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PerkinElmer, Olympus Sell Off Parts of Business to Private Equity

In attempts to slim down and focus more closely on medical or life sciences offerings, both Olympus and PerkinElmer have recently sold off portions of their businesses to private equity firms. On August 29, Tokyo-based Olympus, a manufacturer of optical products, announced the sale of its microscope unit Evident to Bain Capital for $3.08 billion. The deal follows scientific products and services corporation PerkinElmer’s August 1 announcement it had entered an agreement with New Mountain Capital to divest its Applied, Food, and Enterprise Services businesses for up to $2.45 billion in cash.

Proceeds from the deals will allow both companies to pour resources into refined focuses: life sciences and diagnostics offerings for PerkinElmer, and medical technologies for Olympus. Selling to private equity will hopefully give the offloaded businesses the opportunity to continue growing, while from the private equity buyers’ perspectives, the stable and positive cash flow expected by the divested businesses make them attractive acquisitions.

PerkinElmer has been moving toward focusing on life sciences in recent years, acquiring both antibody and reagents powerhouse BioLegend and diagnostics company Oxford Immunotec in 2021. A source close to the recent sale told Reuters that other options were considered, including spinning off the units or selling to strategic buyers, but the carve out to New Mountain won out as it will both allow PerkinElmer to invest in its existing life sciences businesses and fund future acquisitions within that scope.

The deal completes PerkinElmer’s transformation into a pure-play Life Sciences and Diagnostics company that will adopt a new name and stock ticker at a later date, the company said in a press release. These remaining units are expected to make $3.3 billion in sales this year, around 60% from diagnostics and around 40% from life sciences, while the divested businesses, which include PerkinElmer’s portfolio of chromatography and mass spectrometry instruments, are expected to bring in $1.3 billion in 2022. Overall, the divestiture of the three PerkinElmer businesses improves the growth profile of the company, experts tell Reuters.

Olympus, too, has been reorganizing its portfolio in the last few years, and though its scientific businesses remain profitable, their growth has stalled. In mid-2020, the company sold off its longstanding camera business, and in 2021, got rid of subsidiaries focused on IT solutions and regenerative medicine development. In 2020, the company told Evaluate Vantage it was focusing on acquiring innovative therapeutic technologies and made good on the promise later that year when it purchased Verna Medical Technologies, an interventional pulmonology device firm.

The divestment of Evident could enable Olympus to continue making similar acquisitions. After selling Evident, Olympus will operate as a global medical technology company and specifically allocate resources to its endoscopic and therapeutic solutions sections, the company said in a release announcing the deal. The divested microscopy businesses contributed to less than 10% of the company’s revenues, Chemical & Engineering News reports, and have little customer overlap with its medical device business. As such, divesting not only allows Olympus to focus on the medical market but also simplify its operations.

M&A Highlights July 1–August 9

PerkinElmer to Divest Applied, Food, and Enterprise Service Businesses

Waltham, MA, August 1, 2022: PerkinElmer will divest its Applied, Food and Enterprise Services businesses to private equity firm New Mountain Capital for up to $2.45 billion. In the deal, New Mountain will acquire PerkinElmer’s OneSource laboratory services as well as a portfolio of atomic spectroscopy, molecular spectroscopy, and chromatography instruments, consumables and reagents that serve the biopharma, food, environmental and safety and applied end markets.

More about the sale: When the transaction closes, the divested businesses will retain the PerkinElmer name and brand while PerkinElmer’s Life Sciences and Diagnostics businesses will adopt a new name and stock ticker. These remaining businesses are expected to generate $3.3 billion of revenue in 2022.

Agilent Acquires Polymer Standards Service

Santa Clara, CA, August 2, 2022: Agilent Technologies has acquired Polymer Standards Service (PSS), which provides hardware and software solutions for polymer characterization. The acquisition of PSS, which is based in Mainz, Germany, will add key technology to Agilent’s gel permeation chromatography and size exclusion chromatography offerings, said Jacob Thaysen, senior vice president, Agilent. Financial terms of the deal were not disclosed.

More about PSS: Privately held and founded in 1985, PSS has a US office in Amherst, MA, in addition to its German headquarters. Its products include columns, software, systems, and detectors for size exclusion chromatography, interaction polymer chromatography and 2-dimensional chromatography (2D). PSS also provides trainings and contract analysis and compliance services.

