A Welcome Rebound

Sales to industrial markets (defined as chemicals, oil and gas, metals and mining), recovered in 2017, following four years of decline. Publicly held instrument suppliers to heavy industry, such as Bruker, Spectris (Materials Analysis) and Thermo Fisher Scientific, announced a pick-up in sales in 2017. For example, Agilent Technologies reported a return to growth for its chemical and energy business that accelerated during 2017.

While companies’ strong year-over-year results for these end-markets reflected their recent poor performance, such end-markets may be less attractive to diversified instrument firms going forward due to their volatility and the more attractive opportunities in life science markets. Key technology segments supported by industrial markets include atomic spectroscopy techniques and GC. Nonetheless, suppliers should be able to ride the rebound after years of underinvestment, and the market will remain a cornerstone for dedicated suppliers and companies offering a range of required techniques.

Diagnostic Focus

Last year was yet another year in which instrument and lab product companies prioritized investments in diagnostics companies. The emphasis was most evident through the many acquisition announcements. PerkinElmer bought Tulip Diagnostics (see IBO 1/15/17) and EUROIMMUN (see IBO 6/30/17), upping the Diagnostics segment as a share of sales. Building on the success of its MALDI Biotyper products, Burker expanded its associated product offerings and expertise with the purchases of InVivo Biotech (see IBO 1/15/17) and MERLIN Diagnostics (see IBO 9/30/17).

In addition to acquisitions, several instrument companies announced important firsts for regulatory approval, reaping the results of earlier investments. Thermo Fisher Scientific announced US FDA premarket approval for its Oncomine DX Target Test, the first approval for a test of this kind (see IBO 6/30/17).  Agilent gained US FDA clearance for the GenetiSure DX Postnatal Assay, a microarray CGH assay—its first such product for diagnostics use (see IBO 9/15/17). In addition, instrument companies continued to increase their partnerships with diagnostic companies, both for development and marketing. Agilent partnered with Agendia to develop a RNA-Seq kit for for clinical applications (see IBO 7/31/17).

On the MS side, SCIEX launched the first US FDA-approved kit for Vitamin D testing on an LC/MS system geared toward clinical applications (see IBO 6/30/17, IBO 8/15/17). Also, PerkinElmer announced the registration of its LC/MS system with the FDA and CE marking (see IBO 11/30/17). In addition, Thermo Fisher previewed its first integrated LC/MS for the clinical market (see IBO 6/15/17). With investments in clinical diagnostics products and applications by instrument companies, with both short- and long-term goals, such companies continue to expand their share of revenues from clinical markets.

Software and Informatics Come on Strong

Software has advanced instrument data processing, access and analysis, as well as contributed revolutionary developments in instrument usability and application-specific workflows. The next generation of informatics and software solutions, led by AI, IoT and data integration and sharing solutions, are impacting instrument companies’ strategies and product development.

In 2017, several major companies made even deeper investments in the field, as Thermo Fisher Scientific acquired Core Informatics (see IBO 3/15/17), Danaher purchased IDBS (see IBO 10/31/17) and Eppendorf acquired Bio ITech (see IBO 3/31/17). Although all of these acquisitions are centered on traditional lab technology, they are a testament to the necessary integration of software and informatics capabilities with instrument data and workflows.

Likewise, major investments continued in the bioinformatics space around NGS analysis, particularly for clinical applications. Advances in informatics are especially key to the further development of the analytical capability of numerous technologies, including NGS, advanced microscopy and MS. Meanwhile, smaller companies such as Desktop Genetics for CRISPR, FlowJo for flow cytometry and Media Cybernetics for confocal microscopy benefited from specialized expertise related to analytical data, and were valuable partners for system providers.