Lab Spending in 2017 – Part 2

Lab Budgets and Sources of Funding in 2017: The Market Outlook for the United States, Europe and Asia is the latest report from BioInformatics LLC. The report is based on a survey of more than 1,000 life scientists who answered a detailed questionnaire about their budget and spending plans for 2017. Suppliers of laboratory instrumentation and consumables rely upon the biennial report to project demand in ten broad product categories.

Market Overview

In this article we discuss some of our observations from our US-based scientists. As we have discussed before, the overarching theme in the US, both for academics and for pharma/biotech scientists is uncertainty. For academics, uncertainty in levels of funding and research priorities is an issue due to conflicting statements from the new administration. Additionally, key staff positions at many key funding agencies remain vacant.

Similarly, changing and conflicting statements on regulations relating to the pharmaceutical and biotech industries have been confusing, but our respondents report they are likely to have little impact on 2017 budget and spending. Despite concerns about the ability of the FDA to continue to approve drugs and inspect facilities at an appropriate pace due to staffing issues, the drug pipeline appears robust, in addition to the continuing strong demand for generics in the US.

Both academic and pharma/biotech researchers report budget growth for FY2017. However, academic researchers expect a decrease in FY2018.

Academic Funding Levels

Funding success rates for most major funding agencies in the US remain relatively low, severely limiting opportunities for growth:

• NIH: R01 (large multi-year grants) and R21s (smaller, exploratory multi-year grants) success rates were 16% and 14% respectively in 2015, despite applications being at an all time high. Within divisions of the NIH, some rates were lower. Additionally, new investigators are reporting an increasingly difficult time attracting funding.
• NSF: The NSF estimates that it funds 21% of the research grant applications, and 23% of competitive awards (fellowships and grants) which has remained static.

Academic researchers expect a slowdown for FY2018 with budgets expected to decrease 1.5% over FY2017. One respondent tried to find a bright spot:

“While we are fearful about funding for basic foundational research, we are hopeful that the private industry (pharma, etc.) will still be ok.”

 

Pharma/Biotech Funding Levels

According to the Quintiles IMS Institute, the US pharma/biotech market is expected to grow at a slower rate between 6–7% CAGR through 2021, due to increased media and political pressure over pricing structures, orphan drugs, and uncertainty surrounding the status of the Affordable Care Act. Generics remain popular, and will also account for some of the reduction in growth, as some profitable drugs become available as generics during this time frame.

Our survey data shows that pharma/biotech is showing stronger growth than academia for both FY2017 and FY2018, but growth in FY2018 budgets is expected to be slower than FY2017. In contrast to academic labs, more than half of the pharma/biotech labs surveyed have budgets greater than $1 million. Interestingly, 13% of the pharma/biotech labs we surveyed have budgets over $5 million and this percentage is expected to increase by FY2018 highlighting the trend toward very large labs at commercial organizations.

Impact on Lab Spending

Overall, our respondents projected 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. The full report provides in great detail the percent of lab budgets allocated for instrumentation and consumables. Spending for both instrumentation and consumables is then presented for 10 broad sub-categories including:

• Cell based analysis
• Genome analysis
• Protein analysis
• General lab equipment
• Cell-based analysis kits and reagents
• Genome analysis kits and reagents
• Protein purification and separation kits and reagents
• Live animals
• General laboratory chemicals, plasticware, glassware and disposables

Market Outlook

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.

One scientist wrote:

“Use of CRISPR as a method of not only gene editing but actual therapy, along with new imaging techniques will allow a new era in molecular biological and chemical biology. New techniques are allowing us to understand the canonical pathways in manner never before obtainable. This deep biology, coupled with a chemical biology approach should provide meaningful cures in cancer, cardiovascular disease, and metabolic disorders.”

While another commented:

“Genome editing technologies are the most exciting technological breakthrough, not necessarily on the horizon but already happening. This would include not only CRISPR/Cas9 but further targeted nuclease-based technologies that permit gene knockout and knock-in with increasing ease. These technologies greatly facilitate genetic analysis through screening and targeted studies in vitro as well as dramatically improving methods for developing new in vivo models. Our lab works with transgenic mice and has recently been using genome editing to create novel models with speed that would have been unimaginable just a few years ago. The ability to engineer and study specific mutations also allows for better modeling of human disease.”

“Scientists in the US and Europe are the most pessimistic about their future,” said Madelaine Denno, Ph.D., one of our senior analysts at BioInformatics LLC. “This is such an exciting time to be in life science research, but there’s a real sense of frustration at many labs. Even though US budgets remain on average remain much higher than those in Asia, it’s Asian scientists who are most optimistic about their future prospects for funding.”

The report contains detailed information on current and projected funding, planned spending on instrumentation and consumables, and scientists’ opinions on funding and the future of life science research. The insights contained in this report will enable senior management to forecast demand, fine-tune projections, and set goals and allocations for 2016.