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Analyst Sees Stimulus Countering Funding Weakness Late in '09

NEW YORK (GenomeWeb News) – As the National Institutes of Health begins rolling out funding opportunities under the $10.4 billion it is receiving through the American Recovery and Reinvestment Act, the effect of these new funds is not likely to be seen until late 2009 or early 2010.

However, the extra money is expected to offset continuing weakness from other sources of funding for life sciences research, according to a report published today by Thomas Weisel Partners analyst Peter Lawson.

His research team surveyed 54 scientists across multiple biological research disciplines to get a view of when these researchers expected to receive money that they could spend on equipment and chemistries and which parts of the industry were most likely to benefit from this bolus of funds. Of the scientists surveyed, 57 percent said that government grants were their primary funding source, followed by 20 percent who cited charity and private foundations, and 12 percent who cited university and institutional endowments. Eight percent cited pharma/biotech as the primary funding source for their research.

"We believe NIH funding is a late 2009 event, with significant economic headwinds and weak funding from sources outside of government," Lawson wrote in the report. "We continue to favor large, diversified companies that have an extensive menu of consumables and those biased towards diagnostics, such as Thermo Fisher and Qiagen — with Life Technologies, Affymetrix, and Becton Dickinson also well-positioned."

According to Lawson, the benefit of the new NIH funds would continue to be offset by a decrease in university endowment and research institute asset values and spending cuts from pharma and biotech firms.

Lawson said that incremental spending would likely result in headcount increases first, not instrumentation purchases, with a positive effect also for reagent usage. This would favor firms such as Life Technologies, Affy, Bio-Rad, Qiagen, Sigma-Aldrich, and BD, said Lawson.

However, among researchers who said that they may add instrumentation, cellular analysis instruments scored highest, with 43 percent of those likely to add instrumentation naming cellular imaging as that technology. Microarrays and cell culture instruments were also cited by 24 percent of respondents. Chromatography instruments scored poorly among respondents, and 32 percent of the survey respondents said that they were unlikely to add any high-end equipment to their lab, even with NIH offering funds to help with such purchases.