In IBO’s annual forecast issue, we take a look back at the business trends that emerged or accelerated in the prior year in the analytical instrument industry. The list is presented in alphabetical order.

Applied Markets

Companies such as Applied Biosystems, Bruker Daltonics, Invitrogen, QIAGEN NV and Waters continued to expand into the so-called “applied markets” last year, including food safety, environmental testing and forensics. These applications were largely the result of the migration of basic research techniques, such as real-time PCR and MS, into new, more routine applications for industrial end-users. The results were new products tailored to specific industrial applications, increased competition and an emphasis on application support.

Changing of the Guard

In 2007, several CEOs announced retirement plans, including those at Agilent (see IBO 8/31/07), Mettler-Toledo (see IBO 11/15/07), PerkinElmer (see IBO 7/31/07) and Hitachi High-Technologies (see IBO 4/15/07). Shimadzu Scientific Instruments (see IBO 4/30/07) and Affymetrix (see IBO 10/15/07) named new presidents, while, in December, Applied Biosystems named Mark Stevenson president, replacing Interim President Tony White. The new management at these companies can be expected to make changes and to put their own marks on each company’s operations and strategy. Exiting under more difficult circumstances in 2007 were the upper management of OI (see IBO 3/31/07), Symyx Technologies (see IBO 4/30/07), Veeco Instruments (see IBO 7/15/07) and Whatman (see IBO 1/31/07).

Diversification

A number of major analytical instrument companies broadened their product lines and end-user markets in 2007, looking to diversify revenue streams, pursue high-growth markets and create complete solutions. Several major instrument companies grew even bigger, enlarging their numbers of product lines and end-markets served through significant acquisitions. Companies that added scale and fast-growing product lines to their portfolios with acquisitions in 2007 included Bruker Biosciences, Eppendorf AG (see IBO 7/15/07), MDS, Roche (see IBO 3/31/07, 6/30/07) and X-Rite (see IBO 8/31/07). Agilent Technologies diversified their product offerings, expanded their share of the academic and government markets, endeavored to create integrated workflows and created a dedicated materials science unit (see IBO 4/15/07). Meanwhile, Varian declared its intention to increase its focus on the pharmaceutical market, creating a dedicated sales force. Instrumentation companies traditionally associated with research tools continued to expand into diagnostics. Agilent (see IBO 6/30/07), Luminex, Bruker BioSciences (see IBO 12/15/07), PerkinElmer (see IBO 10/15/07, 12/31/07), QIAGEN NV (see IBO 6/15/07), Sequenom (see IBO 4/30/07), Thermo Fisher Scientific and Waters (see IBO 11/15/07) took further steps into the diagnostics marketplace.

Energy

Last year was another good year for oil and gas companies, which meant continued investments in operational infrastructure, including instrumentation, particularly in Latin America, the Middle East and Russia. Such investments benefited GC companies as well as providers of specialized instrumentation for oil and gas testing. Development of alternative energy sources, such as biodiesel and ethanol, were also an active area, as big energy and diversified industrial companies, along with venture capital and governments worldwide, poured money into both basic research as well as production. Many instrument companies, such as PerkinElmer, Shimadzu and Thermo Fisher Scientific, introduced dedicated solutions for the energy market. Public and private investments in alternative energy development are expected to increase this year, making the small market a fast-growing one.

Food Safety

The EU’s regulatory agenda and new laboratories and regulations in Asia spurred rapid growth in the food testing market in 2007. The increasing adoption of LC/MS and GC/MS as routine techniques for food analysis, including testing for agricultural chemicals and adulterated seafood, continued to propel sales. Issues surrounding food safety made headlines, leading to increased awareness, as well as new reform and harmonization efforts. Suppliers of pathogen detection products also benefited, while new detection techniques utilizing nucleic acid analysis continued to make progress. Meanwhile, agriculture and food suppliers, as well as the public sector, increased their investments in genomic technologies to study and develop food sources.

Going Direct

As in 2006, instrument companies continued to increase their direct presence in foreign countries in 2007, as growth, particularly in Asia, and greater sales and application support necessitated a direct presence in countries where distributors were previously used. Among the companies establishing subsidiaries abroad last year were Binder GmbH (see IBO 8/15/07), Dionex (see IBO 3/31/07, 7/31/07), Foss A/S (see IBO 6/15/07), Phenomenex (see IBO 4/30/07) and QIAGEN (see IBO 10/15/07). Smaller sized companies, such as Asylum Research (see IBO 12/31/07), Arnel (see IBO 11/15/07) and SGE Analytical Science, also increased their presence overseas. Although they are small markets, emerging countries are the fastest-growing markets for instrumentation and laboratory supplies. In addition, companies are establishing a global presence in order to more efficiently serve the worldwide operations of end-users. The expanding world market has created greater obstacles for some smaller manufacturers with limited resources and a local focus.

New Life for Mature Technologies

Last year was an especially good year for a number of “mature” techniques, namely, atomic absorption spectroscopy, inductively coupled plasma spectrometry (ICP), ICP-MS, GC and GC/MS. Capital investments by the metals and petrochemicals industries, as well as increased attention to food, product and environmental safety, were key growth drivers for a number of companies that offer a suite of atomic spectroscopy products or GC products, including Agilent, PerkinElmer, Thermo Fisher Scientific and Varian. A recent cycle of new product introductions also helped to feed market demand, as companies continued to increase the sensitivity, ease of use and robustness of these techniques. In addition, demand for these instruments in developing countries, both by government labs, in the case of China, and by heavy industry, in the case of Russia, further drove sales for instrument firms in developing nations.

Pharma Outsourcing

It was another tough year for major pharmaceutical companies, although the impact on instrument sales was mixed. Pharmaceutical companies increasingly turned to outsourcing, providing a changing market landscape. Outsourcing to China and India added to the momentum in these fast-growing regional markets, while contract research organizations and the biotechnology industry were steady customers, as they each benefited from pharmaceutical companies’ pursuit of new drugs. In addition, the number of instrument companies offering services has increased. Companies such as Caliper Life Sciences (see IBO 4/30/07), PerkinElmer (see IBO 8/31/07) and Sequenom (see IBO 11/30/07) introduced or expanded assay development services to offer validated solutions and development expertise, seeking new revenues in this burgeoning market as well as market insight and competitive advantage. Other companies, such as Bruker BioSpin (see IBO 12/31/07), introduced analytical services to capitalize on their expertise.