In spite of the ambiguous global economic environment, calendar year second quarter demand for a majority of large publicly held instrument and lab product companies remained steadfast. Reminiscent of the first quarter, strength was highlighted in the pharmaceutical and certain applied markets, such as food and environmental, especially in China.

Despite sturdy demand, sales growth for the 20 firms or business units in IBO’s Life Science and Analytical Instrument Indexes (LSA Indexes) (see page 9) decelerated slightly sequentially due to extra selling days and timing of orders for a number of companies in the first quarter. In addition, continued weakness in the oil market as well as soft research spending, mainly in Europe, partially impeded sales growth.

Combined calendar year second quarter sales for companies in the LSA Indexes grew 4.5% organically, compared to 6.4% in the first quarter. Quarterly estimates were calculated for Oxford Instruments, whose results were not announced before this issue’s publication. Further financial reviews of companies can be found on pages 9–11 and in the May 15 issue of IBO.

Biopharmaceutical sales for the LSA Indexes grew below the 10% range recorded in the first quarter due to a stronger comparison. However, demand remained healthy for technology upgrades, new products and bioproduction, as well as small molecule QA/QC and large molecule R&D applications. Agilent Technologies, PerkinElmer and Waters each recorded biopharmaceutical sales of 10% or higher. Despite a strong comparison, Thermo Fisher Scientific, Merck KGaA Life Science (Merck LS) and VWR each reported biopharmaceutical sales growth in the high single digits. Thermo Fisher and Merck LS benefited from demand for bioprocess and bioproduction products. Bio-Techne, QIAGEN and Tecan similarly reported strength in this market.

Applied market sales remained steady in the second quarter with growth roughly in the mid–single digit range for the LSA Indexes. Strength was primarily driven by food testing in China due to expanded regulatory measures. Accordingly, food sales for PerkinElmer and Agilent grew roughly 15% and 11%, respectively. Furthermore, Waters and Bruker highlighted demand for food testing applications. Applied sales for Thermo Fisher, which advanced 5%, were also led by demand for food testing and environmental products in China. QIAGEN reported particular strength in the Applied Testing business, for which sales grew 9%, due to timing of orders and strong demand related to forensics applications. Overall, environmental sales were mostly positive for the Indexes but grew at a slower pace than food markets. However, HORIBA was negatively impacted by lower sales of stack gas and water quality analyzers, primarily in Asia.

Academic and government markets took a slightly unexpected negative turn for several companies due to constrained funding in Europe. Academic and government sales fell sharply for Bruker, and contracted 5% and 4% for Agilent and Waters, respectively. For this market, sales contracted for PerkinElmer and negatively impacted European sales for Illumina. Thermo Fisher reported much slower growth on a sequential basis, as academic and government sales grew in the low single digits. However, several companies maintained steady growth in these markets. Academic and government sales grew 6% for QIAGEN and in the low single digits for VWR. Despite weakness in the UK, Spectris Materials Analysis (MA) reported higher academic sales, driven by demand in North America and China.

Industrial market sales were also a significant headwind in the quarter as a number of companies in the LSA Indexes reported softer-than-expected demand due to continued macroeconomic challenges and delayed equipment purchases. Industrial sales for PerkinElmer declined double digits, and fell 4% and 5% for Agilent and Thermo Fisher, respectively. Bruker and Spectris MA also reported weakening industrial demand. Conversely, Waters recorded mid-single digit growth in the industrial markets due to new products from its TA business. Industrial sales growth for VWR expanded in the low single digits.

Geographically, China was again the major driver for the LSA Indexes, with growth in double digits. Agilent, Merck LS, QIAGEN, PerkinElmer, Thermo Fisher and Waters each reported double-digit sales growth in China. Given the small base, Illumina delivered 70% growth in the region due to strong demand for NIPT and oncology products. Shimadzu also recorded strong analytical instrument sales in China. North American sales were mostly stable for firms, but European sales slowed for a number of companies due to lower research and industrial spending. In fact, both Bruker and Illumina recorded sales declines in Europe. Japan continued to weigh on sales growth, with a number of companies reporting notable declines.

Life Science Sales Index

Second quarter IBO Life Science Index sales advanced 7.8% organically to $3,795 million. QIAGEN’s life sciences business and Pacific Biosciences (Products and Services) were added to the Index. Overall, growth was led by ongoing demand in the biopharmaceutical markets, including strong sales of bioproduction and bioprocess products for Thermo Scientific LSS and Merck LS. Adjusted operating margin slipped 31 basis points to 23.7%.

Analytical Instrument Sales Index

Second quarter sales for the IBO Analytical Instrument Index grew 1.1% organically to $3,498 million. Growth was hindered by weak results for Bruker, and slower organic growth for non-US companies in the Index as a result of slower academic and government spending, as well as weak industrial demand. Adjusted operating margin expanded 100 basis points to 17.8% driven by restructuring activity and cost control measures.