Major investments in life science and personalized medicine fuel growth in demand for the analytical and life science instruments market. In fact, the fastest growing end-markets for 2016 are heavily influenced by life science research. Biotechnology research labs are using advanced gene editing methods and NGS and are harnessing big data to develop diagnostics and therapeutics. The agriculture and food & beverage market is using similar tools to develop disease-resistant crops. CROs continue to expand, particularly in Asia Pacific, while growth in hospitals and clinical applications is being driven by technologies such as HPLC, mass spectrometry (MS), microarrays, PCR and NGS. The pharmaceutical industry, which had a spectacular year in 2015, is forecast to post more modest growth for 2016, buoyed by LC and MS. Industrial end-user markets are expected to perform better this year than last, led by semiconductor & electronics, independent testing labs and metals. The oil & gas market is expected to be somewhat anemic, as low oil prices carry into 2016. However, increased production levels are expected to fuel growth for midstream and downstream applications.

Chemicals

According to the American Chemical Council’s annual forecast, published in December 2015, global chemical production is expected to increase 3.3% this year, following 2.8% growth in 2015. Production in developing nations will grow 4.8%, up from a 3.6% increase in 2015. However, production increases in developed countries will remain the same with 2.6% growth. Leading countries include China with a 7% increase in chemical production and India with a 6.7% rise. The fastest growing market segments are expected to be Specialties at 3.9% and Pharmaceuticals at 3.5%. Global capital spending by the chemical industry is estimated to grow 4.5% to $470.3 billion compared to a 2.5% increase in 2015.

US chemical production rose an estimated 3.6% in 2015 but is expected to increase only 2.9% in 2016 due to slower consumer product sales and weaker manufacturing demand. US chemical producers’ capital spending jumped 18.4% last year to $39.6 billion, but will moderate this year with still strong 7.5% growth. US chemical industry’s R&D spending is also expected to show faster growth this year, rising 3.3% in 2016, led by pharmaceutical R&D, versus 2.5% growth to $60.6 billion last year.

In December 2015, Cefic, the European Chemical Industry Council, predicted EU chemical production will increase 1% in 2016, following 0.5% growth in 2015.

Pharmaceuticals and Biotechnology

According to a November 2015 report from IMS (see IBO 11/30/15), global medicine spending will grow from 2015 to 2020 at a compound annual growth rate of 4%–7%, compared to a 4.8% increase from 2010 to 2015, to reach $1,400–$1,430 billion. For the same period, spending by pharmemerging countries will outpace all others, increasing 7%–10% to $345–$371 billion, versus 11.9% growth for the previous five-year period. Developed countries’ spending will rise 3%–6% to reach $870–$900 billion. Rest of world spending will increase 1%–4% to $150–$180 billion, down from 5.2% growth in the 2010–15 period.

Global pharmaceutical R&D spending declined an estimated 0.5% in 2015 to $141.6 billion, but is expected to increase 2.1% this year, according to a June 2015 report from EvaluatePharma (see IBO 6/30/15). In 2015, R&D as a percentage of sales was 19.2% but will drop to 18.6% in 2016.

In January, EvaluatePharma estimated that the amount raised by 61 pharmaceutical and biotech companies’ IPOs on Western stock exchanges totaled $4.7 billion in 2015, for a 6% increase in the average amount raised. The pace of biotech IPOs is expected to slow this year. Dow Jones VentureWire reports 34 US biotech IPOs last year, down from 58 in 2014.

In 2015, the FDA approved 45 new molecular entities and new therapeutic biological products, up from 41 in 2015 and the highest amount since 1996. The European Medicines Agency approved 93 brand and generic drugs, up from 82.

Energy

Total world petroleum production rose 2.4% in 2015 to 95.54 millions barrels per day (bpd), excluding OCED commercial stocks, according to the US Energy’s Information Administration’s “Short-Term Energy Outlook,” published in December 2015. In 2016, production is estimated to increase only 0.3%. Consumption grew 1.5% to 93.82 million last year, with a 1.5% increase expected this year.

According to the International Energy Association, world oil demand grew at 1.5 millions of barrels per day (mb/d) in 2015 but is expected to slow to 1.2 mb/d in 2016. Oil demand totaled 94.6 mb/d in 2015, up 2.0%, and is estimated to grow 1.3% this year.

In January, Moody’s estimated upstream oil and gas capital spending to decline 20%–25% this year for oil exploration and production. In a report released this month, Citi Research estimates a 26% decline, after a 32% plummet in 2015.

Clean energy funding had a record year as developing countries led investments and photovoltaic pricing declined. Clean energy investments rose 4% in 2015 to $328.9 billion, according to Bloomberg New Energy Finance. Investments by venture capital and private equity increased 17%, but investments in public companies declined 27% to $14.4 billion. Government and corporate R&D for clean energy rose just 1% to $28.3 billion.