The world market for chemical and biological warfare agent detectors
could reach nearly $400 million in 2002, with the United States
leading this sector as both the top investor in technology and the
biggest buyer of new equipment.
Global spending forecasts for chem-bio detectors were revised after
the Sept. 11 terrorist attacks, said Jenny Benavidez, research analyst
for Frost & Sullivan Aerospace and Defense group. Her original
forecast for 2002 sales was $322 million. It jumped to $383 million,
given the recent surge in spending by the U.S. government. Revenues
for this industry are expected to rise to $426 million by 2003,
she said in an interview. By 2007, it could grow to more than $490
million.
The customers who are fueling the increased demand for CB warfare
agent detection include the U.S. military services, security forces,
first responders, emergency medical services and programs that deal
with chemical weapons demilitarization, chemical arsenals/site remediation,
strategic port/airfield monitoring, border management, and water
and food testing.
After September 11, Benavidez said, first-responder agencies in
the United States and the National Guard’s weapons of mass
destruction teams have generated new sales of chem-bio detectors.
“In the past, most of the agencies on the non-federal level
received insufficient funding to enable them to purchase sophisticated
detection systems,” she said. “With a limited budget,
the choice often is between one $150,000 detector or multiple protective
suits with gas masks or other basic items.” Before September
11, she added, not many agencies believed that they would be likely
to use these detectors other than in training drills.
It is not clear, however, whether the additional revenues expected
in this market will translate into new corporate investments in
chem-bio protective systems, Benavidez said. Firms in this market,
for the most part, develop new technologies under government contracts.
“Research and development is not a cheap endeavor,”
she said. “Companies need government funding, usually from
the services or from the Defense Advanced Research Projects Agency.”
Before September 11, she added, companies were “operating
under the assumption that ‘it hasn’t happened yet, so
let’s not worry about it.’” It is now possible,
but not certain, that the increased fear of new attacks in the United
States could make commercial companies more willing to spend the
capital to design and develop the detectors.
“I expect that some new companies will be coming into the
market,” said Benavidez. Other firms may try to introduce
existing detectors that have been used in the medical field, for
example, and were not necessarily designed for agent detection.
“Now, they can come into the market and say ‘our system
can detect anthrax too.’” Most recently, a Pentagon
solicitation for portable mass spectrometers generated proposals
from 30 companies.
One challenge for newcomers, she said, is that the military organizations
have their preferred manufacturers. The civilian market could grow,
“but not enough to sustain new companies without a proven
track record.”
Another potential barrier to companies seeking to enter the chem-bio
defense market is the high cost of technology, which means many
new participants make their way into this sector through mergers
and acquisitions. Other avenues of entry, she noted, include allying
with a research lab and “thereby gaining some recognition
and possibly production work.
“Obtaining lucrative government contracts is a vital component
of companies’ business plans,” said Benavidez.
Chemical detection technology has improved vastly since Operation
Desert Storm, where many of the systems used by the U.S. military
and allies experienced high false-alarm rates.
Biological detection capabilities, meanwhile, have not matured
as fast, said Benavidez. One problem that has not yet been solved
is the timeliness of the detection. While chemical detectors work
in about five-to-10 seconds, biological devices require up to 10
minutes to sense and identify an agent. They need time to discriminate
between the natural biologics in the air and potentially an agent
that has been introduced intentionally, such as anthrax. More scientific-instrument
firms are getting into the business, she said.
Benavidez predicts that these systems will get faster in the foreseeable
future. “There have been great strides made in this area.
I expect to see the response time drop.”
Reasons for Growth
Worldwide expenditures on chemical detectors reached $120 million
in 2000. By 2007, the market will surpass $201 million, she said.
There are several reasons for this growth:
The following factors, however, will restrain revenue growth:
Revenues for biological warfare agent detectors amounted to $109
million in 2000. Benavidez said that, by 2007, this segment of the
market could reach $217.7 million.
The expected growth is driven by:
Future demand for biological detection equipment could suffer if:
While there is considerable potential for growth in the chemical
and biological warfare agent detector markets, the stakes are “very
high,” she said. “Opportunities worth large sums of
money are contracted on an infrequent basis. ... Many of the market
leaders in this industry today are those that have won large lucrative
contracts for engineering and manufacturing development and/or production.”
Outside the United States, only the United Kingdom is expected
to make any significant expenditures in new chem-bio defense technology.
In 1998-1999, the U.K. Ministry of Defence spent about $60 million
on chem-bio defense research, about $45 million on chem-bio defense
related procurement, and about $6 million on chem-bio medical countermeasures.
From 2000 through 2002, the British government is forecast to spend
about $380 million on chem-bio defense.