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.
Earlier this month, Agilent Technologies published an open letter to explain its withdrawal from the production of large nuclear magnetic resonance (NMR) instruments. The academic community responded with a letter of its own with 358 signers so far. Below are the major points of each letter.
• 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.
• 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.”