A More Focused Approach

As economic headwinds in China, industrial and selected government markets continued in 2014, several analytical-instrument and lab-product companies took steps to focus on a narrower set of businesses and product lines, in some cases, divesting assets and, in other cases, consolidating their positions. Among the year’s most prominent product-line exits were Bruker’s sales of its GC and ICP-MS businesses (see IBO 7/31/14), Agilent’s cessation of NMR sales (see IBO 10/15/14) and Thermo Fisher Scientific’s sale of Cole-Parmer (see IBO 7/31/14). Examples of companies honing their focuses on specific markets included Roche’s investments in clinical sequencing (see IBO 6/15/14, 6/30/14, 12/31/14), Merck KGaA’s enlarged presence in lab products and bioprocessing (see IBO 9/30/14), and Illumina’s investments in diagnostics (see IBO 7/31/14).

Diagnostics Strategies

Despite regulatory uncertainty and greater competition, diagnostics markets were important components of analytical-instrument and lab-product companies’ strategic interests in 2014, as firms positioned their businesses to capitalize on the utilization of research-related techniques, in particular sequencing, for applications such as personalized medicine and companion diagnostics. Instrument and lab companies expanding their stake in the diagnostics market via acquisitions included Illumina (see IBO 7/31/14), Sigma-Aldrich (see IBO 10/31/14), Tecan (see IBO 7/31/14) and VWR (see IBO 9/15/14). Significant FDA approvals were the clearances of Affymetrix’s CytoScan DX Assay for cytogenetics and Thermo Scientific’s Ion PGM Dx (see IBO 9/30/14). Partnerships also remained a focal point for companies to grow their presence in this market, as significant agreements were struck between Illumina and pharmaceutical firms (see IBO 8/31/14), Thermo Scientific and drug developers (see IBO 9/30/14), and Affymetrix and Arosa Diagnostics (see IBO 10/31/14). Outside of genomics, instrument companies continued to make inroads into other diagnostic markets, including Thermo Scientific’s major releases in the clinical MS market (see IBO 9/30/14) and Waters’s acquisition of REIMS (see IBO 7/31/14). Other diagnostics markets in which some instrument makers are investing but that IBO does not routinely cover include noninvasive prenatal testing, pathology and circulating tumor-cell analysis.

China’s Lag

Although China’s macroeconomic growth slowed last year, the more immediate concern for major analytical instrument and lab product companies was the country’s stepped-up enforcement of corruption laws and the reorganization of the China FDA, as each development delayed product orders. Agilent Technologies, Bruker, PerkinElmer, Thermo Scientific and Waters reported lower sales growth to the country due to the developments but forecast only a short-term effect. However, the timing of the return to a normalized sales-growth pattern presents a challenge, as do questions about the extent of the bounce back. Sectors affected include food safety and environmental testing.

Partnerships

Analytical-instrument companies increased their reliance on partnerships last year to further R&D, spur new investments and expand geographically. Companies continue to partner with academic institutions and government agencies, especially in Asia, to gain expertise in market-specific applications, for technology development and to establish themselves among scientific researchers. Notable academic partnerships were announced by Agilent (see IBO 8/15/14), Leica Microsystems (see IBO 12/15/14), Thermo Scientific (see IBO 6/15/14) and Waters (see IBO 1/31/14). Similarly, to drive the development of diagnostic applications, instrument makers, such as Illumina (see IBO 3/31/24) and PerkinElmer (see IBO 5/15/14), entered into agreements with diagnostics labs and test providers. Companies also continued to partner with their customers to not only develop products but to provide more-fully–integrated and customized services and solutions. This was evident in PerkinElmer’s further expansion of its OneSource business with new software offerings and Thermo Scientific’s integration of Life Technologies.