Figure 1. Spectroscopy market by product segment.

24 Spectroscopy SHOWCASE March 2002 www.spectroscopyonline.com

Mass Spectrometry Shines Bright in an Otherwise Bleak Market for Spectroscopy Instrumentation

I N D U S T R Y T R E N D S

Lawrence S. SchmidStrategic Directions InternationalLos Angeles, CA

Sales of analytical and life science in-strumentation in 2001 was a touch-and-go situation with the realities ofthe global economic downturn set-ting in and muting the hopes of

many instrument vendors. Reports begansurfacing in the spring suggesting thattimes were getting tough — and that wasthe good news. Although the first half of2001 exhibited some encouraging signs,the difficulties in the United States, Eu-rope, Japan, and Latin America in the sec-ond half dashed prospects for an above-average year. According to StrategicDirections International’s (SDi) Instru-ment Business Outlook (IBO), the totalworldwide market of instrumentation andrelated aftermarket and service revenuesreached $21 billion, growing about 7.3%from 2000 levels. Compared with some in-dustries, this kind of growth was welcome,but still disappointing, given the fore-casted growth at the beginning of 2001 of8.7%. Of course, last year’s forecast didnot anticipate the unforeseen recessionand September’s world-changing events.

The overall analytical and life scienceinstrument market is expected to reboundmodestly in 2002, exhibiting growth in ex-cess of 9%. As usual, above-averagegrowth is expected from the life sciencemarket, which bodes well for bioinstru-mentation and liquid chromatography(LC) techniques. But even here, growthrates will likely be five to eight percentagepoints lower than what was experiencedduring the last few years. Other analyticaltechniques, such as physical propertymeasurement, surface analyzers, electronmicroscopes, and gas chromatography(GC), are unlikely to do much better thantheir below-par performance in 2001 be-cause of their orientation toward heavy in-dustry, petroleum processing, and elec-tronics manufacturing.

Although market growth slowed during2001, it seemed to accelerate trends al-ready underway, such as strategic acquisi-tions, divestitures, and reorganizations.PerkinElmer (Norwalk, CT) was the mostactive, with examples in each category.PerkinElmer acquired Packard Bioscience,a leader in laboratory automation tech-nologies, while divesting various indus-trial activities and their detection systemsbusiness. Thermo Electron (Waltham,MA) focused heavily on reorganizationand efficiency moves to better position thecompany for future organic growth, and

perhaps a return to acquisition minded-ness. Waters (Milford, MA) and AgilentTechnologies (Palo Alto, CA) also signalednew approaches based on recent an-nouncements of reorganizations and re-alignments. Varian (Palo Alto, CA), on theother hand, continued its march towardbecoming a genuine life science partici-pant through several acquisition moves.

2001 was also a year in which severallong-standing litigation pursuits were set-tled. These included a resolution of dis-putes between Bruker Daltonics (Billerica,MA) and Agilent Technologies withThermo Electron over ion-trap mass spec-trometry (MS) technology, and an induc-tively coupled plasma (ICP)-MS relatedsuit between Spectro (Kleve, Germany)and Varian. So what is the outlook for theoverall field of spectroscopy? A quick an-swer seems to depend on whether or notyou are a vendor of MS instrumentation,because if you are, then 2002 looks quitepromising.

SDi categorizes the spectroscopy marketinto three distinct sectors: molecular spec-troscopy, atomic spectroscopy, and MS.The applications of the techniques in-cluded in each sector and their prospectsdiffer significantly, even within each sec-tor. The overall worldwide spectroscopyareas accounted for approximately $5.25billion in revenues for 2001, or about 25%of the total instrument market. The over-all spectroscopy market is estimated tohave grown slightly less than 5% in 2001,but is estimated to expand about 6.5% in2002. Because most spectroscopy tech-niques are very mature businesses, such agrowth projection is very encouraging andshould help to ameliorate last year’s lack-luster performance. Table I lists some ofthe expected growth rates for the fastest-and slowest-growing products. Figure 1shows the breakdown of the spectroscopymarket by product segment.

