Overview

Life science industries continue to be the instrument and lab product market growth leaders. However, the agriculture/food market is estimated to offer slightly greater sales opportunities this year than pharmaceutical labs, as contamination issues are a growing global problem. Both pharmaceutical and biotechnology segments, along with their support counterparts, CROs, will have above average growth potential, despite the managerial and logistical changes driven by cost controls. The applied markets of chemicals, polymers, semiconductors and metals all lag because of the global economic malaise. The academic and government sectors are still suffering from cutbacks in the US and Europe, but growth in other regions is moderating this trend.

Pharmaceuticals

The Economist predicted in late 2012 that pharmaceutical sales would grow 5% this year, with generic drugs accounting for 10% of revenues. As part of a May 2012 report, EvaluatePharma projected sales of prescription and over-the-counter drugs to grow 3.3% in 2013 to $772 billion, with biologics accounting for 21% of sales. In 2012, sales of prescription and over-the-counter drugs are forecast to have been flat. The Manufacturers Alliance for Productivity and Innovation (MMPI) forecast in December 2012 that US pharmaceutical and medicine production will decline 1% this year, compared with a 4% decline in 2012.

EvaluatePharma expected global pharmaceutical R&D spending to increase 1.4% this year to $136.1 billion, after falling 0.3% last year. According to Battelle and R&D Magazine’s annual R&D forecast (see IBO 12/15/12), worldwide life science R&D spending, of which pharmaceutical spending is predominate, will increase 4.2% this year to $189.2 billion, after growing 1.1% last year. US life science R&D spending is estimated to grow 1.4% to $82.7 billion.

Burrill & Company estimates that global life science companies’ financing rose 23.9% in 2012 to $71.1 billion. Including partnerships, financing rose 13.9% to $91.7 billion, but global partnering alone declined 1.3% to an estimated $37.7 million. Accounting for the largest share of financing was public financing, which declined 3.9% to $80.0 billion. In addition, debt offerings fell 10.2% to $49.9 billion. However, venture capital financing for life science companies increased 22.7% to $12.4 billion. Merger and acquisition activity declined last year, down 31.2% to $109.2 billion. For 2013, Burrill forecasts financings to total over $100 billion, with private financing up 20%.

Based on a survey of four private and one public CRO, Barron’s predicted in a December 2012 article that preclinical revenues at CROs will grow 5%–10% this year, versus flat growth in 2012. However, pricing are expected to stay the same. Barron’s also noted that Phase III continues to be an investment focus for biopharmaceutical companies.

Chemicals

The American Chemistry Council forecasts US chemical output to rise 1.9% to $760 billion, following a 1.5% increase last year. Similarly, the Manufacturers Alliance for Productivity and Innovation (MAPI) estimates US production of basic chemicals will rise 1% this year, the same as last year.

MAPI estimates Eurozone chemical production to reverse from last year’s 1.7% decline and grow 0.6% this year. Chemical production in Central Europe is expected to increase 2.6% this year, compared with 2.8% in 2012. Similar to MAPI’s estimate, the European Chemical Industry Council forecasts chemical output will rise 0.5% this year, following a 2.0% decline in 2012.

Battelle and R&D Magazine forecast global R&D spending on chemicals and advanced materials to rise 0.7% to $42.0 million this year, following a 3.9% decrease in 2012. A survey of 17 chemical companies by Chemical & Engineering News found that these companies plan to increase capital expenditures 14.1% this year. A survey of eight firms’ R&D spending plans found a planned 3.0% increase for 2013.

Energy

In an update released this month, the US Energy Information Administration (EIA) expects world production of crude oil and liquid fuels to rise slightly in 2013, growing 1.1% to 90.01 million barrels per day (bpd). In 2012, it increased 2.2%. Crude oil and liquid fuel production of countries in the Organization for Economic Development (OECD) is estimated to increase 5.2% to 23.68 million bpd. Non-OECD production should be flat at 66.33 million bpd.

According to a December 2012 International Energy Agency (IEA) report, oil product demand will increase 1.0% this year, up from 0.9% last year, to 90.52 million bpd. OECD demand is expected to decline 0.7%, following a 1.0% decrease last year. Non-OCED demand is estimated to increase 2.7% in 2013, compared with 3.0% growth in 2012. OECD supply is estimated to grow 3.0% to 20.3 million bpd. In 2012, it grew 4.2%. Non-OECD supply is expected to increase 1.7% to 54.2 million bpd, compared to 0.1% growth last year.

Barclay Research forecast oil and gas exploration and production capital spending to grow 6.6% in 2013 to $644 billion, with spending outside North America accounting for 71% of the total. A survey by Oil & Gas Journal indicates that the distillation capacity for crude oil increased by over 700,000 barrels/crude per day (bc/d) to 89 million bc/d last year. Batelle and R&D Magazine forecast energy R&D spending to grow 1.9% to $16.0 billion, compared to flat last year.

 Bar Graph: End-Markets Sales Growth Predictions for Analytical Instruments Industry in 2013

 Metals         0.5%

 Semi./Elec.    1.0%

 Polymers       1.7%

 Chemicals      2.0%

 Govt.          2.6%

 Academia       2.8%

 Indep. Test    3.0%

 Hosp./Clinical 4.3%

 CROs           4.7%

 Pharma.        5.1%

 Biotech.       5.7%

 Ag./Food       5.8%