Developing Regions Drive Instrumention Growth

Finding the right feature/price balance is key to success for process analytical instruments vendors, study says.

Demand for new equipment in developing regions allows manufacturers of process analytical instruments to sustain revenues despite stagnating need from North America, Europe, and Japan.

A new analysis from Frost & Sullivan entitled “World Process Analytical Instruments Market,” reveals that revenue in this market totaled $2.28 billion in 2004. Analysts project it to reach $3.07 billion in 2011.

The report analyzes key market dynamics and trends that influence demand for process analytical instruments such as chromatographs, spectrometers, gas analyzers and liquid analyzers. It also includes revenue forecasts, demand analysis and strategic recommendations that assist service providers in capturing market share.

Low profits

"Rapidly developing markets are showing excellent growth rates both in number of units sold and market revenue, but higher profit margins, which vendors expect from mature markets, are hard to come by," notes Frost & Sullivan Research Analyst T.V. Navin Kumar, "the prime reason being that emerging markets take time to adopt high-end products."

At the same time, end-users in developed countries demand cheaper products with more product features and benefits. In order to maintain profit margins, vendors need to offer product variants and services at different price levels to fit the individual needs of the developing and developed markets.

In the current market scenario, customers are demanding cheaper instruments with integrated solutions capable of communicating with other process analyzers. Such advancements in technology would not only increase profit margins but also stimulate demand in mature markets.

Since fundamental design of the instruments remains more or less the same, a good strategy for differentiation, would be to focus on associated electronics and communication aspects of the process analyzers, concludes the report.

"Value engineering and varying the product designs right at the production stage are going to be crucial for augmenting revenues," says Navin Kumar.

Introduction of software and digital communications into the instruments, add-on features such as interconnectivity with other process analyzers, and operability with handheld devices and laptops are gaining in significance.

Acquisition strategy

In an effort to incorporate such advanced capabilities and expand product portfolio, analytical instrument manufacturers are increasingly acquiring smaller companies with specialized capabilities. For example, companies with limited experience in data management will benefit from acquiring data management firms.

Apart from technically superior products, an efficient distribution channel could allow vendors to gain an edge over competing brands and make a positive impact across new and emerging applications in the biotechnology, chemicals, and gas refining industries.

"More concerted efforts are essential to retain customers through adequate training in terms of problem solving and customer support," observes Navin Kumar. "Interactive training procedures, for example, would increase customer awareness regarding product features and also help in improving brand image."

Going forward, an appropriate blend of advanced product features, excellent customer support and service strategy, and competitive pricing will be critical to succeed in the process analytical instruments market.

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