Dealers, auctioneers and brokers, as well as instrument companies themselves, offer pre-owned systems at a discount to new systems. Nearly any category of analytical instrumentation is available in various conditions: refurbished, “as is,” and, in some cases, barely used. Savings are wide ranging, and depend not only on the age and condition of the particular instrument, but also on the availability of similar systems, as well as the conditions under which it is sold. The increasing maturity of the market for previously owned lab instruments has led to a variety of business models. Three companies exemplify the diversity of sales outlets for pre-owned instruments and the state of the market today.

Founded in 1995, Analytical Instrument Recycle (AIR) offers reconditioned analytical instruments, specializing in chromatography. What makes the company unique is the talent and experience of its employees, according to Phil Tallarico, president of AIR. “All of the technicians physically worked in a lab for at least 10 years before they got into this business,” he said. “It’s the dual experience of actually having worked in a laboratory and being able to work on the analytical equipment. Those two qualities are really rare to find.”

Refurbishment is not a simple process. “Usually what we’ll do is we’ll completely disassemble the piece of equipment and then rebuild it from the ground up. It’s almost like we’re remanufacturing it,” explained Mr. Tallarico. “[For] any parts that are dirty we have a machine that puts a new finish on them. And then any parts that don’t pass the testing are replaced.” Systems are then tested according to the manufacturers’ standards. The refurbishment process typically takes a few days, but can be longer depending on the system and its condition.

The age of the instruments that AIR handles varies widely. As Travis McComas, AIR’s national account manager, told IBO, “a lot of our products are anywhere between 25 years of age all the way up to the current model.” The age of the instrument affects pricing. “Generally, the client can expect to save around 50% of the cost of a new piece of instrumentation,” he commented. But older models generally mean bigger savings. “If you go three generations back, you’re probably going to pay 30% of what a new piece of equipment would cost,” explained Mr. Tallarico.

The lifespan of instruments can create challenges for reconditioning, such as finding parts and updating software. Software sold with AIR systems is fully licensed, and is one of the most expensive aspects of reconditioning. Most of AIR’s products, and all of its chromatography systems, are sold with one-year warranties.

AIR’s typical customer has changed over the years. “It used to be that the environmental industry was our major market,” said Mr. Tallarico. Today, AIR’s customers fall into a few categories. “Smaller labs are probably a lot larger part of our clientele. We also sell a lot to research facilities, universities, for student laboratories, that type of thing, as well as a lot of start-up businesses,” commented Mr. McComas.

Customer expectations have also changed. “When I first started, the quality expectations of the customers were a lot less than they are now,” stated Mr. Tallarico “The customers didn’t expect much from the used equipment industry 15 years ago. But they expect [the instruments] to be like new nowadays.” Asked about possible reasons for the change, he said, “I think since it was such a young industry 15 years ago, no one knew what to expect. And then, as we got better at it, people’s expectation became the standards we kept setting for ourselves.”

The recession had mixed effects on the business. The banks’ credit freeze early last year slowed sales. “But once the banks relaxed, it really boomed,” said Mr. Tallarico. The slower economy has also made inventory tight. “There is an increased demand for supply of used equipment now because people are a bit more frugal with their spending,” said Mr. McComas. “But at the same time, they’re not buying new instruments. They’re holding on a lot to their old inventory, so it’s harder to find a supply for our inventory because, rather than a lab just taking an instrument system off line to buy a new piece of equipment, they’re holding on to it to extend that lifetime.” Mr. McComas anticipated that the rise in demand for used systems will continue. As Mr. Tallarico put it: “Once they see that it looks like it’s brand new, that it functions like it’s brand new and we provide really good service for them, it’s really easy to get them to come back and buy used again.”

Dealers, such as AIR, are one aspect of the pre-owned lab instrument business. Another popular method for acquiring pre-owned lab equipment is through Internet auctions. LabX provides an online auction platform, as well as online listings, classified ads, a database of pre-owned equipment available on other websites, and other services. The company was founded in 1995 and is now a business-to-business marketplace for sellers and buyers.

According to Ken Piech, general manager, LabX’s sellers generally fall into three groups: pre-owned instrument vendors; instrument manufacturers, who want to promote new products or sell surplus and demonstration units; and scientists and researchers, who want to sell old systems. The primary buyers are scientists and researchers.

LabX supports a diverse user base of 17,000 registered members. Nearly a third of LabX members, the largest category of end-users, are industrial labs, and 23% are academic research labs. Among members, the largest percentage, 23%, are involved in biotech and life science research. Pharmaceutical research is the focus for 13% of members. Small labs and independent research labs are the most common purchasers of pre-owned instruments on the website. “But we do have a large representation of the biggest companies in the world also (the large pharmaceutical manufacturers, for example) that also buy used equipment on LabX,” said Mr. Piech. The three largest categories of analytical lab instruments listed on the site are chromatography and spectroscopy products, particularly UV-Vis spectrophotometers, and microscopes.

