Danaher Corporation (DHR) Earnings Call Transcript & Summary

Good day, everyone, and welcome to Danaher's 2021 Annual Investor Day. We wish we could be doing this in person, but do appreciate everyone joining virtually via the webcast. First, just going to start on the forward-looking statements. Not going to read all of these, but do need to say, today's presentation may include forward-looking statements, and actual results may differ materially from these statements. Please refer to the slides for more information. On the agenda, I think we have a great day for you. First, Rainer is going to give an overview of the portfolio and the evolution of the portfolio into the $28 billion revenue company we are today. He'll spend some time on DBS and how we view it as our competitive advantage, and then also get into how we're creating long-term value through strategic M&A. After that, Kevin Chance is going to go into more details around the Danaher Business System. And then following Kevin, our other executive vice presidents and group executives will spend time on the respective businesses. We're going to structure the platform presentations into 3 different sections and there will be a Q&A session after each of those respective sections. Rainer will close with some remarks and then get into a final Q&A after that. We'll take a short break at about 1:35 p.m. Eastern time and then hopefully have things wrapped up about 3:15 p.m. Eastern time. So with that, we'll turn things over to Rainer.

Thanks, Matt, and good day to all of you. We're excited to have you with us, albeit remotely. Of course, we wish we could be together in person, but your health and safety are paramount. So thank you for joining us via the webcast. So we have a full agenda for you today, and you'll hear from several of our leaders, and you'll hear about Danaher's evolution into a leading science and technology company, how we use the Danaher Business System to build long-term sustainable competitive advantage and some great examples of long-term value creation using M&A. And some examples would be the recent acquisition of Cytiva, Cepheid, Pall and IDT, but also other transactions in the product identification and water quality platforms, which are great case studies in compounding long-term returns. Now all of this builds a strong foundation for building long-term sustainable returns for both our businesses and our shareholders. Now before we jump in, let's quickly recap the first half of the year and what we're seeing in the second half. And we feel really good about our strong start in the first half of 2021 with 30% core growth, while gaining share in most of our businesses and we doubled our earnings per share year-over-year and free cash flow increased by over 70%. So we see no change to our full year core growth expectations of around 20% core growth, with our COVID-related contributions consistent with what we discussed during our Q2 earnings call and 10% core growth in our base businesses. We've also been really active on the M&A front with 10 transactions for over $10 billion, and our biggest transaction, Aldevron, expands our leading position into genomic medicines in a much more meaningful way. We also completed our first bolt-ons for IDT and Cytiva. So we look forward to finishing the year strong and continuing the momentum into 2022. So let's have a look at Danaher today. What a lineup we've been able to build up over the past several years. For 2021, we estimate $28 billion of revenue in 3 external reporting segments, 4 strategic platforms and right around 25 largely independent operating companies. Now our operating companies tend to be #1 or #2 players in their respective markets, buffeted by attractive end markets, which are supported by strong secular growth drivers. Our operating companies typically have a common business model, exemplifying our bias towards razor/razor-blade business models and a captive recurring revenue. Now we tend to create leverage across the platforms with the Danaher Business System, talent development and of course, across the high-growth markets. So the Danaher you see today is a culmination of a strategic purpose-driven evolution over the last several years into a science and technology leader. Now let's have a brief look at the nature of that purpose-driven portfolio evolution, which was done organically, leveraging the Danaher Business System to improve our businesses and also inorganically. We made several keystone deals with the acquisitions of Pall, Cepheid, IDT and Cytiva, all with higher core growth rates, attractive business models with significant recurring revenue, strong margin profiles and leading positions in attractive end markets. And at the same time, we created Fortive and Envista as stand-alone, publicly-traded companies. So now we're a bigger company, but most importantly, we're better, with strong exposure to very attractive end markets, skewing Danaher to higher growth, higher recurring revenue and higher margins. We often say it's not about being bigger just to be bigger. It's about being better and stronger every day. So let's have a closer look at our end markets and the secular growth drivers that support them. Our portfolio evolution has repositioned us to higher growth verticals across the board from our life sciences businesses through to diagnostics, to water quality and product identification. Now in Life Sciences, we're positioned in the middle of the shift towards biologic therapeutics, with 50% more monoclonal antibodies in the development pipeline today versus 5 years ago. We also see the growing focus on genomic medicines, with 10x more cell and gene therapies in development versus 2015. We also expect sustained long-term growth as biologic therapeutics are still early in their potential and their market penetration as they plot their paths towards continued regulatory approval, eventually developing into the new standard of care. In Diagnostics, the molecular diagnostics market has plenty of growth runway with less than 30% penetration of existing menus and many more disease states in the pipeline. The decentralization of health care from centralized care settings closer to the patients