Market Segment Training

AA ~$2,000M* GC ~$1,650M*Biotech ~$7,500M* Liquid ~$4,100M* (growth at ~6% per annum)

*based on figures from SDI 2004All prices quoted in USD

Instrumentation Market Value Overview

North America and Europe – largest markets ~ 60-65% of the LC market

Asia and Japan – each have 10-15%

Rest of the world – 5-10%

Geographical Market Distribution

Total LC sales $2,800M

– Instrument sales $1,500M

– Service $300M

– Consumables and data systems $1,000M

Correlates to 20,000 systems – 20% prep, 80% analytical

Less than 1,000 units were UPLC or other systems

Unit price for conventional system ~$40,000

Market Breakdown - 04

Pharmaceutical – 25%

Independent test labs, Research and Development – 10%

Environmental – 20%

Other industries include – Petrochemical, Food and Agriculture, Bio-analysis, Research and Regulatory and polymer – all make up less than 10% each

Note – a 1% market is still $1.5 billion dollar area!!!

LC Sales Market by Industry

Widely accepted that Waters and Agilent control 40% of the market

Cover most relevant industries

Companies standardise on Empower, Chemstation etc.

Thermo, Shimadzu, Dionex, Varian and others share the remaining 50-60% of market

Market Share Breakdown

Greater range of product coverage than other vendors

Sample prep, consumables, columns, hardware, software, distribution, worldwide service and other technologies

Waters and Agilent until now the only other vendors with this complete package offering

What Advantages Does Varian Have?

Process Prep Analytical LCMS GPC GC/MS Other Columns Service

Varian Y Y Y Y Y Y Y Y Y

Agilent N ½ Y Y Y Y Y Y Contract

Waters N Y Y Y Y N N Y Y

Knauer N ½ Y N N N N N Limited

Thermo N N Y Y N N Y N Y

Where Varian Sits in Respect to the Rest of the Competition in Terms of Product and Service Offerings

Buy many instruments from nano scale to super prep

Most pharma companies have R and D and QC functions

Most pharma companies work with both large and small molecules

Generic pharma companies tend to be more production – QC with less R and D

Pharma Business

Purchased La Jolla pharmaceuticals for $372M

Invested $150M in improvements at the La Jolla site

Research in high throughput screening, discovery technologies, rational drug design, combinatorial and medicinal chemistry, cancer, HIV, hepatitis, blindness, diabetes and obesity

13,000 scientists work on over 600 R and D projects

In 2004 Pfizer will invest $7.5Bn in R and D projects worldwide

Example of a Pharma Business - Pfizer

Regulatory compliance, reliable methods on fully characterised columns and software

Excellent service response times, reduced downtimes

Resistance to change based on large investment in vendors data system and strategies

Low cost, reproducible consumables key to these accounts which can lead to hardware and software sales

Pharma QA/QC Requirements

Can lock the Pharma customer in with complete package

Service can make or break the relationship

Data system can determine future purchases

Seamless method translation from R and D to QA/QC

Pharma QA/QC Requirements Cont.

Knowledgeable users, troubleshooting role

Develop methods to pass onto QC/QA

Gradient pumps, PDA, column heaters, ELSD

Very analytical buyers of equipment

Require reliable, robust equipment and data systems

Pharma Methods Development/Validation

Interested in a diverse range of techniques – capillary, analytical to semi-prep. Hyphenated techniques – NMR, MS, MS/MS, TOF etc.

Money is generally not an issue if the technology gives the user an edge

Data package must have a useability and offer control of information rich instrumentation

Pharma Research and Development

Driven by EPA or equivalent organisations around the world

Consists of contract labs carrying out analyses such as PAHs, Carbamates, PCBs

Strong offerings in associated techniques like GC, GCMS, AAS and ICP

Environmental

Varied applications

Usually budget systems, robust, easy to use, easy to service are strong drivers

High end research units in high visibility proteomics research groups similar to Biotech companies

Target research groups/students, long term strategy

Academic Research

Fast growing, diverse and large budgets

Large range of techniques used HPLC, NMR, CE, MS and X-ray crystallography

Proteins are target compounds, very sensitive, biocompatible systems and consumables required

Need to know if system is to be used for characterisation, quantitation or preparative

Can probe deeper to customise system for the customer

Biotech Industry