On the occasion of Pittcon 2018, IBO spoke with three of the analytical instrument and lab product industry’s largest companies about the major trends affecting their businesses and the evolution of each company’s products and strategies.

Shimadzu Scientific Instruments (SSI), Thermo Fisher Scientific and Waters each have information technology high on their agendas, with approaches that encompass not only specific instruments but laboratory operations in general. The companies are also deeply involved in driving new end-markets addressing their respective set of solutions. In addition, the companies discussed the short-term challenges, all of which reflect key market opportunities and industry changes. Finally, the companies commented on the latest internal developments, ranging from new initiatives to customer communication to differentiation.

Thermo Fisher Scientific

Dan Shine, senior vice president and president of Thermo Fisher’s Analytical Instruments Group, cited structural biology as an emerging application for his division, precipitated by the 2016 purchase of electron microscopy firm FEI (see IBO 5/31/16). “I think the most exciting [application] is structural biology. It’s still very early, but we have a leading presence with our Titan Krios cryo-electron microscope,” he told IBO. Growing the market will in part depend on ongoing innovation and a workflow focus.  “The next step is helping our customers build out workflows and get more structures imaged. Right now, getting a clean structure can take several months, so we’re challenging ourselves on how we can optimize that process. Our users are all trying to figure it out on their own, so how do we make it more repeatable and much more predictable?”

Cryo-EM is also an example of technology synergies within the company, as MS-derived information can help such analyses. “Another challenge for structural biologists is how to ensure they are getting a good sample to the analyzer,” explained Mr. Shine. “Mass spectrometry can help determine if this is the protein that you’re looking at and are trying to analyze, so you’re sure you’ve got the right sample. The cryo-EM is expensive so you don’t want to waste time analyzing a bad sample.”

“When we talk about $900 million of R&D [spending], typically a third or so is software related.”

An area of high focus for Thermo Fisher currently is what it terms “digital science.” Current projects include the Thermo Fisher Cloud, building in new instrument-maintenance and diagnostic capabilities, and web marketing. “When we talk about $900 million of R&D [spending], typically a third or so is software related,” noted Mr. Shine. “We continue to build up centralized capabilities, like the Thermo Fisher Cloud, but we also connect those capabilities back into the individual product lines. It’s important to make sure we get the benefit from the scale investments the overall company is making,” he added. “Once they have our product, we look for ways that we change the way we service our customers. Once we have connected systems, it allows us to do more remote diagnostics and change the nature of our service.”

As Jakob Gudbrand, vice president and general manager, Chromatography, for Thermo Fisher Scientific, explained, “We have hundreds of thousands of customers who are producing lots of data on our technologies. It’s not the data that they have proprietary access to that we’re interested in; it’s the uses of the technology for the workflows or whatever experiment they are doing, how they interact with that data we have access to, and our ability to mine that data and make something intelligent out of it.” As Mr. Shine and Mr. Gudbrand stressed, digital science encompasses multiple facets and opportunities. “We are only scratching the surface,” said Mr. Gudbrand. “It’s about how we harness that. We’ve created a digital science business unit in the company that reports up to the most senior level.”

Discussing the challenges for the instrument and lab product industry itself and Thermo Fisher in particular, Mr. Shine commented on the opportunities created by the new US tax law, as capital purchases can now be depreciated over 1 year rather than the typical 5–7 years, thus stimulating new purchases. “I am excited by the tax law change, especially for capital equipment with the new accelerated depreciation rules. We’re still working with our customers to explain what that means for them as they look to purchase new instruments,” noted Mr. Shine. “So, basically, it gives customers that immediate tax deduction on new purchases. We haven’t seen the changes in buying pattern yet, but it’s still early. In the long term, we’re optimistic that the tax change will favorably impact demand in our industry.”

A past challenge was the downturn in industrial markets, such as metal and oil, of recent years. However, as Mr. Shine told IBO, Thermo Fisher’s diversity of end-markets isolated the company from any severe effect. “The industrial markets are cyclical by nature. What’s nice about Thermo Fisher is the breadth of end-markets that we serve. Diagnostics and health care are different from industrial or academic and government,” he emphasized. “So as long as we’re balanced, we are a bit insulated from economic shifts because of our size. One of our end-markets can slow down or accelerate and it can be buffered by the other markets we serve.”

“Flexibility and modality in our systems that we talked about are critical for our customers to future proof their investments.”

Even though Thermo Fisher now participates in the semiconductor industry via its electron microscopy product lines, that industry’s cycles are less impactful on R&D purchases. “We’re quite differentiated with our technology serving these customers. The semiconductor companies are focused more on creating the next generation of devices and how electron microscopes can help them advance their research,” explained Mr. Shine. “Even though the semiconductor industry is known to be a cyclical market, we have seen that R&D investments are not quite as volatile for the products we supply.”