at the point of care, provides another important growth catalyst as molecular diagnostics become more prolific. In water quality and product identification, clean water and sustainability remain a significant issue across the globe as population growth and a warming climate continue to pressure the water supply. And for the same reasons, food and beverage safety are critical and important, providing a sustained growth dynamic for product identification. And lastly, horizontal secular growth drivers such as high-growth markets, increasing regulatory requirements and digital workflows further catalyze growth across our entire portfolio. So our portfolio evolution has created a powerful lineup, combining exposure to very attractive end markets with a unique and powerful business model powered by DBS. The secular growth drivers that we just talked about and shown at the bottom right are a result of our positioning within attractive, fast-growing end markets. In fact, 1/3 of the business is within biopharma and 10% is within molecular diagnostics, both of which were a very small percentage of our portfolio just 5 years ago. And our businesses are united by a common business model, characterized by razor/razor-blade businesses with large, well-entrenched installed bases of instrumentation or equipment and significant captive recurring revenues. In fact, our captive and durable recurring revenues, which are often specced into regulatory approvals, represent 75% of our portfolio today. So we believe the combination of our business model, our differentiated positioning in attractive end markets and the power of the Danaher Business System uniquely sets us up for long-term outperformance. So let's have a look at the impact of our portfolio evolution and culture on our performance metrics. To start with, this evolution has really changed the growth dynamics of the portfolio into a stronger and better Danaher. For example, we were at low single-digit core growth just 5 years ago, and we're now in the low double digits when you average the last 3 years. And while we've seen some benefit from COVID over the past 18 months, we've also seen strong underlying base business growth, which has rerated meaningfully higher. Now I mentioned our more durable recurring sales of now 75% of revenues versus 45% earlier. So let's have a look at our operating margins. The 800 basis point improvement in operating margins is the result of both portfolio moves to higher-margin businesses, such as IDT and Cytiva coming in, but also Envista leading the portfolio as well as substantial growth and DBS-empowered improvement in our core businesses. Finally, strong free cash flow generation, which is a Danaher hallmark, drives an estimated $6 billion plus of free cash flow in 2021, nearly double just 5 years ago, further fueling our bias to deploying capital to M&A and providing our flywheel with even greater leverage. So if we step back, we've evolved into a $28 billion higher growth, higher recurring revenue, higher-margin portfolio of tremendous leading businesses in highly attractive end markets. So you've heard about the attractiveness of our portfolio and the end markets we serve, but how do we run our businesses? Fundamental to how we execute at Danaher is the Danaher Business System, or DBS. Based on the foundations of our core values and our shared purpose, DBS is our source of sustainable competitive advantage across all Danaher businesses. And DBS is much more than just a set of tools and processes we use to run the business. The 5 core values of DBS represent what we believe and they're the foundation of our shared purpose, helping realize life's potential. Now we always start with The Best Team Wins, putting the best team on the field every day and by charging that team with the responsibility to listen to our customers, meaning when customers talk, we listen., And we deploy that Voice of the Customer back into the businesses with the certainty that it fuels continuous improvement or Kaizen, which is our way of life, and we validate the progress with the metrics our customers value most: quality, delivery, cost, innovation. Now at the same time, that voice of the customer informs the innovation that defines our future, ultimately by creating sustainable competitive advantage and market share gain. And finally, we compete for shareholders. We compete for investment dollars on the basis of our ability to drive compounding annual returns on a long-term basis. So DBS is our culture. It's who we are, and it's how we do what we do. Now I started with the best team because executing our strategy and delivering is not possible without having the best team on the field each and every day. And how we acquire and engage associates and the expertise we need as a science and technology leader has evolved over time, just as the needs of our businesses have changed. And because of that, we installed a Scientific Advisory Board and Chief Science Officer over the last 12 months to give us increased domain knowledge and expertise in some of the world's most technical and complex markets. Now we continue to focus on developing talent, but with increased emphasis on having a diverse, inclusive and engaged team. And lastly, we supplement our internal development efforts with acquired domain expertise from M&A and other external sources. So some examples of this would be the recent digital and software skills we added to our water quality business with the Aquatic Informatics and Sedaru deals. So let's briefly look at Danaher from a different perspective,, with a view towards sustainability. At Danaher, sustainability means stakeholder commitments to customers, investors, associates, and, of course, the communities in which we live and work. And those commitments are built around 3 pillars: innovation, people and the environment. And as we do with any acquisition or process challenge, we believe DBS is our competitive advantage and can be applied to help us achieve and exceed our sustainability goals, while differentiating us in this really important and evolving area. So you'll hear examples of how DBS is making a difference across these 3 pillars during today's presentations. Innovation