Why Pharma & Chemistry Equipment Manufacturers Struggle to Sell SaaS — And How to Fix It

Introduction: From Equipment Supplier to Digital Partner

Pharma and chemistry equipment manufacturers have mastered the art of building precise, compliant, and reliable devices—whether it’s safety cabinets, chromatography systems, balances, or automation platforms. But as labs become more digital, manufacturers face a new expectation: every piece of equipment should come with a connected, data-driven layer.

The potential is undeniable. The digital lab market is forecast to grow from $2.6B in 2022 to $5.1B by 2030 (CAGR 7.1%) (MarketsandMarkets, 2023). Similarly, lab informatics—LIMS, ELN, LES—will reach $5.2B by 2030 (Grand View Research, 2024).

Yet, most digital launches from equipment OEMs struggle. Monitoring dashboards, compliance apps, or connected software often fail to gain traction. The problem? They are developed and sold like hardware, not SaaS.

1. Treating Software Like Hardware

The Challenge:

Manufacturers are used to long product cycles: 3–5 years of R&D, extensive testing, followed by big product launches. This works for equipment, where compliance and reliability are paramount. But software thrives on agile, iterative development, with customer feedback driving weekly or monthly releases.

Too often, OEM software teams build in isolation. They spend years developing a “perfect” tool, only to launch a product that doesn’t match customer needs—or is already outdated.

The Solution:

• Adopt agile development: release MVPs, test in pilot labs, and update iteratively.
• Bring customers into development early: co-creation workshops, beta programs, and structured feedback loops.
• Separate software release cycles from hardware: a cabinet may take 4 years to design; a monitoring app should evolve every 4 weeks.

2. Sales Approach: SaaS ≠ Equipment

The Challenge:

Selling hardware is transactional. A sales rep lists specifications, negotiates price, and closes a capital expenditure deal. SaaS is consultative: it requires proving ROI, handling objections around subscriptions, and nurturing ongoing adoption.

Most equipment sales reps are not trained—or incentivized—to sell software. Without clear incentives, SaaS gets ignored. Gartner research shows 70% of industrial OEM SaaS initiatives stall due to sales channel resistance (Gartner, 2023).

The Solution:

• Create dedicated SaaS sales enablement: playbooks, objection handling, demo flows.
• Train reps in value-based selling (compliance time saved, audit risks reduced).
• Update commission structures: reward SaaS attach rates and renewals, not just equipment deals.
• Consider hybrid teams: hardware reps open the door, SaaS specialists close and support adoption.

3. Lack of Recurring Revenue Understanding

The Challenge:

Recurring revenue is foreign to many OEMs. Hardware is sold once; SaaS is billed monthly or annually. Recurring models require different forecasting, KPIs (ARR, churn, CAC), and customer success structures. Many manufacturers default to one-time license fees, undermining the SaaS model.

This creates internal friction: finance teams dislike the uncertainty of ARR, sales prefer big one-off bonuses, and leadership struggles to explain SaaS to boards accustomed to hardware cycles.

The Solution:

• Start with hybrid pricing models: bundle 1–2 years of software into hardware deals, then convert to recurring renewals.
• Educate leadership and finance teams on SaaS KPIs: ARR, churn, LTV/CAC ratios.
• Create a Customer Success function to own renewals and adoption—this is critical for recurring revenue.
• Use ROI calculators with customers to justify ongoing spend (e.g., one prevented compliance failure = €100,000+ saved).

4. Product-Market Fit Blind Spots

The Challenge:

Equipment OEMs often launch digital products without deep validation. Features are built based on engineering assumptions rather than lab manager needs. The result: tools that sound good on paper but add little daily value.

Example: One manufacturer developed a complex dashboard for cabinet airflow analytics. Engineers were proud of it. Scientists? They just wanted a simple compliance log they could show auditors. Adoption failed.

The Solution:

• Build ICP (Ideal Customer Profile) maps: who exactly uses the software (lab managers, QA officers, HSE managers)?
• Run usability tests before scaling.
• Align digital features with compliance and efficiency outcomes, not just “cool data.”

5. Ecosystem Blind Spots

The Challenge:

Labs rarely use one vendor’s full ecosystem. They mix equipment, ELNs, LIMS, and building systems. If your software doesn’t integrate, it creates silos. Yet, many OEMs avoid partnerships, hoping to lock customers into proprietary ecosystems.

The result? Customers bypass the OEM’s software and stick to third-party tools that work across brands.

The Solution:

• Build API-first software: allow connections with ELNs (e.g., Benchling, eLabNext), LIMS, and facility systems.
• Partner with startups that specialize in interoperability.
• Position yourself as a connector, not a closed system. Labs value flexibility.

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Case Example: Clustermarket Partnerships

At Clustermarket, we scaled SaaS adoption across 2,000 labs globally. Partnerships with equipment OEMs were key. By bundling Clustermarket’s scheduling and monitoring into cabinets, freezers, and automation systems, OEMs could tell a stronger story: “This isn’t just a piece of hardware—it’s a connected solution.”

Sales teams were trained, ROI tools were developed, and adoption grew rapidly. OEMs gained a new revenue stream, labs saved compliance hours, and Clustermarket expanded distribution.

Actionable Recommendations for Equipment Manufacturers

Challenge / Solution

Building software like hardware - Adopt agile dev cycles, customer co-creation, fast pilots

Sales not fit for SaaS - Train reps, adjust incentives, create SaaS playbooks

Lack of recurring revenue models - Introduce ARR metrics, hybrid pricing, customer success functions

Poor product-market fit - Define ICPs, run usability tests, build compliance-focused features

Ecosystem blind spots - Build APIs, partner with startups, join digital lab clusters

Conclusion: Becoming Digital Partners, Not Just Equipment Suppliers

Pharma and chemistry labs are demanding more than equipment—they want integrated solutions that ensure compliance, improve safety, and streamline workflows.

For manufacturers, this requires a cultural shift: from slow hardware cycles to agile software sprints, from transactional sales to consultative SaaS adoption, from one-off revenue to recurring models.

Those who embrace the shift will secure stronger margins, recurring growth, and deeper trust with pharma clients. Those who don’t risk being sidelined by competitors and startups that speak the digital lab’s language.