Testing Laboratories
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, 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 32-33 workers, and generates $4-5 million in annual revenue.
- The testing lab industry consists of about 5,200 companies that employ 171,700 workers and generate $23 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, TestAmerica Laboratories, and Pace Analytical Services. Some large international labs, such as Bureau Veritas, have US operations.
Industry Forecast
Testing Laboratories Industry Growth
Coronavirus Update
May 3, 2022 - Vaccine Developers Continue Preparing For Variants
- Biotechnology research services and pharmaceutical manufacturers continue working on updating vaccines to be prepared for coronavirus variants. Testing labs may benefit from the need to verify the efficacy or other qualities of vaccines. In April, Pfizer’s CEO said the company could have a new vaccine version ready by fall 2022 that could protect against Omicron and earlier coronavirus variants. The same month, Moderna said its research showed that its original vaccine combined with one developed to fight the Beta variant provided a stronger defense against not only Alpha and Beta but also the Delta and Omicron variants.
- Testing laboratories may benefit from concerns that pandemic-related shortages may result in the production of more counterfeit products. The anti-counterfeiting alliance ERAI, for example, has posted a warning that hundreds of websites were advertising electronics components, requiring payment in advance, and never delivering orders. ERAI has also identified multiple fraudulent websites operated by a single individual. Increasing incidence of counterfeiting may result in greater demand for product testing at critical points along product supply chains.
- Testing laboratories are likely to benefit as developers of coronavirus tests seek verification that their products provide valid results for a virus that is mutating into new and concerning variants. A few of the tests designed to recognize the original iteration are now being developed, according to Government Executive magazine. The coronavirus will continue to mutate as long as it has hosts to infect, according to Neha Agarwal, the associate director of the PATH Diagnostics Program, an organization that has been tracking COVID-19 tests. This means that test manufacturers will need to closely track the virus’s movements and tailor their products to follow it.
- The Centers for Disease Control and Prevention has said that cleaning once a day is usually enough to minimize the chance of coronavirus transmission in most settings. Testing laboratories are likely to benefit if the guidance results in lower pandemic-related cleaning costs. The CDC did identify one appropriate situation for deep cleaning: an indoor environment where a case of COVID-19 had been confirmed within the past 24 hours.
- The Centers for Disease Control and Prevention (CDC) set up a wastewater surveillance system in September 2020 and now funds sewage monitoring efforts in all 50 states, according to The New York Times. The agency is in the process of adding about 500 testing sites nationwide. Wastewater surveillance can help determine which variants are dominant in a community, which can help doctors make critical treatment decisions. Sewage data can also help detect outbreak hotspots for better allocation of healthcare resources. Public health experts say the US needs to make more investments to expand and better coordinate wastewater surveillance to gather more data and share it more quickly. As at-home test kits have become more widely available less testing is taking place in clinical settings, resulting in fewer testing data which has highlighted the usefulness of wastewater surveillance to determine levels of coronavirus in a given community.
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