is making a difference across many of our businesses, helping our customers solve their most complex problems and improving all of our quality of lives. Joakim Weidemanis will talk about how we're making a difference on the people side in terms of talent development; and Kevin Klau will give some great examples of how DBS tools are helping our water quality platform better protect the environment. So now let's turn to how we view M&A at Danaher. A few slides back, you saw our strong free cash flow generation. We take that strong free cash flow and redeploy it primarily through M&A. And how we thoughtfully deploy that cash strategically through a disciplined M&A process ultimately differentiates us from the standpoint of the returns that we generate over time. Now we consider 3 primary criteria for M&A that many of you have seen before: attractive markets, great companies or specific opportunities within those markets and then valuation focused on the return on invested capital or ROIC. Our approach to M&A is a disciplined one. And it's about the and, not the or. We look for the appropriate alignment and intersection of attractive end market, unique company and valuation requirements. And when we get that alignment right, it leads to substantial compounding returns over time. And I'd like to spend a little more time on this last important point over the next few slides. So let's start with Videojet, where I began my Danaher career and a great example of the long-term effects of compounding. Our concept is really simple: buy a great business, improve performance organically and redeploy that resulting improved cash flow right back into the business. And when we purchased Videojet, it was a low single-digit organic grower, which we significantly improved with the Danaher Business System and bolt-on deals to sustain mid-single-digit growth, with much higher operating margins. So growing Videojet at a sustainably faster rate compounds much higher returns over time, which is what is driving the strong return on invested capital that you see in the solid blue line. And the dotted blue line is the return if Videojet had sustained the lower growth rate at the time of acquisition. And you can see that difference is really substantial and amounts to 1,000 basis points higher return on invested capital. So for sure, it's about getting acquisitions off to a good start and creating value over the first few years, but most important is to continue to create value and improve the business over the long term. So let's have a look at some of our more recent deals. As with Videojet, with these 2 acquisitions of Cepheid and Pall, you can see the Danaher Business System at work across all dimensions, including core growth acceleration, gross and operating profit margin improvement. And this is playing all the way through to ROIC. You see Cepheid on the left, which has grown from $600 million business in acquisition with virtually no operating profit to now a $3 billion business with over 60% gross margins and over 30% operating margins and an expected ROIC of over 20% this year. On the right, Pall, which was a low single-digit grower at acquisition with 50% gross margins and high teens operating profit, has been a very solid high single-digit grower over the past several years, with 2021 reaching into double digits. And as you saw with the Videojet example, these 2 businesses have generated a remarkable incremental $3 billion of cumulative OP over historic levels, which we deploy right back into the business, both organically and inorganically. So you see the power of compounding returns and how we think about value creation at Danaher, which benefits our businesses but also creates substantial value for our shareholders. Now it's still early days for Cepheid and Pall, with much more opportunity to create even more long-term value through the power of DBS. So what does portfolio evolution, attractive end markets, the Danaher Business System and capital allocation mean when you put it all together? Fundamentally, we think we've enhanced the Danaher growth and earnings profile in a post-pandemic world versus where we were pre-pandemic. Pre-2019, we grew 5% to 6% and still Owned Dental; Cytiva was expected to grow 6% to 7%; and Cepheid was growing double digit, but it was only 5% of our business; and the rest of Danaher was growing at a healthy mid-single-digit rate. The pandemic tailwinds have allowed us to really accelerate organic growth investments across the portfolio as well as to deploy meaningful capital to M&A, including the recent Aldevron acquisition. We think that our growth profile has improved by over 100 basis points to mid-single-digit plus based on the fact that Cytiva is exceeding our initial expectations and rerating growth for the long term to high single digits. Cepheid is now representing 10% of the business, while maintaining the original double-digit growth. And the rest of Danaher is benefiting from those accelerated investments I just spoke to. With that higher core growth and the combined power of DBS, disciplined capital allocation and the strength of our portfolio, you should expect from us mid-single-digit plus core growth longer term, with 50 to 75 basis points of operating margin expansion annually, free cash flow continue to exceed net income, and investing our free cash flow annually on M&A, all to deliver double-digit-plus EPS growth. So to summarize, we believe we will exit the pandemic stronger than we entered with a rerated growth and enhanced earnings profile. So to wrap up, I'm really excited for you to hear from some of our top leaders today, who will share an overview of their businesses, the progress they're making and how they are driving value creation. And with those presentations, here are some of the things you'll hear about. For instance, some of the great businesses we have and their strategic positioning within very attractive markets, how we help improve organic growth prospects with DBS and how we've built a great foundation to see sustainable results for all of our stakeholders. So with that, let me introduce Kevin Chance, our Senior Vice President of the Danaher Business System. Take it away, Kevin.