Along with diversity in end-markets, product offerings also drive Thermo Fisher’s strategy. As Mr. Shine highlighted, the company has a unique advantage by being able to integrate a wide range of technologies, all its own, into workflows to maximize productivity. As he put it, “You might have multiple technologies connected together—how does that change the information the user gets about the sample? Because we have all of these technologies under one roof, it’s a lot easier for us to work together than it is for two separate companies with a different set of priorities.”

Another path to improving labs’ productivity is future proofing solutions, according to Mr. Gudbrand. He pointed to the Thermo Scientific Vanquish Duo UHPLC system and Dionex ICS-6000 HPIC systems, both launched at Pittcon, as examples of built-in flexibility to accommodate a lab’s present as well as future needs. In the case of the ICS-6000, for example, new pesticide regulations may call for increased IC/MS testing in the future, which the ICS-6000 can more easily accommodate than previous models. “Flexibility and modality in our systems are critical for our customers to future proof their investments.” He added, “Although we create targeted specific analyzers, and there is a need for those for select workflows, there’s a more important argument for flexibility and modularity, where you can lock down a system to do a specific application while opening it up when you need to do something that is required tomorrow and safeguard your investment.”

Waters

For Waters, emerging applications with bright prospects are medicine, food and materials sciences. As Mike Harrington, Waters’s senior vice president of Global Markets, told IBO, these areas need “more and better measurement.” As he explained, “ In medicine, this [need] ranges from the discovery of new medicines to how they are manufactured and monitored for safety, efficacy and stability.” Likewise, testing demand in the other two markets are driven to basic health and safety needs. “In materials science, the need for specialty measurement is increasing due to demands for higher-quality, higher performing materials and consumer products in the wake of declining natural resources. Finally, in food, the desire for everyone to have safe, nutritious and affordable food puts demand on measurement tools that can assure these desires are met.”

A prime example of these needs rapidly growing is China. Asked for an example of how Waters has directly benefited from the country’s latest five-year plan, Mr. Harrington discussed the nation’s investments in health and safety. “Firstly, the Chinese focus on health care, and specifically the Generics Evaluation project, has resulted in significant investment in Waters’ LC systems and software. Empower has been a vital asset to them in ensuring that they are building compliance into their development of this important industry sub-segment,” he explained. “Secondly, the Chinese Government’s investment in developing a third-party testing laboratory infrastructure has resulted in several large investments in Waters’ LC and LC-MS/MS workflow solutions.”

“In 2017, Asia represented 37% of Waters’ worldwide revenue and delivered 60% of sales growth over the past three years.”

Software and informatics are part of such workflow solutions, and one that Waters is attuned to by meeting labs’ growing requirements in this area, particularly as part of a package offering. “Waters’ informatics portfolio strategy is focused on satisfying customers’ needs to globalize, standardize and centralize laboratory systems. We have integrated our informatics platform with application workflows, instruments and innovative chemistries to ensure a coherent customer experience and maximum customer impact,” noted Mr. Harrington. These needs are particularly evident in regulated labs. As he stressed, “Furthermore, our leadership position in data integrity is a result of being attuned to regulated laboratory needs and gives our customers increased confidence in the quality of their data.”

As for challenges, new user requirements and customer profiles are defining the company’s strategies. “We see three key market shifts that are shaping our strategic focus. First, customers’ measurement needs in the life, materials and food sciences are becoming more application specific, and customers are demanding simpler, more robust and usable integrated workflow solutions,” commented Mr. Harrington.

The continuing regional shift in demand is also significant. “Second, industry growth is being driven more and more from Asia,” noted Mr. Harrington. “In 2017, Asia represented 37% of Waters’ worldwide revenue and delivered 60% of sales growth over the past three years.”

“How well we engage our changing customers and employees will be pivotal in our ability to sustain success.”

Likewise, changes in the demographics of the company’s customers require ongoing re-evaluations. As Mr. Harrington explained, “Third, our customers and employees are getting younger, more diverse, and looking for new ways to access knowledge and interact. How well we engage our changing customers and employees will be pivotal in our ability to sustain success.”

Another important change at Waters has been new leadership, with Chris O’Connell joining the company as CEO nearly three years ago (see IBO 6/30/15). Asked about these changes, Mr. Harrington told IBO that Mr. O’Connell has quickly learned about the company’s technology and customers. “I attribute that to him committing to visiting customers every month and spending many hours in ‘Coffee with Chris’ sessions with our employees at every level of the company.” In addition, Mr. O’Connell has brought new processes to the company, according to Mr. Harrington. “To his credit, Chris is bringing and sharing highly effective management practices to Waters which are sharpening our collective capabilities. By adopting more systematic processes and strategies, Chris is setting up Waters to continue to be successful for many decades to come.”

