In our July 31 issue, IBO provided a mid-year forecast update, decreasing estimated global growth for the 2019 analytical and life science instrumentation industry by two percentage points. However, the decrease was mostly attributed to currency effects, as organic growth in the industry is estimated to be stronger than previous forecasts.

One factor IBO predicted would affect the economy is the ongoing trade tensions between the US and China. While these tensions remain and have had an economic impact, with second quarter GDP growth in China dropping to its lowest value in almost three decades at just over 6%, their effects on US labs and research activities have been relatively minimal thus far. Demand for analytical instrumentation from Chinese customers is still robust, resulting in IBO updating the forecasted growth for the 2019 market to the high-single digits.

Pharma/Bio Segment Surges in 2019

In the original forecast, IBO singled out the pharmaceutical and biotechnology sector as having the greatest likely growth among analytical instrument end-markets. At mid-year, IBO has increased the growth estimates for pharma/bio to the high-single digits, adding further to its leading position compared to other end-markets.

This forecasted rise in growth is echoed by several analytical and life science instrument companies, as indicated in their most recent quarterly conference calls. For example, Marc Casper, president and CEO of Thermo Fisher Scientific, highlighted the strength of the company’s pharmaceutical end-market, which delivered double-digit growth during the second quarter. He also stated that pharma/biotech is Thermo Fisher’s largest and fastest growing end-market.

Additionally, he announced a $150 million investment in building additional capacities and capabilities at Thermo Fisher sites in Italy and the US to help meet growing demand from customers working with the company’s biologics, development, and manufacturing products and services. Mr. Casper reported that multiple segments with Thermo Fisher’s pharmaceutical solutions portfolio excelled in the quarter, including bioproduction, chromatography, mass spectrometry, research and safety channels, and pharma services.

PerkinElmer reported comparable results. Rob Friel, chairman, CEO and president of PerkinElmer, emphasized pharma/biotech, along with diagnostics and food, as leading the company’s high-single digit growth in the Americas and mid-single digits growth in Asia. The strength of the pharma/biotech end-market was also responsible for the 2% organic growth of the company’s Discovery & Analytical Solutions segment, which represents 60% of PerkinElmer’s total sales. Similarly, Bio-Rad Laboratories’ Life Science unit also reported strong sales in its bio/pharma segment, both in discovery as well as in QC and manufacturing, especially as customers continue to develop new cell-based drugs.

“One observation is that pharmaceutical manufacturers seem to be divided between whether to focus resources on generic drugs or on new drugs.”

Agilent Technologies highlighted large pharma accounts in US and Europe in its conference call, pointing out that while companies may be exercising caution in replacing investments in small molecule businesses, they are increasing focus on the large molecule segment. Mike McMullen, president and CEO of Agilent, stated that while 33% of the company’s business is now in bio/pharma, Agilent expects to shift further toward that market with the recently announced acquisitions of BioTek Instruments, which makes microplate readers for cell testing and imaging, and ProZyme, a provider of glycan analysis reagents, kits and standards.

In some cases, growth may be varied based on region. Shimadzu, for instance, outlined in its conference call for its fiscal year ending March 31 that in regards to pharmaceuticals, “the degree of interest varies on the region,” singling out Southeast Asia as a driver of strong sales of key instruments models for pharmaceutical customers. “For many years, the pharmaceuticals industry has been mainly split between new drugs and generics, but more recently new segments have emerged, including biopharmaceuticals, peptide drugs, and other drugs based on mid-sized molecules,” Dr. Teruhisa Ueda, president and CEO of Shimadzu, articulated. “Given those circumstances, one observation is that pharmaceutical manufacturers seem to be divided between whether to focus resources on generic drugs or on new drugs.”

He also pointed out that growth is dependent on the economic progress of a region. “For example, newly emerging economies, such as in Southeast Asia, are in the stage of creating more and more domestic pharmaceutical manufacturers, where growth is presumably mostly for generic drugs,” continued Mr. Ueda. “In developed economies, such as Europe and the United States, the major pharmaceutical manufacturers are optimizing operations by separating their in-house R&D functions from their outsourcing functions. Consequently, CROs and CMOs are on the rise.”

To purchase your copy of the 2019 IBO Analytical Instrument Industry Forecast, which includes IBO’s updated mid-year forecast, click here.

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