Bio-Rad to Acquire Curiosity Diagnostics, Maker of Rapid PCR Diagnostic System

Hercules, CA, August 3, 2022: Bio-Rad Laboratories will acquire Curiosity Diagnostics from Warsaw, Poland-based Scope Fluidics for $100 million in cash and up to $70 million in payment upon achievement of future milestones. Curiosity Diagnostics is developing a rapid PCR system that offers “a streamlined workflow and rapid turnaround times, and is expected to extend our reach beyond high-complexity labs into near-patient molecular diagnostics labs,” said Dara Wright, executive vice president and president, Clinical Diagnostics Group, Bio-Rad.

More about Curiosity Diagnostics: Curiosity’s PCR system, PCR|ONE, is a benchtop, automated PCR device for diagnostic detection of pathogens and genetic targets in 20 minutes. The company has developed diagnostic panels for SARS-CoV-2 and MRSA/MSSA, and the system is currently being distributed to partnering research centers for testing. 

Bio-Techne Acquires Single-Cell Sorting Provider Namocell

Minneapolis, MN, July 5, 2022: Bio-Techne announced completion of its acquisition of Namocell. Headquartered in Mountain View, CA, Namocell provides single-cell sorting for application in biotherapeutics and diagnostics. Bio-Techne expects the deal to close first quarter of its fiscal 2023. Financial details were not available. According to Chuck Kummeth, CEO and president, Bio-Techne, Bio-Techne hopes the acquisition helps the company meet the growing demand for fast cell sorting in research and next-generation therapeutics.

More about Namocell: Namocell’s sorters, including a two-laser system with up to 11 fluorescent detection channels and a single-laser system with 2 channels, use a proprietary technology that combines microfluidics, flow cytometry, and liquid dispensing technology, rather than relying on traditional fluorescence-activated cell sorting methods.

908 Devices Acquires TRACE Analytics
Boston, MA, August 9, 2022: 908 Devices, a maker of handheld and desktop MS devices, has completed acquisition of Braunschweig, Germany-based TRACE Analytics. TRACE develops both single-use and reusable on-line aseptic sampling systems and biosensors for monitoring and control in biotech applications. The acquisition “enables us to take a measurable step forward in our goal to build a connected and comprehensive bioanalytics platform”, said Dr. Kevin J. Knopp, PhD, CEO and cofounder, 908 Devices. The deal consists of initial cash payment of $15.3 million and up to $2 million upon achievement of certain milestones over the next 2 years.

More about TRACE Analytics: Founded in 2003, TRACE Analytics produces online biosensors for monitoring in cell cultivations and microbial fermentations, as well as associated accessories. By acquiring TRACE’s technology, 908 Devices expects to enable their handheld and desktop MS devices as online monitors.

Azenta Completes Acquisition of Barkey, Plans to Acquire B Medical Systems

Chelmsford, MA, Ju1y 1, 2022: Azenta announced completion of its €80 million ($84 million) acquisition of Barkey Holding, a provider of controlled rate thawing devices based in Leopoldshöhe, Germany, and its subsidiaries. Azenta, known as Brooks Automation before December 2021, provides cold-chain sample management solutions and genomic services. The acquisition of Barkey “will extend our extensive cold chain of condition portfolio of products and services, while also expanding our customer reach,” said Steve Schwartz, PhD, CEO and president, Azenta.

About Barkey: Barkey was founded in 1980 and produces dry temperature control products, including their plasmatherm automated thawing device which is FDA-approved for clinical use. In addition to its headquarters in Leopoldshöhe, Barkey established an office in Cambridge, MA, in 2021 and opened an office in Shanghai this year.

August 8, 2022: Azenta will acquire vaccine cold chain provider B Medical Systems and its subsidiaries for €410 million($417 million) with additional cash consideration of up to €50 million ($51 million) payable upon achievement of future performance milestones. B Medical, headquartered in Hosingen, Luxembourg, serves primarily emerging markets with medical refrigeration and real-time monitoring and blood management solutions. The deal is expected to be completed in October.

More about B Medical: B Medical’s portfolio includes vaccine transport systems. It has installed more than 500,000 units in about 150 countries, and its equipment has helped vaccinations reach more than 300 million children in developing countries, according to the company.

