The Year in Review – The Life Science & Analytical Instrument Market
Yesterday we announced that the 2018 SDi Global Assessment Report: The Laboratory Analytical & Life Science Instrumentation Industry will be released in conjunction with PITTCON, which will take place from February 26 – March 1, 2018. It made me think about what an interesting year it’s been for the life science and analytical instrument market and this article will highlight some of developments we observed through the research conducted to produce our reports.
The 2018 SDi Global Assessment Report is widely considered to be the gold standard of market intelligence for the $50+ billion laboratory market for analytical and life science instruments. The report can be pre-purchased at a significant discount as part of the Company’s 2018 subscription plan. The report will update projections made in 2017 where market conditions have contributed to growth or contraction. As in the past, detailed information on 82 different product categories is presented in 10 sections that include chromatography, life science instrumentation, mass spectrometry, molecular spectroscopy, atomic spectroscopy, surface science, materials characterization, lab automation, general analytical techniques, and lab equipment. For the first time, users of the report will have an option to receive an electronic data stream updating the market projections on a quarterly basis.
The announcement was made at the unveiling of the combined SDi/BioInformatics market intelligence portfolio of reports for 2018 that includes 14 titles on both emerging and established markets and the Global Assessment Report quarterly data stream. Heavily discounted prices are available for companies that subscribe before year’s end. Corporate subscribers will also receive unlimited access to all market research reports published in the last five years by both SDi and BioInformatics. Contact us for more information!
2017 started off with a bang as we released the much anticipated Global Assessment Report. At the time, Mike Tice, Vice President of Consulting Services at SDi said, “The $50 billion laboratory market for analytical and life science instruments will likely see an overall growth approaching 4.5% in 2017,” said “It’s difficult to predict the impact the new administration in the U.S. and Brexit and upcoming elections in Europe will have on the market, but we believe there are pockets of opportunities for growth especially in life sciences and in the applied markets of developing economies.”
The largest market, life science instrumentation, we predicted will swell from about $13 billion in 2015 to $$16.5 billion in 2020, at an average rate of 4.9%, just above the overall industry average. While these technologies have long been one of the hottest areas of instrumentation, the nature of the pharma/bio sector is changing and growth is somewhat curtailed. Meanwhile, mass spectrometry continues to be the brightest area of instrumentation, with future growth predicted to top 7%. Surface science techniques are also poised to make great gains, as its various segments are continuing to find technological developments that allow these instruments to work even better. Similarly, other technologies also have niche segments that are evolving and seeing more rapid growth than the overall average. Among them are next-generation sequencers, clinical HPLC, portable mass spectrometry, Raman spectroscopy, and transfection. All ten segments of the laboratory analytical and life science instruments market will achieve positive growth over the next five years. In fact, all except lab automation & software and general analytical techniques will experience higher growth rates during the next five years as compared to the previous five years. Check back with us in February to see our updated projections!
Despite an improving global economy, the life science industry began 2017 in state of uncertainty. Early in the year we released Lab Budgets and Sources of Funding in 2017: The Market Outlook for the United States, Europe and Asia to help provide clarity in these uncertain times. The health of the life science tools industry is directly tied to the annual investments in research and development made by governments, private industry and investors. The economic climate, political pressures, societal needs and technology will all affect the outlook for funding life science research, drug discovery and development in 2017. To help our clients we surveyed more than a thousand life scientists around the world to get a sense of their spending plans for 2017.
Overall, our respondents predicted an increase in their budgets for genome analysis tools from FY2016 to FY2017 across both academic and pharma/biotech labs. Looking forward, pharma/biotech scientists reported that their spending on cell-based analysis tools will decrease slightly while academics project a decrease in their budgets for protein analysis tools. Over half of academic respondents indicated that they were deferring equipment purchases in the coming year – a prediction far more common than among academics than their pharma/biotech counterparts.
Despite the uncertainty, scientists are still excited about the future of life science research. When asked “What do you think is the most exciting technological breakthrough on the horizon in your area of research?” many respondents cited CRISPR, a cheaper and faster genetic editing technique, as the most exciting breakthrough technology on the horizon in their area of research.
We advised our clients that the way to thrive in 2017 was to shore up their core markets, spot the growth opportunities, look at adjacent markets and communicate your value more effectively with your customers. This straightforward advice also guided our publishing calendar for the year. We first looked at two core markets – plasticware and antibodies.
