The Current Scenario and Trends of The Life Science Instruments and Reagents Global Market
The life science sector comprising of companies related to biotechnology, pharmaceutical and biomedical technologies is witnessing high growth rates amidst uncertain economies, fluctuating market, highly regulated & complex environment and constantly evolving technologies. Although other sectors had a downfall since the global recession in 2008, the life science industry had a steady growth rate due to its wide applications in diagnostics, therapeutics and research and its pivotal role among several stakeholders including hospitals and clinics, academic and government institutes, CRO, biotech and pharma.
Technological advancements in life science research across the globe has introduced variety of techniques which are used by researchers for various applications including drug discovery and development, manufacturing, clinical diagnostics, basic research in genomics, proteomics, transcriptomics, metabolomics to cater the ever-growing needs of biotechnology and pharmaceutical, scientific equipments, life science research & services and diagnostics industries. Life Science instruments and reagents market comprises of technologies including Spectrometry, Chromatography, Microscopy, PCR, Flow Cytometry, Laboratory centrifuges, Electrophoresis, NGS, Biochips, Automated liquid handling and robotics, Cell Counters, Laboratory freezer and Others. Others include Sterilization, Western blotting, Colorimeters, Incubator, Fume hoods and High content screening (HCS). According to IQ4I analysis, the Life science instruments and reagents global market is expected to grow at high single-digit CAGR to reach $81,325 million by 2023.
The major factors driving the life science instruments and reagents market include increased focus on R&D expenditure and growth of biotechnology and pharmaceutical industries, technological advancements in analytical devices, growth in funding for research, rising demand of analytical instruments with growing research activities in proteomics, lucrative growth opportunities in emerging markets and increasing demand from various industries. Factors such as high cost of instruments, dearth of skilled professionals and stringent regulations are hampering the market growth.
Life science sector growth is closely associated with global health care spending which is witnessing positive growth fuelled by improving economies, particularly in developing countries, industry consolidation and collaborations. The pharmaceutical sector in U.S. is projected to remain the world’s largest with stable spending. The health care spending is estimated to grow by an average of 4.6 percent annually. Canada is expected to grow at a faster rate of 4.8 percent annually due to its aging population. Medical tourism in Mexico which is the second biggest in the world, will offer growth opportunities for pharma and biotechnology companies. In Europe, UK is the leader in pharmaceutical and bio-therapeutic with the largest number of bio-therapeutic and pharmaceutical companies and has the largest numbers of top ranked universities while Germany is the leader in medical biotech behind the U.S. with the largest number of biotech companies in Europe. Asia –Pacific is one of the fastest growing regions in the life science sector. Australia is at the forefront of the life science sector with over 900 life science companies and large biotechnology sector. Australia recently announced an investment of US$5.25 million to enable easier clinical trials. China has a huge life science sector with over 500 universities and institutes and over 7500 life science companies. China’s pharmaceutical sector is expected to become second largest in the world with high growth rate. India is poised as a preferred destination for clinical trials. The country modified norms and policies to improve drug/device approval process, facilitate transparency. Japan has the second largest pharmaceutical market in the world and the government aims to expand the life sciences market by 30% by 2020. Brazil is the largest pharmaceutical market in Latin America and the 10th largest in the world. However, the country is witnessing continued economic weakness which may limit pharmaceutical growth. Middle-East and Africa are likely to have fastest healthcare spending driven by government policy changes, expansion of health care systems and rising populations.
Among the technologies, spectrometry held the highest share and expected to grow at a mid-single digit by 2023 due to their applications across all the disciplines of life science industry. Government funding, technological advancements in spectrometry, governmental legislation compelling pharmaceutical companies to maintain a high quality of manufacturing drugs are the factors driving the market growth. Among the technologies, NGS is the fastest growing segment with mid double-digit growth rate. The factors driving the market include rapidly increasing adoption of the technology due to the drastic reduction in costs within the past five years, increased usage in clinical diagnostic for genetic disorders and novel and emerging applications of the technology.
