Industry outsources more lab work

In the analysis "North American Analytical Laboratory Services Market"​, the consultancy reveals revenues in this outsourcing industry totalled $603.1m in 2005 and estimates them to reach $743.3m by 2012.

The findings suggest nutraceutical companies are experiencing higher labour costs and may be testing more as the industry increasingly self-regulates itself.

"In addition to steady demand from the pharmaceutical and nutraceutical markets, analytical laboratories are being boosted by government regulation,"​ explains Frost & Sullivan Research Analyst Lakshman Koundinya. "Stringent government legislation and the mandated need to comply is increasing demand for the services offered by these laboratories."​

While the dietary supplement industry is not subject to premarket regulation by the US Food & Drug Administration, trade associations have increasing called for industry vigilance to differentiate their companies from widely publicized scares, such as that over banned ingredient ephedrine.

Frost & Sullivan indicates in the report that due to the benefits of economies of scale, larger analytical laboratories have advantages because of the amount of samples being done at very lower cost.

Nutraceutical and pharmaceutical companies are showing no interest in expanding into testing themselves, which is resulting in smaller laboratories not being able to compete with market leaders, according to the report.

A key lure for nutraceutical companies is the customer focus of these laboratories. "It is four times more expensive to get a new client, than retain an existing one,"​ says Frost & Sullivan's overview. "Therefore, companies are paying grave attention to customer service."​

Also, the increasing cost of running a laboratory and maintaining cost has become an important factor under consideration by many companies. Attention to these factors is likely to boost the revenues of this market.