Sometimes overlooked in a time of great technological advances are the workhorse products upon which every lab depends. Plasticware is one such product and an essential part of every life science laboratory. Items that were once exclusively made of glass including flasks, beakers, test tubes, vials, pipettes, and petri dishes are now more often than not made of plastic. Indeed, some researchers now suggest that the term “in plastico” be added to the life scientist’s lexicon because and increasing amount of analysis and storage but are no longer performed in vitro (the Latin phrase which means “within the glass”). Plastics offer a combination of lightweight, strength, flexibility, safety and convenience that has supplanted glass in many lab applications including cell culture and liquid handling/storage.
Despite the apparently everyday nature of plasticware, the market is complex and competitive. The 2017 Market for Laboratory Plasticware: Cell Culture & Liquid Handling/Storage . The largest suppliers including Corning, Eppendorf, Greiner, Sarstedt, Thermo Fisher Scientific and VWR dominate the market for plasticware. In this highly concentrated market, virtually all leading manufacturers are pursuing some combination of strategies that emphasize product innovation, careful market segmentation, distribution channels and strong branding. Backward integration up the supply chain has also been observed.
We also learned that customers of plasticware remain remarkably brand sensitive despite the best efforts of plasticware manufacturers to establish technological differentiation or to compete on price. This is reflected in the preservation of legacy brand names, fonts and colors, following their acquisition by a competitor. Perhaps this is not surprising. For many scientists, research still carries with it a certain aura of “magic and mystery.” When offered the choice between identical products manufactured under the same conditions, most scientists will choose that which has worked best for them in the past – especially when it comes to plasticware. This level of unflagging loyalty is a direct result of the clarity with which they see the brand. A major challenge facing all plasticware manufacturers, therefore, is to invest heavily in the branding of these commonly used products.
Next we turned our sights on The 2017 Market for Research Antibodies: Keys to Success for Commercial Suppliers. Designed specifically for suppliers of commercial, pre-made catalog antibodies, this primary research report identifies scientists’ expectations and preferences with regards to usage, brands, purchasing, product quality and budgets.
The antibody market is characterized by several large players including Abcam, Cell Signaling Technology, MilliporeSigma, Santa Cruz Biotechnology and Thermo Fisher Scientific. However, the market is extremely fragmented, with the largest suppliers controlling relatively small shares of the total market. This fragmentation is an ideal situation for scientists as they are able to choose the particular brand of antibody that is optimized for their particular application. While this fragmentation can be frustrating for suppliers, it may also present opportunities for growth.
Strategies for success in this market seem to be focused around two different market strategies. Abcam has grown rapidly to become the market share leader by focusing on catalog breadth and convenience. Cell Signaling Technology has grown by focusing on providing quality antibodies for a particular area of research (cell signaling) and by developing other technologies to address the same field. Thus, the two growth strategies currently observed in the market include growth by catalog expansion, or growth by application expertise.
In both our 2017 Global Assessment Report: The Analytical and Life Science Instrument Market and our survey of life science lab budgets we reported that Asian markets were growing faster than scientific markets in the US and Europe. China in particular is of great interest to our clients and we publishing a report specifically on the size and growth of this nearly $6 billion market. The expansion of Chinese manufacturing and the production of raw materials significantly increased demand for analytical instruments and we project it will increase by 5.8% over the next five years. Growth will be led by mass spectrometry, but the market is expected to grow in the mid single digits for all technology segments.
The growth and innovation of Chinese instrument manufacturers has propelled many Chinese companies to the international stage, where they have enjoyed significant demand for their products. The scientists surveyed as part of this report generally believe that instruments from domestic Chinese suppliers are cheaper, but probably not of higher quality than global brands such as Agilent and Thermo Fisher who are the most widely used suppliers. With continued modest demand expected in the US and European markets, the Chinese market for analytical and life science instruments represents an important pocket of growth.
It’s not possible to talk about growth markets without talking about sequencing. Laboratories around the world are generating raw sequencing data at an unprecedented rate. Today it’s possible to generate hundreds of millions of relatively short sequences in a single run in a short period of time with low per base cost. These technological developments have enabled widespread adoption of sequencing. At the same time, the challenges of aligning, analyzing, annotating and understanding the terabytes of data generated represent a major bottleneck in biological discovery and clinical adoption. Indeed, a plot of Moore’s Law compared to sequencing throughput shows the cost of DNA sequencing has declined much faster than the cost of disk storage and processing power.
The 2017 Market for NGS Informatics: Probing the Commercial Landscape was our attempt to help companies understand these challenges from the perspective of NGS users. The scale of the data generated is not simply an obstacle for individual researchers trying to interpret it, but it presents significant informatics issues for reproducibility and even collaboration. NGS users are well aware that simply generating data does not lead to a proportionate increase in knowledge. They can also be excused for being overwhelmed by their range of choices as exemplified by the listing of over 3,000 sequencing analysis tools at the OMICtools website. Customer confusion isn’t helped by the non-stop flurry of new product releases, strategic alliances, investments and innovative start-ups.
