High End Laboratory Equipment Leasing: Problems and Trends

In today’s pharmaceutical market, latest developments in regard to innovation or increased
production capacities are from technological advancements by large pharmaceutical suppliers.
For laboratory This increases the pressure of a CEO level strategy that involves procurement of
latest equipment and machinery from leading upstream suppliers and vendors. This calls for
improved company sourcing strategies that do not affect the company’s cash flow.
Changes in technology and prevention of obsolescence are some reasons companies constantly
replace their equipment. But procurement of high end laboratory equipment is a capital
intensive affair. For smaller companies, sourcing laboratory equipment can drastically increase
the capital required for setting up a laboratory, and reducing funds for unforeseen opportunities
or emergencies. This is why most companies (even larger ones), prefer leasing their high end
laboratory equipment and minimising demands on capital, cash flow and bank lines of credit.
This payment can be done out of future profit and not current working capital.
But high end laboratory equipment manufacturers do not lease any their equipment. For various
reasons that reduce their turnover, these manufacturers are not in the leasing business. It is similar
to a car manufacturer leasing their vehicles to customers; it would simply not be profitable.