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 $4-5 million in annual revenue.

    • The testing lab industry consists of about 5,200 companies that employ 183,900 workers and generate $25 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

                                Mar 14, 2024 - Industry Sales Growth Softens
                                • The testing laboratory industry is expected to experience slower sales growth in 2024 after a softening of demand in 2023 and solid gains in the years following the onset of the pandemic. The industry’s year-over-year sales fell to -0.6 in 2020 before rising to 9.8% in 2021 and 11.6% in 2022, according to Inforum and the Interindustry Economic Research Fund, Inc. In 2023, sales growth fell to 5% and is expected to fall further to 2.2% in 2024 before rising about 4% per year in 2025, 2026, and 2027, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                • 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.
                                • After record levels of construction in the life sciences sector in 2023, activity is expected to slow in 2024 amid tighter lending standards, high interest rates, and a slowing economy, according to a recent report by commercial real estate services firm CBRE. There is currently about 38 million square feet of life sciences space under construction, which the market may not be able to absorb, especially in the sector’s leading markets of Boston, the San Francisco Bay Area, and San Diego. By CBRE estimates, about 18 million square feet of lab space will be completed in 2024, an uptick of about 40% over 2023. A high level of venture capital has been poured into the life sciences sector, leading to a building boom and a potential oversupply of lab space.
                                • Researchers at Germany’s Ruhr University have developed an algorithm that can speed the development of new materials, according to Lab Manager. New materials are needed to make the transition away from fossil fuels, as well as the development of other new technologies. New electrocatalysts are a key area of focus for materials science, and about 50 elements on the periodic table hold potential for new materials. However, the number of possible element combinations is nearly infinite. The algorithm uses a form of machine learning called active learning to scan material candidates four times faster than before, and it can be integrated into existing measurement tools, significantly increasing their efficiency.
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