Carrying on with our theme of growth opportunities, The 2017 Market for CRISPR/Cas9 Genome Editing Products, evaluated the global market for CRISPR/Cas9, segmenting market share and value by region (North America, Europe, Asia Pacific) and industry (Biotech/Pharma and Academia). Our survey of scientific researchers using CRISPR/Cas9 provides in-depth analysis of experimental workflow, brand awareness and usage, product preferences, lab spending by vendor and customer satisfaction and loyalty.
The growth of the CRISPR/Cas9 market can be largely attributed to an improved funding landscape. The NIH and other organizations have increased their funding for CRISPR-focused research. Federal funding for CRISPR-related research has radically increased, with NIH funding for the field jumping from $5.1 million in FY11 to $603 million in FY16. CRISPR-related research papers also greatly increased, rising from 86 in 2011 to 2,162 in 2016. On the commercial side, contract research organizations (CROs) have increased their use of the technique to genetically engineer model animals and cell lines for research purposes. By 2021, we project the market for products to support CRISPR/Cas9 research will reach $3.61 billion in annual revenue.
Next up was The 2017 Market for Single Cell Analysis Products: Convergence of Microfluidics and Omics Platforms. The study of cells has been instrumental in understanding biological processes. Research on genes and proteins expressed in specific types of cells has typically been performed on samples containing many cells, with analysis reflecting the data averaged across them. But over the last several years, studies have indicated differences in cells of the same type or within the same population. Consequently, researchers are conducting single-cell analysis to study the unique qualities of individual cells.
One of the first things we learned was that many researchers define “single cell analysis” quite differently. For the purpose of our research, single cell analysis encompasses the application of genomic, transcriptomic, proteomic, and/or metabolomic techniques to the analysis of isolated, individually partitioned single cells. These techniques, coupled with new methods for cell isolation/partitioning, support the interrogation of single cells at increased levels of scale and throughput than previously possible.
Scientists are pushing suppliers for new approaches to single cell analyses that they need to better understand fundamental biological principles. The research community is looking for new analytical measures and manipulations of cellular contents, structure, and activity at the single cell level significantly beyond what is currently available.
Finally we wrapped up the year looking at three adjacent markets – clinical, security and advanced microscopy. Our SDi division produced another winner with the publication of -Innovation in Clinical Diagnostic Instruments: PCR, NGS, Mass Spec and HPLC – a thorough picture of the molecular diagnostics market – its current situation, trends, and recent market-oriented data about analytical solutions being used in this field. The report provides market data on the primary technologies utilized in the molecular diagnostics market, namely nucleic acid amplification, sequencing, mass spectrometry, HPLC, in situ hybridization, and microarrays.
One of the things we learned was that clinical applications for mass spectroscopy will grow by 7.6% over the next five years. Market leader SCIEX commands the largest market share of both LC/MS Quadruple and LC/MS TOF segments of the market. The company has remained at the forefront of the market through continued product updates and releases, such as their fully integrated LC-MS Topaz system for clinical diagnostics that was unveiled at the American Association of Clinical Chemistry annual meeting in August 2017. While reporting from AACC, our colleagues at IBO were quick to note that in addition to Sciex leading triple quadruople MS companies, including Agilent Technologies, Shimadzu, Thermo Fisher Scientific and Waters were all exhibiting. Although Bruker was not at the show, they control more than half of the MALDI-TOF segment via their MALDI Biotyper.
Also at AACC, Thermo Fisher Scientific demonstrated the Thermo Scientific Cascadion Clinical Analyzer which was unveiled in May 2017. Meanwhile Waters showcased its Class I MS systems at AACC. The company sells three versions of its tandem quadrupole MS systems in the clinical market. All of the leading mass spectrometer manufacturers are competing to overcome the barriers to adoption of mass spec by clinical labs that include: regulatory approval, quality (e.g., variability from lab to lab), resources (e.g., operator skills) and workflow (e.g., turnaround time).
We also looked at clinical applications for Next Generation Sequencing – a market we project will experience a 12% CAGR over the next five years. The power of NGS technologies is migrating from the research market into the clinic at an ever-quickening pace. Researchers, clinicians and manufacturers are demonstrating remarkable innovation is applying the and the power of NGS to address a wide array of applications that include infectious disease, cancer, genetic disorders and non-invasive prenatal testing – many of which are now showing real clinical utility.
One important trend in the analytical instrumentation industry is the continued migration of laboratory technologies into non-laboratory settings. As instruments become more robust, easier to use and smaller, they have escaped the lab into the field in many different applications from environmental testing to point-of-care diagnostics. One critical use for instruments in the field is for security applications, protecting everyone from accidental and intentional threats to human health and public safety.