Thanks, Rainer. I'm really glad to be here today to talk about how we use the Danaher Business System to solve our customers' problems and to create advantage for us. And I'll start by talking a little bit about this image here, which we would call the DBS logo. And there's a lot here, but maybe if I could draw your eye to the text in blue, these are our core values. And on the left-hand side, we start with Best Team Wins. For us to achieve our results and to deliver the kinds of value that we think is so important, we need to have the right people on board with the right talent, skills, knowledge and affinity for the way we run our businesses. Second is customers talk, we listen. You'll see examples later of how we've built capabilities in our organizations to identify both articulated and unarticulated problems, where we see an opportunity to create value for our customers by solving those. The next is Kaizen is our way of life. This is our continuous improvement ethos, and it is a standard practice for everybody in Danaher to engage in Kaizen multiple times per year. And it's the principal way we use to drive continuous improvement in the corporation. Next is innovation defines our future. Markets don't stand still, customers needs change, our competitors change, and we recognize that we need to innovate, whether that's technology innovation or business model innovation in order for us to -- continuing to solve our customers' problems and to create advantage. And the last is we compete for shareholders. I've mentioned we compete with our competitors. We also compete for attention and investment dollars. And we know that we have to perform in order to do that. And last, that's all underpinned by the -- our shared purpose, which is the same across all of our platforms, regardless of the type of business we're involved in, and that's helping realize life's potential. So if we take a step back and look a little bit about how do we get to where we are today, how did DBS evolve, it started in the '80s with the foundation of Danaher, back at that time, one of the businesses, which is now part of Fortive, we call Jacobs Vehicle Systems or Jake Brake. This is where the Danaher Production System, as it was initially called, was invented, founded on the lean principles that came into being -- starting with Toyota in Japan. And those lean tools were critical to helping us deliver efficiency, cost improvement, on-time delivery improvements for our customers. And it's continued to remain important in that regard throughout our -- the last almost 4 decades. But starting in the early 2000s, after our portfolio shifted a bit more towards growth companies, we saw a need to develop tools and best practices to help drive growth. And that's where we introduced our first growth tools, which were commercial-related and eventually, we moved into product innovation-related growth tools. And we expanded that tool set for a good decade and recognized in the late 2000 aughts that there was a strong linkage between the ability of our leaders to utilize those tools effectively and the development that those leaders needed as they progress their careers through Danaher. So we more formally introduced DBS into the leadership side of our development practices and created a new domain called Leadership. And I'll give you examples on the next few slides of -- from our operating companies of how we've used lean growth and leadership tools to drive results here at the company. So the first example is from Cepheid, acquired -- all these examples are within the last decade. And prior to Cepheid's acquisition by Danaher, they had a relatively inefficient and convoluted manufacturing process for their cartridges. You can see on the example here that they started with raw materials, and they took those raw materials to multiple work cells to create subassemblies, which were then brought back to the stock room as a work-in-process, eventually brought together to a final filling process, packaging and then shipment to the customer. Upon acquisition by Danaher, Danaher's -- the DBS office and the Cepheid team set out with a series of Kaizens to identify where there was opportunities for improvement here. So through value stream mapping, VRK, which is Variation Reduction Kaizens, and implementation of project management tools like VPM, Visual Project Management, identified significant opportunities to improve efficiency and effectiveness, resulting in a configuration of the typical Cepheid cartridge manufacturing line today that's more of a one piece flow system where we start with raw materials. We progressively add value sequentially to that starting point, which in this case is the valve body, all the way without ever returning materials back to the stock room without a lot of wasted effort or wasted movement to the point where it's shipped directly to the customer. And we've seen over the time since Cepheid has been part of the portfolio, the ability to reduce that -- reduce the capital requirement by 40% and deploy new manufacturing lines 50% faster and use less space. So this is a great example of a more modern -- a recent example, of how the lean tools at Danaher have dramatically improved productivity, efficiency, costs at our operating companies. The next is a growth example. So this is a product innovation example from Leica Biosystems. This is for a product called the Aperio GT 450, a digital pathology slide scanner. And over the course of a couple of years, LBS adopted a number of our innovation best practices and tools around User-Centric Design, Voice of the Customer. They're closely linked to processes that help our teams understand what the customer really needs. They also used a tool we call Speed Design Review, which has a couple of key components. One is that it co-locates all of the individuals who are engaged in that process in a single room so that they have shared workspace and all of their goals and objectives are laid out on a wall in a visual project management chart, which is the picture on the left, where they have daily standup meetings and ensure that all the different work streams are working in harmony and are working towards their -- the end goal, which is to launch the right product at the right time. There's another practice