Asked about the roots of LabX’s success, Mr. Piech cited several factors. “Being the first website catering to this in 1995 was a big jump start to the business obviously. But I believe it was our ability to target a niche market and focus our energy on lab equipment that makes LabX so successful. Even with an expansion into related high-tech industries, we have maintained a level of attention to each.” In 2000, the company expanded into adjacent markets, such as medical and processing equipment.

Experience in the lab instrument industry was also important. “Our founder and president, Bob Kafato, was a former HPLC sales and service technician for a large corporate manufacturer, and this also provided a strong understanding of the industry and the complex analytical instruments that people are buying and selling each day.” Technology was also important. Mr. Piech and Mr. Kafato wrote much of the software themselves, including the auction platform. He also cited customer service as key.

There are more than 12,000 visitors to the website daily, according to Mr. Piech. Each business day, over 500 buyer email communications are sent to an individual listing and 50 auction ads are closed. Each week, 600 new listings and ads are posted by buyers and sellers. The numbers illustrate the sites’s reach. “The open communication lets researchers find anything anywhere in the world,” says Mr. Piech. Twenty-five percent of LabX’s transactions are international. “I would describe the last few years as a progressive maturity for used equipment in our industry. I wouldn’t say a slow down, but a more even and balanced distribution of selling online, which I believe is more indicative of the long-term progress.”

As for the economic downturn, Mr. Piech described it as a “push” last year. “Our traffic was slightly down on the website, but transactions continued at a regular pace. We found some larger institutional buyers purchasing pre-owed equipment, but then smaller labs stopped purchasing altogether, which made for a balanced year.” In addition, increased supply affected prices. “With many larger labs going out of business, our vendors have seen an increase of used equipment inventories. More products but the same number of buyers typically leads to a lowering of price, which we have seen across a few product segments,” he told IBO. “ We’ve also seen manufacturers of new lab equipment lowering prices, which has temporarily made buying new equipment more attractive in some cases.“ However, he added, the situation is now returning to normal.

Like LabX, EquipNet also utilizes an Internet-based sales model, but that is only part of its business. In addition to listings and auctions for pre-owned instruments, the 11-year-old firm also provides asset management, maintenance, appraisal, inventory and IT services, among other services, for analytical instruments, as well as for manufacturing and other industrial equipment. Customers include GlaxoSmithKline, Eastman Chemical and Unilever. Roger Gallo, CEO of EquipNet, emphasized the company’s unique place in the pre-owned instrument market. “A lot of people in the industry concentrate on certain things, meaning they’re good at GCs, or they’re good at scales, or they’re good at various categories. We, on the other hand—not only on a worldwide footprint but on an asset-based footprint—really cover the whole spectrum of analytical lab equipment.”

For buyers of pre-owned instruments, EquipNet provides auctions, listings and other services, such as instrument searches and maintenance. EquipNet’s auctions are most popular with dealers, which then recondition the instruments for resale. For sellers, the company handles the sale of the pre-owned instruments. According to Mr. Gallo, EquipNet can more effectively price and sell pre-owned instruments than other pre-owned instrument vendors because of its size, inventory and sales channels. “We do it all. Not only do we do marketplace sales, live auctions, online auctions, webcast auctions, donations, scrap programs, recycling, we also do redeployment,” he said. Redeployment is part of the company’s services for managing a company’s existing assets. Among the faster-growing businesses for EquipNet is procurement. “Before, we would represent from our sellers what we have and then match buyers to that. . . . Companies, especially the larger ones, are using us to go find and source alternatives to buying new.”

The value of a pre-owned instrument is not always obvious, according to Mr. Gallo. “Things that you don’t think are worth a thing could be worth a fortune. Let’s say there’s a piece of equipment that’s no longer being manufactured and people need the parts for it, they’ll spend a fortune.”

Discussing the changes in the pre-owned instrument market, Mr. Gallo commented: “we’ve made it so much more accessible and, in many ways, so much more cost effective because we have a really easy means of getting buyers and sellers together and facilitating that transaction, making it work, taking away the fear of buying something on Ebay that you don’t know.” This has grown the market. “I think we’ve opened up a lot more people, who normally wouldn’t have thought of selling, to sell. And I think we’ve opened up the [pre-owned instrument] world to people who normally wouldn’t know where to go to look to buy.”