The security industry broadly classifies potential threats into different categories: chemical, biological, radiological, nuclear, and explosive, often referred to collectively as CBRNE. All of these types of threat are amenable to detection and identification by analytical instrumentation, and there is significant market demand for these products, amounting to more than $2 billion in revenue, according to the estimates provided in our latest market research report on the topic: The 2018 Global Security Market for Analytical Instrumentation.
A diverse set of companies participates in the analytical security market. Many, like Thermo Fisher Scientific and Bruker, are familiar names from the scientific instrumentation industry. Others are more focused on industrial safety and have crossed over into the security market; this would include major players like Mine Safety Appliances (MSA) and Mirion Technologies, which became a world leader in nuclear power safety and security instruments following its acquisition of Canberra Industries from AREVA in July 2016. Other vendors, like Smiths Detection, are quite specialized in the security and defense markets. Earlier this year, Smiths completed its acquisition of another significant security vendor, Morpho Detection. As part of this deal, certain product lines will be divested to a third such vendor, OSI Systems. Clearly, this market is an active one, not just for M&A activity, but also the emergence of innovative companies with disruptive technologies.
Historically, microscopy was one of the first experimental techniques to be developed, with roots tracing back to the 17th century for the first compound microscopes. Despite the great age of the technology, it remains not just an important research tool, but perhaps more importantly, the potential for technological advances has not been exhausted. Fluorescence microscopy originated in the early 20th century, with confocal optics appearing mid-century. These developments, and much more, are the focus of Advanced Microscopy: A Journey from 200nm to 20nm Resolution.
Even today, new modes and applications arise, such as super-resolution fluorescence microscopy, the development of which was awarded the 2014 Nobel Prize in Chemistry. In 2017, the Nobel Prize in Chemistry was awarded for cryo-electron microscopy, furthering demonstrating that the development of new ways to “see” biological processes in high resolution is still incredibly important to life sciences research.
The unending usefulness of one’s ability to see life and materials much smaller than is possible with the naked eye, combined with continuous innovation and recent leaps in technology, has led to an overall market demand for advanced microscopy products is expected to grow by 7.5% over the next five years, reaching an estimated $684 million in 2021.
We also wanted to help our life science clients communicate more effectively with their customers. We started wit the premise that no matter their country of origin, scientists are consumers first. They go home and have a life outside of the lab. They watch television, leaf through magazines, and browse Facebook. However, every media channel they consume inside the lab, during their commute, or sitting at home can be a potential touchpoint to interact with your brand.
Consumer marketing professionals are employing a wide variety of cutting-edge techniques to drive home their brand message and make an emotional connection with their customers. Many of these techniques have not yet migrated to the market for laboratory instrumentation and consumables. To explore how scientists might react to the use of these techniques, we surveyed 1,000 scientists from around the world to gauge their receptivity and experience with:
- Executive branding
- “Smart instruments” that share data
- Video and livestreaming
- Influencer marketing
- Experiential marketing
- Sponsored content and native advertising
- Mobile marketing
- Website design and digital touchpoints
“By far, the most interesting and perhaps most actionable results can be viewed through the filter of age,” observed my colleague Dr. Robin Rothrock. Robin was the lead analyst on our report 2018 Trends in Marketing to Life Scientists: Connecting, Influencing, and Sharing. “Our data suggests that a demographic inflection point has been reached in the scientific population, and not just in North America. The Boomers are starting to retire. And the Millennials are working their way through graduate school and beginning their careers in scientific research. These differences are reflected in customer preferences for how they want to interact with vendor-created content in addition to the nature of the content they want to consume.”
One of the fundamental tenets of marketing is to know one’s audience in order to fully understand their needs and communicate effectively. Generational marketing seeks to deliver a consistent brand message to the right cohort using the most appropriate media. It is based on the concept that every generation has distinct experiences, shared memories and values that shape their expectations and influence their buying behavior.
Marketing techniques and technologies may change. And the way in which scientists want marketers to communicate with them will certainly continue to change. But one thing remains constant: truly novel, breakthrough products will — initially — “sell themselves” in the life science market. The real challenge comes, however, when imitators begin to appear, and when products start to mature. When this occurs, those companies, which have invested the resources in marketing necessary to build brand equity, will emerge the winners.
Thank you for reading our blog this year. Don’t forget that between now and the end of the year we have a But One, Get One 50% special on all of the reports mentioned in this article. From all of us here at BioInformatics and SDI, have a very happy holiday and we’ll see you in the new year!