that we've developed over the last decade or so called Launch Excellence, which ensures that throughout the project, from conception on, the activities that need to be completed in order for us to effectively launch our project -- product at the end of this process are done, right? So you're basically making sure that all those boxes are checked, those actions are taken so that when time comes to launch the product, you're not then having to go back and do anything that was missed. And that's exactly what happened here for this particular product. We saw more than 30 patents, new patents were generated. They delivered 1.5x the revenue that was committed essentially at the project inception over -- through its launch, and it's helped them gain more than 10% market share. So a great example of how these innovation tools can drive impact and share gain. The last opco example I'll give you, again, around the growth tools is around commercial. And this is an example from Pall. Pall saw in the years prior to the COVID pandemic, their customers, particularly their professional customers, looking to migrate towards digital ordering. Pall also found that it was difficult and costly to reach customers through their direct selling channels, particularly in certain high-growth markets and customers who had lower frequency needs, where they wouldn't naturally get as much time and attention from a direct sales team. And the COVID-19 pandemic accelerated this demand and opportunity, not just in the customers in high-growth markets and in these lower frequency use cases but much more broadly. So how did Pall use DBS to address these challenges? They used Policy Deployment, the most powerful tool in the DBS tool book that enables operating companies to drive breakthroughs, build new muscle, new capabilities and they deployed their policy deployment attention towards building e-commerce as a strategic priority. They developed a whole suite of new tools, strategy tools, an online store, how to manage their digital sales through distributors as well. And they deployed these out to the multiple businesses within Pall that were impacted through Kaizen. And if you look in the upper right, the impact was pretty significant. From 2017, where less than 5% of Pall's revenue was done through e-commerce, now greater than 15%, so more than tripled the impact here. And if you look more broadly, because these tools that were developed in -- principally at Pall or first at Pall, have been adopted more broadly across Danaher's operating companies, we've seen Danaher revenue from e-commerce increasing by more than 35% year-over-year in 2020. So developing this digital playbook, it better serves the customer, and it also helps us grow above market. And the last of the 3 domains I want to spend some time on is Leadership. So this is the most recent expansion of DBS. First, recognize that it's the foundation of -- it's who we are and how we do what we do. And we have a need and a responsibility in the DBS office here with -- at Danaher Corporate, to ensure that our leaders are trained in the use of these tools, and we have a series of structured leadership programs for managers, sort of mid-level managers, sort of early-stage execs and more senior executives, where they're introduced to the tools and the best practices sort of in the appropriate order. We also offer trainings to all of our associates, whether they have leadership -- people leadership roles or not, and we train more than 1,000 of our associates every year in multi-day training courses, formerly entirely in-person, but now a mix of in-person and online. And we also manage a certification program for the most critical and important DBS tools. Our associates can get certified or reach even an advanced certification in the use of those tools, which helps us to ensure the expertise needed for those businesses to grow and expand is in the operating company, and they're not reliant exclusively on the DBS office for that set of expertise. And over this time, we've deployed these -- our thinking and our DBS resources to creating tools to help us develop people more than just through trainings. We've developed a set of Best People Leader Expectations. We've embedded those in what we call our Leadership Anchors, which are criteria we use in addition to performance objectives to measure how our associates perform each year. And we've worked with our D&I team to help each of our opcos apply policy deployment to their D&I representation goals. So a pretty substantial new area for us to deploy and use DBS. And in the upper right, we recognize that adult learning is achieved principally by doing. So one of the more important things we do also through our organizational assessment cycle is to identify the new experiences, particularly that our associates need as they move up through their leadership ranks so that they can more capably handle the demands of these -- of the bigger and broader jobs that they're headed to. So if we look at the results, what has this done for us over the last few years? From 2018 to 2020, we've seen less than 5% annual turnover while also increasing annual core OMX by more than 100 basis points per year. And in the last 2 years, 2019 to expected results for this year, we're now delivering low double digits top line growth. So this combination of maintaining our focus on lean, expanding our view towards growth through both commercial and innovation and sort of systematically identifying and building leadership capability through DBS, has really worked for us. So summing it up, DBS has evolved over -- now nearly 40 years to a balanced approach across lean and its origins, growth and now leadership. If you were to sum up in 2 words what DBS most enables for us, it's continuous improvement, it is a culture, it's a set of practices that help us continue to find better ways to serve our customers and find better ways to differentiate ourselves competitively. And as you've heard in other presentations and I'll reiterate here, it is our sustainable long-term competitive advantage. It's the way we deliver breakthroughs and deliver strategic initiatives corporate-wide. And it's -- as I said, it's who we are and how we do what we do. Thanks for the opportunity, and I'll hand it back.

