Low-valued Re causing concern for analytical equipment makers

The market for analytical instruments, which are integral part of any research or quality testing labs, is going through a testing time as a result of slow economic growth and depreciating rupee. While the Rupee was about Rs 45 to the dollar in January 2012, it tumbled to 69 in August 2013 - the dollar rising by over 53% since January 2012. Though the Rupee has stabilised now in the range of 62-63 against the Dollar, still it is too high compared to its value in January 2013 of Rs 53 per Dollar. The analytical epuipment industry, which heavily depends on imports, has witnessed continuous rise in procurement and production cost over last one year, with demand slowing down due to slack in the economy.
 
“It is expected that analytical industry would grow around 10% in India. However the recent developments in terms of rapid decline in Indian economic growth, sharp depreciation of rupee and high interest rates are causing serious concerns. If the situation does not improve rapidly we could expect the market to shrink by more than 10% in a very short time. Since 95% of the systems are imported into India, exchange rate plays a vital role in our customers’ ability to plan and import required equipment,” informed K V Venugopalan, President, Waters India and President, Indian Analytical Industry Association (IAIA).
 
Life sciences and pharmaceutical industry, which is showing better performances than the overall industrial growth, are the major users of analytical epuipment, hence demand for these instruments is still growing. But, rising equipment cost has resulted in customers delaying the purchase or demanding heavy discounts – both resulting in low margins for the equipment manufacturers. “Our major markets such as pharmaceutical and others in India are still growing but at a rate little softer than before. The impact has been due to exchange rate that has pushed up the cost of import considerably. Today, buyers are delaying the purchases in anticipation of some improvement. This has impacted every import business. We hope that the environment changes and the development work in lab space gains the planned momentum again,” said Senya Imamichi, Managing Director, Shimadzu Analytical (India) Pvt Ltd – one of the major suppliers of analytical equipment in India.
 
Still banking on India
Despite the blip, analytical equipment industry is still hope to show decent growth this year. Many manufacturers have increased their engagement with the customers to garner long-term growth. “Shimadzu has a very clear strategy in India and world across - to partner labs in their scientific perusal. We are a solutions provider to customer and hence our growth lies with growth and enrichment of customers working in different segments. We have chalked our Indian growth plan, to create a clear differentiation for customer support and service, along with enhanced technology available from Shimadzu headquarter,” informed Imamichi.
 
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The industry is highly fragmented with more than 150 analytical instrument suppliers offering wide range of equipment in India. This industry is represented by subsidiaries of large multinational companies such as Waters, Agilent and Thermo, large Indian distributors such as Spinco and Lab India. There are also a large number of medium and small suppliers and manufacturers. “More than 95% of the technology and products required for India is still imported and only low technology products are currently manufactured in India,” added Venugopalan of Waters India - which offers a comprehensive range of analytical system solutions, software, and services.
 
The rapid economic growth and the competitive environment coupled with stringent government regulations are forcing Indian industry to have world-class laboratory infrastructure. The Indian analytical instrument market including consumables and spares is estimated around $ 1 billion, with an annual growth rate of above 10 per cent. Pharmaceutical and life science segment is the single largest market for analytical instruments with close to 60% share in India. Venugopalan opined, “The highest growth rate has been in the life science sector, which includes pharma, proteomics, genomics and clinical research related instrumentation. Pharmaceutical and life sciences market is the largest buyer of analytical instruments, followed by government research laboratories and academic institutions. Increased security concerns in India are leading to huge investments in laboratory instrumentation for forensic and explosive detections. Stringent hygiene standards are leading to increased investments in food quality & safety and water analysis.”
 
Speed and accuracy: The key drivers
Though companies are aiming to reduce time to market new products, they could not do so by ignoring quality and safety of the product. Hence, these companies are relying on hi-speed analytical equipment. “Today’s instruments are smaller, highly automated, faster, and offer significantly improved performance characteristics compared to their predecessors. Some of the recent developments include among other things monitoring chemical processes in harsh environments, at high temperatures, and for different manufacturing processes. The life sciences, including medical and clinical, agricultural, toxicological, and environmental analyses are experiencing the greatest expansion of instrumental methods,” said Venugopalan of Waters India.
 
Realising this, equipment manufacturers are developing high-speed equipment. “Higher speed, high sensitivity, regulatory compliance and automation are the emerging technology requirements of analytical scientists. Shimadzu is committed to meet such needs through its ultra-fast technologies and total solutions approach for various challenging analytical applications,” disclosed Imamichi.
 
The fields of proteomics, genomics, and metabolomics depend heavily on ultra-performance chromatography, mass spectrometry and other sophisticated instrumentation. Venugopalan said, “Systems which integrate the sample preparation and introduction will become more common, increasing productivity and reducing operator intervention. Computers and informatics are now an integral part of almost every instrument, where they control measurement parameters as well as the collection, processing, storage and display of data.”
 
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As the regulatory agencies demanding high level of compliance, the demand for high-end instrumentation such as MS is increasing in India. Imamichi observed, “As the Shimadzu technology progresses, there is an upcoming demand for our techniques and improvement. For various demanding application areas such as food safety, genotoxic impurities, etc higher sensitivity is the need of hour. This is where we see high utility of Shimadzu technological advancements in mass-spectrometry. Also, with increased focus and funding in academia and research we see a great demand of our instrumentation and solutions.”
 
Analytical chemistry - the study of separation, identification, and quantification of the chemical materials - play a very significant role in the scientific, technological and economic growth of any nation, according to Waters India’s Venugopalan. Instrumental methods of chemical analysis have become the principal means of obtaining information in diverse areas of science and technology. Experts believe that the analytical instrument market is likely to witness high double-digit growth in future as the country becomes more quality conscious and adopts research culture into its DNA.
 
Imamichi said, “The increase in R&D, educational and QC activities across various segments of science drives the growth. The major investments are in pharma & chemical industries and food testing in private sector in addition to government funding in the areas of academia & research in universities and research institutions. Environmental, clinical, bio-similars and CRAMS are emerging areas for advanced analytical equipment.”