In our 2017 IBO Review & Forecast issue, we report that instrument and laboratory product companies, just like other industries, felt the effects of 2016’s high degree of uncertainty. Political developments, such as Brexit and the US election, as well as economic questions, including growth expectations for China and the possibility of higher US interest rates, complicated demand forecasts and planning.
In December 2016, the Conference Board reported that US business capital spending declined 0.7% in 2016. Experts indicate that for many companies capital spending was put on hold due to the US election and macroeconomic uncertainty. This suggests that in certain markets some instrument purchases may have been delayed.
In particular, the outlook for industrial markets and Western Europe proved to be unpredictable. Agilent Technologies reported disappointment with continued weakness in the oil market, while PerkinElmer anticipates industrial end-market sales for the year to miss initial expectations. Bruker faced an unexpected slump in Europe early in the year, and Illumina revised revenue guidance due to disappointing European demand. On the positive side, biopharmaceutical spending and Chinese government spending surpassed expectations for a number of major companies.
We expect that this sense of uncertainty will continue for the foreseeable future and cause life science and analytical instrument companies to pursue a combination of strategies to compete in market segments where spending remains, at the very least, consistent. In the coming weeks, we’ll be exploring these strategies and market segments here at our blog, in Instrument Business Outlook, and Digest, our monthly newsletter. In the meantime, we welcome your thoughts on how our industry is reacting to these uncertain times.