The Top 30 Companies of 2006

This year, IBO’s top 30 analytical and life science instrument companies shifted in rankings and five new companies were added to the list. The top 30 companies accounted for $20.9 billion in sales during 2006, or approximately 64% of the total $32.8 billion analytical and life science instrument market. Twelve of the 30 companies posted double-digit sales growth last year. There were two changes among the top 10 companies on the list in 2006, and 22 changes among the top 30 companies, including new additions. Revenue growth for the top 30 was influenced by beneficial currency exchange effects due to the diminishing value of the US dollar and the acceleration of acquisitions. IBO ranks companies based on analytical and life science instrument sales, including related aftermarket and service revenues, in calendar-year 2006. Sales include acquisitions and divestitures completed in 2006. Sales figures are rounded off to the nearest $5 million. When exact sales information was not available, estimates were made based on company reports, interviews and market trends. All foreign revenue figures are converted to US dollars. IBO added three new technologies, centrifuges, liquid handling and pipettes, to the categories of instrumentation sales. Classification as analytical and life science instruments is defined by nine categories of instrumentation (separations, life science, mass spectrometry, laboratory automation, atomic spectroscopy, molecular spectroscopy, surface science techniques, physical property testing, general analytical techniques) (see IBO 1/15/07) and does not include laboratory equipment, process analytical instrumentation or instruments designed exclusively for clinical applications. Based on the reclassification of instrumentation sales, Carl Zeiss and Nikon’s optical microscopy products put them on the list and the inclusion of liquid handling and pipettes vaulted Eppendorf into the top 30. IBO’s reevaluation of Sigma-Aldrich and Merck KGaA’s business segments propelled the companies to numbers 13 and 24, respectively. Consequently, Leica Microsystems, FOSS, Horiba, Sartorius, VWR International were bumped from the top 30. Nearly three-quarters of the companies in the top 30 made some kind of movement in ranking this year. Beckman Coulter made the most significant jump in ranking compared to 2005, climbing six spots to number 10 following the inclusion of its centrifuge business; Beckman Coulter displaced Hitachi High-Technologies from its slot. Four other companies managed to improve their rankings. Danaher, Invitrogen, Roche Applied Science and Thermo Fisher Scientific each rose as a result of either acquisitions or strong revenue growth. Thermo Fisher Scientific made the most significant change, reclaiming the second spot from Agilent. In 2007, Thermo Fisher Scientific is expected to challenge Applied Biosystems for the top position. Thirteen companies moved down the list, with Bio-Rad Laboratories and Fisher Scientific International losing the most ground, both slipping six spots to numbers 18 and 27, respectively, due to the reevaluation of their instrument businesses and the Thermo Fisher Scientific merger (see IBO 1/15/06). The merger was completed on November 9, 2006, and thus approximately two months’ worth of sales were reported under Thermo Fisher Scientific’s revenues, and the remaining 10 months were included as Fisher Scientific International’s sales. While the Bruker companies remained in the number eight position, they were able to close the gap between them and the next-closest company on the list, GE Healthcare. Bruker BioSciences completed the acquisition of Bruker Optics in July 2006 (see IBO 7/31/06) and thus was able to count roughly half of Bruker Optics’ revenues for 2006. We expect sales to increase in the year to come, as the companies will benefit from a full year of Bruker Optics’ sales. The top five companies on the list accounted for 23.3% of the total analytical and life science instrument market and 36.5% of the top 30 companies’ revenues in 2006. For this year, total revenue for the top five companies increased 12.2% to $7.6 billion, but declined as a percentage of the top 30’s sales, falling from 39.2% in 2005. In 2006 all of the top five companies generated more than $1 billion in annual instrument sales, with four of the five companies reporting double-digit growth. PerkinElmer was the only company among the top five to report low single-digit growth. Total instrument sales for the top 30 in 2006 increased 20.6% to $20.9 billion. The average growth rate of the top 30 companies in 2006 was an impressive 10.4%, an increase of 490 basis points from 2005. Danaher’s acquisition of Leica Microsystems (see IBO 7/15/05) and strong growth in its water-testing instrument business made it the fastest-growing company among the top 30 last year, soaring 60.6%. Eleven other companies also reported double-digit sales growth: Applied Biosystems, Thermo Fisher Scientific, Agilent, Waters, Becton Dickinson, QIAGEN, Eppendorf, Roche Applied Science, and Tecan all benefited from either bolt-on acquisitions or relatively strong organic growth. Among the five slowest-growing companies, Affymetrix and Hitachi High-Technologies were the only two companies that reported declining sales: Affymetrix’s sales fell 3.5% and Hitachi High-Technologies’ sales slipped 1.5%. For the remaining three companies that round off the list of the five slowest-growing companies—Fisher Scientific International, Sigma-Aldrich and Mettler-Toledo—instrument sales grew less than 3.5%. North American and Asia-Pacific companies accounted for 67% and 14% of top 30 companies’ revenues, respectively, both decreasing one percentage point from 2005, while European companies gained two percentage points, representing 19% of top 30 companies’ revenues. The charts on page four illustrate the distribution of revenues based on ranking and location. Competition among the top 10 companies is becoming more intense. The most significant contest will be between Thermo Fisher Scientific and Applied Biosystems for the number one ranking. Given the tight range of sales figures in the list of top 30, the ranking for several other companies on the list could also change, either up or down. There are now seven companies with sales in the $300 million range and five companies each in the $400 million and $700 million range. Many of the companies not among the top 30 may continue to merge and become serious contenders, leading to newcomers among the top 30 in 2007. Going forward, strategic acquisitions will continue to play a major factor in determining the top 30 companies. One company to watch is MDS, whose acquisition of Molecular Devices this January (see IBO 1/31/07) should place them in the lower section of the top 30 next year. Since several companies just below the cutoff are separated by tens of millions of dollars, organic growth or foreign exchange rates could also play an important role in next year’s rankings. The Top 30 Analytical and Life Science Instrument Companies of 2006 Rank Company CY Rev. ($B) 1 Applied Biosystems 2.02 2 Thermo Fisher Scientific 1.68 3 Agilent Technologies 1.64 4 Waters 1.28 5 PerkinElmer 1.03 6 Shimadzu 0.96 7 GE Healthcare 0.88 8 Bruker companies 0.78 9 Varian 0.73 10 Beckman Coulter 0.73 11 Becton Dickinson 0.72 12 Invitrogen 0.71 13 Sigma-Aldrich 0.63 14 Hitachi High-Technologies 0.59 15 JEOL 0.58 16 Mettler-Toledo 0.55 17 Danaher 0.54 18 Bio-Rad Laboratories 0.50 19 QIAGEN 0.47 20 Olympus 0.46 21 Carl Zeiss 0.43 22 Nikon 0.41 23 Eppendorf 0.38 24 Merck KGaA 0.37 25 Affymetrix 0.36 26 Roche (Applied Science) 0.33 27 Fisher Scientific Int’l 0.31 28 Tecan 0.31 29 Dionex 0.30 30 Spectris 0.29 Pie Graph: Top 30 Revenue Share by Ranking, 2006 #1–#5: 37% #6–#10: 20% #11–#15: 15% #16–#20: 12% #21–#25: 9% #26–#30: 7% Pie Graph: Top 30 Revenue Share by Company Region, 2006 North America: 67% Europe: 19% Asia-Pacific: 14% Bar Graph: The Five Fastest and Slowest Growing Companies Among the Top 30, 2005–2006 Affymetrix -4% Hitachi High-Technologies -2% Fisher Scientific Int’l 1% Sigma-Aldrich 3% Mettler-Toledo 3% Tecan 17% Shimadzu 1 8% Thermo Fisher Scientific 19% Becton Dickinson 23% Danaher 61%

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