The growing prevalence of wholesale bypass has negatively impacted wholesalers
New York, NY (PRWEB) July 09, 2014
The Laboratory Supply Wholesaling industry distributes laboratory, scientific and school equipment and supplies. Professional, laboratory and scientific equipment account for nearly three-fourths of industry revenue and, therefore, closely follows the performance of professional, scientific and technical service industries. Demand from these downstream industries contracted slightly in 2010, due to unfavourable economic conditions, reducing industry revenue during the year. The industry's equipment and supplies are relatively discretionary and many labs cut back on new equipment purchases during the year. However, rebounding demand has risen in following years, increasing revenue during 2014. Overall, revenue is anticipated to grow at an annualized rate over the five years to 2014.
The growing prevalence of wholesale bypass, which is when businesses purchase directly from manufacturers, has negatively impacted wholesalers that distribute school supplies and other niche products. Comparatively, wholesale bypass has not significantly affected laboratory supply wholesalers thanks to the vertical integration of major players, such as Thermo Fisher Scientific. However, laboratory companies are actively consolidating to expand their product offerings and market reach. According to IBISWorld Industry Analyst Britanny Carter, “Wholesale bypass and acquisitions are expected to reduce the number of companies in the five years to 2014.” While profit margins have expanded for several laboratory distributors due to consolidation and growing demand, price competition from wholesale bypass has reduced profit for other distributors. Therefore profit margins are forecast to remain steady relative to the five years prior. However, profit dipped slightly over 2010, due to a notable drop in demand from downstream industries, such as education.
"Industry returns are expected to grow over the five years to 2019, as the industry continues to consolidate, and research and development expenditure accelerates," says Carter. During the period, consolidation is anticipated to reduce the number of operators. Growing demand from biotechnology and improved research and development budgets are forecast to boost revenue over the period. While demand conditions for educational services is expected to improve, wholesale bypass will hamper demand for school equipment and supplies and partially offset industry growth.
For more information, visit IBISWorld’s Laboratory Supply Wholesaling in Canada industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry wholesale laboratory, scientific and school equipment, instruments and supplies. This industry excludes medical, hospital and dental equipment and supply distribution.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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