Growth through innovation is a core strategy for Idexx Laboratories Inc., a Westbrook, Maine-based manufacturer of diagnostic instruments and software for veterinarians. Thanks to a steady stream of new-product introductions, Idexx achieved organic revenue growth of 5% in 2009 and 9% in 2008, and is expecting organic growth of around 6% this year.
That's no easy task in a veterinary market that plateaued during the recession. Idexx Chairman and CEO Jonathan Ayers notes that one key to the company's continued growth is that its products help veterinary practices provide a "higher standard of care" for pets, enabling those practices to build strong customer relationships -- and charge more for their services.
"Part of our strategy is that our products help our customers grow, and that's one way they provide value," Ayers says. "These are new categories, or new value propositions, that we create -- new things that [customers] can do that they were not able to do before."
Take the company's Idexx ProCyte Dx hematology analyzer, for example. Launched earlier this year, the ProCyte Dx is the latest in a suite of tools that enable veterinarians to conduct diagnostic bloodwork on a pet and share the results with the pet owner during the same appointment -- which Ayers calls "real-time care." The instrument provides bloodwork results in two minutes, compared with 14 minutes for the previous instrument.
Providing blood-test results in real time demonstrates the value associated with veterinary care and creates a better customer experience for the pet owner, Ayers explains. He likens the experience to taking your car to a mechanic for repair work, and having the mechanic "give you the broken parts back to show they actually did something."
"Even in the recession, we're finding that there are veterinary practices that are growing at 10% or 15% year over year because they're finding ways of surviving by evolving their practice model to be more client-focused as opposed to just relying on people walking in the door," Ayers says.
Idexx, the No. 22-ranked IW 50 Best Manufacturer in 2010, has been growing as well. Sales of new products such as ProCyte Dx helped Idexx achieve 7% organic growth through the first half of the year, according to Ayers. At press time, the company was projecting that its full-year revenues would reach nearly $1.1 billion, up from $1.03 billion in 2009. Earnings per share were expected to be between $2.23 and $2.28, up from $2.01 in 2009.
Going forward, Ayers sees IT-based products and services as a major growth opportunity for the company. While overall revenues in second-quarter 2010 increased 6% to $281.5 million, the company reported nearly 31% organic growth for sales of its information management systems and digital radiography products in the first half of 2010.
IT is not a new space for Idexx. However, the company in recent years has been "accelerating the pace" of product releases "that are using information technology to either make the product better or as a product in and of itself," Ayers says. The company's latest software offerings "support electronic medical records in the veterinary practice in the same way that trend is happening on the human side," he adds.
The Idexx VetLab Station Laboratory Information Management System, for instance, integrates test results from the ProCyte Dx and other Idexx analyzers into a single report, providing a complete electronic medical record of the patient.
Launched in 2007 and updated in 2008 and 2009, the software enables veterinary practitioners to detect changes or trends in pets' conditions by comparing their current results with historical results, making it easier for the practitioners to make medical decisions, Ayers explains.
The company is seeing brisk adoption of an Internet-based customer support tool called Idexx SmartService Solutions. Through the service, trained technicians can remotely access instruments such as the ProCyte Dx to troubleshoot and resolve issues. Launched in January 2009, the company expects adoption to jump from 2,000 SmartService customers at the beginning of 2010 to 6,500 customers by the end of the year.
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