CROs will again be the leading growth end-market in 2015. Pharmaceutical and biotechnology firms continue to outsource analytical-research activities and clinical trials, especially to China and India. The CRO market is followed closely in forecast growth by biotech, agriculture and food, hospital and clinical, and pharmaceutical labs, all which have similar analysis requirements, creating a boon for mass spectrometry and HPLC. The independent testing–lab market, especially for environmental analysis, should perform well as a result of increased regulations in advanced nations, coupled with genuine remediation efforts in emerging economies, such as China. Government and academic markets will suffer from stretched government funding. The chemical industry, despite lower energy and feedstock costs, will underperform due to global economic sluggishness. The oil and gas market will be particularly moribund due to falling prices and in turn will affect the metals industry, which is also under pressure from excess supply conditions.

Chemicals

Worldwide chemical production is expected to grow in 2015, led by developing countries, where it will expand 5.4% compared to 2.8% for developed nations, according to an American Chemistry Council (ACC) December 2014 report. Total global chemical production is forecast to expand 3.6% in 2015, up from 2.8% last year. Among the countries where chemical output is expected to grow the fastest are China, Singapore and Mexico, with growth of 8.2%, 5.8% and 5.1%, respectively. US and German chemical production are forecast to grow 3.7% and 2.3%, respectively.

With production expected to accelerate, capital spending is expected to follow suit. The ACC estimates that worldwide capital spending by the chemical industry will rise 4.9% in 2015 to $469.2 billion, up from 4.8% growth in 2014. However, in the US, chemical-industry capital-spending growth is forecast to slow this year but still increase a robust 8.8% to $36.3 billion, but down from last year’s 11.8% jump. Likewise, the US chemical industry’s R&D spending is also expected to pick up, rising 3.3% to $59.4 billion, following a modest 1.8% expansion last year.

Worldwide, the fastest-growing segments of chemical production are forecast to be Other Specialties, Plastic Resins and Synthetic Rubber, at 4.5%, 4.2% and 3.8%, respectively, according to the ACC. Pharmaceuticals production grew 3.3% in 2014 and is expected to rise 3.5% this year. Production of Specialty Chemicals and Basic Chemicals is forecast to rise 4.2% and 3.6%, following 3.6% and 2.3% growth last year, respectively.

Pharmaceuticals and Biotech

Prescription-drug sales are forecast to increase at a faster rate in 2015, growing 5.4% to $790 billion, compared to growth of 4.4% in 2014, according to a June 2014 report from EvaluatePharma (see IBO 7/15/14). Generic-drug sales continue to outpace the total market, rising an estimated 6.8% last year to $74 billion, with the same growth rate forecast for this year. Biologic sales also continue to outpace the market, with an 8.8% increase in 2015 to $197 billion. However, this is slower growth than the 9.7% increase recorded in 2014. Global sales of prescription and over-the-counter drugs grew an estimated 4.4% last year and are expected to grow 5.3% this year to $829 billion. For pharmaceutical and biotech R&D, EvaluatePharma estimates spending will increase 2.5% this year to $144.5 billion, down from a 3.2% increase in 2014.

After an especially strong 2014 for life science fundraising, activity is expected to slow in 2015 but still remain healthy, according to The Burrill Report. Globally, total life science funding rose 12.2% in 2014 to $104.2 billion. It was an especially strong year for IPOs, which raised $11.0 billion, a 45.8% increase as 133 life science companies went public. Venture capital–investments also blossomed, rising 30.2% to $16.5 billion. The fastest-growing fundraising segment was mergers and acquisitions, which increased 169.4% with $355.3 billion in deals.

Energy

Although a number of energy forecasts were published last year, the drop in oil prices is expected to result in revisions of such reports. Published this month, the latest US Energy Intelligence Agency (EIA) update forecasts consumption of world crude oil and liquid fuel to increase 1.1% this year to 92.39 million barrels per day (bpd), a slight increase from 1.0% growth last year. However, the supply of world crude oil and liquid fuel supply is forecast to slow from 2.2% growth in 2014 to 0.9% growth in 2015 to 92.97 million bpd.

Also released this month, Barclays “E&P Spending Outlook,” which is based on a survey of 225 energy companies, forecasts exploration and production (E&P) spending to decline a minimum of 8.8% this year to $619 billion. North American spending is estimated to plunge 14.1%. The survey was conducted in December 2014 and will likely be revised downward. In a report released this month, Cowan and Co. forecasts E&P budgets for 476 oil and gas firms to decline 17% in 2015 to $571 billion, assuming an average price of $70 per barrel. An average oil price of $6o per barrel would result in a 30%–35% decrease in spending. But spending by seven “supermajors” is expected to decline only 9%–15%. Regionally, spending in the Middle East is expected to remain steady.