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The $40 billion global lab instrumentation market is expected to grow in 2012 despite uncertain academic and government funding.
COVER STORY
Instrumentation: Caution Prevails In Light Of Varied Market Opportunities
After a downturn in 2009 and a strong uptick in 2010, many companies were upbeat going into 2011. But the year turned out more challenging than expected, with many economic upheavals and no consistent recovery. For 2012, although macroeconomic data remain mixed, the life sciences tools industry “should grow in excess of global GDP given steady innovation, healthy pricing, expanding end markets, and global investment in R&D, particularly in emerging markets,” Goldman Sachs stock analyst David Roman told clients in an outlook report for medical and life sciences technology.
However, academic funding is still constrained, and government austerity measures will likely further weigh on European growth, he added. Factoring in currency exchange rates, product launches, sales volumes, and acquisitions, Roman and colleagues forecast average sales growth of 6% in 2012 for 10 leading life sciences tools firms.
Peter Lawson, executive director at Mizuho Securities USA, sees similar rates of sales growth, driven by applied, industrial, and emerging markets. In a forecast report, he points to concerns about European stability, flat U.S. government funding, and weak academic spending, which includes the last trickle of stimulus funding.
Instrument firms share these concerns. “Uncertainty regarding funding in the public sector, both in the U.S. and Europe, has led to longer lead times in academic and government markets, a trend we expect to see continue into 2012,” says Chuck Kummeth, president for chromatography and mass spectrometry at Thermo Fisher Scientific. But, he adds, “we see a growing market across all segments in China and India, Brazil in Latin America, and countries in Eastern Europe.”
Other trends are pushing suppliers to expand their offerings. Labs in many industries must generate faster, more accurate results while reducing costs, Kummeth explains. Customer demands for increased levels of detection in routine applications such as food safety, environmental analysis, and clinical research are also driving innovation.
Agilent Technologies is typical of instrument companies with its 2012 revenue growth prediction of about 6%. “We remain cautious as we enter the new year but believe there are several excellent market opportunities,” said Bill Sullivan, Agilent’s CEO, when presenting the firm’s fiscal results in November.
He ranked communications, food, and petrochemicals on the plus side, along with opportunities to expand in life sciences. “Couple these market opportunities with our continued investment in emerging markets, and we believe our growth expectations are realistic, barring a financial crisis,” he concluded about 2012.
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