Neogen Acquires Thai Distributer of its Products

Lansing, MI, July 6, 2022: Neogen announced acquisition of Thai-Neo Biotech. Located in Bangkok, Thailand, Thai-Neo has been a distributor of Neogen’s food safety rapid tests and solutions for 20 years. “We see this as a tremendous opportunity to grow our aquaculture, genomics, and animal safety businesses, while also offering our food safety solutions to new customers in the area,” said Dr. Jason Lilly, PhD, vice president of International Business, Neogen. Financial terms of the deal were not disclosed.

More about Neogen: This deal compliments Neogen’s previous acquisitions of its distributor partners in South America, Europe, and beyond. In December 2021, Neogen announced an agreement with 3M to combine the latterΓÇÖs Food Safety business with Neogen’s exisiting operations.

IMF’s Global Economic Outlook Remains “Gloomy” and Uncertain

As new risks spill into an economy already weakened by the COVID-19 pandemic, the International Monetary Fund (IMF) forecasts global growth to continue to slow in 2022. In its July 2022 World Economic Outlook (WEO) Update: Gloomy and More Uncertain, an update to its yearly WEO released in April, the IMF predicts growth to slow to 3.2% in 2022, revising its April forecast of 3.6% and down from 6.1% in 2021. After a shaky and slight recovery last year, risks identified in the April WEO, including the war in Ukraine, ballooning inflation, and economic slowdowns in China will continue to have adverse effects, the Update states.

It’s not all bad news; the economies of Brazil, Mexico, Colombia, and Chile have seen a more robust recovery than expected, contributing to an upward revision of 0.5 percentage points to projected growth in Latin America and the Caribbean. But globally, consumer prices have risen even faster than initially expected and inflation remains a chief concern. In the US and UK, inflation has reached its highest rate in more than 40 years, with the consumer price index rising by 9.1% in both the US in June and the UK in May when compared with a year earlier. Dismal consumer spending has caused the IMF to revise projected 2022 GDP for the US down 1.4 points to 2.3%.

*Changes in value compared with predictions from April 2022 WEO are in parentheses.

Globally, inflation this year is expected to reach 6.6% in advanced economies and 9.5% in emerging market and developing economies, a bump of 0.9 and 0.8 percentage points, respectively, from the fund’s April projections. To address rising inflation, which has outpaced wage growth in both advanced and emerging market and developing economies, central banks in many countries have raised interest rates even higher than expected in April’s WEO.

Since April 2022, China’s zero-COVID policy led to lockdowns as outbreaks and new variants arose, pushing the country’s economy into a slowdown and resulting in supply-chain disruptions for the rest of the world. Shanghai entered a strict lockdown in April for 2 months, halting activity in many of the city’s semiconductor, electronics, and chemical manufacturing factories and disrupting activity at the world’s busiest port. The WEO warns future COVID-19 outbreaks could create further logjams for cargo moving through China’s ports and stop production in factories based in locked-down districts.

Lastly, the war in Ukraine continues to have cascading effects due to dependence on oil, gas, and metals exports from Russia, and Ukraine’s status as the breadbasket of Europe. Russia normally accounts for 10% of the world’s oil production, and Russia and Ukraine are together responsible for nearly 30% of the world’s wheat. The crisis has driven an inflation in global food prices, particularly prices of cereal grains. Russian gas exports to Europe have fallen to 40% of last year’s level, increasing crude oil prices, albeit at a rate slightly lower than the April WEO due to offsets made by OPEC. Overall, the WEO expects oil prices to increase by 50.4% in 2022 (with nonfuel commodity prices increasing by 10.1%). In the event of an unprecedented complete cut-off of Russian energy exports, the WEO predicts further inflation and a steeper deceleration global growth to 2.6% in 2022 and 2% in 2023, nearing 50-year lows, with shocks felt most acutely in Europe.

Combined, these factors could affect many end markets that intersect with the analytical instrument industry. Supply chain backups and higher energy prices could affect transport and costs of materials and products. Raised interest rates might hamper companies’ and institutions’ purchasing power for instruments. And for consumers, high prices of essentials like food and energy could curb large purchases or spending in discretionary categories, and less consumer spending could lead to a decrease in product testing. In all, the IMF positions the current economic outlook as “extraordinarily uncertain” due to the many shifting risks outlined in the WEO Update, but across the board, the prognosis is “gloomy.”

Laboratories Aren’t Immune to the “Great Resignation”

The pandemic shook up nearly every facet of modern life, including employees’ views of what they value at work. In a trend dubbed the “Great Resignation” or the “Great Attrition,” about 47.4 million workers quit their jobs in 2021, and more than 4 million people have quit their jobs each month this year. At the end of June (the latest month with available data), 10.7 million jobs were open in the US, down 5.6% from 11.3 million in May but up 9.2% from 9.8 million in June of 2021, according to the US Bureau of Labor Statistics.

