Volume 92 Issue 47 | pp. 17-18
Issue Date: November 24, 2014

Agilent Draws Academics’ Ire

Following NMR exit, users fear price increases for new instruments and early obsolescence for older equipment
Department: Business
Keywords: NMR-Agilent, Bruker, JEOL, nuclear magnetic resonance
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UNSUPPORTED?
Agilent delivered this 800-MHz NMR magnet in 2012 to the University of Illinois, Urbana-Champaign.
Credit: Olson
A picture of an Agilent 800-MHz NMR magnet at the University of Illinois, Urbana-Champaign.
 
UNSUPPORTED?
Agilent delivered this 800-MHz NMR magnet in 2012 to the University of Illinois, Urbana-Champaign.
Credit: Olson

A month after scientific instrument maker Agilent Technologies said it would stop making large nuclear magnetic resonance (NMR) spectroscopy instruments because they are not profitable, academic users are still puzzled and upset.

Users’ worst fears are playing out already as Bruker, which observers say now commands more than 90% of the $1 billion-per-year global market for the large instruments, plans to end discounts on new purchases and “rightsize” its NMR business in the face of an overall slowdown in demand. The only positive sign is a reentry into the business by Japanese NMR instrument maker JEOL after a three-year absence.

Agilent’s exit from NMR “sends the message that magnetic resonance imaging of animals is not a worthy endeavor, that solid-state NMR of materials doesn’t pay, that trying to understand the structure and function of proteins and nucleic acids in cells under physiological conditions is secondary to maybe getting an electron microscope or X-ray structure,” says Lucio Frydman, chief scientist for chemistry and biology at the National High Magnetic Field Laboratory, which is headquartered at Florida State University.

“It is an earthquake for the NMR field,” says Lyndon Emsley, a chemist at France’s University of Lyon and scientific director of the Lyon-based European Center for High Field NMR.

In early November, Agilent explained in an open letter to the NMR community that it was exiting because “the NMR business was not profitable, and given the market realities, the business outlook was bleak.” The firm had roughly 20% of the market.

Agilent, Academics Publish Open Letters

Agilent:

• The NMR business was not profitable.

• Agilent must invest in technologies that ensure profitable growth.

• The outlook for the NMR business is bleak.

• Agilent will honor support agreements for their full term.

Academic community:

• By leaving the NMR business, Agilent is undermining its stated business objective of providing solutions to its life sciences and chemistry constituencies.

• The timing of the withdrawal ignores developments, including new technologies for advancing the utility and sensitivity of NMR analyses, emerging from Agilent.

• The cost of replacing legacy instruments will be staggering.

• Agilent will further damage its credibility if it doesn’t ensure access to NMR parts, documentation, schematics, and software to mitigate effects of its decision.

An Agilent spokeswoman further explained in an e-mail to C&EN that Agilent must concentrate on faster-growing and more profitable life sciences, diagnostics, and applied chemical market instrument lines. “This is especially important now since the spin-off of our electronic measurement business.” Agilent completed the spin-off of Keysight Technologies to shareholders on Nov. 1.

Unimpressed, about 350 academic users so far have signed their own open letter to Agilent, excoriating the firm for its sudden decision to exit the NMR business and complaining that the cost to replace existing instruments will be “staggering.”

Agilent’s exit is particularly distressing to customers who thought that Agilent’s purchase of the Varian NMR business in 2010 would mean a revival of the legendary equipment line, which established NMR as a respected analytical technology in the 1960s.

Frydman, Emsley, and others worry that without the competition Agilent provided, development of advanced NMR instruments for molecular structure studies will come more slowly, existing Agilent equipment will succumb to early obsolescence, and prices will rise.

NMR researchers have historically collaborated closely with companies to help move the field forward, researchers say. In Emsley’s specialty of solid-state NMR, for example, scientists depend on fast-spinning probes. “It would be very hard to go back to building that stuff ourselves,” he says.

As for instrument lifetime, Agilent promises users that it will continue to support its NMR machines for up to seven years, but many say that won’t be enough. “I’ve got spectrometers that are 20 years old, and we still use them,” says Lewis Kay, a chemistry professor at the University of Toronto. “For someone with a two-year-old [Agilent] machine right now, what will happen?” he asks. Will researchers have to spend $1 million to replace an instrument for want of a $30 part, he wonders.

Despite Agilent’s exit, Bruker is not anticipating an uptick in NMR instrument demand anytime soon. In fact, demand is slowing after two years of robust growth, Frank H. Laukien, chief executive officer of Bruker, told analysts during an earnings call earlier this month. Agilent’s exit from the NMR business might mean some “incremental revenue in mid-2015 and beyond … but the magnitude of that effect is yet to be determined,” he said.

Over the next few years, Laukien said, Bruker expects a growth rate for NMR in the “low- to mid-single digits.” The firm now plans to reduce its manufacturing footprint and cost structure for producing NMR equipment to “align our costs with the expected level of revenues.”

In response to an analyst’s question about whether Bruker would take the opportunity to raise NMR prices with Agilent gone, Laukien indicated that prices would indeed rise. “Historically, there had been, in some cases, just very aggressive discounting. I think that may abate quite a bit,” he said.

The only bright spot in the NMR market comes from the Japanese maker JEOL, which has a less than 10% market share. Three years ago, the firm spun off a majority stake in the business to a Japanese government research corporation. Earlier this year, it bought the business back and introduced an updated NMR line.

