Testing Laboratories

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,200 testing labs in the US perform physical, chemical and other analytical testing services to evaluate products, substances, or systems and provide certification for manufacturers and other industries. Labs may also provide independent data to support a product’s claims.

Dependence On Highly Skilled Workers

Testing labs require the skills of highly educated scientists, engineers, and technicians.

High Capital Requirements

The fixed costs associated with establishing a testing lab can be high.

Industry size & Structure

A typical testing lab operates out of a single location, employs 35 workers, and generates $5.3 million in annual revenue.

    • The testing lab industry consists of about 5,200 companies that employ 180,000 workers and generate $27.5 billion annually.
    • The testing lab industry is concentrated with the top 50 firms accounting for 46% of industry revenue.
    • Customer industries include defense, aerospace, telecommunications, automotive, consumer products, agricultural products, and industrial products.
    • Large domestic companies include KBR, Pace Analytical Services, and UL Solutions. Some large international labs, such as Bureau Veritas and Eurofins Scientific have US operations.
                                Industry Forecast
                                Testing Laboratories Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Jul 12, 2024 - Industry Growth to Improve, Then Flatten
                                • The testing laboratory industry is expected to experience slower sales growth in 2024 after a softening of demand in 2023. The industry’s year-over-year sales growth fell to 5.8% in 2023 after posting an increase of 14.3% in 2022, according to Inforum and the Interindustry Economic Research Fund, Inc. Testing lab industry sales growth is projected to further moderate to 2.6% in 2024 then see flat but steady average annual growth of about 4.2% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                • Researchers at China’s Guangdong University of Technology and Pudong New District People’s Hospital say they have developed a new way to test food for contamination by pathogens that is faster and more efficient than current methods, according to the American Institute of Physics. Current tools for detecting foodborne pathogens, such as DNA sequencing and cell culture, are difficult to execute on a large scale, are time-consuming, and require highly trained personnel and specialized equipment. The researchers in China developed a microfluidic chip that uses light to detect multiple pathogens simultaneously, including E. coli, salmonella, listeria, and S. aureus. The chips were made with 3D printing, making them easy to produce on a large scale.
                                • In April 2024, the EPA designated two types of per- and polyfluoroalkyl substances (PFAS) - more commonly known as “forever chemicals” - as hazardous substances under Superfund or CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act). The EPA began enforcing the new designation on July 8, 2024. The designation affects perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) and ensures that spills, leaks, and other releases of the chemicals are reported and cleaned up. Forever chemicals - which are used in food packaging, textiles, and cookware – have been linked to health problems, including cancers and immune and developmental disorders. The EPA says that designating PFOA and PFOS under its Superfund authority will expedite clean-ups and ensure parties responsible for the pollution pay for cleaning contaminated sites. PFOA and PFOS are no longer manufactured in the US, but because they take a long time to break down, they remain widespread in water and soil. The EPA ruling could increase demand for testing lab services.
                                • Researchers at North Carolina State University recently proposed a set of guidelines and definitions to help optimize the development of so-called “self-driving labs” that use artificial intelligence (AI) and automated systems to speed research and discovery. Self-driving labs can potentially expedite the development of new molecules, materials, and manufacturing technologies with applications in everything from electronics to pharmaceuticals. In early experiments, self-driving labs have reduced discovery times for new materials from months or years to days. The findings suggest a group of shared definitions and performance metrics researchers use in published works stemming from their self-driving labs. The proposed metrics include how much guidance the self-driving system needs from users, operational lifetime without user intervention, and experiment times.
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