CROs are projected to be the leading growth market for the instrument industry in 2014. Pharmaceutical and biotechnology firms are increasingly outsourcing analytical research activities and clinical trials, especially those located in China. The CRO market is followed closely by biotech, agriculture/food, hospital/clinical and pharmaceutical labs, all with similar analysis requirements, especially utilizing mass spectrometry and HPLC technologies. Molecular diagnostics is also a driving force in these life science sectors. Government and academic markets are expected to rebound briskly in 2014 as budget cuts that have been constraining growth are eased.

Chemicals

Worldwide chemical production is estimated to increase 3.8% this year after growing 2.4% last year, according to a December 2013 report by the American Chemistry Council. The fastest growing segment is expected to be specialty chemicals, with production increasing 4.2%. The chemical industry’s capital investment is expected rise 6.6% in 2014 to $467.7 billion, compared to 6.0% growth last year. Capacity utilization will be 86.2% in 2014, up from 85.9% in 2013. By region, chemical production is expected to rise 2.6%, 3.3%, 1.4%, 4.1%, 4.8% and 6.5% in North America, Latin America, Western Europe, Central and Eastern Europe, Africa and the Middle East, and Asia Pacific, respectively.

The ACC estimates R&D spending by the US chemical industry rose just 0.5% last year to $56.9 billion. However, it is estimated to accelerate in coming years, growing 2.5% this year and reaching $68.7 billion by 2018. Due to new petrochemical investments, capital spending by the US chemical industry rose 10.0% in 2013 to $42.4 billion and is estimated to grow 9.0% this year, totaling $61.2 billion by 2018.

Pharmaceuticals

Fitch Ratings reported this month that it estimates global sales of brand name drugs will increase 2%–3% this year as patent expirations, EU pricing policies and US unemployment impact growth. Patents covering around 4% of the pharmaceutical market, or $34 billion, will expire this year.

In a June 2013 report (see IBO 6/30/13), EvaluatePharma estimated that worldwide prescription pharmaceutical sales grew just 0.4% last year to $717 billion but will increase 3.8% in 2014. Generic drug sales are projected to increase 9.7% in 2013 to $70 billion and to grow 10.0% this year. Sales of biologics are estimated to rise 8.9% in 2014 to $182 billion, following 8.4% growth last year. Pharmaceutical and biotechnology R&D expenditures are projected to increase 1.6% this year to $137.5 billion, after a 1.5% decline in 2013.

IMS Health forecast in a November 2013 report (see IBO 11/30/13) that spending on traditional pharmaceuticals in developed markets will be flat in 2014 at $450 billion, following a 1.1% decline in 2013. However, pharmerging markets’ spending on traditional medicine will rise 11.9% in 2014 to $244 billion, compared to 9.5% growth last year. For specialty pharmaceuticals, spending by developed markets is expected to grow 4.6% this year to $160 billion and to have grown 3.3% in 2013. Special pharmaceuticals spending by pharmerging markets is estimated to have increased 13.0% in 2013 to $26 billion and to grow 11.5% this year.

According to a Burrill & Company’s report released this month, in 2013, the capital raised privately and publicly by life science companies, including pharmaceutical and biotech companies, increased 3.4% to $95.7 billion. However, US companies’ financing fell 2% to $69.7 billion due to a decline in public debt financing. Worldwide, life science companies’ equity funding increased 39.2% to $40.8 billion to account for 43% of total financing. US companies raised $31 billion for a 54.8% increase.

Energy

The International Energy Agency forecast in December that 2014 world oil demand would rise 1.3% to 92.4 million barrels a day (b/d), the same percentage increase as last year. Demand from Asia Pacific is expected to grow 2.0% to 30.7 million b/d to overtake demand from the Americas, which will be flat at 30.6 million b/d. In 2013, demand from Asia Pacific and the Americas increased 1.3% and 1.7%, respectively. Total OECD demand is estimated to decrease 0.4% this year to 45.7 million b/d, after a decline of 0.1% last year. Total non-OECD demand is expected to grow 3.1% to 46.7 million b/d, up from 2.8% last year.

With growth of 5.2%, total OECD supply is estimated to reach 22.1 million b/d this year, compared to 5.5% growth in 2013. Total non-OECD supply is projected to reach 30.2 million b/d, with growth of 2.0%. Last year, total non-OECD supply was flat. Global biofuels demand is expected to be flat at 2.0 million b/d, after increasing 5.3% last year. Global biofuels production is forecast to rise 3.6% to 2.04 million b/d, compared to 6.5% growth in 2013.

In its annual forecast, Barclays Bank estimates oil exploration and production spending will rise 6.1% this year to $723 billion, led by the 14%, 13% and 11% growth in the Middle East, Latin America and Russia, respectively, according to epmag.com. Spending in Europe, Asia, Africa and North America is estimated to increase 8%, 3%, 10% and 7%, respectively. In 2013, oil and production spending rose 7.4%. The forecast, released in December 2013, is based on a survey of 309 industry executives.