The top 15 players occupy about half of the market share. High growth rate technologies such as NGS, Biochips, PCR, flow cytometry and high-end instruments such as HPLC, microscopes have a consolidated market. For example, the top 5 players in Microscopy market occupy more than 75% of share. In NGS market, top three players occupy close to 60% of the share and Illumina is the market leader with close to 45% of the share. End users are dependent on these limited suppliers providing more bargaining power to these companies. On the other hand, mature markets such as spectrometry, chromatography and low-end technologies such as electrophoresis tend towards a fragmented market due to the expiry of patents and prolonged presence in the market with many players in the field.
A majority of life science instruments and reagents companies had a steady growth with sustained financial performance in the year 2016 due to demand from biotechnology and pharmaceutical companies. Thermo Fisher Scientific, Danaher, Merck KGaA KgaA, Illumina Agilent technologies, BD and Company, Bruker are among the top players in the life science instruments and reagents global market. The top ten players occupy approximately half of the share in the market. These players are striving to maintain their leadership position in the market by increasing their presence in all the technologies either by organic growth or by acquisitions. For example, Thermo Fisher Scientific recently acquired FEI company that enabled Thermo Fisher Scientific to penetrate Microscopy market. Thermo Fisher Scientific also acquired Affymetrix and expanded their product portfolio in flow cytometry.
Thermo Fisher Scientific held the largest market share due to their presence across all the technologies from basic to high-end technologies and unmatched global reach across end users. Thermo Fisher scientific not only has its presence in all the technologies; it is also the top player in Spectrometry, Chromatography, and PCR; one of the top players in microscopy, flow cytometry, biochips and NGS. Danaher held the second largest share as the company strives to differentiate their offerings from their competitors. As a part of company’s strategy, acquisition and mergers are carried out which helps in the expansion of the business and strengthen their product portfolio. Danaher recently acquired Phenomenex, a provider of high-quality reagents in chromatography which expanded their product portfolio in chromatography and increased their presence in life science market. Analysis of percentage of revenue in the life sciences sector revenue of the total company revenue showed that Illumina had the highest share, where more than 85% of the revenue was in the life science sector. Assessing the growth of the companies in 2015 in comparison with 2014, BD and company reported the highest growth rate of 21.7% followed by Illumina with 19.3% growth rate.
Companies are employing several strategies to increase their product pipeline, increase revenue and propel innovation. In order to provide innovative, advanced and reliable products, companies focus on increasing investment in R&D and maintain robust teams to meet demands and maintain their leadership position. Mergers and acquisition (M&A) is also the other key strategy employed in the life science industry leading to global consolidation. M&A in the life science industry witnessed a record number of transactions totaling $520 billion in 2015 in U.S. However some several restraining factors such as expiry of patents and high cost of drug development are inhibiting growth for multinational corporations. As a result, companies are altering business consolidation through strategic divestures. The venture capital scenario in the life science industry is witnessing robust growth with seven companies being listed in the Forbes’ Midas list with a higher ranking. Investors for life science were comparatively less, a few years ago due to contrasting market dynamics, high capital and time requirement and stringent regulations. However, expedited approval pathways, the trend towards personalized medicine, favorable regulatory environment have fuelled innovation and venture capital funding has increased 29% over the previous year.
Companies also face some challenges that hinder the life science instruments and reagents market. Companies will need to adapt to the evolving regulatory environment which is complex and vigorous. They also need to maintain transparency in product commercialization, manufacturing process and clinical trial quality. Government legislations in developed and developing countries are focusing on reducing health care costs by reducing reimbursements and pricing, hence threatening the players in the industry.
Life science research is a top priority across the globe, both in developed and emerging countries which will aid the growth of life science instrument and reagents market. The industry is witnessing high growth rate, however, they need to plan for the evolving economic conditions, market scenario and legislations. Some of the segments of instruments market have become saturated in developed regions, companies need to identify the next emerging markets. The life science instruments and reagents industry is trending towards a consolidated market for high-end and novel technologies. However, the industry is fragmented for low-end and mature technologies.