Thank you, Kevin, for that great overview of the evolution of DBS and great examples of DBS driving performance. You'll hear more examples of this throughout the rest of the day. Now if we move on to Life Sciences, we have 2 presenters. First, we'll have Jennifer Honeycutt, which will start by giving an overview of the evolution of the platform into the $15 billion business it is today. And she'll also spend some time talking about the progress we've made at businesses such as SCIEX, Beckman Life Sciences, and IDT plus give an overview of Aldevron, which we were so excited to close last week. After that, we'll have Emmanuel Ligner spend time to speak with us about Cytiva and Pall, specifically around our bioprocessing exposure. And with that, I'll turn it on over to Jennifer, our Executive Vice President of the Life Science Tools Platform.

Thanks, Rainer, and good morning, everyone. I have the privilege today of talking about the Life Sciences platform. I've had the privilege of being part of this platform over the last 8 years, first at Beckman Coulter Life Sciences and then subsequently, at Pall Corporation. And it's really been just terrific seeing this platform grow over time and continue to evolve to some very attractive further market segments and end markets. It's currently a $14.5 billion revenue estimated here in 2021. And over time, you'd see that we've evolved this platform to being disproportionately exposed to the biopharma market, which is now over 50% of our source of revenue here. We enjoy fairly even distribution in geographic sales, with an ever-increasing exposure to recurring revenue, which is now over 70% of these businesses. Strong brands and leading market positions that you see here that are really anchored with these strong secular drivers, including the acceleration of life sciences research, new biologics modalities, vaccines and therapeutics that we've seen during the pandemic for COVID-19 vaccines and emerging investments in high-growth markets. We've been under quite a transition over time in terms of evolving this platform. In 2015, these businesses were fairly evenly split, spread between these markets that you see here, but in the main, low single-digit core revenue growth, 45% recurring revenue and under 15% operating margin to now projected $14.5 billion in revenue, with over 20% core revenue growth, over 70% recurring revenue and over 25% operating margin. You can see here the very intentional move over time between some of these slower growth markets that you see in research to a disproportionate focus here in the biopharmaceutical market. And over these 10 years, we've been able to see that we continue to acquire premium brands in key areas of the life sciences market and in applying our DBS rigor and our strategic M&A, basically providing a very strong sustainable trajectory going forward. Emmanuel, in the next talk, is going to talk to you about Cytiva and Pall and their contributions to bioprocessing. But I'm going to spend time in my talk here to talk about these fantastic life sciences tools businesses. Starting with our most recent acquisition, Aldevron, which I'm happy to say, closed on August 30. This is an outstanding business, roughly $400 million in total revenue. We see this business growing at a sustained 20% or greater in terms of organic growth over time. They are the leading producer of high-quality plasma, DNA, mRNA and proteins, over 90% of this business in that plasma space. And we couldn't be more excited about the team that is coming to Danaher. We've got the transition team partnered up from the Danaher side, with the transition leaders on the Aldevron side. And we're just really excited about the scale, the quality, the reputation, the turnaround time that this business brings to the portfolio. And we think that the application of DBS will further allow this terrific business to enhance its performance over time. Again, this provides a fantastic beachhead for us in our genomic medicine enterprise, wherein we're seeing the rapid adoption of gene and cell therapies, DNA and RNA vaccines and gene editing technologies. So in the main, I think we feel pretty good about Aldevron being accretive to multiple levels of our Danaher business. In terms of accelerating growth across the Life Sciences businesses, you can see here that in the 2012 to 2016 time frame, we saw these businesses growing at kind of low single digits, mid-single-digit growers. And through a combination of running the Danaher playbook, new product launches and strategic acquisitions, we've been able to move these businesses to about 400 basis points of additional growth. In terms of what that looks like, it looks like the standard playbook that we've run in the past, wherein we have outstanding operational execution relative to deployment of DBS, which helps us do product life cycle management effectively, increasing our margins, lowering the cost of G&A and allowing us to reinvest in growth, in many cases, specific to innovation, but also in terms of commercial execution. We have been able to apply DBS rigor to our R&D processes to increase the cadence of innovation, and then we augment the position of these businesses through strategic M&A that allow us to enhance their capabilities and expand their presence