1. 2006 HPLC Market Analysis

2. Overall Market 180,000 operating systems worldwide
This figure is growing by ~6% every year
Total revenue in 2006 was $3225M*
To put this in perspective – single Quad MS – $136M up 10% from 2005.
* All figures are approximate and in USD
The HPLC market has grown to its present size due to both the versatility and utility of the technique. As an analytical or preparative technique its utility is based on the ability to separate a diverse range of molecules and compounds that are dissolved in water or solvents.
Most of the values given here are based on credible industry reports including SDI reports. All values are “approximate” and to avoid repeatedly stating that fact – this will be the last time it will be said. Revenue values include service and accessories, but do not include large scale preparative systems or MS other than single Quad MS. For convenience revenues are all stated in US dollars.
Overall Market
It is astonishing that there are 180,000 operation systems world wide – and that number is continuing to grow at over 6% per year. The total revenue for 2006 in HPLC was 3225M, up 6% from To give some scale to this value – Single Quad MS was 136M with 10% growth and IC was 310M with 9% growth.

3. HPLC Product Segment The $3225M can be broken down into: Service $510M
Aftermarket $1504M
New systems $1220M
(Aftermarket constitutes consumables, computers, post sale detectors, cabling and software upgrades)
HPLC product segments
In short, the target areas that the 920-LC and 940-LC are aimed at constitute 85% of the combined HPLC market.
HPLC can be divided into some natural sections – determined largely by flow rate or specific applications. As mentioned above the 3225M for total HPLC can be segmented into service 501M, aftermarket 1504M and new systems 1220M. Aftermarket is an unusual category that includes all post installation consumables with add on detectors, computers, software upgrades and so on – some of this value can occur at the time of the initial sale.
More informative – is the division of the new systems, this 1220M value. The largest division by far is 764M for conventional HPLC – that section that the 920-LC is targeted at. Capillary/Nano LC had 76M in sales; Fast LC (including UPLC) was 113M. The applications divisions of GPC with 52M and Amino Acid Analysis at 35M are significant as well.
It is significant that there is a lot of attention given to the newer and growing areas of LC – like capillary or UPLC – yet they are still significantly smaller than conventional LC, and will remain so for several years.
The new Varian 940-LC will enter the Preparative HPLC – predominantly semi prep LC market – a very significant 180M segment that we have a great opportunity to grow in.

4. New System Breakdown
The largest number of new LC systems ordered is in the conventional HPLC – $764M – 920-LC target segment
Fast LC/UPLC – $113M
GPC – $52M
Amino Acid analysis – $35M
Semi-Prep – $180M
In short the target areas for the 920-LC and 940-LC are aimed at 85% of the combined HPLC market

5. Geographical Distribution of LC Systems
180,000 LC systems worldwide
North America – 38%,
Europe – 31%
Japan – 14%
Asia and Latin America - 11%
ROW – 6%

6. Installed Base by Markets
Pharma – 45,000 systems
Government and Academia – 45,000 systems
Chemical/Agriculture and food – 25,000 systems
Independent test/CRO labs – 15,000 systems
Biotech – 15,000 systems
Preparative systems – 31,000
It is informative to see the rough estimates, by market, for installed systems. The largest base is in Pharma with 45,000. Academia and government facilities combine to a similar number of 45,000 systems. The Chemical and Agriculture/food areas have 25,000 systems and the independent test/CRO segment has 15,000 systems. The comparatively new Biotech area has 15,000 systems installed.

7. Average Cost of Systems
Average system price is steady at ~$45-50K
This includes, gradient pump, autosampler, absorbance detector, data system and service charges
Basic systems ~$30K
UPLC systems ~$80-90K
Preparative systems - ~$40-50K
It comes as a real surprise to most analysts that the average system price has remained stable at about $45-50K. A basic system can attract less than 30K, but the most common system includes a gradient pump, autosampler, absorbance detector, data system and service charges. More exotic systems – like UPLC or nano systems demand higher than average prices ~$80K.
Operation Preparative systems number over 31,000 – with more than 4,200 systems shipped in The average price of these systems was $40K, although systems can range between $16 to 60K.

8. Market Growth The HPLC market grew by 6% last year,
In 2006 the number of retired systems was estimated to be ~13,275
The number of new systems sold worldwide was 23,000
Indicates a large proportion of the business is available with existing customers
Each year there are large numbers of systems “retired”. In 2006 this number was estimated at systems – compared to around 23,000 new systems shipped out to customer’s world wide. These values are given to indicate the importance of calling on existing accounts – as well as new accounts.

9. Demand by Industry
Pharma market – 28% of sales, continuing to grow worldwide and rapidly in Asia
Independent labs and contract research organisations constitute 10% of market and continue to grow at 6%
Academia and government sectors – 25% of sales
Biotech – 10% and continues to grow rapidly
Demand by Industry
Most growth in HPLC has been in the 6% level – and will continue to be at that level
The Pharma area accounts for 28% of sales, and is expected to grow world wide – and rapidly in Asia/Pacific areas. This segment has a strong concentration of Waters and Agilent systems and data solutions. The generic pharma market is showing above average growth.
At 10% of the market, Independent test labs including contract research organizations can look to 6% growth. This is driven by outsourcing of pharma and environmental work by large drug and chemical companies.
Academia and government sectors account for almost 25% of the total market – with slower growth of 5% - largely driven by life science applications. In contrast the substantial (10%) biotech industry should experience higher growth.

