The life science and analytical instrument markets showed continued slow recovery in the third quarter of 2024, as instrument sales and the Chinese economy both improved.
Waters returned to growth with a 4% jump in core revenue, as instruments and chemistry each rose 1% and services leapt 6%, led by the pharmaceutical and industrial sectors. Instrument sales growth for liquid chromatography—following seven quarters of decline—and mass spectrometry provides evidence of an emerging instrument replacement cycle, and even some signs of installed base expansion. Chemistry consumables rose 8%.
Merck KGaA’s Science & Lab Solutions also returned to growth, posting a 4.3% increase, boosted by industrial, testing, and diagnostics applications. Thermo Fisher Scientific’s Analytical Instruments segment logged a 3% bump, buoyed by the electron microscopy business. This follows a 3% rise in Q2 and marks a third consecutive quarter of increasing revenue gains.
Agilent’s overall revenues were flat (-0.3%), which is a 4% improvement from Q2, while its Life Science and Applied Markets Group was down 1% year on year, up from last quarter’s 7% decline. Instrument orders, though still constrained, grew year-on-year and for the third consecutive quarter, signaling a steady recovery. The CrossLab Group was up 5%, with growth in every market and region except China, where it was flat year over year but up sequentially.
Bruker’s Scientific Instruments (BSI) segment posted a 3.8% increase, on top of ~11% organic growth a year ago, with a mid-single-digit gain in bookings, the highest in over a year. Within its BSI segment, BioSpin Group revenue grew in the low teens, with sales of two gigahertz-class NMR systems. The CALID Group, which includes optics, IR, near-IR, and Raman spectroscopy, among others, sank by low-double digits, as strong performance from the MALDI Biotyper and applied mass spectrometry businesses was more than offset by losses in biopharma. The Nano division grew by mid-single digits, with strength in semiconductors and X-ray systems and weakness in fluorescence microscopy.
Illumina’s core revenue fell 2%, with consumables growth offset by instrument drops. Sequencing consumables revenue was up 7%, driven by ongoing uptake of the NovaSeq X instrument series.
Danaher’s Life Sciences segment dipped 2%, in line with expectations, with consumables and service gains more than offset by declines in instrument sales, particularly in China. Shimadzu’s Analytical and Measuring Instruments business was down ~3.5% in USD, jumping up from last quarter’s 9% drop.
Small Gains in Pharma and Biopharma
A 3% lift in pharma sales was key to Waters’s Q3 performance, as ex-China sales rose by mid-single digits, up 3% for instruments and 7% for recurring revenue, with gains in both small- and large-molecule applications.
Agilent’s sales in pharma, its largest end market, slipped 1%, slightly better than expected, with small-molecule business up low single digits and biopharma dropping mid-single digits. All regions grew, except for the Americas, dragged down by the nucleic acid business, as anticipated.
Danaher is starting to see early signs of improvement in pharma and biotech, especially in North America, even as the sector remains soft.
Industrial and Applied Markets Mixed
The industrial market also returned to growth for Waters, led by food and environmental applications, up 5%, and chemical analysis, which gained low double-digits, along with PFAS analysis in food and environmental applications. Thermo also saw low-single-digit improvements in industrial applications, highlighted by its electron microscopy business.
PFAS solutions, leaping 40% across multiple end markets, continue to drive the industrial segment at Agilent. Chemicals and advanced materials showed a 1% gain, and the advanced materials submarket grew mid-single digits, driven by semiconductor applications. Environmental and forensics fell 6%, however, and food was down 3%.
Academia and Government Markets Holding
The academic and government markets provided growth for Bruker BioSpin, Bruker Nano, and Thermo, with single-digit gains for the latter driven by electron microscopy as well as the research and safety markets. Waters’s sales in this segment were flat, while Agilent’s fell 1%. Danaher saw stability in the North American academic market but weakness in Europe.
China Slowly Recovering
While North American and European markets displayed no remarkable change, with results ranging from negative to positive single digits, the Chinese economy continued its slow improvement. Waters saw sales in China fall by mid-single digits, as they climbed upward this year from an almost 30% plunge in Q1 and a low-teens drop in Q2. Danaher fell by high single-digits, Bruker declined low double-digits, and Agilent was down 3%, exceeding expectations as it booked its first China stimulus orders. For Thermo, China and Asia Pacific were both flat. Ex-China, Asia Pacific revenue was up by high single digits for Agilent and by double digits for Bruker.
Outlook
Waters raised both its Q4 and full-year guidance, anticipating 5% to 7% growth in the fourth quarter and full-year results of –0.9% to –0.3%. The company also expects China to return to positive territory in Q4, even while waiting until 2025 for the stimulus to bear fruit.
Thermo, Danaher, and Merck KGaA all left their Q4 and full-year forecasts unchanged, though Merck KGaA now expects to hit the lower end of its range for its Science & Lab Solutions division.
Illumina is still forecasting Q4 instrument revenue to decline in the mid-30s percentage range while sequencing consumables revenue grows by low to mid-single-digits. The company lowered its full year core revenue guidance slightly, to -3%, given the continued constrained near-term macroeconomic environment.
Bruker forecasts low-single-digit Q4 growth against tough comparisons of 16% gains a year ago. The company lowered its full-year guidance to 3% to 4% growth, as it no longer expects to see benefits this year from nascent recoveries in biopharma and China. Given its typical two-quarter lag between orders and revenue, the company does not expect to see China stimulus gains until the second half of 2025.
Agilent, which ended its fiscal year in October, expects the recovery of the past few quarters to continue in fiscal 2025, with market growth at slower than historical rates for the full year but returning to more traditional levels of growth in the second half.