Laboratory Analytical Instruments

SIC 3826

Companies in this industry

Industry report:

This group covers establishments primarily engaged in manufacturing laboratory instruments and instrumentation systems for chemical or physical analysis of the composition or concentration of samples of solid, fluid, gaseous, or composite material. Establishments primarily engaged in manufacturing instruments for monitoring and analyzing continuous samples from medical patients are classified in SIC 3845: Electromedical and Electrotherapeutic Apparatus; and from industrial process streams are classified in SIC 3823: Industrial Instruments for Measurement, Display, and Control of Process Variables; and Related Products.

Industry Snapshot

The laboratory analytical instruments industry is an international business dominated by large, innovative companies. In addition, numerous small firms compete by forming alliances or operating in niche markets. The industry is characterized by high profits, an emphasis on advanced technology, and sporadic growth. Companies typically sell their products directly to research laboratories in pharmaceutical firms, food companies, hospitals, and other establishments that work with chemicals or analyze substances.

Laboratory analytical instruments manufactured by this industry are used to conduct physical and chemical analyses. Major product groups include clinical laboratory, chromatographic, and spectrophotometric instruments and mass spectrometers. In 2008, industry shipments were worth approximately $12.7 billion, and the industry's workforce numbered 37,200 employees. In the late 2000s, this high-technology sector exported more than half of its output.

From about $3.5 billion in 1987--the first year in which this industry was recognized as a separate industrial classification--shipments of laboratory analytical instruments more than doubled to $7.2 billion in 1998. U.S. technological superiority and increasing demand for analytical instruments made this an important growth industry. According to a report in Laboratory Equipment, in 2009, the most significant industry drivers were automation technologies, an improving economy, and increased throughput (the amount of data that can be processed in a specific amount of time). Other factors included enhanced performance of equipment that would deliver better and more accurate results.

One of the largest product segments in this industry in the 2000s was mass spectrometry instrumentation, which represented approximately 25 percent of industry shipments. This type of equipment analyzes chemicals by sorting gaseous ions in electric and magnetic fields. The two major types of mass spectroscopes are spectrographs, which use nonelectric means to detect the sorted ions, and spectrometers, which measure ions electrically. Nuclear magnetic resonance spectrometry also was a rapidly advancing industry segment in the 2000s.

Chromatographic equipment is used to separate chemical substances to determine their content or to prepare them for further testing. Chromatography instruments are applied in oil refineries and on space vehicles to analyze atmospheres on other planets. This segment accounted for approximately 12 percent of industry sales in the 2000s. Mass spectrometry and gas chromatography capabilities were often combined into a single instrument. GC/MS was the most widely used tandem instrument technique worldwide.

Spectrophotometric instruments represented about 10 percent of the industry's shipments in the 2000s. These devices are used to view, meter, and record spectrums of light or forms of radiated energy. Spectrochemical analysis usually involves the examination of radiation emission by molecules that have been heated or excited by some other form of energy, or the absorption of radiation of particular wavelengths by certain molecules.

In addition to the three major product segments, approximately 40 percent of industry sales were derived from many other devices, including a wide range of instruments made for clinical laboratories, individual parts and accessories, and other specialized instruments. Examples of specialized instruments are titrimeters, which measure the concentration of a substance in a solution; densitometers, which gauge the optical density of a material; coulometric analyzers, which detect the amount of a substance released during electrolysis; and turbidimeters, which measure the scattering of a light beam through a solution that contains suspended particulate matter. Parts, replacement components, and accessories accounted for approximately 10 percent of all revenues.

Background and Development

Devices used to measure the purity of gold date back to the fourth century B.C. The term "analysis," in the chemical sense, was first posited in the 1660s. A series of breakthroughs in chemical measuring methods occurred during the 1800s that preceded the development of more advanced analytic instruments later in the nineteenth century.

Rudimentary analytical instruments and measuring devices predate the birth of Christ. Naturalist Robert Boyle of England was credited with introducing the term "analysis," in the chemical sense, in his book The Sceptical Chymist, published in 1661. In 1669, Isaac Newton conducted light spectrum experiments that eventually led to the development of the spectroscope. Also in the seventeenth century, the first precise gravimetric analysis equipment (used to measure specific gravity) was believed to have been created by Friedreich Hoffman, a German physician and chemist. Numerous key inventions and discoveries during the eighteenth century included the flame test for alkali metals, qualitative analysis techniques, and titrimetric analysis.

Most instruments and methods before the eighteenth century yielded qualitative analyses. In the nineteenth century, however, French chemist Antoine-Laurent Lavoisier ushered in quantitative analysis, or the determination of the amounts and proportions of chemicals or elements in a substance or gas. Major breakthroughs in analytical instruments and methods during the 1800s included electrochemical analysis methods and gas analysis. In addition, German chemists Gustav Robert Kirchoff and Robert Bunsen introduced the first practical spectroscope in 1859. This important development led to the discovery of new elements. Spectrographic equipment improved greatly during the late 1800s and early 1900s with the introduction of mass spectrography in 1920, flame photometry in 1928, and radiochemical methods developed after World War II.

