In each year’s forecast issue, IBO takes a look back at the events of the previous year and the trends that emerged. The list is presented in no particular order.

Recovery

Last year was a year of recovery for analytical instrument and laboratory product sales. On the heels of the global economic upturn, instrument sales benefited from the more stable economic environment, growth in China and other developing nations, and improved credit and financing conditions. Specific end-user markets also experienced a recovery. The industrial and biopharmaceutical markets strengthened, as restocking and replacement cycles drove sales. In addition, increased production and capital spending in the chemical, oil and metals industries revived demand. Also making a comeback was the semiconductor/electronics market, propelled by LED development. Many instrument and laboratory product companies were also well-positioned to take advantage of the spending uptick. A steady flow of new product introductions, as well as technology improvements and sales incentives helped stimulate sales growth.

Recession Aftermath

In the tough market conditions created by the economic downturn in 2008 and 2009, many analytical instrument and laboratory product companies struggled to grow sales. Pricing pressure and harder-to-obtain financing also took a toll. Although 2010 was a much better year for many companies, some firms continued to be challenged as they dealt with the after effects of the economic downturn. In addition, continued pricing competition; end-market changes, such as in the pharmaceutical market; and high costs made a full recovery more difficult for them. As a result, in 2010, more instrument and laboratory product companies exited the industry. Some businesses were sold due to lower-than-expected profits or investors’ desire to cash out. Among the public companies that were acquired, or were set to be acquired, were Symyx Technologies (see IBO 4/15/10), ICx Technologies (see IBO 8/31/10) and RAE Systems (see IBO 9/30/10). Companies for which investors accepted buyout offers included MDS (see IBO 1/31/10), OI (see IBO 9/15/10) and Robotic Technology Systems (see IBO 10/31/10). Companies in receivership included Reologica (see IBO 4/15/10) and Ludesi (see IBO 12/15/10). Other firms made major operational changes to increase profitability. Among these companies were Helicos BioSciences (see IBO 5/31/10), febit (see IBO 6/30/10) and Fluorotechnics (see IBO 12/15/10).

Mergers and Acquisitions

The substantial cash holdings of larger companies, low interest rates, private equity activity and the post-recession environment helped drive greater acquisition activity in 2010 (see IBO 11/15/10). Major acquisitions by Merck KGaA (see IBO 2/28/10), Agilent (see IBO 7/31/09) and Thermo Fisher Scientific (see IBO 12/15/10) demonstrated that major companies were willing to undertake large transactions. However, most deals were bolt-on acquisitions, indicating more companies were available for purchase and that pricing was reasonable. Acquisitions were both strategic, as in the cases of Merck KGaA buying Millipore and Thermo’s planned acquisition of Dionex, and opportunistic, as in the cases of Malvern Instruments’ purchase of Reologica (see IBO 4/25/10) and Bruker’s acquisition of three Varian product lines (see IBO 3/15/10). A reshuffling of product portfolios, as was the case with Caliper Life Sciences (see IBO 5/31/10) and Tecan (see IBO 7/15/10) also prompted increased acquisition activity. As companies staked out growing markets following the economic recovery, intensifying interest in developing markets, diagnostics and consumables products also fueled acquisition interest.

Beyond India and China

In 2010, companies made new investments in other emerging markets besides India and China. Most notably, more companies opened new offices in Brazil, such as Syrris (see IBO 2/28/10) and Thermo (see IBO 6/15/10), as the country’s rapid growth, as well as investments in infrastructure and science, indicated long-term growth opportunities. Growing end-markets, such as food safety, as well as cost savings for manufacturing and supply chains, resulted in increased expansion in southeast Asia for firms. For example, Agilent announced plans to move NMR console manufacturing to Penang, Malaysia. Companies also noted growth prospects in Eastern Europe and the Middle East.

Acceleration Away from Traditional Promotional Tools

The shift toward new promotional opportunities and tools increased last year among analytical and lab product firms, resulting in a diminishing reliance on trade shows and print advertising. Companies adopted more direct, targeted and novel methods for customer interaction, such as webinars, local presentations and online interactions. For example, PerkinElmer announced that it would not exhibit at Pittcon in 2011 (see IBO 12/15/10). In fact, it appears that both customers and vendors are finding it harder to justify the cost of attending large trade shows, compared with smaller, more focused scientific meetings. Companies also expanded their web capabilities, which range from portals for product customization, such as microarrays; to databases of scientific resources (see IBO 2/15/10); to dedicated websites, such as Agilent’s genomics website. In this way, companies hope to extend their relationships with customers worldwide and provide greater resources for them.