As a challenging macroeconomic environment continues, leading international publicly held life science and analytical companies reported revenue for the first quarter of 2024 that was generally down in the low to high single digits, against tough comparisons of strong growth a year ago. This was all roughly as expected.
...Thermo Fisher’s core revenue decreased 3%; Danaher’s life science segment dropped 3%;
Agilent’s revenue fell 7.4%; and Waters was down 9%. Bruker’s Scientific Instruments business was flat. A few firms had bigger drops: Merck KGaA’s Life Sciences division fell 13% in EUR (-7.2% in USD). Bio-Rad’s life science group sank 25%, though its clinical diagnostics segment gained nearly 5%.
Shimadzu was an exception, with 7% growth in JPY (but -9.4% in USD), although the company reported only on the full-year results of its fiscal year that ends on March 31, without a quarterly breakdown that would provide a head-to-head comparison.
China Woes Continue, with Hope from the New Stimulus
China continues to drag down growth. Danaher’s life sciences business was down in the high teens in China. Merck KGaA’s life sciences business fell 10% (in EUR) there. Agilent’s China revenue dropped 21%, missing expectations of a mid-teens decline, as demand weakness extended beyond pharma. Sales for Waters in the Asian behemoth fell just under 30%, which was better than expected.
The new Chinese stimulus, which is three times the size of the previous program and includes a focus on equipment upgrades, is raising hopes for a market rebound. But with a three-year rollout, it is unclear whether the industry will see gains this year.
In the Americas and Europe, sales generally fell in the low- to mid-single digits.
Pharma Still Slow
The pharmaceutical industry, still drawing down pandemic-era overstocking, also continues to provide challenges for growth.
Agilent’s pharma sales declined 11% across both biopharma and small molecules, though consumables delivered mid-single-digit growth, to bolster slow instruments sales, which are expected to continue to be sluggish through the end of the year.
For Waters, pharma sales declined 6% worldwide, weighed down by the nearly 30% drop in China. Nonetheless, the company is forecasting low-single-digit pharma growth for the full year. “Outside of China, there is no drama,” Waters reports.
Merck KGaA expects most destocking to be done by the end of the second quarter for its life sciences process solutions customers.
Academia and Government a Mixed Bag
The academic and government sectors, which generally contribute about 30% of the lab market, have been a mixed bag.
These sectors fell 12% for Agilent, and Waters saw 30% slower growth in these end markets. Both were mainly dragged down by China, particularly compared with strong Q1 sales a year ago, but in North America, the delayed signing of the NIH budget also slowed academic research spending.
Danaher, in contrast, found that the academic market held up better comparatively, particularly for more advanced instrumentation. Bruker experienced growth in the academic and government markets for its BioSpin business—where it expects to see revenue later this year from the sale of three gigahertz NMR systems—and for its Nano division, which grew in the mid-teens.
Other applied end markets, such as industrial, chemical, advanced materials, food, and forensics, generally declined in the low-single digits, against tough comparisons, particularly in China.
In the environmental market, the demand for instruments for PFAS analysis continues to be a bright spot for anticipated growth. Of particular note, Thermo Fisher has partnered with the North Carolina Collaboratory, a new network that supports PFAS research.
Outlook
Based on first quarter results, most firms are maintaining their full-year 2024 outlook, generally in the range of low negative to low positive single-digit growth. Agilent, however, lowered its outlook slightly, to -4% to -5%, because of concerns about China overall and pharma outside of China.