And industries that rely on labs aren’t immune. The Bureau reported over 2 million healthcare and social services job openings and 790,000 manufacturing job openings at the end of June. As of July 22, job postings on the hiring platform Indeed.com are up nearly 68% for positions in scientific R&D, 78% for medical technicians, and 90.5% for positions in production and manufacturing compared with pre-pandemic levels in February 2020. Some large companies that profited during the pandemic expanded; for example, Johnson & Johnson grew 7.2% from 132,200 to 141,700 employees between 2019 and 2021.* Other companies have seen their ranks decrease Pfizer’s numbers dropped 10.5% from 88,300 to 79,000 employees in the same time frame.

“We are suffering, along with the rest of the country, from the ‘where-are-the-workers’ syndrome,” says Jan Hudson, partner and CEO of Surf Search, a recruiting firm in San Diego, CA, that specializes in health care, medical devices, and the pharmaceutical and biotech industries. The pandemic is mostly to blame, Hudson says, and employees are now looking for remote work and other perks.

Before the pandemic, employers weren’t paying close enough attention to retention, says Chris Clancy, associate vice president and practice director in Life Sciences and Biotechnology at Boston, MA-based recruiting firm HireMinds. A report published in July by McKinsey & Company found that 54% of respondents working in healthcare or pharmaceuticals who quit their jobs between April 2020 and April 2022 did not return to that same industry, citing a lack of opportunities for career development or advancement and inadequate compensation as top reasons for quitting. Clancy says many employers are now desperate to fill spots at their lab benches.

For the candidates who stuck around the lab and are now looking for jobs, their wish lists are long. Ample time off and stock options are high on jobseekers must-have lists, Hudson says. But many prospective employees are looking for hybrid or fully remote work options above all, a tricky proposition for lab-based work. “You can’t culture cells from home,” Clancy says.

Because of the premium placed on remote work, “good lab hands are hard to find,” he says.

Even if a potential staffer is aware they’ll need to be physically at the bench, they often are looking for leadership to be in-person too, says Carla Yacoub, senior scientific recruiting associate at Boston-area firm Sci.bio Recruiting. “It may be a challenge for these companies to encourage their senior leadership to be on-site as much as they can,” she says.

Outsourcing wet lab work to CROs might play a growing role, says Aly Budny, senior marketing and scientific recruiting associate, also with Sci.bio. “Instead of executing experiments in a lab setting, scientists now design and troubleshoot experiments that are fully executed at a CRO, outside of their company’s lab,” she says, enabling them to work remotely.

Along with research associates and lab technicians, both Hudson and Clancy also see companies struggle to recruit bioinformaticians or other data scientists to their ranks. But while the pandemic has been hard on labs, Clancy points out that laboratories have proved now, more than ever, to be necessary. “These are the employees who were obviously essential in making the [COVID-19] vaccine and improving outcomes for antiviral pills,” he says. “The industry is still healthy and vital.”

Despite US employment numbers having returned to pre-pandemic levels and a 3.5% unemployment rate as of the July jobs report, labs continue to face staffing shortages.

*According to our estimates, only about 9% of the increase in employee numbers is attributable to acquisitions.

IMF Downgrades Its Outlook for the Global Economy

The economic fallout from the war in Ukraine will reach far beyond the countries involved. In its April 2022 World Economic Outlook (WEO): War Sets Back the Global Recovery, the International Monetary Fund (IMF) cited the conflict as the primary reason for the slowing of global growth the institution now predicts. While recovery from the COVID-19 pandemic in 2021 was slightly stronger than expected, it is still in progress, with recent lockdowns in China slowing manufacturing and further disrupting supply chains. In addition, the prospect of new SARS-CoV-2 variants continues to pose a threat to the global recovery.

Anticipation of shortages in the wake of the Russian invasion of Ukraine has driven up commodities prices. The regions that will be most affected are the Caucasus and Central Asia, Europe, the Middle East, North Africa, and sub-Saharan Africa. Russia is a major global supplier of gas, metals, and oil. Russia and Ukraine are large producers of corn and wheat, together accounting for almost 30% of the worldΓÇÖs wheat exports. The price hikes of these commodities are anticipated to exacerbate inflation; the WEO has increased 2022 inflation projections for advanced economies, and emerging market and developing economies to 5.7% and 8.7%, respectively.