At the time of the spin-off, JEOL realized it “didn’t have the ability in-house” to upgrade an aging NMR line in need of investment, explains Robert Santorelli, chairman emeritus of the firm’s U.S. marketing arm. “What we have is more competitive now,” he says. The firm is hashing over whether to offer recently updated NMR accessories, such as cryoprobes that improve instrument sensitivity, to owners of other NMR brands.

Regardless of what happens with JEOL or Bruker, NMR users are upset that they seem to be doing science at the mercy of business decision-makers.

“Decisions are being made by M.B.A.s that may have an excellent grasp of the ledger and assets and liabilities over the short term,” the University of Toronto’s Kay says. “But one wonders whether they’re thinking long-term or realizing the damage this could do to science and its ultimate impact on society.”

 
Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society
Comments
Stanislav Sykora (Mon Nov 24 12:22:16 EST 2014)
The major in-vitro NMR makers are private Companies with quite limited public-funding contributions. Consequently, they can do whatever they please, regardless of whether it is an error (even for themselves, as I believe) or not. This might have been a political error. Today, without an attached NMR spectrum, not a single chemical or biochemical paper concerning chemical structure analysis can be published. Consequently, an amazing volume of public-funded research depends upon access to NMR spectrometers. Having left the manufacturing of such key technology in the hands of just three manufacturers (worldwide!), with no public strings attached, was not very wise. What can be done in a short run today, I am not sure. But, again worldwide, there is fortunately a lot of talent and know-how on which to build, the "community" of experts is quite well-knit, and in my opinion there are new major technical possibilities emerging right now (I think that this might have also played a role in Agilent's decision). Much as I am conceptually against public meddling in free market, we may have here a justified case for targeted public intervention aiming at preserving the existing know how and laying grounds for a vigorously competitive NMR manufacturing background.
Gregory Helms (Mon Nov 24 23:42:27 EST 2014)
My lab was not even half way through a major upgrade with Agilent equipment when the letter came about the decision to "exit" the NMR business. Needless to say this was a complete shock to us as we had just finished negotiations not even 3 months prior. We would have gone with the attractive Bruker offer had we had any inkling that this would happen. The recent announcement of the 3rd generation cryogenic probe with stellar specs seemed to be proof that Agilent was really ready to get back in the game. We certainly do not feel like "valued" customers and we are finding ourselves in exactly the situation that Prof. Kay was commenting on. Well maintained spectrometers can easily last 15 plus years and the fact that we have a seven year horizon is very unsettling. We have only received enough money for major improvements 2 times in the last 20 years so the equipment has to last more than seven years. It is unlikely that money will be any easier to obtain in the future. Since we chose Agilent we will now be faced with an "Agilent tax" in the future as wholesale replacement of all spectrometers and probes will be necessary when these systems near the end of their usable life. There will not be an "upgrade path" of any kind. I am particularly upset about the fact that the software will be frozen at the current level and it will be extremely hard to keep up with the fast pace of the field without software that is being actively upgraded and maintained. At the very least the source code for the software should be made available as well as the technical service documentation so that we have a fighting chance to maintain the instruments and to keep up with developments in the field. It is ironic that the birthplace of NMR and certainly of commercial NMR no longer makes research-grade, high field spectrometers. Agilent's decision is a no-win for the entire NMR community. Agilent should remember that members of this community also buy mass spectrometers, HPLC equipment and other analytical gear.
Jon Webb (Wed Dec 03 14:35:32 EST 2014)
It is sad that we are witnessing the end of an era with Agilent/Varian NMR exiting the business. Varian developed and sold the very first commercial NMR Spectrometer back in 1952, and has been a cornerstone of our industry ever since.

Over the years we have seen IBM Corporation, Nicolet Instrument Corporation, General Electric, Oxford Instruments, and a few others enter and exit the NMR industry for various reasons. Of that group, Varian has certainly been the most significant in terms of longevity and contributions to the industry. I personally have been in this business for nearly 37 years, and I am saddened to see this happen.

Most of you are undoubtedly wondering where this leaves Agilent and Varian NMR users in terms of support, servicing and repairs. I have no intention of making this a commercial post, but I believe that it is very important to let all users of Agilent and Varian NMR spectrometers know that MR Resources has a continuing commitment to support those systems. Further, we are quickly making plans to expand the company significantly to support as many Agilent/Varian NMR systems users as possible. I am hopeful that this will help ease the minds of many people.

I would like to offer any help that I possibly can to my NMR colleagues in this critical time.

Best regards,

Jon Webb
jFriday (Fri Mar 13 16:04:53 EDT 2015)
Given the level of service for used system peddlers, you are still better off buying new. More so with the lack of any possible help from the original manufacturer.
IET (Thu Dec 11 12:45:07 EST 2014)
We are greatly disheartened by Agilent's recent NMR news. IET has been in business over thirty five years and we look forward to helping support Agilent/Varian NMR products for many years to come. We have a large supply of parts and complete systems, as well as the service support for your exisiting Agilent/Varian NMR systems. IET also offers repair services for your parts on an exchange basis. We hope this message will offer some relief for the current owners of Agilent/Varian systems.

Sincerely,

The IET team

International Equipment Trading, LTD
www.ietltd.com
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