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Instrumentation: Year Ahead Will Test Robustness Of The Recovery

by Ann M. Thayer
January 10, 2011 | A version of this story appeared in Volume 89, Issue 2

Growth in the instrumentation market is expected to continue this year, but given lingering uncertainties in economic and political outlooks, it may not be as assured or robust as in 2010.

After a historically unprecedented sales drop in 2009, instrument makers saw the business recover in 2010. The global instrumentation industry grew about 6% in 2010 to more than $38 billion, after declining about 3% in 2009, according to the Los Angeles-based research firm Strategic Directions International.

Although many companies reported higher sales, the levels varied across technology areas, end-use applications, and geographies. Instruments for life sciences research and analysis, notably mass spectrometers, were among the growth areas.

Complicating estimates for 2011, several instrument firms expanded via acquisitions in 2010, but they now must show whether they can grow organically. Many instrument makers also are concerned that much of the 2010 uptick might simply have been pent-up demand from customers who held back on spending in 2009.

Factoring out any acquisitions, 2010 revenues in the life sciences tools area were at or below prerecession levels, analysts at Morgan Stanley told clients recently. Stable underlying growth over 2009’s lows “favor a sustainable recovery,” they concluded.

“As we look at the markets and at the order pipeline, I think it is going to be a solid year in 2011,” says Dusty Tenney, PerkinElmer’s president of analytical sciences and laboratory services. He puts realistic expectations for sales growth in the low- to mid-single-digit percent range. “Although we are seeing some ups and downs and little bumps and bruises here and there, the market has stabilized, and we are coming back to more normal levels of growth,” he adds.

In late 2010, some companies upped their estimates for future sales and earnings. Bruker and Agilent Technologies were among the more bullish. For 2011, Bruker expects 16% growth, and Agilent anticipates 14% growth.

“We continue to see positive signs globally regarding spending by our industrial and applied customers, and we are confident that academic and government research budgets in many key European countries will be stable or grow next year,” Bruker CEO Frank H. Laukien said when reporting earnings.

Geographically, most instrument companies are looking toward Asia and South America, where growth is being driven by environmental concerns and stricter regulations. “By virtue that the infrastructure doesn’t exist, that in itself is creating tremendous double-digit demand growth,” Tenney says.



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