At Pittcon, IBO sat down with executives of three of the world’s largest instrument and lab product manufacturers. The conversations focused on some of the dominant issues shaping the industry’s growth prospects as well as company developments.

“The biggest challenge, and a challenge we are meeting, is scaling up our organization at the same rate the business is growing.”

A major growth driver for the industry in general, and especially for food safety, is China. Discussing the challenges in China, Mike Harrington, PhD, senior vice president, Global Markets, at Waters, told IBO, “The growth has been so fast that building the necessary infrastructure [is an ongoing challenge]. I’ll give you an example: two out of every five mass spectrometers that we manufacture are sold in China. . . . So as the volume grows, how do we bring on board fast enough really well trained and expert service engineers and scientists to train our customers?” The company continues to grow in the country to meet this need. “The biggest challenge, and a challenge we are meeting, is scaling up our organization at the same rate the business is growing.” Also, he noted the country’s size and diversity of customer locations, stating “You’ve got everything [there], from intense urbanization to remote locations.”

Rajat Mehta, vice president and general manager, Applied Technologies, at Thermo Fisher Scientific, explained that although macro-economic growth concerns for China remain, individual end-markets are healthy.  “[T]he technologies and markets where we participate—food, as an example, we see good growth drivers as consumer awareness around food safety is increasing. The consumer purchasing power continues to increase over there and is driving growth. Environmental—soil and air pollution are some real issues that have not only an impact on quality of life, but also an impact on the industrial productivity.”

In China, the company seeks to participate not only in the country’s high-end instrument market but also the broader market in general, according to Jakob Gudbrand, president, Chromatography and Mass Spectrometry, at Thermo Fisher. This is accomplished through a strong local presence. “We have two important platforms for that in China: we have our China Innovation Center and our China Manufacturing Center.” He noted, “We manufacture in China. Just in our chromatography and MS space, we manufacture some ICs there, some GCs there, some AAs there, some ICPs there. . . . So with a manufacturing footprint in China plus an innovation center in China, we’re able to take a more local view of the market.” Such innovation is also utilized on a global basis. “The AAs, the ICP, the GC, the ion chromatographs—are all manufactured in China. The IC and the GC, part of it, are innovated in China. But all of them are sold globally.”

While China has certainly been a success story for the industry as a whole, the weakness of industrial end-markets, such as oil and mining, in recent years has been a challenge for many companies and the world economy in general. As Jim Corbett, executive vice president and president, Discovery & Analytical Solutions, at PerkinElmer, told IBO, the ability to access strength in different end-markets has been an advantage for his company in dealing with slower industrial growth. “You try to pivot to markets whose spend might be more robust. Pharma and biotech have been strong over the last few years. We’re starting to see academic come back a little bit more, not as strong as I would like it, but it’s there,” he explained. “You pivot and you shift your resources to try to go after that. And then you look at your long-term product roadmap and try to say, ‘Ok, am I building the next generation products for the right end-markets to get those needs met?’ And you have to adjust the R&D investment as well.” As for the industrial markets specifically, he told IBO, “Industrial has impacted us globally, but more so in a lot of the Asia Pacific [countries] because we are otherwise doing so well there.”

Similarly, Dr. Harrington cited the diversity of Waters’ end-markets as a factor in growing sales despite slower industrial markets. “What tends to happen is our business shifts around a little bit. We’ve never seen meteoric growth in that segment, but neither have we seen some sort of cataclysmic fall. It tends to come from different segments at different times,“ he explained. The company’s technologies also allow it to respond to different market needs. “The technology we sell into the different segments is quite similar. . . . [It is] subtle variations on a common platform. As a result, our experts in sales and marketing and support are quite flexible to be deployed into different segments as the need arises.”

“Now more than ever, our customers in these areas are looking for new products that help accelerate their innovation and drive productivity in their processes”

According to Dan Shine, president, Analytical Instruments, at Thermo Fisher, the company has adjusted to the industrial market’s slowness with new products. “We are focused on helping our customers navigate through this environment. Now more than ever, our customers in these areas are looking for new products that help accelerate their innovation and drive productivity in their processes,” he cited. He cited the Thermo Scientific ARL Quant’x EDXRF spectrometer and the Thermo Scientific iXR Raman Spectrometer as two new products addressing this market. He added, “In China, we continue to see good demand in all of our end-markets. We have leveraged our Thermo Fisher scale to help expand our sales and service capabilities in this region—as well as further develop local product development and manufacturing capabilities in order to more quickly respond to the unique needs of our China and Asia-based customers.”