Molecular spectroscopy techniques ac-count for approximately 46% of the spec-

PHO

TOD

ISC

Molecular spectroscopy

2000

3.0

2.5

2.0

1.5

1.0

0.5

0.02001

Mar

ket (

$ bi

llion

)

2002 2003

Atomic spectroscopy Mass spectrometry

Table I. Spectroscopy product growth prospects for 2002.Fastest-growing Slowest-growing

Quadrupole Sector masstime-of-flight 25–30% spectrometry 1–3%High-resolutionliquid chromatography–mass spectrometry 10–15% Arc-spark 2–3%Raman 10–15% Atomic absorption 2–3%Fourier transform–ion cyclotron resonance 8–10% UV/Vis 3–4%Matrix-assistedlaser desorption Inductively ionization mass spectrometry 8–10% coupled plasma 4–5%

26 Spectroscopy SHOWCASE March 2002 www.spectroscopyonline.com

Figure 3. Estimated growth in spectroscopy sectors for 2002.Figure 2. Percentage of 2001 revenues ($5.2billion) for each spectroscopy market sector.

troscopy market, although many differenttechniques are represented. Atomic spec-troscopy is the second-largest sector at al-most 36%, while MS represents just 18% ofspectroscopy revenues (see Figure 2). Itshould be noted, however, that general-purpose LC-MS and GC-MS — major MStechniques — are not included here as theyare considered to be part of the chromatog-raphy market. Revenues of these hyphen-ated techniques would increase the signifi-cance of the MS figures by two-thirds.

Molecular SpectroscopyMolecular spectroscopy instrumentationcan range from single-wavelength pho-tometers costing a few hundred dollars tohigh-resolution nuclear magnetic reso-nance (NMR) spectrometers priced atover $2 million. Sales of molecular spec-

troscopy instruments, supplies, and ser-vices are expected to exceed $2.5 billion in2002, suggesting a modest overall growthexpectation of slightly more than 5%. Themarket for the majority of the molecularspectroscopy techniques is fairly saturated,although a continuing stream of newproducts and declining prices continues tohelp stimulate growth in what is essen-tially a replacement market.

The largest single market segment re-lates to a range of instruments in the UVand visible spectrum, which collectivelyaccounts for more than a quarter of an-nual industry revenues. Unfortunately,this category of instruments is the mostmature, offering little growth potential ex-cept when older units are retired and re-placed. It is here that increased perfor-mance and lower prices have become a

way of life. NMR spectrometers, account-ing for the second-largest analytical cate-gory, could not be more different. Theseinstruments are growing in popularity de-spite their hefty price tags, especially in lifescience laboratories for structural deter-minations. Raman spectroscopy, thesmallest instrument category (accountingfor just 3% of the market), continues toexhibit strong growth, especially for thenew line up of dispersive instrumentationintroduced in recent years. Conversely,stand-alone fluorescence instrumentationis facing increased competition from otherinstrumentation based on fluorescencespectroscopy, like microplate readers, andis therefore transitioning to specialty ap-plications such as protein-binding analy-sis. NMR is also threatened by innovativeMS and x-ray diffraction techniques.

However, each approach seems to bethriving because of user preferences, aswell as somewhat different performanceand applicability profiles.

Atomic Spectroscopy2001 was a very tough year for the atomicspectroscopy market because of its closeassociation with industrial markets, espe-cially the semiconductor sector, which suf-fered the most in the global economicslowdown. The overall market expandedjust over 2% in 2001. It is forecasted togrow twice as rapidly in 2002, at about4.5%, which would put the market at wellover $1.9 billion. X-ray fluorescence andatomic absorption (AA) are the largestsegments, each with about 20% of themarket. Perhaps surprisingly, the fastest-growing segment is x-ray diffractometry,especially the single-crystal portion of themarket, which is benefiting from increaseduse in protein characterization for drugdiscovery. The traditional growth segmentof ICP-MS did not fare so well in 2001,and it will likely not do much better in2002, because of decreased demand forsemiconductor industry applications.

The fact that atomic spectroscopy issuch an important analytical technique forthe elemental analysis of metals has been anegative factor this year as primary andsecondary metals producers and the heavyequipment industry cut back their activi-ties in response to slowing demand. Arcspark spectrometers and elemental ana-lyzer manufacturers saw systems sales de-crease in 2001, and 2002 is likely to onlyshow minimal growth. Fortunately, the

Molecularspectroscopy

46%Atomic

spectroscopy36%

Massspectrometry

18%

Mass spectrometry

Molecular spectroscopy

Atomic spectroscopy

0 5 10

Growth (%)

15

Circle 33, 34

INDUSTRY TRENDS

Spectroscopy SHOWCASE March 2002 27

spare parts and service portions of thesebusinesses have continued to hold up be-cause of the large installed base ofinstrumentation.

