We serve large, attractive markets worth more than $8 billion
As a global supplier of critical life science research reagents and tools, we help life scientists to advance scientific discovery through their research.
We estimate that our capabilities serve a total addressable market of ~$8 billion, which we estimate is comprised of a total addressable market of the research antibody and reagents industry of ~$3 billion and a total addressable market for the generation of third-party antibodies for diagnostic and therapeutic companies’ applications of ~$5 billion.
Long-term industry forces across our markets remain attractive, with consistent increases in research funding and capital investment in many parts of the world supporting the growth of collaborative and global discovery networks.
Notwithstanding the impact of COVID-19, the convergence of a number of industry trends is expected to support a continuation of the long-term market growth trends experienced across both research use only (‘RUO’) and clinical markets, resulting in an increased demand for our products and services, including:
1. Favourable demographic and epidemiological trends
Global demand for healthcare is increasing, driven primarily by rising and ageing populations, an increased prevalence of chronic diseases and a focus on improving access to healthcare.
Deloitte forecast that healthcare spending is expected to rise at a CAGR of 5% over 2019–23, up from 2.7% in 2014 to 2018, whilst The Centers for Medicare and Medicaid Services estimate that in the United States, the total healthcare expenditure will increase from representing approximately 17.7% of gross domestic product in 2018 to approximately 19.4% in 2027.
In addition to the demographic trends driving the global demand for healthcare, and in turn the demand for biomedical research, there has been a steady rise in the population of the scientific community that forms a large part of our customer base. In the United Kingdom, for example, from 2014 to 2018, there was a 3% increase in the number of individuals who obtained higher education qualifications in Biological Sciences and a 9% increase in postgraduate degrees awarded during this same period.
2. Supportive funding environment for biomedical research
Life science research funding continues to grow in many countries around the world, driven by increased investment into biomedical research from a variety of sources, including governments, industry participants and private capital.
Increased investment is funding translational research programmes associated with the development of next-generation therapies including immuno-oncology and immuno-therapy, treatments for chronic diseases associated with ageing populations, as well as rare and genetic diseases and the ongoing threat from infectious diseases. This trend has also resulted in an increase in funding for industry-academia collaborations. Recent examples include the National Institutes of Health’s (NIH) BRAIN initiative and the National Cancer Institute’s Cancer Moonshot programme. The increase in government funding for life science research is particularly relevant for us, as a large percentage of our revenue is derived from customers conducting academic studies or from research institutes.
3. Focus on increased research reproducibility and reagent quality to reduce wasted time and resources
Beyond their use in therapeutics, antibodies play a vital role in biomedical research across the life science industry. The quality of research reagents is intrinsically linked to the reproducibility of data. High-quality research antibodies, providing high specificity, sensitivity and consistency are critical to increasing confidence in research outcomes and reducing the gratuitous expenditure of both time and funding resources.
With an estimated $17 billion lost in avoidable experiment expenditure annually, against a backdrop of increased outsourcing of research and development in order to optimise efficiency and reduce lead times, the ability for researchers to source high-quality and validated reagents is increasingly important.
4. Growing significance of genomics and proteomics
The pace of technological innovation has significantly reduced the cost of gene sequencing in recent years, rapidly expanding its use and consequently resulting in a commensurate increase in the identification of possible genetic targets and biomarkers for disease diagnosis and treatment.
This has led to a proliferation in proteomic research in areas spanning stem cell research, gene editing, epigenetics, neuroscience and oncology. In addition, the market is further benefiting from the increase in the use of instrumentation, which facilitates automation and an increase in the use of technologies such as multiplexing allowing for a comprehensive, quick analysis of proteins. This increases both the efficiency and speed of output of biological research and thus the volume of available data, which in turn drives advances in process design and development in an ongoing cycle. We believe all areas of proteomics research are benefiting from these trends.
5. China expansion
The Chinese market represents a large and attractive growth opportunity. Increasing health needs, driven by an expanding and ageing population, has resulted in a heightened focus on healthcare and innovation.
China now ranks second in the world for citations for the number of scientific papers produced, behind the United States, based on industry data as of November 2019. The Chinese government has placed scientific and technological innovation at the centre of the long-term socio-economic development of the country and is supporting this initiative through funding, reform and societal status. In 2018, China spent approximately $293bn on research and development, which was 2.1% of the country’s GDP and an 11.6% increase compared to 2017. We expect to see continued growth in research and development spending in China.
In March 2019, the government announced the intention to increase research efforts and enhance innovative capabilities as well as encouraging enterprise-led industry-academia research collaborations. In 2019/20, sales in China contributed to 16% of our catalogue sales, and we believe the Chinese market has the potential to grow to become the same size as the US market for our business over the next 15 years.
It will be some time before the full impact of the COVID-19 pandemic is known or realised, however the initial economic shock to many global economies has been unprecedented. The economic impact of COVID-19 on the life industry has been similarly significant, but it has also seen a divergence of impact. Companies with COVID-19-specific products have seen benefits, but at the same time there has been significant disruption to research and development activity due to temporary laboratory closures and the interruption of clinical studies. This in turn has dampened demand for products other than those relating to COVID-19.
A large percentage of Abcam’s revenues are derived from consumers who are publicly funded through research grants. Whilst the long-term impact on government funding for life science research is not yet known, there are various risks and opportunities regarding the funding outlook, including:
Learn more about the drivers of the proteomic research reagents market
Learn more about the market for third party antibody development in clinical applications