Strategic Commercial Moves to Win in 2023

Growth Companies’ Plans to Ensure Above Market Growth This Year

A recent GenomeWeb article noted that the top 40 companies to watch in the Life Sciences and Analytical Instruments space saw share prices drop 34% in 2022. Alexander Group’s 2022 research and project work among this community shows that while it was a challenging year from a share price perspective, many companies did realize double-digit growth. In 2023, Life Sciences and Analytical Instruments industry growth is expected to be lower relative to the results in 2021 and 2022 as COVID-19 tailwind subsides. While stock prices may normalize as the market corrects, companies are still managing to grow. Alexander Group found the following common planning moves by bifurcating companies into two cohorts: high-growth and moderate-growth. High-growth companies are investing in headcount, a specialization layer and enablement to maintain their current growth trajectory. Moderate-growth companies are rationalizing non-core headcount and instead investing in inside sales and marketing to drive revenue more efficiently.

High-growth Companies

Companies in this cohort are continuing to produce double digit growth. These companies are riding a combination of funding waves by NIH, pharma/biopharma R&D expansion, growth in applied markets such as environment and material, and through acquisitions. They are making three moves to ensure growth in 2023:

1. Headcount – Companies competing in high-growth markets are fighting for market share. Alexander Group is seeing significant investments across the commercial engine: digital marketing, sellers capable of selling full portfolio and post-sales resources to ensure customer success to drive stickiness and expansion.
2. Specialization – Companies are looking beyond product specialists and are paying to bring in highly skilled and experienced science-oriented resources. They’re expanding workflow/application specialists and post-sales specialists on commercial teams to match customer needs.
3. Enablement – Companies are adding resources to the revenue operations function and investing in systems that generate the insights to drive commercial efficiency.

One revenue leader who has been through multiple business cycles mentioned moving chess pieces on the board this year to ensure above market growth.

Moderate-growth Companies

Commercial organization retrenching was limited to companies or divisions with the greatest exposure to macroeconomic slowdown. Such companies included those with low margin run-rate consumables, high exposure to clinical markets or volatile/unpredictable new modalities, etc. Companies in this cohort are planning the following three changes to stabilize business:

1. Rationalizing non-core headcount – Companies are reprioritizing activities and coverage of select segments. They are cutting headcount while attempting to limit overall impact on the business. They are ensuring a continuation of providing high-quality customer experience for customers that drive a significant portion of revenue.
2. Expanding inside sales – Companies are making a big shift to leveraging inside sales, especially those that primarily encompass a consumables portfolio. Ratio of field to inside sellers has moved rapidly from 3:1 to 1:1. Seasoned inside sellers’ pay levels are now approaching that of field sellers. Though the cost advantage of office-based resources may be marginal, their productivity is more consequential. Inside sellers can cover many more customers effectively by shifting travel time to engaged selling time. Customers also prefer the on-demand availability of inside sellers.
3. Moving to marketing-only coverage – Companies are looking to the marketing organization to address customer coverage gaps given cost constraints. In addition to traditional marketing responsibilities such as generating awareness and inbound traffic, marketing is being tasked to drive low-priced instrument sales, consumables reorder and service contract renewals, instead of deploying quota carrying customers against such transactional opportunities.

Are you planning to make key changes to your FY23 & FY24 plans to adjust to the new market reality? Contact an Alexander Group Life Sciences and Analytical Instruments practice leader to learn how Alexander Group can help.