In retrospect, 2012 was a major disappointment. After two years of solid growth, it was expected that in 2012 growth would come back to earth. Unfortunately, the landing was not pretty. Many of the same economic problems facing the industry in 2012 were evident in 2011. Such problems did little to halt labs purchasing plans, so it seemed reasonable to assume a similar pattern would unfold in 2012. It did not.

The global economic situation worsened, uncertainty reigned and lab budgets were reduced due to above average purchasing activity during the previous two years and government funding cutbacks. IBO’s forecast of analytical and life science instrument industry growth of 5.5% was dashed almost from the start (see IBO 1/15/12, 7/31/12).

IBO now believes that the industry only expanded 2.4% in 2012 to $44.7 billion in revenues for initial systems, aftermarket and service expenditures. Total revenues for 2011 were $43.7 billion. Please note that revenues have been adjusted upwards for 2008–2014 to account for the addition of instrument categories not previously included in our forecast issues, especially in the lab equipment category (see page 13).

During 2012, economic difficulties, especially in Europe but also the US and Japan, had a major impact on industry prospects. A slowdown in China, India and Brazil contributed to lackluster sales where they once were the industry’s saving grace. World trade volumes were also reduced, as China shipped less to Europe and Brazil and resource-rich countries exported less raw materials.

Some of the gloom was self-inflicted, as political wrangling in the US and uncertainty regarding negotiations over tax hikes and budget cuts caused corporate management to put expansion plans on hold. Likewise, in Europe, austerity measures, a threatened euro and recessions cascading from one country to another took their toll. Domestic problems in India and a change in leadership in China also contributed to a general market malaise.

While some of these problems still overhang the instrument market, several have diminished so prospects for 2013 are improving, but not nearly enough. IBO forecasts that the instrument industry will grow 3.6% to approximately $46.3 billion in 2013. One of the reasons 2012 performed so poorly was negative exchange-rate influence, which is estimated at -2.5%. For 2013, currency effects are expected to be negligible.

Consensus economic forecasts suggest that global economic growth will increase 3.7% in 2013 from 3.3% in 2012 (see page 15). Likewise, economic forecasts for 2014 and beyond are more upbeat. Given this encouragement and for other reasons, IBO feels 2014 will be a much better year and is predicting growth to accelerate to 5.2%.

For 2013, MS (see page 6) and surface science (see page 10) instrumentation will be the fastest growing categories.

 Bar Graph/Line Graph: Instrument Industry Revenues and Growth

 Year    Revenues (Billions)   %Change

 2008        $40.0              5.4%

 2009        $38.0             -5.0%

 2010        $40.4              6.4%

 2011        $43.7              8.2%

 2012        $44.7              2.4%

 2013        $46.3              3.6%

 2014        $48.8              5.2%