IBO Sales Indexes: Strong Life Science Sales in Fourth Quarter 2017

Calendar year fourth quarter 2017 delivered robust results, as publicly held instrument and lab products businesses’ demand expanded. Sales to most major geographies along with most key end-markets performed better than expected, according to many companies, especially sales in the Asia Pacific region and to the biopharmaceutical end-market.

As such, combined calendar year fourth quarter 2017 sales for the 22 companies or business units in the IBO Life Science and Analytical Instrument Indexes (LSA Indexes) grew 9.4% organically, versus 4.3% in the prior fourth quarter. Sequentially, organic sales growth was up 3.2 percentage points. Against the nine-month organic growth rate, fourth quarter 2017 organic sales growth was up 1.2 percentage points. For calendar year 2017, LSA Indexes revenue grew 6.3% organically, compared to the prior year organic growth of 4.9%.

Quarterly estimates were calculated for three companies: Bio-Rad Laboratories Life Science, Merck KGaA Life Science and NanoString Technologies. All sales figures below are organic. IBO will publish the final LSA Indexes figures when they are updated.


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Biopharmaceutical Markets

Fourth quarter 2017 biopharmaceutical sales for companies and businesses in the LSA Indexes remained strong, with organic growth in the mid- to high single digits. Growth for this end-market among the Indexes’ companies was primarily driven by Bio-Techne, QIAGEN and Thermo Fisher Scientific’s revenues. Thermo Fisher’s organic sales to the end-market rose double digits, supported by strong bioproduction sales, along with improved chromatography and MS-related demand. Bio-Techne’s sales to the biopharmaceutical end-market grew in the high teens. QIAGEN delivered high-single digit organic sales growth for biopharmaceutical products, while Agilent Technologies’ sales for this end-market grew at a similar pace.

For the entire year, the biopharmaceutical sales of the Indexes’ companies and businesses increased in the mid-single digits roughly, with particular strength in the second and fourth quarters of 2017.


Applied Markets

Organic sales growth in applied markets for the companies and businesses in the LSA Indexes increased in the high single digits. The strong organic growth for the quarter was mostly driven by continued sales strength for Agilent, PerkinElmer and QIAGEN. Applied end-market sales for Agilent grew in the low teens, driven by higher analytical instrument demand. QIAGEN delivered high-single digit growth to the applied end-market due to improved food testing sales.

Food sales for the quarter for the Indexes’ companies and businesses rose mid-single digits, while sales to the environmental end-market increased in the high single digits. Food sales were driven by high single digit sales growth for Agilent and PerkinElmer, with a mid-single contribution by Thermo Fisher. Environmental organic sales were driven by double-digit growth for Agilent.


Academic and Government Markets

Academic and government sales for the quarter grew at a mid-single digit pace among the Indexes’ businesses, with contributions from improved demand in the European region and the Americas. Indexes companies’ organic growth for this end-market improved from the fourth quarter of the prior year, for which growth was flat. A number of companies, including Agilent, Bio-Techne and Waters, all delivered strong double-digit growth for the quarter. Agilent and Bio-Techne’s organic sales to the end-market rose in the low teens, while organic sales for Waters rose in the mid-teens. Increased academic and government funding overseas in Europe and Southeast Asia remained a strong catalyst for this solid end-market growth.


Industrial Markets

Fourth quarter 2017 industrial sales for the LSA Indexes increased in the mid-single digits, driven by solid sales for Bruker Scientific and Thermo Fisher. Both companies’ sales to this end-market grew organically in the mid- to high single digits. Shimadzu Analytical and Measuring Instruments (AMI) and PerkinElmer both contributed as well, as their sales to this end-market advanced in the mid-single digits and low-single digits, respectively. The chemical end-market continued to improve, with a pick-up in sales for Agilent and Shimadzu AMI.


Geographic Markets

Fourth quarter 2017 sales to the Asia Pacific region rose over 7% organically for the Indexes’ companies and businesses, driven by double-digit growth for Bruker Scientific, Shimadzu AMI and Thermo Fisher. Asia Pacific sales for the Indexes’ businesses grew the fastest of the three major regions. Bruker Scientific reported low-teens organic sales growth in the Asia Pacific region. Organically, Shimadzu AMI sales to the region grew 8.8%.