Shimadzu Scientific Instruments

Shimadzu Scientific Instruments (SSI), the US division of Japanese firm Shimadzu, discussed its challenges and industry issues from a US perspective. Speaking to the challenges the industry faces in general, Scott Kuzdzal, PhD, vice president of Marketing for SSI, told IBO, “Maintaining continuous growth is challenging, especially in more mature markets with increasing competition. Additional challenges include future US economic stability, responding quickly to emerging markets and unifying global marketing messages.”

Rapid growth of the company’s division has led to other challenges, notably customer support. “We have always prided ourselves on great customer support. We treat somebody who has 1 Shimadzu instrument the same as somebody who has 100 instruments. We never walk away from them. We’re always there to support them with free technical phone support,” emphasized Dr. Kuzdzal. “As Shimadzu continues to grow, that becomes challenging to provide that same level of technical support. So we’ve been adding not only more service people, we’ve been adding tech support people and even boosting up our applications groups to provide that support.”

“If we provide the entire solution with the methods, the consumables and the informatics, [the labs are] all using the same things, so it is much easier for our support team to provide support.”

SSI’s increasing presence in the aftermarket also affects support services. “If we provide the entire solution with methods, consumables and informatics, the labs are all using the same things so it is much easier for our support team to provide support,” he added.

Shimadzu’s expansion of its consumables business has been focused on partnerships and an acquisition (see IBO 6/30/17). Dr. Kuzdzal commented on the changes in regard to SSI, “We’ve been doing a lot with Restek and other third-party manufacturers. We’ve hired a product manager for consumables. That’s something Shimadzu Scientific Instruments has never had before, and we recognize the aftermarket business is something we need to expand our efforts into.”

An example of new consumables products addressing the biologics market provided by Dr. Kuzdzal is the nSMOL (nano-Surface and Molecular Orientation Limited proteolysis) Antibody BA Kit. “The nSMOL Antibody BA Kit is a ready-to-use reagent kit for collecting monoclonal antibodies from blood or other biological samples using immunoglobulin collection resin, and then performing selective proteolysis of the Fab region of these antibodies via trypsin-immobilized nanoparticles,” said Dr. Kuzdzal. The kit is designed to accelerate method development.

Beyond instruments, Shimadzu continues to introduce new software solutions for biopharmaceuticals. Targeting cell culture analysis, the company released the Cell Culture Profiling Method Package for LC/MS/MS. Discussing SSI’s informatics strategy, Dr. Kuzdzal told IBO, “Recently, an increasing demand for food safety, environmental analyses, pharmaceuticals and integrated omics data analyses has led to a dramatic increase in the number of samples being analyzed which, in turn, has resulted in demands for faster, easier-to-use instruments and software. Also, today’s scientists want to combine data from many different types of instruments, with data integrity assurance, complete support for regulatory compliance and total lab data management.”

“Shimadzu is also the only large analytical instrument manufacturer that also manufactures medical instruments, and this has enabled us to develop powerful, hybrid technologies that integrate analytical and medical technologies.”

In particular, the company has worked to connect its various its range of analytical technologies. “Shimadzu has continued innovating our cross-platform LabSolutions informatics offering, with expanded multi-data report creation functions that allow users to prepare reports with combined data from various instruments. Not only can reports be created for LC, GC, MS, FTIR, UV, balances and other instruments individually, but they can combine data from several disparate instruments.”

Discussing promising applications, Dr. Kuzdzal also noted the company’s focus on cannabis testing and its expansion to new types of analyses and customers. “Cannabis testing for us and most of the market right now is 95% quality control testing, where you’re looking for things like cannabinoid potencies, terpene profiles and contaminants. However, what we’re seeing is that the market is expanding far beyond quality control testing to areas like academic research, pharmaceuticals and even clinical chemistry,” he explained.“Some universities absolutely cannot touch the plant, still. They’re afraid of losing federal funding. However, they can work with reference standards and things that are DEA [Drug Enforcement Administration] exempt, so they can really help with improving the chromatography and addressing the analytical challenges.”

Clinical is another emerging application for SSI and one that has driven new investments. “Recent applications that enable multiplexed measurements by mass spectrometry for clinical research and diagnostics offer new opportunities for Shimadzu,” Dr. Kuzdzal told IBO in regards to LC/MS solutions. He emphasized that Shimadzu’s differentiation compared to other instrument companies in this end-market due to Shimadzu’s internal capabilities provided by its Medical Systems Division, which makes imaging systems. “Shimadzu is also the only large analytical instrument manufacturer that also manufactures medical instruments, and this has enabled us to develop powerful, hybrid technologies that integrate analytical and medical technologies.” Asked about the kit development for the diagnostic market, he said, “We are interested in kit development toward Class II FDA status. But now we provide Class I registered [MS] medical devices, and we’re working on developing clinical diagnostic kits, as well as identifying powerful, new biomarkers.”