Global Life Science Drives the Market
Pharmaceutical and Biotechnology
EvaluatePharma forecast that R&D spending by pharmaceutical companies will rise 1.0% this year to $134 billion, according to a June 2011 report. From now until 2016, R&D spending by drug companies is expected to grow an average of 2.5% annually to total $147 billion. EvaluatePharma forecasted prescription drug revenues to have a combined annual growth rate of 4.0% between 2010 and 2016 to reach $853 billion. The percentage of sales from biotech drugs is set to increase from 18% in 2010 to 21% by 2016. Over the same period, biotech drug sales are expected to grow 48% to $192 billion.
Sales lost to patent expirations and generic competition are expected to total $171 billion between 2011 and 2015, according to IMS. The share of the pharmaceutical market for branded drugs will decrease to 53% by 2015, compared with 64% in 2010, according to IMS. Fitch Ratings expects sales will decline for five of the 13 largest drug companies that it rates. Drugs with more than $50 billion in sales will lose patent protection this year.
Revenue from pharmaceutical R&D outsourcing rose 6.6% to $36.6 billion last year, according to Kalorama Information. The percentage of pharmaceutical R&D spending going to outsourced R&D increased from 26% to 38%.
Worldwide venture capital financing for life science companies increased 8.7% last year to $9,906 million, according to Burrill & Company. Public financing of life science companies grew 26.8% to $82,423 million, and debt offerings rose 46.4% to $55,456 million. A December 2011 survey by the National Venture Capital Association (NVCA) of 500 venture capital professionals and CEOs found that 58% of respondents expect biopharmaceutical and medical device investments to decline this year.
Energy
The Economist forecasts worldwide energy consumption to rise 3% this year. In December 2011, the International Energy Agency forecast oil demand to increase 1.5% this year to 90.63 million barrels per day (bpd). A medium-term forecast released at the same time estimated that demand will reach 95 bpd in 2016 and that conventional crude oil will represent less than 40% of that growth.
According to OPEC’s November 2011 World Oil Outlook (WOO), in 2035, non-crude liquids are expected to supply more than 75% of demand. In addition, 6.8 million bpd in new capacity for crude oil distillation is expected to be added by 2015, with China and India representing 50% of capacity and developing regions accounting for 5.5 million bpd. The WOO estimated required investments in refinery processing to be $425 billion by 2015, including $210 billion for known projects and $150 billion for maintenance. Asia will account for $150 billion of the total, with China accounting for 60% of that. But the need for refinery capacity will decline as the share of non-crude oil sources of energy increase. A Barclays Capital survey of 350 oil and gas exploration and production firms found that spending on oil and gas exploration and production should expand 10% this year to $598 million.
The IEA estimated in December 2011 that biofuels production will grow 22% from 2010 to 2016 to 2.22 million bpd. According to Bloomberg New Energy Finance, clean energy investments rose 5% last year to $260 billion. Investments in solar technology led all segments, rising 36% to $136.6 billion. Biofuels investments grew 4.7% to $9 billion. However, corporate R&D and government R&D investments both declined, falling 13.7% and 21.6% to $13.2 billion and $12.7 billion, respectively. The NVCA survey found that 55% of respondents expect investment in clean technology firms to decrease this year.
Chemicals
Global chemical output grew 3.5% in 2011, down from 10.0% in 2010, according to the American Chemistry Council (ACC). This year, chemical output is forecast to increase 3.6%, with 6.2% growth in developing nations, up from 5.4% last year. Developed countries’ chemical production is expected to grow 1.6%, including growth in US chemical output of just 1.2%. In 2011, the ACC estimates that US chemical output rose 3.8% and Europe output grew 2.0%. Capital spending by the US chemicals industry increased an estimated 7.0% in 2011 to $29.4 billion and is expected to grow 7.1% this year.
The European Chemical Industry Council (CEFIC) predicted that European chemical production will grow 1.5% this year, down from 2.0% in 2011. The German chemical industry association (VCI) expected domestic chemical output to rise 1.0% this year, compared with 4.0% in 2011. The VCI estimated German chemical company’s investments increased 10.0% last year to €6.4 billion ($8.6 billion = €0.75 = $1) and R&D rose 6.5% to €8.8 billion ($11.8 billion). The ACC forecasts that Western European chemical production will climb 1.1% this year, compared with 2.5% in 2011. Russian, Central and Eastern European chemical output is expected to decline from 5.3% growth last year to 4.5% growth in 2012.
The ACC estimated that Asia-Pacific chemicals production will increase 6.8% this year, compared with 6.0% growth in 2011. China will lead growth with output increasing 10.2%, compared with 11.1% growth last year.
Bar Graph: End-Markets Sales Growth Predictions for Analytical Instruments Industry for 2012
Chemicals 2.10%
Polymers 2.50%
Metals 3.30%
Oil/Petrochem. 3.80%
Semicon./Elect. 4.50%
Indep. Test 5.40%
Government 5.50%
Pharma. 5.50%
Academia 5.60%
Food and Bev. 8.30%
Biotech 8.40%