Perhaps the greatest innovations in the history of this industry related to the development of chromatography. Although first conceived in 1903, workable chromatography equipment was not built until the early 1940s. Gas chromatography and other advanced techniques that emerged during the 1950s significantly expanded the breadth of the analytical instrument industry. These pivotal innovations, combined with steady market growth during the post-World War II economic expansion, resulted in healthy revenue gains for instrument manufacturers. The United States assumed a global technological lead that it enjoyed throughout the 1960s and 1970s.

Although shipments of all types of U.S. laboratory equipment surged during the 1980s, not until 1987 did the U.S. government classify analytical instruments as a separate industry. By that time, sales of goods in this sector had grown to about $3.5 billion and were rising rapidly compared to most laboratory equipment industries. Indeed, sales jumped 11.5 percent in both 1988 and 1989. As the U.S. economy slumped into a recession, shipments grew 14 percent to almost $5 billion in 1990, then increased more slowly to $5.8 billion in 1995. In addition to steady growth in domestic demand, U.S. producers reaped the benefits of a global interest in their high-technology products. U.S. exports soared from $1.3 billion in 1989 to nearly $2.7 billion in 1996, while imports climbed from $654 million to $1.3 billion during the same period.

The laboratory analytical instruments industry prospered during the 1990s because of four key factors: the increased concern over the spread of viruses, such as acquired immune deficiency syndrome (AIDS); an intensified quest for new drugs by pharmaceutical companies; a proliferation of environmental concerns and regulations; and the strong demand overseas for high-technology, high-profit instruments. As a result, industry shipments rose from $6.8 billion in 1997 to $7.7 billion in 2000.

During the same time that manufacturers in this industry were boosting sales and profit margins on high-technology items, many also were increasing their profits through productivity gains. Increased automation, advanced information systems, and management restructuring allowed many competitors to cut costs. The size of the workforce began to wane, falling from 36,820 in 1997 to approximately 36,183 in 2000. Production workers in 2000 numbered 12,930, compared to 13,660 in 1997. Productivity gains were partly offset by higher research and development costs.

In the late 1990s, manufacturers focused on product quality, customer service, and new product introductions. Environmental and pharmaceutical markets offered the strongest growth domestically, but demand from food processing, biotechnology, and chemical industries remained relatively healthy.

Industry shipment values remained steady at $8.3 billion in 2001 and 2002 and increased to $9.2 billion in 2003. Revenues continued to grow during 2004. The global market for analytical and life science instrumentation, including aftermarket supplies and services, equaled more than $26 billion in 2004. Worldwide revenues from the spectroscopy sector accounted for approximately 22 percent of that total, or $5.7 billion. Molecular spectroscopic instruments made up approximately 40 percent of the spectroscopy market, and atomic spectroscopy and mass spectrometry made up approximately 30 percent each.

Within the molecular spectroscopy sector, nuclear magnetic resonance (NMR) showed the fastest growth during the mid-2000s. NMR techniques grew by 10 percent. Although molecular spectroscopy includes numerous techniques covering a broad range of applications, the NMR, ultraviolet, and infrared techniques accounted for nearly 75 percent of the sector. That trend continued later in the decade, due in part to an NMR software package developed in 2007 that helped assign NMR data and automatically evaluated whether a proposed chemical structure was consistent with an NMR spectrum. If the structure did not match, the software highlighted specifically where the inconsistency lay, focusing the chemist's attention on the problematic area

The atomic spectroscopy segment had significant gains in instrumentation for arc/spark, elemental analyzers, and X-ray techniques in the mid-2000s. Arc/spark was benefiting from strength in the metals industry, especially in the rapidly expanding markets of China and India. Elemental analyzers, particularly total organic carbon and mercury analyzers, were being sustained by the semiconductor, pharmaceutical, and environmental industries.

The overall spectroscopy industry was being driven by growth in mass spectroscopy. "MS suppliers have introduced a host of new high-resolution spectrometers to meet the pent-up demand," Lawrence S. Schmid noted in Spectrocopy Magazine in March 2005. "However, interest is not promotion driven; rather the technical challenges facing many scientists are daunting and mass spectrometry appears to offer near term solutions."

Fourier transform mass spectroscopy (FT-MS), which was taking market share from the magnetic sector of mass spectroscopy, was the fastest-growing sector in the mid-2000s. Despite the FT-MS's price tag, which ranged between $500,000 and $1 million, buyers were readily available in the mid-2000s.

Current Conditions

U.S. sales in the analytical instruments industry totaled $33.1 billion in 2009. About 1,650 establishments employed 46,510 workers in the industry. Approximately 85 percent of these businesses were small, employing fewer than 50 people; however, firms employing more than 50 workers accounted for more than 86 percent of total sales. California, home of industry leader Beckman Coulter, employed the most workers in this industry in 2010, 12,800. New Jersey was a distant second with 7,700 workers, followed by Massachusetts with 4,800; Florida with 2,200; and Pennsylvania with 2,100.

