Competitive Pressures

Tough government and academic markets and, toward year end, slowing industrial markets, plus lagging global growth, made 2012 a year when instrument and lab product companies had to compete harder than usual in many markets. Many companies noted pricing pressure across product lines, particularly for sales to industrial markets. This effect also played out regionally, as more companies increased their investments in sales efforts and operations in Asia, South America and Eastern Europe, creating a more crowded marketplace. In addition, with fewer markets showing growth, more companies focused increased efforts on those markets that did show growth, such as food safety and cell biology, intensifying competition.

Diagnostics

An ongoing trend, the expansion of analytical instrument companies into the diagnostics market, was particularly notable in 2012, as Agilent (see IBO 5/31/12), Illumina (see IBO 9/30/12) and Life Technologies (see IBO 7/31/12, 10/15/12) each made major diagnostics purchases and laid out plans for the development of their molecular diagnostics businesses (see IBO 9/30/12). As a result of these purchases, each company now has FDA-approved or laboratory-developed tests on the market. Development of companion diagnostics, a new market, also became a focus for instrument makers, including Agilent, Life Technologies and QIAGEN. Other companies continuing to add to their diagnostics strategy via acquisitions included Luminex (see IBO 7/15/12) and QIAGEN (see IBO 6/30/12), with investments in PCR and sequencing instrumentation, respectively, as well as Thermo, with its $925 million purchase of One Lambda (see IBO 7/31/12) and PerkinElmer’s Chinese acquisition (see IBO 11/15/12). QIAGEN and Sequenom furthered adoption efforts for their diagnostics tests, continuing to increase the ratio of each company’s diagnostics sales to their non-diagnostic sales. Companies also entered a range of partnerships to strengthen test development and commercialization.

Reconfigurations

As companies weathered a tougher market environment in 2012 and prepared for a similar environment in 2013, several firms reoriented operations to solidify growth prospects and profitability. This reorientation took the form of divestments, new leadership and organizational changes. In the largest divestment, Becton Dickinson (BD) sold its Discovery Labware business to Corning Life Sciences for $730 million (see IBO 4/15/12). Thermo also shed a slower growth business, selling its Laboratory Workstations unit (see IBO 6/30/12, 10/31/12). GE divested a series of laboratory-oriented product lines (see IBO 5/31/12, 7/15/12, 12/15/12), Affymetrix sold an eBioscience business (see IBO 12/15/12) and Roche exited the DNA microarray gene expression market (see IBO 6/15/12). Also, in what could also be the first in a series of several smaller-size divestitures, Bruker announced the sale of its Japanese thermal analysis business last fall (see IBO 9/15/12) as part of larger restructuring. Tecan (see IBO 2/15/12) and MTS Systems (see IBO 4/15/12) announced CEO changes and began new initiatives, while VWR’s long-time CEO departed (see IBO 7/31/12). Firms announcing division management changes included Thermo (see IBO 3/15/12), Roche Applied Science (see IBO 3/31/12) and Merck Millipore (see IBO 7/15/12, 8/31/12). Reorganizations aimed at meeting new financial goals were undertaken at Olympus (see IBO 8/31/12), Merck Millipore (see IBO 10/15/12), Bruker (see IBO 12/15/12) and Enzo Biochem Life Sciences (see IBO 12/15/12). QIAGEN (see IBO 7/15/12), Agilent (see IBO 8/31/12) and Sigma-Aldrich (see IBO 12/31/12) announced structural realignments.