10. Demand by Function
Research and Development – 37% of market – driven by performance and sensitivity
Quality control – pharma industry – 31% of market – driven by reliability and low cost
Analytical services – 18% – environmental analyses
method development – 10% of market – driven by performance and productivity gains
Teaching – 4% of market – driven by low costs, robustness
Demand by Function
Teaching – accounts for 4% of systems – they must be “unbreakable”.
The function of a laboratory can be classified by the nature of the work it does – it has a significant impact on the number of samples processed and the nature of the instrumentation purchased.
Due to the flexibility of LC it is not surprising that the most common function is Research and Development with 37% of the total market. In this area the drivers are separation performance and sensitivity.
A close second is driven by product production in the pharma and chemical industries with 31% of all instruments used for Quality Control. In this area reliability and consistency are highly valued – as are low operational costs.
Analytical Services account for 18% of sales – these systems are very similar to the QA sector – mostly used for “general” analytical work with environmental samples.
10% of systems are used for method development. This challenging area values new performance capacities and productivity gains in any parameter.
Lastly 4% of systems are used for teaching. These customers value simplicity and low prices – with a strong desire for the system to be unbreakable.

11. What Type of Systems?
94% of systems have an absorbance detector – almost half are PDA
5-7% have RI, ELSD, Fluorescence
95% of systems had an autosampler
40% were purchased with a data system
64% were purchased with service contract
The Systems
Over 95% of analytical systems use an autosampler!
A recent survey was conducted in over 300 labs in Europe and the US, in a fairly representative set of markets. Some interesting facts can be had from these large, representative, user surveys.
The absorbance detector is the “standard” detector for HPLC with over 94% of systems having an absorbance detector. For analytical systems, almost half of this are PDA detectors. There are several LC detectors that are used as a “secondary” detector – at about similar levels between 5-7% - Fluorescence, ELSD and RI. These secondary detectors deliver superior sensitivity and selectivity for compounds that are difficult to detect by absorbance.
In these labs – only 4% of systems operated without an autosampler. Over 95% of systems used an autosampler!
When the systems were purchased – only 40% of the systems were purchased with a chromatography data system. Not surprising as many systems are added to “open seats” on an existing data system. More notably – 64% of systems were purchased with a service contract of some form at the time of initial system purchase.
Of the vendors represented – more than half of the systems owned are Waters or Agilent. Shimadzu is the next most frequently cited. Several vendors have between 5 to 10% share Dionex, Thermo, Hitachi and Varian.

12. Desired Areas of Improvement
Customer survey revealed the most common areas of improvement are:
Analysis software – 44%
Column switching – 31%
System control – 25%
Autosampler – 18%
Cycle time – 14%
Fraction collection – 14%
Set up – 11%
Calibration – 10%

13. Good News Analysis Software – NEW Galaxie version and system driver
Column Switching – NEW pre-plumbed, software integrated, automated valves
System Control – NEW system interface – one page, one place system control
Autosampler – NEW autosampler with better precision, carry over and speed
Cycle time – NEW autosampler and control with preplumbing for fast, reliable cycles
Fraction collection – NEW collector and software driver –“real time” and reliable
Set-up – NEW arrives set up, single system driver pre-configured – fast installs
Calibration –IMS to aid all calibration parameters –Analytical –Galaxie is very strong
Areas for improvement
This independent survey demonstrates that we have what the users are asking for!
The HPLC users described above, listed their most desired areas of improvement for systems – here are the results
Analysis Software 44%
Column Switching 31%
System Control 25%
Autosampler 18%
Cycle Time 14%
Fraction Collection 14%
Set-up 11%
Calibration 10%
Other 6%
No improvement needed …….1%
For the 920-LC and 940-LC – here are some of the results!
Analysis Software – NEW Galaxie Version and System Driver
Column Switching – NEW pre-plumbed, software integrated, automated valves
System Control – NEW system interface – one page, one place system control
Autosampler – NEW autosampler with better precision, carry over and speed
Cycle time – NEW autosampler and control with preplumbing for fast, reliable cycles
Fraction collection – NEW collector and software driver –“real time” and reliable
Set-up – NEW arrives set up, single system driver pre-configured – fast installs
Calibration –IMS to aid all calibration parameters –Analytical –Galaxie is very strong
Other – NEW, many other benefit bundles
The conclusion is; with the 920-LC and 940-LC we do have systems that the market is asking for. Targeted and appropriate for the larger sections of the market.
You represent Varian with all the software, services, consumables and associated technologies to be a viable, premium level, vendor.

14. Conclusion of the 920-LC and 940-LC
We have systems that the market is asking for.
Targeted and appropriate for the larger sections of the market.
Present Varian as a supplier for all the software, services, consumables and associated technologies to be a viable, premium level, vendor.