*Changes in value compared with predictions from January 2022 WEO Update are in parentheses.

The consequences of the war to Ukraine’s economy are unsurprising—it will take years for the country to rebuild from the deaths, destruction, and fleeing of its people brought on by the invasion—and the WEO predicts a 35% plunge in the Ukrainian economy for 2022. Trade and financial sanctions will act to depress Russian GDP by 8.5%. Many European countries have begun to reduce their reliance on Russian energy, an act that will continue to affect the Russian economy beyond the short term. The war is expected to affect Europe most via higher energy prices, with emerging and developing European economies also experiencing trade disruptions. In advanced European economies, some industries already suffering supply-chain interruptions are predicted to be further hampered by the war and sanctions.

Higher food prices—especially that of wheat—restrict growth in the Caucasus and Central Asia, the Middle East, and North Africa. The Middle East and North Africa are also expected to be affected by a decrease in tourism. However, oil exporting countries will benefit from higher energy prices. On balance, the WEO anticipates 4.6% GDP growth for the Middle East and Central Asia, up 0.3 percentage point from the January projection. Similarly, the economy of sub-Saharan Africa is largely subject to the warΓÇÖs impact on food and fossil fuel prices. Although political and social unrest also depress the outlook for the region, its economy is nonetheless predicted to expand by 3.8% in 2022, 0.1 percentage point higher than forecast in January.

The main influence on the Asian economy continues to be China. Recent COVID-related lockdowns and restrictions, as well as weak urban employment recovery, have impaired manufacturing, trade, and private consumption in China. Real estate investment has also lost some of its momentum. For the Asian region as a whole, weaker demand and higher commodities pricing will slow growth.

Tightening monetary policy to counter inflation is predicted to suppress growth in North America, with war-related trade disruption and lower demand from the US also coming into play for the US and Canada, respectively. Latin America and the Caribbean are less tied to Europe but will also be subject to Inflation and tightening of financial policy.

With so much uncertainty in the state of international affairs, the WEO points out the challenges of making quantitative predictions for the world’s economy. Nonetheless, some means by which the war and sanctions will influence the global economy can be determined.

Federal Budget for R&D Finally Passed

On March 15th, 2022—nearly six months late—President Biden signed the FY2022 spending bill. Compared with the previous fiscal year’s appropriations, total federal funding for R&D increased 7.1% to $169 billion. Although many agencies were allocated much less than the Biden administration had requested, all science agencies received increases in funding.

The total budget for all programs of the National Science Foundation (NSF) went up 4.1%, reaching $8.8 billion. The Department of Energy’s Office of Science’s budget received a 6.4% boost to $7.5 billion, and ARPA-E’s funding gained 5.4% to reach $450 million. Appropriations for the USDA’s Agriculture Research Service, which dropped 5.0% in FY2021, this year increased 15.3% to reach $1.76 billion. In contrast, the EPA’s total science and technology budget was bumped up a meager 2.9% to $750 million, with funds designated for Clean Air programs only.

Appropriations for the agency receiving the largest amount of research funding, the National Institutes of Health (NIH), increased 5.3% to a total of $45 billion. Budgets of the most well-funded institutes, the National Cancer Institute (NCI) and National Institute of Allergy and Infectious Diseases (NIAID) grew 5.4% and 4.2% to $6.9 billion and $6.3 billion, respectively. The institutes for which appropriations increased the most include the National Institutes on Aging (NIA), Drug Abuse (NIDA), and Minority and Health Disparities (NIMHD), whose budgets grew 7.8%, 8.2%, and 17.2% to $1.6 billion, $4.2 billion, and $460 million, respectively.

The Biden Administration additionally proposed the creation of the Advanced Research Projects Agency for Health (ARPA-H), to bolster the government’s ability to accelerate biomedical and health research. Although $6.5 billion was requested, the program, which focuses on agile, risky, and transformational biomedical research projects, received only $1 billion. ARPA-H is housed within NIH but the “high-risk, high-reward” program will be culturally and operationally unique from its counterparts, as it strives, per its mission, “to benefit the health of all Americans by catalyzing health breakthroughs that cannot readily be accomplished through traditional research or commercial activity.”

