Life science instrumentation: aftermarket gold.

The life science market accounts for the largest share of the analytical instrumentation market. While funding from private and public sources continues to fuel growth, pharmaceutical, government and academic spending is not as robust as just a few years ago. In addition, the dynamics of the market are changing as life science research takes on challenges that focus on complex biological systems and exploit molecular processes for diagnostics and drug development.

In 2005, the life science instrumentation market grew 6.1% to $7.6 billion. The life science instrument market includes DNA and peptide sequencers, DNA and peptide synthesizers, thermal cyclers and real-time PCR, gel electrophoresis systems, plasmid purification products, microarray-based products, biosensors, bioinformatics, and flow cytometers and cell analysis systems, as well as associated aftermarket and service revenues for these techniques.

The rapid pace and new discoveries in life science research have forced instrument companies to respond quickly to changing market conditions. The expanding realm of genomic and proteomic applications has helped leading vendors increase sales. However, niche players with novel technologies are competing successfully and, in some cases, stealing market share from industry leaders. Many vendors have responded with mergers, acquisitions, partnerships and licenses, and increased investments in product development.

Life science instruments are predominantly used by four end-user segments: academia, biotechnology, government and pharmaceutical research labs. Genomic and proteomic researchers are outfitting their labs with new technologies to replace slower and more labor-intensive techniques and expand capabilities for new applications.

Nucleic acid amplification, or PCR (polymerase chain reaction), accounts for the largest share of the life science instrumentation market and is expected to be its fastest growing segment. Real-time PCR has become the method of choice for nucleic acid amplification and new aftermarket products and assays are driving demand. Applied Biosystems leads this market due to its application expertise and intellectual property. Last March, the Roche's foundational patents covering the PCR process, which Applied Biosystems licenses, expired in the US and, in 2006, they are set to expire overseas. However, Applied Biosystems owns numerous patents for real-time PCR, for which it also offers licenses.

Microarray technology has improved since its birth about a decade ago. Although gene expression remains the primary application for DNA microarrays, their use for genotyping and comparative genomics applications is increasing. In addition, more protein and tissue arrays are becoming available. The microarray market is still undergoing consolidation and is expected to grow about 4% in 2006, with the fastest growth in the commercial market.

The flow cytometry and other cell analysis market is estimated to account for 13.3% of the life science instrumentation market and is driven by applications such as transfection and high-content screening. Although sequencer market growth is expected to be flat for 2006, it continues to advance as the next generation of sequencers is now becoming available. These sequencers promise higher throughput and less expensive workflows. While basic research continues to account for the majority of the demand, diagnostic and clinical applications exhibit significant potential.

The life science instrumentation market is quite fragmented. The top five vendors account for nearly half of the total demand. Applied Biosystems continues to lead the market with about 18% share of the market. GE Healthcare and Invitrogen combine for about 19% of the market, while Becton Dickinson and QIAGEN represent about 7% and 5% of the market, respectively.

2005 Life Science Market by Product Type

After-market      46%
Initial Systems   43%
Service           11%

Note: Table made from pie chart.

2005 Life Science Supplier Market Shares

Applied Biosystems   18%
GE Healthcare        10%
Invitrogen            9%
Becton Dickinson      7%
QIAGEN                5%
Others               51%

Note: Table made from pie chart.

2004-07 Total Life Science Instrumentation Market

$Millions

2004   7151
2005   7586
2006   7994
2007   8318

Note: Table made from bar graph.

Life Science Instrumentation Market Leaders

Informatics                      MDL, Accelrys
Microarrays, Biosensors          Affymetrix, Biacore
Electrophoresis                  GE Healthcare, Bio-Rad
Plasmid Purification             QIAGEN, GE Healthcare
Nucleic Acid Amplification       Applied Biosystems, Invitrogen
Sequencing                       Applied Biosys., GE Healthcare
Flow Cytometry, Cell Analysis    Becton Dickinson, Beckman
Synthesis                        Applied Biosys., GE Healthcare

Life Science Instrumentation 2005-06

                                Market Share   Growth Rate

Nucleic Acid Amplification          17.9%          8.5%
Microarray/Biosensors               16.7%          4.2%
Flow Cytometry/Cell Analysis        13.3%          7.2%
Informatics                         12.5%          4.3%
Sequencing                          11.0%          1.0%
Plasmid Purification                10.9%          7.8%
Synthesis                            9.0%          5.4%
Electrophoresis                      8.6%          2.5%
Total                              100.0%          5.4%