AA, ICP, and ICP-MS systems serve theneeds of many types of users, but the envi-ronmental market is key, and here too busi-ness has not been very robust. Althoughenvironmental requirements continue toincrease worldwide, industry over-capacityand low processing fees have depressed thepurchase of instrument systems, especiallyfor inorganic analysis. Only total organiccarbon analyzers have continued to be inrelatively strong demand.

Mass SpectrometryMS is clearly the most promising portionof the spectroscopy marketplace. Al-though its most mature contributor, mag-netic sector MS, is quite stagnant, theother techniques in the group more thanmake up for it. The market for initial sys-tems, aftermarket, and service for MS ap-proached $1 billion in turnover for 2001,which suggests that the market grew al-most 10% in 2001. Total MS market de-mand may well approach $1.1 billion in2002, reflecting a projected growth ofmore than 13% (see Figure 3). Please notethat this year’s forecast includes high-resolution LC-MS (triple quads and iontrap MSn units). However, general-pur-pose LC-MS and GC-MS are not includedhere because these techniques are coveredin chromatography market analyses.

High-resolution MS is by far the largestMS market segment, accounting for morethan 50% of sales in 2001. It also is growingat about 15% as the result of increased usein pharmaceutical industry drug discoveryefforts, as well as in many other settingsthat require high resolution. Quadrupoletime-of-flight (Q-TOF) MS is, however, therising star of the market as its many config-urations, offered by a growing list of sup-pliers, find acceptance in pharmaceutical,biotechnology, academia, government re-search, and independent testing laborato-ries, particularly for proteomic applica-tions. Although the technique is pricey,sometimes approaching $1 million, usersreport very favorable results. Growth for2002 is projected at close to 30%. Fouriertransform (FT)-ion cyclotron resonance, orFT-MS, is another high-priced techniquewith outstanding resolution that continuesto find additional applications in the mar-ketplace. However, it tends to be consideredoverly complex, and does not lend itself asnicely to high-throughput applications as Q-TOF, so it tends to be found in niche applications.

Matrix-assisted laser desorption ioniza-tion (MALDI)-TOF is also found princi-pally in life science applications, but it isnot growing as fast as in previous periodsbecause of competition from other MStechniques. Nevertheless, it is a large(18%), growing segment. The fastest salesgrowth within this market is from bench-top initial systems, although the higher-performance — and more costly — free-standing systems account for greater sales.Magnetic sector instruments currently ex-hibit little, if any, growth and are expectedto decline in significance in the near fu-ture. Currently they are experiencing re-newed interest as an ideal technique fordioxin analysis, and a number of ordershave been received, especially from Japan,where a special effort is underway to de-tect dioxin contamination.

The Spectroscopy Market ConundrumSpectroscopy is an important analyticalcategory. It serves users in almost everylaboratory setting, and it will continue todo so for years to come. Spectroscopy in-strumentation is available in a vast arrayof configurations with equally diverse us-age. Spectrophotometers and spectrome-ters tend to be rugged and often providereliable results well beyond their designobjectives. Although this may not servethe interests of manufacturers as well asusers, it attests to the enduring nature ofthe technology. In addition to revolution-

ary new instruments like Q-TOFs, thefield is blessed with a regular infusion ofinnovation within almost every productcategory. AA is an excellent example. Herewe have seen a stream of new instrumentintroductions that are faster, smaller, eas-ier to use, and even less costly. Such com-mitment on the part of vendors is likelybased on competitive motivations, but themarketplace also benefits. We do not ex-pect these market dynamics to changeanytime soon.

Lawrence S. Schmid is president and chief execu-tive officer of Strategic Directions International,a consulting and market intelligence firm. Hecan be contacted at the address and phone andfax numbers listed below, or by e-mail atlschmid@strategic-directions.com. For more in-formation on IBO or other instrumentation re-search, contact Strategic Directions Interna-tional, 6242 Westchester Parkway, Suite 100, LosAngeles, CA 90045, (310) 641-4982, fax: (310)641-8851, e-mail: IBO@strategic-directions.com.

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