PAI 2022: The Process Analytical Instrument Market Report Is Now Available

In 2021, the process analytical instruments (PAI) market and PAI worldwide enterprise (which also includes the value of analyzer-related services) reached $4.7 billion and $7.5 billion, respectively. Over the next few years, demand from many end-user markets is expected to increase 5%–7% per year driven by solid growth from the pharmaceutical industry.

Combustion and emissions/environmental monitoring applications are expected to post robust growth. Geographically, the Western Europe and China will undergo the fastest growth over the coming years, while demand from Latin America and Eastern Europe will be somewhat anemic for the forecast period. The conflict between Russia and Ukraine has cast uncertainty across global markets. It has exacerbated supply chain disruptions and affected numerous sectors, including the agriculture, automobile, energy, and semiconductor industries. TDA’s PAI report includes predictions based on these recent events for energy independence, the Russian economy, and the relationship between Russia and China.

2022 TDA Instrument Industry Outlook Report Now Available

With the continuation of the COVID-19 pandemic and ongoing attempts to reestablish normal operations, 2021 was a year of ups and downs. The global economy began to improve, with vaccinations against COVID-19, declines in death rates, and resumption of activity in many slowed or stalled areas pointing toward steady economic recovery. However, new SARS-CoV-2 variants, continued supply disruptions, and elevated inflation have tempered these gains. The lab and analytical instruments industry has been somewhat insulated from these changes—many of its technologies underlie processes or operations in our society and economy that persist except in the case of lockdown.

In 2021, the lab and process analytical instruments industry grew 19.6% to $81.2 billion. Broken down, the market for lab instruments expanded 20.9% to reach $74.9 billion; the process analytical instruments (PAI), and the lab enclosures and furniture markets experienced gains of 7.3% and 4.8% in 2021, for $4.4 and $2.0 billion in revenues, respectively. Growth of all technology segments accelerated in 2021, including life science instruments and lab automation, despite high growth comparisons from 2020 of 27.5% and 13.1%, respectively.

Growth of all technology segments, geographic markets, and end markets posted double-digit gains, with the pharma/biopharma/CRO application sector standing out with 27.4% growth, in response to the pandemic-related increase in need for drugs and vaccines. By region, demand from Asia rose fastest, followed closely by North American demand.

Opportunities Soar as Cannabis Use Climbs

A confluence of factors over the last couple of years has led to a surge in cannabis use in the US and beyond. For one, the cannabis market has been booming for the past several years, as individual states in the US (the largest geographic market for cannabis) have increasingly legalized adult-use and medical cannabis. In addition, the COVID-19 pandemic has boosted consumption of the drug in North America.

As of this writing, medical cannabis use has been legalized in 37 states, the District of Columbia, and four permanently inhabited US territories. Within that group, 18 states, the District of Columbia, the Northern Mariana Islands, and Guam have legalized cannabis for adult use. In the November 2020 election, every ballot measure calling for decriminalization or legalization of cannabis passed, reflecting the publicΓÇÖs growing acceptance of the substance (despite its remaining prohibited federally). In The State of Legal Cannabis Markets, 8th Edition (released in April 2020), Arcview Market Research and BDS Analytics (now BDSA), estimated 36.5% growth in the US cannabis market in 2019 to $12.4 billion and forecast 38% growth worldwide in 2020, with CAGR 2019ΓÇô2025 of 21.2%.

The COVID-19 pandemic began against the backdrop of this booming industry. In many US states and Canada, cannabis operations were considered essential businesses early in the pandemic, remaining open as establishments closed. A number of surveys have revealed that cannabis use has increased in Canada and the US, often to help relieve feelings of anxiety and isolation that have accompanied stay-at-home orders and other pandemic-related restrictions. Reflecting the surge in consumption, in February 2021, BDSA estimated 2020 legal cannabis sales in the US and globally to have grown 46% and 45%, respectively. BDSA’s September update projects a 41% jump in 2021 sales.

For the analytical instruments industry, these trends translate into considerable opportunity. Although regulations are not uniform across the US, the legal sale of cannabis and cannabis products requires testing for cannabinoids, foreign material, heavy metals, microbial impurities, moisture content, mycotoxins, residual pesticides, residual solvents and processing chemicals, terpenoids, and water activity, for example. As the cannabis market expands and testing regulations are established, the number and capacity of testing labs will increase as well. As the tests required vary by state, the technologies labs need will depend on location. For lab products more generally, testing will drive demand for chemicals, labware, and equipment. Some of this demand will also be fueled by production of cannabis products, which may require processes such as extraction and purification of cannabinoids.

