Last year was a bit bumpy, filled with offsetting forces, such as solid growth in the US public sector at the start of the year, but was slightly down due to government funding in Asia and weakening US demand in the second half of the year. The applied markets experienced similar dynamics, where growth was robust for the clinical and agriculture and food & beverage sectors, but lackluster demand for environmental testing counteracted this positive trend. The life science markets, particularly the pharmaceutical and biotechnology sector, were consistently up in 2015, while the chemicals markets were somewhat stagnant.

In terms of geographic markets, in 2015, growth in local currencies was spectacular. However, the stronger dollar negated much of the growth, particularly in Europe, Japan and Latin America, which experienced double-digit negative effects when translated into dollars. Nevertheless, the overall analytical and life science instrument and lab products market, including aftermarket and service, managed to increase 1.4%. This is slightly up from the July 2015 mid-year forecast of 1.1% (see IBO 7/31/15).

Exchange rates are unlikely to be as detrimental to instrument and lab product sales for 2016. Currency translation in Europe and Japan is estimated to be somewhat negligible this year, but the Latin American market will likely be depressed due to double-digit currency effects from the Brazilian real and Mexican peso. In spite of these headwinds, IBO forecasts industry growth for 2016 to be 3.5%.

Although sales might be less impacted from currency compared to last year, the US dollar is still very strong. This puts US-based instrument manufacturers at a disadvantage when selling internationally. Instrument prices may need to be adjusted to compete with local vendors, which would lower overall margins. In addition, foreign companies will have an advantage when selling into the US by offering instruments at deep discounts, affording foreign manufacturers the opportunity to gain market share.

The emerging and developing economies are forecast to drive growth in the instrument and lab products industry. The rebalancing of China’s economic activity from investment and manufacturing to consumption will increase growth for aftermarket and service.

Global GDP is estimated to rise 3.6% in 2016, according to the IMF (see page 16). Advanced economies are forecast to increase 2.2%, while emerging and developing markets are expected to grow 5.0%.

Demand in the overall instrument market will be driven by genomic instrumentation, mass spectrometry and surface science techniques. In addition, atomic spectroscopy, chromatography and lab automation are expected to rebound nicely from a rather lackluster 2015.