Thermo Fisher Scientific Inc.'s location in Massachusetts helped make that state number one in terms of revenue; that state accounted for almost 50 percent of total industry sales. California was second with 22 percent; Wisconsin had 15 percent and Oregon had six percent. The largest category by far in terms of sales, according to Dun & Bradstreet, was spectroscopic instruments, followed by chromatographic equipment and thermal analysis instruments.

Industry Leaders

Market share in the laboratory analytical instruments industry is concentrated, with a few industry leaders controlling the market. High start-up costs and rigid technological requirements discourage new entrants.

A 2006 merger between Thermo Electron and Fisher Scientific International created Thermo Fisher Scientific Inc., of Waltham, Massachusetts, which served more than 350,000 customers worldwide in biotech and pharmaceutical companies, clinical diagnostic labs, and hospitals, among other institutions in the early 2010s. Thermo Fisher Scientific Inc. had 35,400 employees and sales of $10.1 billion in 2009.

Beckman Coulter, headquartered in Brea, California, attained its status among industry leaders through the acquisition of Coulter by Beckman Instruments in 1997. In 2009, the company reported sales of $3.2 billion. Its workforce included more than 11,800 employees worldwide. As of 2010, the company made more than 600 diagnostic testing tools and supplies.

Other industry leaders in 2010 included Roche Diagnostics Corp. of Indianapolis, Indiana, with sales of $9.6 billion and 25,900 employees; Siemens Health Care Diagnostics of Deerfield, Illinois, with sales of $5.0 billion and 2,400 employees; PerkinElmer Corp. (formerly EG&G) of Waltham, Massachusetts, with $1.8 billion in sales and 8,200 employees; and Agilent Technologies of Santa Clara, California, with sales of $4.4 billion and 16,800 employees.

Workforce

Despite expectations for market growth, future employment opportunities in this industry are questionable due to industry consolidation. However, because of the high-tech nature of the industry, loss of production-related job to overseas operations affected this industry less than other sectors that depend more heavily on production capabilities. According to the U.S. Census Bureau, in 2008, industry employment was 37,200. Only about a third of the employers were production workers.

America and the World

The U.S. laboratory analytical instruments industry is the most advanced and productive in the world. Total exports reached $8.69 billion in 2009, up from $6.66 billion in 2005 and $8.12 billion in 2007. Imports, on the other hand, declined, from $12.19 billion in 2005 to $11.52 billion in 2009, although imports did see a surge in 2007 and 2008, with value of shipments reaching $14.60 billion and $14.85 billion, respectively.

The export market for U.S. goods is extremely fragmented, suggesting solid long-term growth potential. Product categories realizing the greatest overseas demand included chromatographs and electrophoresis instruments, general chemical instruments, and viscosity measuring devices.

Demand is expected to increase with the growing biotechnology field, more stringent requirements for environmental testing, and increased capital spending by the pollution control, semiconductor, paper, automotive, and food industries. Development of new foods and flavors has increased both demand and sales of laboratory equipment for assessing moisture content, quality, and shelf life.

Research and Technology

Major technological trends in the 2000s included the ongoing proliferation of combined equipment, such as single units that integrated both chromatograph and spectrometer functions; smaller instruments, particularly portable environmental field equipment; increased quality and precision; and growth in information systems and robotics. The growth in information systems and robotics was evidenced by rising installations of laboratory information management systems (LIMS), as well as a growing demand for automated sample preparation systems for biopharmaceutical applications.

Similarly, manufacturers were introducing easier-to-use chromatography and mass spectrometry devices. Advanced systems automatically optimized and tuned themselves during operation, thereby eliminating much of the practice and guesswork associated with conventional instruments. In addition, many newer instruments combined up to three major functions into one unit.

In the 2000s, technological advances were driving the industry. "GC [gas chromatography] is a very large market," Greg Wells, business manager of Varian's Mass Spectrometry Products told Instrument Business Outlook in 2004. "It has a very large installed base and new analytical problems and challenges continue to confront our customers and these challenges are generally more and more difficult....So the technologies that have been successful in the past are not necessarily adequate for the newer analytical requirements." As a result, equipment continued to advance in complexity and integrated designs. For example, in 2005, Agilent Technologies Inc. introduced a dual-mode ion source for mass spectrometry that can operate simultaneously or separately in both electrospray and atmospheric pressure chemical ionization modes.

In 2005, the European Space Agency used GS/MS instrumentation aboard its Huygens probe, which detached from the Cassini-Huygens mission, to begin exploration of Saturn and its primary moon, Titan. The probe used GS/MS instruments to send back information on the composition of Titan's atmosphere for analysis.

One of the newest developments in the field in the early 2010s was high-harmonic spectroscopy, through which reaction times of atoms could be measured on the attosecond (one quintillionth of a second) timescale. The new technique was developed by the Joint Laboratory for Attosecond Science at the University of Ottawa in Ontario in conjunction with the Institute for Photonics at the Technical University in Vienna, Austria.

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