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Analytical instruments: Support for R&D essential
Our Mumbai & Bengaluru bureaus | Thursday, October 31, 2013, 08:00 Hrs  [IST]

Analytical instrument industry being multidisciplinary requires manpower with technical skills. Hence it is essential the government should look to revising and introducing the related educational inputs that could support the needs of the industry for research and development (R&D), according to KV Venugopalan, president, Indian Analytical Industry Association (IAIA).

Analytical instruments development is both technology and capital intensive. A strong R&D base with multi-disciplinary capability is mandatory to develop modern instrumentation which is ahead of those currently available in the market. Indian industry being small and fragmented does not have the capability to make such investments and focused efforts and support from Government is necessary to make any progress in this area. Close collaboration with academia, government R&D establishments and industry is essential for the success of any developmental programme, said Venugopalan

“The Indian analytical instrument market including consumables and spares is estimated at around $1 billion with a growth rate of above 10 per cent. This along with the rising demand and developments in food safety and pharmaceuticals production will help the industry to grow at a steady pace. There is high dependence on import of technologies for research and at times they are not easily available for various commercial or legal reasons. The time has come to focus on developing cutting edge technologies and instruments in India that will give us advantage in the coming decades”, Venugopalan added

A high demand for customized instrumentation from end-user segments has opened up a huge potential for growth in the laboratory analytical instruments market in India. The laboratory analytical instruments market in the country is expected to be worth $ 2.37 billion by 2018 from $ 762.5 million in 2012. The end- users for this segment are pharmaceuticals and life sciences, government and academic research institutions, environmental safety, agricultural analytical research, third party besides  food & beverage testing laboratories, chemicals and petrochemicals industries, amongst others.

Though analytical instruments industry has faced very challenging market conditions in 2012 due to combination of many factors including high inflation and depreciation of the India rupee, yet  the future looks positive, particularly for the pharmaceutical and life sciences market.

The growth of analytical instruments market largely depends on the R&D spending of industries such as pharmaceutical, chemical, food & beverages, oil & gas. The industry is witnessing speedy technological improvements as a result of continually increasing R&D initiatives. The manufacturers are focusing on developing new products which are more compact, faster, cheaper, accurate and multi-disciplined.

More over as the pharma, biotech and food sectors are required to meet US PDA and other international standards for the analysis of raw materials, QA/QC which call for high quality analytical instruments.

Government institutions and research laboratories continue to be the key customers for analytical instrument companies in India. Segments like agricultural analytical research and contract research, however, offer scope for higher growth.  Additionally, as conventional customers are  seen to continue with their growth plans, this segment can be expected to see sustain its revenue generation.

India has seen the highest growth rate in pharmaceuticals, biotechnology, proteomics, genomics and clinical research. This has created a demand for range of analytical equipment. Apart from this owing to the rising security concerns in India for the purpose of forensic and explosive detections, huge investments are being made for laboratory and analytical equipment.

Even the food and beverage industry in India is subject to increased investments due to the stringent  hygiene standards mandatory need for pure drinking and utility water analysis. This is a very good sign for analytical equipment market as it can lead to higher foreign direct investment to benefit the economy over time, said industry observers.

The equipment industry is multidisciplinary that is hence driven by application or industry exact requirements that requires human capital along with technical skills. India has a huge number of skilled technicians and skilled manpower and is hence said to provide an extra benefactor industry based in India.

At  seminar on Advanced Instrumental Analytical Techniques in Mumbai, Dr Rakesh Tirpude of  Indian Pharmaceutical Association- Maharashtra State Branch (IPA- MSB) said, "The scope for application and complexity of the advanced analytical instruments call for thorough knowledge of the basic techniques and analysis. The sheer volume of instrumentation in industrial sector has catapulted and capabilities hitherto uncommon to most users."

It is a common observation that the fresh university graduates have little practical knowledge or experience about the instrumentation and their applications though they have elementary theoretical background covered in the curriculum. This necessitates their re-orientation and training for taking up lab functions.

Manufacturing of analytical instruments in India is driven by market perspectives, government policies, infrastructure, logistics, vendor supply chain, R&D, human resources, education system and  customer expectations.

According to a report on the Indian laboratory analytical instruments market by Frost & Sullivan, the  revenues generated was over $762.5 million in 2012 and is expected to  reach $ 2,370 million ($2.37 billion) in 2018.

Government funding serves as the fulcrum for laboratory analytical instrument procurement in India. The government institutions and research laboratories continue to be key customers for analytical instrument vendors. The untapped agricultural and contract research end-user groups offer added scope for laboratory analytical instrument manufacturers, and the agricultural sector's shift towards application-specific instrumentation in particular, will aid the market's steady year-on-year growth.

"The increase in the number of contract research organizations in India, especially in clinical research management has led to achieve several contracts for manufacturing and research from other countries," said the analyst, Frost & Sullivan. Technological advancements in instrumentation, the creation and up-gradation of corresponding software platforms, and research and development (R&D) will propel the market further. Acquisitions and partnerships, which enable companies to enter niche segments and resist competition, will in turn, require technology developments and R&D, and open additional avenues for revenue generation.

However, R&D costs are high and the inability of domestic small and medium enterprises, original equipment manufacturers, and distributors to meet these expenses, restrains market development. In addition, slow implementation of government laws and regulations in several consumer segments also dampen adoption process across different segments in this market.

 The government, apart from strictly enforcing policies, must re-assess and reframe strategies to encourage manufacturing in India. Customized instruments to suit end-user requirements, and automation and hyphenation must be key areas of focus in the laboratory analytical instrumentation space.

"Multinational companies need to build a complete manufacturing and R&D ecosystem to stimulate job opportunities, rather than merely importing from their worldwide facilities," noted the analyst. "Academic institutions' increased interaction with end-user companies will close the gap between practical training at the academic level and the expectations of businesses operating in the lab analytical instrumentation market."

Today China and India are emerging as leading marketplaces for analytical instruments in the Asian region. The laboratory analytical instrument market is India is growing at a rate of 15-20 per cent compared to developed nations growth rate of 3-4 per cent.

China has a good competitive manufacturing potential vis-a-vis India, as China opened its economy for foreign investment in nineties and their progress in infrastructure facilities and logistics is much faster compared to India. Market potential within China is also three times higher than India. Though the growth rates are same in both the countries, manufacturing growth is currently higher in China compared to India. With improving infrastructure facilities , India will catch up with China in the next five to six years. It will be similar to growth in the automobiles where India is at par with China. India has an edge over China in technical manpower for R&D and capability for software development at a lower cost which should help us achieve much higher growth rates in the future.

In the meanwhile according to a forecast by TechNavio's analysts , the global laboratory analytical instrument market is poised to to grow at a CAGR of 5.93 per cent over the period 2012-2016. One of the key factors contributing to this market growth is the increased adoption of large molecule analysis instruments by pharmaceutical companies. The global laboratory analytical instrument market has also been witnessing the development of instruments with increased features and functionalities. However, the long replacement cycles of laboratory analytical instruments could pose a challenge to the growth of this market.

Globally, the demand for analytical instruments grew during the last few years, and the US market took the leading position to strengthen the market , says the US Analytical Instruments Market's forecast report. Major industry players' revenue grew significantly due to strict regulations & compliances, high investments and product innovations. The overall analytical instruments sector for the US is expected to reach $ 7.3 billion through 2014.

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