A Good Ending to a Sturdy Year
A majority of large publicly held instrument and lab product companies ended 2015 on a strong note, benefiting from sustained demand from biopharmaceutical customers and steady growth in applied markets. Nevertheless, currency effects along with weak industrial markets continued to dampen organic top line growth. Moreover, several companies were negatively impacted by fewer selling days and strong year-over-year comparisons.
For the businesses in the IBO Life Science and Analytical Instrument Sales Indexes (see page 9), combined calendar year fourth quarter 2015 sales grew 2.7% excluding acquisitions, or 5.6% organically. Quarterly estimates were calculated for Merck KGaA, Oxford Instruments and Tecan, whose results were not yet announced before this issue’s publication. For the year, sales for the combined Indexes improved 2.8% excluding acquisitions or 5.9% organically.
Biopharmaceutical sales remained robust in the fourth quarter 2015, especially for Thermo Fisher Scientific and Agilent Technologies, for which such sales grew roughly 16% and 19%, respectively. Sales for the two firms grew exponentially faster than the market due to technology upgrades, new products and demand in China. In addition, NanoString Technologies recorded strong double-digit revenue growth from pharmaceutical customers.
Several other companies recorded healthy biopharmaceutical demand, including PerkinElmer, whose sales from its top pharmaceutical customers outside of Japan grew double digits. Bio-Techne quantified upper single-digit biopharmaceutical revenue growth within its Biotechnology segment. Biopharmaceutical sales for Waters expanded roughly 7%, driven by demand from generic customers in India. However, the company’s organic growth slowed compared to the rest of the year due to a tougher comparison, especially in China. Like Waters, Shimadzu’s Analytical and Measuring Instruments (AMI) and Spectris’s Materials Analysis (MA) segments experienced significant biopharmaceutical demand in India.
Sales to health care and clinical markets also contributed to growth in the quarter. Illumina detailed that shipments to clinical oncology customers grew 40% and that NIPT revenue grew more than 50%. Similarly, PerkinElmer experienced strong demand for prenatal testing as well as infectious disease screening. Shimadzu AMI sales were aided by improved demand from therapeutics markets.
Applied markets were sturdy in the calendar year fourth quarter 2015, including healthy sales of food and environmental products. Demand in these markets contributed to growth for PerkinElmer, Thermo and Waters. Agilent posted a 9% increase in environmental sales but slightly lower food sales. In addition, Bruker benefited from new NMR customers for food screening applications.
Academic and government markets remained stable in spite of weakness in Japan and certain European regions. Several companies benefited from budget flushes, including Agilent and Thermo, for which academic and government sales each grew in the mid-single digits. Despite lower spending in Japan, PerkinElmer recorded academic and government sales growth. Furthermore, academic sales were positive for Bruker Nano Group and grew in the low single digits for Bio-Techne’s Biotechnology segment. Conversely, Waters recorded roughly a mid-single digit decline in academic and government revenue because of a strong comparison.
Industrial markets experienced little improvement in fourth quarter 2015, as Bruker Nano Group, PerkinElmer and Thermo Analytical Technologies all reported weakness. Agilent encountered a significant drag on sales from oil and gas exploration and production customers.
Geographically, US and European demand varied by company and were also impacted by timing of orders and year-over-year comparisons. Growth in China was particularly strong for Agilent, Illumina, PerkinElmer and Thermo. Despite only a modest percentage of sales, Bio-Techne’s Biotechnology sales in China jumped roughly 30%. India was similarly strong for Waters, Shimadzu AMI and Spectris MA.
Japan remained a headwind for most companies, with the exception of Agilent for which sales grew 5.7%. Japanese sales for the Waters Division were flat. In addition, sales in certain emerging markets such as Latin American, Russia and Brazil affected growth for PerkinElmer and Thermo.
Life Science Index Sales
Fourth quarter 2015 IBO Life Science Index sales rose 5.0%, 7.3% organically, to $3,772 million. Excluding Illumina, Index sales grew 5.2% organically, led by demand from biopharmaceutical markets, including particular strength for bioproduction sales within Thermo Life Sciences Solutions. Clinical demand boosted growth for Affymetrix, Illumina and NanoString Technologies. Adjusted operating profit expanded 50 basis points to 24.7% of sales.
For 2015, Index sales climbed 6.0%, 7.7% organically, to $13.9 billion. Excluding Illumina, Index sales grew 5.0% organically. Adjusted operating margin advanced 130 basis points to 24.4%.
Analytical Instrument Index Sales
Fourth quarter 2015 sales for IBO’s Analytical Instrument Index grew 0.6%, 4.1% excluding currency, to $4,018 million. Sales were particularly strong for LC and LC/MS, including aftermarket revenue. Index sales also benefited from increased demand within Bruker’s NMR and Detection businesses, as well as strong Health Sciences revenue for Waters. Adjusted operating margin climbed 170 basis points to 21.4% of sales, as a number of companies benefited from product mix and improved operating efficiencies.
For 2015, Index sales were flat at $14.7 billion but grew 4.3% organically. Adjusted operating margin expanded 140 basis points to 18.7%.
Reported IBO Index sales growths exclude acquisitions and are based on constant exchange rates for international companies when converted into US dollars.
IBO Life Science Index: Affymetrix; Bio-Rad Laboratories (Life Science); Biotage; Bio-Techne (Biotechnology, Protein Platforms); Brooks Automation (Life Science Systems); Fluidigm; Illumina; Merck KGaA (Life Science); NanoString Technologies; PerkinElmer (Human Health); Tecan (Life Sciences) and Thermo Fisher Scientific (Life Science Solutions).
IBO Analytical Instrument Index: Agilent Technologies (Life Sciences and Applied Markets, Agilent Crosslab); Bruker (Scientific Instruments); HORIBA (Process & Environmental Instruments & Systems, Scientific Instruments & Systems); Oxford Instruments; PerkinElmer (Environmental Health); Shimadzu (Analytical and Measuring Instruments); Spectris (Materials Analysis); Thermo Fisher Scientific (Analytical Technologies) and Waters.