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Our Markets’ Growth Drivers

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Testing, Inspection & Certification Services Market

Bioanalytical testing (defined by Eurofins as testing all products or substances that we eat, drink, ingest, inhale or which come into contact with our bodies) is a relatively new market, that started expanding significantly only a few decades ago, particularly for third party service providers. Despite the ongoing consolidation process, the market is still highly fragmented with a large number of smaller and medium sized laboratories offering a limited technological portfolio, regional presence and customer reach. In contrast, the Eurofins Group and a few large international peers offer their customers almost global support and a very large range of analytical services.

Eurofins’ management believes that several significant trends and factors are supportive of the continued growth of the markets in which it operates.

The Bioanalytical Testing Market Growth Drivers

Wealth & Life Expectation

Thanks to sufficient food, modern technology, healthcare and medical coverage in industrialised countries, most people can live comfortably and grow old healthily. As the average wealth in these countries increases, the demand even for expensive pharmaceuticals enabling people to enjoy better lives is growing. The aversion to risk that may be associated with some food and consumer products and contamination of the environment is also increasing as people become more aware of the issues that surround them.

New Technologies

New technologies open new perspectives for applications in the pharmaceutical, food and environmental markets. In recent years, the food industry has developed many new products which apply new technologies and processes, such as “functional food”, food given an additional function (often one related to health promotion or disease prevention) by adding new ingredients or more existing ingredients.

Eurofins benefits from advancements in technology. The Group is capable of developing new methods to help develop and register new pharmaceutical products, as well as to track and analyse, for example, residues of pesticides, pharmaceutical substances, allergens or GMOs in a wide range of food products. Increasingly sensitive analytical equipment and methods also act as a driver for better quality assurance and to detect substances that people were not previously aware of or able to measure.

Consumer Protection

Along with the development of new technologies and a rising standard of living in the industrialised countries, consumers are becoming increasingly aware of product safety and quality and are averse to any health risks linked with food, pharmaceuticals or the environment. The demand for higher quality goods and services, and the associated requirement for testing, are also driven by increasingly strict regulations introduced by governmental authorities, the European Commission, the FDA or worldwide standardisation bodies in the pharmaceutical, food and environmental markets.

Globalisation

As businesses increasingly look to global markets for their suppliers, they also become more exposed to the additional risks that are created by this global sourcing. The wider the supply chain becomes, the greater and more complex the risk of quality divergence across the chain becomes and hence the need for testing.

In addition to Europe and North America, Eurofins is able to meet clients’ needs across the globe including in an increasing number of supply chain locations in South America, Eastern Europe, and in Asia. By operating laboratories in many of the countries where suppliers of food ingredients or agricultural commodities exist, Eurofins has a clear understanding of global conditions and regulations. Furthermore, Eurofins also offers a reliable standard of high quality and extensive expertise in those local markets for global customers with worldwide operations.

One-stop-service provider

Eurofins aims to provide its customers with as wide a range of analytical services as possible. The main way in which this is achieved is through Eurofins’ market-leading testing portfolio of over 130,000 tests. In addition, most large customers benefit from having key account managers. These account managers can draw on the possibility of a large number of Eurofins laboratories, some being very specialized. Eurofins in turn is able to allow each laboratory in the Group to focus on their own area of expertise and yet retain customers through being able to offer the complete range of tests provided by all laboratories in the Group or in one business line.

Brand Protection

In times of enhanced quality and safety consciousness of consumers, global marketing of products and international media coverage, brands are very valuable and highly vulnerable assets that need constant protection. By carrying out a large range of analyses as part of pro-active quality assurance programmes, Eurofins supports its global customers in maintaining the integrity of their brands.

Outsourcing

To run in-house or government/public laboratories, as a rule, is seldom cost effective and therefore outsourcing to a global supplier, such as Eurofins, is becoming increasingly common. An outsourcing deal can represent a win-win situation for both sides. It allows the outsourcing partner to use its capital more efficiently, turn fixed costs into variable costs and to benefit from Eurofins' expertise in operating laboratories. On the other hand, Eurofins gains long-term partnerships with the customer, allowing both parties to concentrate on their core businesses.

Clinical Diagnostics Market Growth Drivers

The clinical diagnostics market comprises assays, instruments, and services that help in the diagnosis and treatment of diseases. Since 2014, Eurofins has been focusing a large part of its investments in this sector with a special focus on innovative specialized diagnostic services with a growing genetic and genomic component. The market is expected to grow as effective diagnosis enables a more personalized medicine – i.e. allow healthcare professionals to better diagnose and prescribe more accurate treatment for each patient.

Demographics

Eurofins believes that as world population grows and ages, the need for earlier and more sophisticated diagnosis and treatment of diseases will likely drive up the demand for laboratory diagnostic services.

Medical/scientific innovations

Technological innovations relevant to medicine could lead to earlier or more accurate diagnosis and treatment of diseases. Advances in genomics, for example, are expected to lead to advanced diagnostic tests, which in turn could bring the healthcare system closer to personalized medicine, which relies on individualised diagnostic and prognostic testing. Based on individualized testing physicians may prescribe the most effective healthcare treatments or lifestyle changes for individual patients.

The increased availability of healthcare data, including those resulting from sequencing technologies frequently referred to as “next generation DNA sequencing”, and continually improving ability to analyze such data at the patient level, is likely to open new possibilities to positively impacting diagnosis and treatment of diseases.

Prevention and wellness

The increasing burden of healthcare costs on government and healthcare agencies has advanced the case for better control of medical and laboratory diagnostic costs but also for greater focus on early diagnosis and prevention. In some cases, healthcare providers and payers (governments or insurance agencies) increasingly recognize the value of diagnostics as a means to improve health and reduce the cost of healthcare through early detection, prevention, and more effective treatment.