Some of the technologies and their purposes used for cannabis analysis are as follows:

    • Evaporators, grinders, homogenizers, and mills for extraction;
    • HPLC, UPLC, LC-MS, GC-MS: cannabinoid and terpene potency, mycotoxins, pesticides, and residual solvents;
    • ICP-MS, atomic absorption;
    • MALDI-MS, qPCR: microbes.

Although companies in the analytical instrument and lab products industries are well aware of the potential associated with the cannabis market, they might not yet appreciate the scale of the opportunity, particularly in light of the COVID-19 pandemic.

The Pandemic, Plastics, and Pipette Tips

In an August survey conducted by TDA, product shortages and delays in delivery were at the top of the list of market trends scientific researchers were experiencing. The blame for this lies in more than one way in the COVID-19 pandemic. Beginning in March 2020, the scarcity of personal protective equipment (PPE) among health care workers made headlines. This was soon followed by a paucity of lab consumables, which has continued to present, as testing for the virus ramped up. According to one academic researcher, “It is becoming difficult to obtain specific plasticware, tips, or other consumables commonly used for COVID-19 testing.”

The paucity of pipette tips has received particular attention in the media. In January 2020, the FDA added pipette tips and micropipettes to its list of device shortages, estimating them to be in short supply for the “duration of the COVID-19 Public Health Emergency.” In an article published in January of this year, health care improvement company Premier reported that, since May 2020, hospitals’ daily use of pipette tips has grown more than 50%. In addition, average lead time for pipette tips had lengthened to more than 25 days. And the need for pipette tips is not shrinking. NPR reported that the average COVID-19 test requires four tips, and, with the spread of the Delta variant, the Johns Hopkins Coronavirus Resource Center shows the number of daily tests administered to be at about the same level as in January and February of this year on most days exceeding 1 million (and on a few, surpassing 2 million). So-called nonessential labs are also experiencing the delays and product scarcity as they resume activity, even at reduced capacity. Researchers have resorted to washing and reusing pipette tips, running tests in batches, and strategically planning experiments and tests to reduce tip consumptionΓÇöall measures that trade off factors such as time and contamination risk.

To help alleviate the scarcity of pipette tips, the US Department of Defense and Department of Health and Human Services (HHS) has awarded tens of millions of dollars in contracts to companies such as Corning, Tecan, and Thermo Fisher Scientific to step up their production of tips and other lab supplies. However, fulfilling these contracts is dependent on the availability of plastics, which are, in turn, dependent on supply chains and manufacturing ability.

The pandemic has disrupted supply chains around the world. The shutdown of borders has led to customs delays, and container ships are backed up at ports owing to reduced workforce or, in some cases, closure resulting from workers testing positive for COVID-19. After many countries ceased manufacturing and exporting goods early in the pandemic, activity has resumed, only to be faced with shortages of available shipping containers. The addition of stochastic events, such as the Suez Canal blockage in March, or hurricanes and winter storms, has compounded the problem.

The production of plastics, including polyethylene (PE) and polypropylene (PP), has hit some additional snags. Hurricane Laura in 2020 caused several petrochemical plants in Texas and Louisiana to shut down, reducing production in a market already experiencing shortages in PE and PP. According to Plastics Today, facilities forced to close by winter storms in Texas in February of this year accounted for 80%–85% of PE and PP production in the US. Factory fires and force majeure declarations of several plastics manufacturers in Europe and the US have also hampered plastics production.

For an industry already contending with an inefficient supply chain (as reported in SupplyChainBrain), the combination of the surge in demand for, decreased production of, and disruptions receiving lab products, including pipette tips, can have dire consequences. As reported in STAT News, scientists from labs screening newborns for genetic health conditions have spoken out about how the shortage of pipette tips has threatened to shut down parts of some screening programs, putting the health of infants at risk. In a win for these programs, in April, they received higher priority by HHS when ordering pipette tips.

Providers of lab products have been making strides in improving their supply chains. However, despite the resilience and even thriving of some labs, among some researchers, the short-term outlook is grim. “Supply shortages have greatly impacted operations and changed what we can offer to students and how quickly research can be accomplished,” commented one survey respondent. “Students are going to be leaving college with a lot less hands-on skills than what they were before the pandemic.” Asked how the pandemic and resulting economic conditions have affected lab operations, another researcher stated, “Badly. We are almost closed.”