European sales for the fourth quarter 2017 grew over 6% organically for the Indexes’ companies and businesses, heavily driven by significant growth for Bio-Techne, Illumina and PerkinElmer. Bio-Techne’s organic sales for the European region leaped nearly 20% in part due to academic and government spending. Illumina’s organic sales to the region grew in the mid-twenties, driven by NGS sales, along with improved oncology application-related demand. Array-related revenue for Illumina also contributed to the strong organic growth for the region. PerkinElmer organic sales to the European region were up in the low teens.

Sales to the Americas for the Indexes’ companies and businesses in the fourth quarter 2017 grew at a healthy pace, up 6% organically. Overall strength for the region was driven mostly by Bio-Techne and Illumina. Shimadzu AMI’s mid-teens organic growth also added to the region’s robust performance. Bio-Techne sales to the Americas grew in the low teens, while Illumina sales to the region were up over 30%.


Life Science Index Sales

IBO’s Life Science Index sales advanced 9.3% organically for the fourth quarter 2017. Sales growth was up 3.0 percentage points sequentially and 3.7 percentage points versus the prior year period.

The organic growth for the Index was primarily driven by strong double-digit growth for Bio-Techne and Illumina. Both companies’ revenues grew over 20% on a reported basis, rising 21.7% and 25.6%, respectively. Organically, Illumina’s sales growth was still up 20%, while Bio-Techne’s organic sales growth hit 17.7%. Illumina significantly improved its sales of high-throughput NGS systems, driven by a strong recovery in demand. Thermo Fisher Life Science Solutions (LSS) also contributed Index sales increases, advancing 11.2% to $1,578.0 million. Organically, Thermo Fisher LSS sales grew 8.2%.

Adjusted operating margin for the Index increased 3.6 percentage points to 25.3%. Sequentially, adjusted operating margin rose 3.8 percentage points. Full-year 2017 sales growth for the Index rose 6.9%, compared to 5.3% in 2016.

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Analytical Instrument Index Sales

Fourth quarter 2017 IBO Analytical Instrument Index sales grew 6.8% organically to $4,767.0 million, up 3.8 percentage points. Sequentially, Index sales were up 60 basis points, continuing an uptrend in growth for the third consecutive quarter.

Reported sales growth for the Index rose high single digits, up 9.2%. Improved demand in the Americas, along with continued strength in LC/MS-related products drove Index sales for the quarter. End-market wise, the biopharmaceutical and applied markets continued to do well, with Shimadzu AMI and Waters contributing high-single digit revenue growth. Thermo Fisher delivered strong biopharmaceutical end-market sales growth as well, up double-digits for the quarter. Index adjusted operating margin amounted to 22.1%, an increase of 2.1 percentage points.

As for the full year  2017, organic revenues for the Index rose 6.7%, up 2.8 percentage points from 3.9% in 2016.

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Reported IBO Indexes’ sales growth excludes acquisitions and are based on constant exchange rates for international companies when converted into US dollars.

IBO Life Science Index businesses: Becton, Dickinson (BD Biosciences); Bio-Rad Laboratories (Life Science); Biotage; Bio-Techne (Biotechnology, Protein Platforms); Fluidigm (Product); Illumina; Merck KGaA (Life Science); NanoString Technologies; Pacific Biosciences (Products, Services); PerkinElmer (Applied Genomics); QIAGEN (Life Sciences); Tecan (Life Sciences); Thermo Fisher Scientific (Life Science Solutions).

IBO Analytical Instrument Index businesses: Agilent Technologies (Life Sciences and Applied Markets, Agilent Crosslab); Bruker (Scientific Instruments); HORIBA (Process and Environmental Instruments & Systems, Scientific Instruments & Systems); Oxford Instruments; PerkinElmer (Discovery and Analytical Solutions); Shimadzu (Analytical and Measuring Instruments); Spectris (Materials Analysis); Thermo Fisher Scientific (Analytical Technologies); Waters.

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