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Wall Street Analyst Survey Finds Mass Specs the Top Priority for Capital Equipment Spending

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The verdict may still be out on Washington's economic stimulus package, but according to one Wall Street analyst, it continues to boost the prospects for mass spec sales.

This week, Isaac Ro at investment bank Leerink Swann wrote in an analyst note that in its second-quarter survey of 83 university-based researchers, capital equipment was cited as the top priority in their research budgets, and superceded genomics tools for the first time since the company began conducting its quarterly surveys at the end of 2008: 31 percent of respondents said capital equipment is their top priority while 24 percent said genomics tools are their top priority.

Ro attributed the shift to the $300 million in high-end instrumentation grants specifically targeted by the stimulus package.

Further breaking down the "positive responses for capital equipment," Ro said that a "significant" number of respondents, 35 percent, cited mass specs as their highest priority within the category. Along with "various 'big-ticket' items," which also was cited 35 percent of the time, mass spec purchases was the most cited priority by respondents who said capital-equipment purchases is their top budget priority.

While Agilent, Waters, and Bruker should benefit from the trend, the biggest beneficiary is expected to be Thermo Fisher Scientific because of its "industry-leading Orbitrap" platforms, he added.

According to Ro, Life Technologies, whose Applied Biosystems division has a joint-venture agreement with MDS on mass specs, is the world's largest mass spec firm, followed by Thermo Fisher, Agilent, and Waters.

The note is another indication that a once-bleak outlook for mass specs in 2009 could turn out to be, instead, a success story. In its Q4 2008 survey, Leerink Swann found that, with anticipated cuts to their budgets, capital-equipment purchases, such as mass specs, would be the first items to be crossed off the to-buy list of researchers [see PM 12/18/08].

But the mass spec picture has quickly turned around as a result of the increased funding to the National Institutes of Health coming from the economic stimulus package. In addition to grants specifically targeting high-end instruments, other grant programs funding a chef's mix of scientific research could result in a bonanza for mass spec vendors.

While it's early still for the vendors to see any bounce from the grants, they have reported high quote activity for their mass specs, which are expected to translate to sales later this year and into 2010. At last month's American Society for Mass Spectrometry conference, representatives from the major mass spec firms all said that in the first half of 2009, their instrument businesses had performed better than they originally feared [See PM 06/04/09].

Leerink Swann also noted the improving outlook in mass specs when it found in its Q1 2009 survey, conducted in March that the stimulus funding had cracked open sales opportunities that had not been there before.

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