in the attractive end markets that we see. So this balance of inorganic and organic investment, combined with the power of DBS, has really helped us propel this entire segment of Danaher. If I look at Beckman LS, I had the privilege of running this business from 2013 to 2017. At that time, we had some pretty tired products that were long in the tooth. This business has just transformed tremendously, right, in terms of the disciplined approach to product life cycle management, reducing their G&A cost by 200 basis points, taking those funds, reinvesting in new product development that allows them to improve gross margins. We've spent almost about $100 million over the last 5 years in new product development and sales and marketing, which has allowed us not only to get this business on a better organic growth trajectory but also to improve their overall operating margin by over 1,000 basis points. Back in the day, I had the opportunity to sort of initiate the development of the Biomek i-Series. Leaders who have followed have done a fantastic job of accelerating the growth rate of our flow cytometry franchise with iterations of the CytoFLEX here that came in as the Xitogen acquisition. They've recently launched CytoFLEX S-Flow Cytometer, which has up to 4 lasers and 13 parameters for a higher dynamic range and really focusing on that next generation of research use of flow cytometry. And more recently, the team has launched the Vi-CELL BLU Cell Viability Analyzer, which enables fast, accurate analysis of cell health and bioprocessing scale up and manufacturing. So over 30 new product launches developed in the last 3 years, obviously, taking this business from what was really a low single-digit grower in 2012 to 2016 to a business that's sustainably growing over 10% each year. SCIEX, our mass spectroscopy franchise here, has done just an outstanding job in terms of their innovation and driving the flywheel of new product development. Recently launched the ZenoTOF 7600, which is a high-resolution, accurate mass spec for biopharma and LS Research, really getting us a disproportionate focus now into that life sciences and biopharma research space. It's 20x more sensitive than traditional time-of-flight systems, which allows you to analyze over 40% more proteins than existing systems. And so this is really the vehicle that allows advanced therapeutics characterization and quantification of molecules that were previously at undetectable levels. In terms of the Triple Quad, this is reinforcing SCIEX's leadership in quantitative mass spec. This is the 7500, recently been launched. It is 7x more sensitive than existing systems and allows you to analyze 30% more metabolites that really helps researchers better understand drug activity and safety profiles of further getting the best drug candidates to market faster. And so if we look at this in its entirety, SCIEX, again, has been on a multiyear journey here to transform their product portfolio into the most attractive sectors, over 40% of which is contributing to sales in aggregate. So great work done by the SCIEX team here to really propel their innovation engine from what it was to what it is today. IDT, a business that actually was our first genomics medicine investment, I would say, our oligonucleotide business here that we had aspirations for what we wanted to do with that business when acquired in 2017. They've been able to achieve over 500 basis points of geographic expansion, largely in Asia Pacific as a function of our investments there. They've added over 60,000 square feet of manufacturing space, largely in GMP, which has been supporting COVID vaccine development and PCR testing. And then commercial execution, we've been able to grow the NGS market by virtue of deploying not only DBS tools but also investing in feet on the street to get 50% growth in terms of that space. So DBS rigor for funnel management, daily management and commercial execution has really played well there. And you can see how these results read through, right? $300 million business in 2018 to over $500 million anticipated this year, with core growth at a sustainable 20% or greater, 65% gross margin and a cumulative 750 basis points of operating margin expansion. Again, those 3 factors that you'll hear time and time again is really related to organic investment, inorganic investment and the flywheel of using DBS, in this case, getting us to quality and turnaround time, a case of innovation that's competitive in the market and flexibility and scalability as customers move from research use over to GMP scale and use. So in summary, this is just a terrific group of businesses. This platform has evolved into higher growth margin and recurring revenue within the portfolio indexed to the most attractive end markets. You can see obviously, our passion and interest in continuing to grow and invest in that biopharmaceutical space, with a focus and an interest in genomic medicine. Aldevron creates an incredible beachhead for us to invest in this space, along with IDT to expand our capability into this fast-growing segment and then enhancing our core growth trajectory and long-term competitive advantage through organic, inorganic investments and the application of DBS. Thanks for listening, and I'll turn it back to Rainer.

