Eurofins Scientific: Lab Network Structure & Scale | In Practise

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Eurofins Scientific: Lab Network Structure & Scale

Former Chief Operating Officer, Spain at Eurofins Scientific

Why is this interview interesting?

  • Eurofins org structure and the role of Gilles Martin
  • Design of the lab network and relationship between specialized and routine labs
  • How a sample test flows through the network
  • What a customer like Nestlé really cares about when outsourcing testing
  • How tests are priced between biology and chemistry labs
  • Economies of scale for Eurofins versus other TIC players
  • Challenges for Eurofins to serve customers effectively at scale
  • How Eurofins could lose market share to competitors

Eurofins Scientific

Why is this company interesting?

Eurofins is a French-listed, owner-operated lab testing company that operates in the food, agriculture, environmental, and pharmaceutical industries. The company was founded in 1987 and has compounded at 30% for over 34 years to become one of the highest performing European listed equities over the last 30 years.

Eurofins is run by the founder Gilles Martin who still owns 25% of the business. Martin has made over 400 acquisitions since 1997 and opened 180 new labs. The company owns ~800 labs that offer 200,000 microbiology, chemistry, and other types of specialized testing to large corporate QA divisions to ensure product quality meets regulatory standards and customer demands.

Eurofins benefits from high lab density that reduces the test turnaround time and the wide range of tests available create sticky relationships with customers. Over 70% of the revenue ex-COVID benefits come from food, pharma, cosmetic, and environmental verticals but the potential growth opportunity lies in more specialised clinical diagnostic testing.


Executive Bio

Mike Meissner

Former Chief Operating Officer, Spain at Eurofins Scientific

Mike is the Former Chief Operating Officer for Spain at Eurofins Scientific where he was responsible for running and designing the laboratory network for the country. He acquired and integrated 3 lab businesses into the Eurofins network and restructured the logistics to improve the hub and spoke network. Prior to running Spain, Mike spent 2 years as Managing Director of Biology in Europe which was a horizontal function that was in charge of managing the biology routine labs close to the customer. Mike is a seasoned operations executive and prior to Eurofins spent 12 years at Ikea and cargo-partner, a full range logistics provider. Read more

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Interview Transcript

Mike, please tell us about your background and role at Eurofins?

Three and a half years ago I started working for Eurofins out of coincidence. I started off as a managing director for biology in the German market and was then promoted to the Chief Operating Officer for Spain.

How is the organizational structure of Eurofins evolving?

That is a complex one; Eurofins is divided into industry segments. Food and feed is the core business of Eurofins Scientific. Clinical diagnostics, genetics, pharmaceuticals, med-tech agroscience and environment are the core segments for Eurofins. Within each segment, you have a management team, corporate by regions, down to single facilities. Eurofins has a decentralized structure, with a service center in their Brussels headquarters setting standards and giving guidelines.

It is entrepreneur driven in the sense that there is a top-down, general global guidance, but local leaders are encouraged to make their own decisions.

Where does biology fit into that decentralized structure?

Another challenging topic is the structure. 15 laboratories or facilities in a country, equates to 15 leaders, on top of which there is a country manager and division leader, focusing purely on biology, chemistry, pesticides or toxins. A division leader for biology would guide the 15 facilities who each report back. In the day-to-day business, each of them has their own P&L, staff and client portfolio of responsibility. Eurofins strategically combines both local mindset and divisional decision making, with the challenge being bringing them together.

Taking Spain as an example, would each facility have a manager with their own P&L and client book, so a manager for food and a manager for environmental?


Would there also be different managers for biology and chemistry?


It seems to be done vertically by sector, but then also horizontally?

Correct, which is confusing from the outside, especially if you are used to a matrix structure, which is what most organizations have. Because Eurofins is both vertical and horizontal, it changes the dynamics and supports decision making processes.

Over the past few years, Eurofins have become more organized into geographic regions. How has this impacted the business?

Locally, in Spain, it has worked extremely well and is very clear in terms of structure, guidelines and boundaries. However, since Spain does not communicate with the US and are not part of a common region, everybody is isolated, doing their own thing. When it comes to cross-selling or inter-company synergies, the structure lacks potential. If the US discovers a new method or machine to validate or analyze certain tests, Spain would not be informed.

They would not be able to take full advantage of it and would later invest money and resources in, most likely, the very same method. Eurofins would end up spending twice the resources, time and money, and thereby lose synergy. The risk Eurofins takes is that each leader focuses only on their local business P&L, always thinking first of their own profits before supporting or collaborating with other facilities, even in the same country.

We regularly receive this feedback, especially from our large-scale clients.

How is decision making set more broadly for the company?

A corporate management team defines standards, rules and guidelines and global purchasing teams enter into contracts with suppliers and vendors. They would spread these decisions into the group, countries and units. However, if a lab director of a certain facility is unhappy with that contract, he can make a decision locally because it is his P&L and responsibility. Decision making is, therefore, a two-way channel.

Division leaders also play a role, but when it comes to a local decision, the last word is always the facility leader of each unit.

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Eurofins Scientific: Lab Network Structure & Scale

August 20, 2020

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