. However, the company increased its workforce by 4.0% due to acquisitions and product development. As a result, productivity for Waters dropped 8.5%, or 6.6% excluding currency.

PerkinElmer’s revenues fell 7.5%, 4.5% excluding currency, due to the recession. During the year, the company added 300 employees or 3.8% of its workforce, following acquisitions. But the company also implemented two restructuring plans, affecting 337 employees. PerkinElmer’s productivity declined 10.9%, or 8.0% excluding currency.

Acquisitions negatively impacted productivity for Harvard Bioscience and Analytik Jena AG Instruments. The number of Harvard Biosciences employees expanded 10.5% following the acquisition of Denville (see IBO 9/15/09), but revenues grew 2.8% on a currency-neutral basis, including 8.6% growth from the acquisition. As a result productivity for the firm fell 6.9% excluding currency.

Analytik Jena Instruments increased its workforce by 44.2% in fiscal 2009 due to acquisitions. However, revenues grew 34.0%, including 23.7% growth from acquisitions, leading productivity to fall 7.1%.

Excluded from the table were Thermo Fisher Scientific and Life Technologies, for which fiscal 2008 figures were impacted by major acquisitions. In 2009, Thermo’s productivity fell 6.1%, or 4.2% excluding currency. Thermo consolidated production and R&D operations. The Analytical Technologies, and Laboratory Products and Services segments cut 520 and 370 employees, respectively, primarily in manufacturing, sales and services. However, Thermo netted 900 employees for growth of 2.3%, following several acquisitions. Thermo’s revenues slipped 3.7%, or 1.7% excluding currency.

Life Technologies’s productivity grew 13.2% last year, 15.2% excluding currency, due to synergies and revenue growth following the acquisition of Applied Biosystems (see IBO 11/15/08). Head count fell by 700 employees, or 7.2%, but revenues rose 5.0%, or 6.8% excluding currency. Average sales per employee were $373,311 excluding currency.

Chart: Average Sales per Employee of 21 Selected Instrument Companies

2007 2008 2009

Sales/Employee Average 245.2382069 269.8365802 262.1335759