For the companies themselves, responding to evolving end-markets can also involve internal transformations. Last year, PerkinElmer reorganized the company into two new divisions, Diagnostics and Discovery & Analytical Solutions (see IBO 9/30/16). Asked about the reorganization, Mr. Corbett said, “There are some end-market synergies that make a lot of common sense, particularly in pharma, biotech and academia, where sales and service in our front-end channel could really be organized more appropriately to deliver that customer base a full suite of our products.” The change also affected R&D. “We’ve got some leverage from how we are organizing our R&D organization, so now when we look across the entire portfolio, we are aligned by instrument platforms. We’ve also aligned under what I call our Digital Solutions group, which also includes our informatics solutions, to go across our portfolio.”

The change also builds upon the company’s established OneSource business as well as its strength in the pharmaceutical market. “Our OneSource Services are a great anchor for us in the research market. Clearly, we’ve got great capabilities there. We’ve continued to see nice growth. Now we can complement that with the full suite of products that go into the pharma market.” These opportunities include products across the division “Some analytical products are sold into QA/QC and other areas. Now that we have a commercial front-end that is going to be more organized around that end-market, we think we’re going to continue to do well.”

PerkinElmer’s technologies can also serve both the Diagnostics and Discovery & Analytical Solutions division. As Mr. Corbett told IBO, the triple-quadrupole MS technology gained by PerkinElmer through its purchase of Ionics (see IBO 9/30/16) was launched as the QSight system in China last fall, targeting applications such as high-volume food testing and testing for pesticides. “At the same time, the Diagnostics business, which utilizes mass spec in newborn screening, will then offer that to customers. So it accommodates both sides of the business,” he explained.

For Thermo Fisher, collaboration also extends across businesses. “We connect our teams (whether R&D or product management) to work in new, exciting ways to bring our capabilities to the market that allow us to compete in a new segment,” noted Mr. Gudbrand. “Like food, for example, or pharma and environmental, we bring our product teams together to present our value proposition in the most compelling way. Obviously, from a growth perspective, we think about driving growth. We would select the application areas where we are better differentiated and where the markets are growing faster.” He cited pesticide analysis as an example, saying, “Whether in environmental or food, which is around a $450ish million market, our chromatography, MS, and trace elemental [analysis] technologies are relevant.”

All three executives commented on the potential of informatics and software solution to drive market growth, a fact borne out by the investments companies are making in the area. “It’s a huge area for us. It’s the single largest investment we make in product development,” stated Dr. Harrington. In particular, he noted, software demand is being driven by regulatory needs. Regarding the company’s Empower CDS, he said “If you look at the FDA, MHRA (Medicines and Healthcare Products Regulatory Agency), PIC/S (Pharmaceutical Inspection Co-operation Scheme), and the World Health Organization, they have all issued new guidance in 2016 about the management of data in enterprises in regulated environments. . . . It really plays to our strength.”

The company is also developing its software to change the user experience. “We are working very hard, especially in our mass spectrometry solutions with UNIFI, on building out a whole new user experience that simplifies what is an extraordinarily complex set of analyses that [scientists] have to do,” said Dr. Harrington. In addition, the company is working toward “complete system intelligence.” As he explained, this is “trying not just to use informatics to handle a challenge of data interpretation, results and decision making, but also using software and analytics to help you to understand and predict the health of your instrument.” He added, “Building from the health of individual instruments, we hope to draw information from our thousands of instruments all over the world, to be able to predict, inform and troubleshoot instrument health ahead of time.”

Likewise, Mr. Corbett sees enormous potential in informatics. “Increasingly, our customers are generating more and more data, so how we can help them utilize that data in more compelling ways is really going to be the driver for the analytical laboratory moving forward,” he said. “We’ve been on this path with informatics, acquiring different assets to get a comprehensive suite of capabilities, like our electronic lab notebook. We complement that with our TIBCO Spotfire capabilities. So now we’re able to help our customers aggregate different data sets and allow them to utilize that in a more compelling way.”

“I don’t think the need for information management is going to slow down at all, and so I think as a laboratory supplier it is critical we have that offering to help customers”

These opportunities will continue to affect how the customers’ lab works as well as the company’s product development. “I don’t think the need for information management is going to slow down at all, and so I think as a laboratory supplier it is critical we have that offering to help customers,” said Mr. Corbett. “So we continue to invest in that part of the portfolio. We’re looking for broader applications than in the pharma market and we’re starting to do that, and I think with the R&D organization reorganized, the cross pollination across the end-markets is going to occur.”

Thermo Fisher’s announcement at Pittcon of its acquisition of Core Informatics demonstrated the company’s ongoing investments in the area. As Mr. Gudbrand explained at the company’s press conference, this purchase supports Thermo Fisher’s investment in software for private and true SaaS cloud offerings, and enables it to offer software from discovery through informatics. The company is also addressing the fragmentation of software offerings.