End-Market Forecast: Life Science Leads the Way

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Life science applications continue to provide more opportunities than other areas, and this is reflected in IBO’s estimates for growth in demand by industry for 2017. Tools like sequencers, automated ELISAs and advanced microscopes are not only used in traditional pharmaceutical and biotechnology applications, but are also rapidly migrating into other areas, such as food analysis and, especially, clinical applications. The hospital and clinical end-market is poised to achieve the fastest growth in 2017, estimated at 6.8%, followed closely by CROs, which service the pharmaceutical and biotech sector.

Among industrial segments, the semiconductor, electronics and nanotechnology end-markets have the best prospects for the year, but a cyclical downturn in the long term is expected. Utilities, particularly water and power, are experiencing strong uptake in both developing nations and the first world, where long deferred infrastructure spending is finally being supported with new projects.

Academic markets will advance 3.6% for the year and, again, life science applications are supporting the majority of the growth, while demand for research into materials and environmental testing is forecast to be weaker. Chemical facilities, and the oil and gas industry remain challenging markets but should produce positive growth for the year.


According to the American Chemistry Council’s (ACC) December 2016 publication, “Year End 2016 Chemical Industry Situation and Outlook,” worldwide chemicals output in volume is estimated to have risen 2.2% in 2016, with an expected increase of 2.9% in 2017 and 3.3% in 2018. These figures include volume growth for pharmaceuticals of 2.4% last year, and 3.1% and 3.4% in 2017 and 2018, respectively.

Growth in output volume in 2017 will be led by India, with a 6.4% increase, followed by China, where output will increase 6.3%, and Asia-Pacific excluding Japan, where it will rise 5.2%. This is compared to 6.4%, 6.7% and 5.3% growth, respectively, last year. US output is estimated to grow 3.3%, following 2016’s meager 0.9% increase.

VCI, Germany’s chemical trade group, reported in December 2016 that German chemical production declined 0.5% last year, with a 0.5% increase expected this year. German chemical companies’ investments declined 0.3% in 2016 to €7.1 billion ($7.6 billion = €0.93 = $1), but research budgets rose 2.0% to  €10.7 billion ($11.5 billion).

The ACC report estimates capital spending by the global chemicals industry to increase 4.1% in 2017 to $473.1 billion, up from 3.8% growth this year. In 2018, it is forecast to grow even faster, rising 5.6%.


According to EvaluatePharma’s “World Preview 2016, Outlook to 2022,” published in September 2016 (see IBO 9/30/16), global pharmaceutical R&D spending is estimated to have increased 2.6% in 2016 to $153.8 billion. In 2017, it is estimated to accelerate, with 3.4% growth, followed by 2.8% growth in 2018. R&D spending for generics is estimated to have jumped 9.6% last year to $80 billion, with 7.5% and 7.0% increases forecast for 2017 and 2018, respectively.

Global prescription drug sales, excluding generics, are estimated to have increased 4.4% in 2016 to $698 billion. In 2017 and 2018, such sales are expected to rise 5.5% and 6.2%, respectively. Estimated sales of generic drugs grew 9.6% in 2016 to $80 billion, with an expected growth for 2017 and 2018 of 7.5% and 7.0%, respectively. Sales of orphan drugs are forecast to have increased 10.8% last year to $113 billion, with forecast growth of 12.4% and 12.6% in 2017 and 2018, respectively.

By type of drug, EvaluatePharma estimates biotechnology drugs accounted for a quarter of 2016’s $812 billion prescription and over-the-counter drug sales. The share is estimated to increase to 26% in 2017 and 27% in 2018.

In its special report, “Industries in 2017,” the Economist Intelligence Unit forecasted pharmaceutical spending in North America, Asia-Pacific, Western Europe, Latin America and Transition Economies to grow 4.4%, 5.0%, 1.5%, 12.5% and 9.8% to $500 billion, $253 billion, $198 billion, $72 billion and $45 billion, respectively.

Biopharmaceutical companies raised $37.3 million in financing in 2016, down 46.4% from the previous year, according to BioWorld. Public offerings (IPO and follow-ons), other financings of public companies and private financing of biotech firms accounted for 56%, 22% and 22%, respectively. A total of 38 IPOs were completed worldwide. Private placements totaled 283, with 25 in the $100 million or over range.


The International Energy Agency (IEA), in its December 2016 “Oil Market Report”, estimated total worldwide oil demand was 96.3 million barrels per day (mb/d), up 1.4%. In 2017, demand is forecast to rise 1.4%. Global oil supply is estimated to have been flat last year at 97.0 mb/d. Estimates for 2017 were unavailable.

The US Energy Information Administration’s (EIA) January “Short-Term Energy Outlook” reported worldwide supply of petroleum and other liquids totaled 96.44 mb/d in 2016, with a 1.1% increase expected for 2017 followed by a 1.4% rise in 2018.

According to the EIA, in 2016, total world consumption reached 95.57 mb/d, up 1.5%. In 2017 and 2018, consumption is forecast to increase 1.7% and 1.6%, respectively, led by China and India. Prices for crude oil are anticipated to remain less than $60 per barrel through 2017 and 2018.

In January, Barclays stated it expects oil and gas companies to increase exploration and production spending 7% in 2017. The results are based on a survey of 215 oil and gas companies. North American spending is expected to rise 27%, up from a 38% decline last year, while international spending will increase 2%, compared to an 18% decrease in 2016. Spending will be led by national oil companies, with an expected increase of 9%. Spending by European and US companies, and so-called “investor-owned companies” is estimated to decline. In December 2016, Wood Mackenzie forecast exploration and production spending to increase 3% this year to $450 billion, its first increase since 2014.

According to figures published in January by Bloomberg New Energy Finance, clean energy spending declined 17.5% last year to $287.5 million. The decline was largely due to equipment prices, as well as a 26% drop in Chinese spending to $87.8 billion and Japan’s 43% spending decline to $22.8 billion. Asia Pacific accounted for 47% of spending. Corporate R&D declined 21% to $13.4 billion, but government R&D rose 8% to $14.4 billion.

Solar investments fell 32% to $116 billion but still led all sectors. Biomass investments were flat at $6.7 billion. Biofuels investments plummeted 37% to $2.2 billion.

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