According to Instrument Business Outlook (IBO) — a publication of Strategic Directions International, Inc. (SDI), which is a consulting and market intelligence firm specializing in this market — the total worldwide market for analytical and life science instrumentation and related aftermarket and service revenues was estimated at $32.8 billion in 2006. This represented an overall increase in industry revenues of 6.5% from 2005. As with the recent past, some uncertainty still persists. The world continues to struggle with high oil prices; political turmoil persists in the Middle East; and the political situation in the U.S. might portend changes in government funding and attitude toward international trade and investment. The pharmaceutical industry appears to be entering a period of profound change as it relates to R&D, manufacturing logistics, pricing, and marketing approaches. The long-term impact on the laboratory analytical industry has yet to be determined. And will China and India prove to be the "horn of plenty" that many desire? With all this in mind, SDI still projects a similar but slightly lower overall industry revenue increase in 2007 of just over 6%.

The year 2006 was characterized by moderate shifts in the focus of instrument companies occasioned by changing demand conditions in North America and Asia. More emphasis is now being given to opportunities across Asia, especially in China and India, and because Japan's economy has improved significantly. North America, while still the largest instrument market, demands less attention as growth will come elsewhere, but customer satisfaction cannot be shortchanged. Thermo Electron's (Waltham, Massachusetts) acquisition of Fisher Scientific is designed to address customer needs in a holistic manner, by offering one-stop shopping. And while big pharma might not be the bonanza of former years, the rest of pharma and biotech in general offer many opportunities. A host of fast liquid chromatography (LC) product introductions will likely impact the mass spectrometry (MS) market, as LC–MS instruments will have significantly enhanced sample introduction. The European Reduction in Hazardous Substance regulations (RoHS) went into effect and the X-ray fluorescence (XRF) market boomed as manufacturers worldwide worked to "get the lead out" of their circuit boards. Thermo Electron benefited greatly from its acquisition of handheld XRF manufacturer Niton, and others like Bruker BioSciences (Billerica, Massachusetts) joined the fray. Agilent Technologies (Palo Alto, California) bought out its joint venture partner Yokogawa Analytical to enhance its prospect in Japan and for inductively coupled plasma (ICP)-MS, while X-Rite (Grand Rapids, Michigan) and Amazys merged to change the market dynamics in color measurement. Actually, for an established industry, 2006 was a momentous year.

Figure 1: 2006 spectroscopy market by sector ($7.2 billion).

There is also a growing interest in the aftermarket aspect of the industry revenue mix, which includes such areas as consumables, software updates, and accessories. This is in recognition of the growing importance of those areas as the market expands and matures. In fact, in some market segments, the aftermarket is growing faster than instrument system revenues and is often more profitable. So it should be noted that all the revenue projections in this article include the total mix of revenue sources: instrument system sales, aftermarket, and service.

The spectroscopy market can be segmented into three distinct sectors: molecular spectroscopy, atomic spectroscopy, and mass spectrometry. The applications of the techniques included in each sector and their prospects differ significantly, even within each sector. Worldwide revenues for all spectroscopy segments is estimated at $7.2 billion for 2006, or about 22% of the entire laboratory analytical and life science instrument market. The overall spectroscopy market is estimated to have grown 7.2% in 2006, over a full percentage point better than what we had forecasted last year. SDI projects 2007 growth for the spectroscopy market to be similar to 2006, increasing about 6.5%, which suggests that this market actually will exceed total laboratory market growth, as it did in 2006.