Instrument and laboratory product companies have been building manufacturing facilities in developing nations for years (see IBO 3/15/11). Such facilities offer more than lower manufacturing costs, as they encompass several components of a company’s strategy for the country and surrounding region. Among these components are expanding local R&D, offering local products and services, and meeting market demand.

Several instrument and laboratory product firms have recently opened manufacturing facilities in China. Last month, Promega opened its Shanghai Promega Life Science Center, which is the firm’s fifth manufacturing facility. The facility makes products for the company’s research and diagnostic product lines. It replaces another manufacturing facility but adds molecular diagnostics R&D and cGMP operations geared specifically for the Chinese market. Promega has had a presence in China since 1985. The new facility employs 40 scientists, technicians and administrators.

Following suit in manufacturing expansion in China is Thermo Fisher Scientific, which last month completed construction of a $20 million, 118,000-square-foot manufacturing facility in Suzhou. Thermo also has a manufacturing facility in Beijing. The Suzhou facility manufactures lab equipment and consumables, including flasks, cell culture dishes, cryo vials, freezers and incubators. Thermo plans to have more than 400 employees at the facility by 2015. The facility is part of Thermo’s strategy to localize production in the country in order to be competitive in local markets. In fact, in Thermo’s May analyst meeting, President and CEO Marc N. Casper disclosed that the company hopes to increase its Chinese revenues from products manufactured in China from 20% to 50% by 2016. The company’s strategy also includes local R&D. By 2013, it plans to employ 200 engineers in the country. Currently, Thermo has 2,000 employees in China.

Life Technologies is another company that recently opened a manufacturing facility in China to address the local market. In September, the company announced the completion of a Beijing facility to manufacture DNA testing solutions for forensics labs (see IBO 11/15/12). More than 400 crime labs in the country have initiated DNA database programs, and products manufactured at the facility, such as the GlobalFiler testing kits (see IBO 11/15/12), are aimed at such programs. The new facility is just one component in Life Technologies’ strategy for the country. The company is also expanding its local presence through acquisitions. The firm recently acquired Beijing Maojian United Star Technology (see IBO 8/15/12), a distributor of its Invitrogen brand reagents. “As we see this research reagents and instruments industry mature and consolidate, our goal is to vertically integrate ever more forward into our distributors in countries where we’re seeing really strong growth,” stated Life Technologies Senior Vice President and CFO David Hoffmeister on the company’s third-quarter conference call. Joint ventures also enable greater access to local markets. This year, Life Technologies has announced partnerships with China-based Sino Biological (see IBO 11/15/12) and DaAn Gene (see IBO 1/31/12). In its January JP Morgan presentation, the company stated that it is developing local products for China and India with lower price points. The firm has 800 employees in China.

Life Technologies is also focusing on better serving the Asia Pacific region. In June, the company opened the Global Instrument Center of Excellence in Singapore to manufacture products, including next-generation sequencers and molecular diagnostics instruments (see IBO 8/31/12). The company stated that the facility is its sole internal instrument manufacturing facility outside of the United States. The facility will make products for both the Asia Pacific region and worldwide. Life Technologies will also transfer production of its Ion Torrent Personal Genome Machine to the Singapore location. “Asia Pacific is one of our fastest growing geographies, and with this growth, our volume of items shipped per day in the region has increased fourfold over the last two years,” said Mr. Hoffmeister. The facility will complement the company’s distribution center in Singapore to better serve its Asia Pacific customer base and increase turnaround times by as much as 50%.

Like Life Technologies, Sigma-Aldrich’s Asian expansion is focused on serving local markets. Sigma-Aldrich opened a packaging, shipping and quality control center in Wuxi, China, earlier this year, which provides packaging for local products, as well as analytical services and quality control services. By expanding its presence in Wuxi, where it already has a manufacturing facility, Sigma-Aldrich will be able to shorten the supply chain. “[An] important aspect to operational excellence is the localization of supply chain, especially on products where it’s either hard to ship or it is more commoditized in these emerging markets,” stated Sigma-Aldrich Vice President and Treasurer Kirk A. Richter on the company’s third-quarter conference call. “We’re localized in the supply chains where we source locally so that we can sell and compete locally.”

Sigma-Aldrich is applying the same strategy in other emerging markets. Earlier this year, the company completed a $5 million, 57,000-square-foot expansion of its Bangalore, India, manufacturing facility, where it manufactures products for local markets. Sigma-Aldrich hopes to improve service for local customers in India and throughout Asia Pacific with the expansion, which consists of 49,000 square feet of distribution space and 8,000 square feet of packaging space. The facility will add to existing manufacturing and R&D in the country. Sigma-Aldrich hopes to increase its Asia Pacific and Latin American current sales by 72% by 2016. Part of the strategy is for the company to increase the percentage of sales of products manufactured locally from 8% to 30%–40%. The company has 1,300 employees in Asia.

Eastern Europe is another emerging region where instrument and laboratory product companies are benefiting from manufacturing opportunities. In September, Thermo opened the 156,000-square-foot Molecular Biology Center of Excellence in Vilnius, Lithuania (see IBO 11/15/12). The Center manufactures molecular, protein and cellular biology products. In addition, R&D for molecular biology products is performed at the facility. The facility is designed to accommodate growing demand from life sciences customers in Eastern Europe and to serve as a manufacturing and R&D base for the region. The facility houses more than 400 research, laboratory and manufacturing employees. The new facility builds on Thermo’s 2010 acquisition of molecular biology company Fermentas (see IBO 5/31/10).

Also expanding manufacturing in Eastern Europe is FEI, which announced in June that it will build a $35 million, 270,000-square-foot facility in Brno, Czech Republic (see IBO 8/31/12). The facility will be twice the size of the existing one. Like Thermo and Promega, the company will conduct both R&D and manufacturing operations at the facility. FEI expects that merging manufacturing and R&D will improve production efficiency, as 60% of the company’s products were manufactured in the Czech Republic in 2012. FEI first established a presence in the Czech Republic with a manufacturing facility in 1998. The company has 500 employees in the country.