Thank you, Jennifer. It's clear how the portfolio has evolved tremendously and how innovation and the Danaher Business System are driving operational performance at many of our businesses. I'm also extremely excited about having Aldevron as part of the Danaher team. So with that now, let's turn it on over to Emmanuel to walk through our bioprocessing exposure, give an update on Cytiva and where we couldn't be more pleased with how the team has performed over the last 1.5 years. Emmanuel is the Vice President and Group Executive of the Biotechnology Group and the President of Cytiva. Over to you, Emmanuel.

Thank you, Rainer. Good morning, everyone. It's good to be here. I want to give you an update of Cytiva and Pall. You heard Jennifer talking about the Life Science platform, but would like to go a bit more deeper into the last 18 months of Cytiva and Pall. Let me introduce you first to Cytiva through a short video. [Presentation]

As you saw in this video, Cytiva is a global biopharma company with more than 8,500 passionated scientists. We have scale. Our revenue forecast for this year is about $6 billion with a very well geographical mix and a good balance between equipment and consumable. In fact, a very large part of our consumables revenue is a recurrent revenue. What we're doing every day is to really help customers around the world from their fundamental research, moving to development and manufacturing, the scaling of their processing. We are able to help the customers from a picogram to a metric ton. Now we've done that for many years. We've done that for many generation of biomolecules. But we've done that under the name Cytiva for only 18 months. So what have we done for the last 18 months? Well, first of all, we established Cytiva as a brand. But not only we rebrand 32,000 product, but we also, through good communication, through marketing, established Cytiva brand as a leading brand in the life science industry. The recent Kantar survey shows that Cytiva in terms of brand power, the willingness to buy, and brand premium, the willingness to buy at a higher price, Cytiva scored 3 points more than the industry average. Now at close, we needed the help of GE, and we signed more than 200 transition service agreement with GE. I'm really happy to report to you today that by the end of this month, by the end of September, we will have exited all of those TSA on-time according to our original schedule. The team has done a phenomenal job. We are expanding, we are growing fast, and we have, of course, hired more than 1,500 people that joined our team globally in order to support our growth and continue to support our customers. The Danaher Business System is a very powerful tool, and we are embracing it. We learn it, but more importantly, we are practicing it day in, day out. And I would like to share a couple of examples with you. Leveraging DBS, we've been able to double the output of our manufacturing plant in single-use technology. And more recently, we look at our innovation on-time delivery and we have been able to double the time improvement of those project leveraging DBS. We will continue to learn and practice DBS. Now the financials. We're very proud and very excited about the financial results of Cytiva. Compared to acquisition, we've doubled the revenue. And this year, we are looking at delivering a 35% core growth, improving our operating profit by 500 basis points and delivering a high single-digit ROIC. Now we know we will continue to grow fast and we will grow fast from a higher base as initially told. First of all, as you know, we are supported by a very strong industry. You know that there is constantly shift from medicines to biologics. There is an acceleration of focus on the genomic medicines, the cell and gene therapy and other new modalities. 10x more project since 2015, and this is accelerating further. High-growth markets such as China have a huge need of additional capacity of production and also have seen tremendous investment in innovation medicines. And then COVID. The COVID tales is continuing. Today, only 1/3 of the global population is vaccinated. So how are we going to continue to grow and continue to deliver strong results? Well, in the bioprocessing, Pall and Cytiva together offer a really strong offering for our customers and create an incredible offering. First of all, our portfolio. Our portfolio are complementary. We will see that in the next slide. But I just want you to remember that both portfolio together create the broadest offering in the industry. Just one note here, our single-use technology business, bioreactor, bags, flow paths for fluid management, et cetera, is going to exceed $1 billion this year. We also wrap our products with services, with scientific support every day in our customers. I will speak a bit about this later, but this is really a strong differentiation. We'll continue to invest in R&D. We'll continue to invest in innovation. We have scale. We will see a bit about this later, but the scale allow us to deploy capacity of production, serve our customers better, differentiate ourselves in inorganic investment as well. The future is bright for Pall and Cytiva in bioprocessing. Let's go back to some details about our portfolio. As you can see in this workflow, Pall and Cytiva are complementary. In upstream, in cell culture and single-use technology, we start from media, bags, bioreactors, mixers and fluid management, as I was talking about, various bioreactors that answer various needs for the customers and, of course, debris filtration. In downstream, very strong leading product line around skids, around column and of course, chromatography resin and Pall filtration. Pall filtration product line is extremely strong, well recognized by the customers. Skids, consumables and, of course, sterile filtration at the end of the API. But with recent inorganic investment, we have enlarged our workflow offering to drug product, to fill and finish. The VanRx was gloveless, fill and finish tools make us together with Pall Life Science, able to serve the customers from an idea to a vial. If we look at the scale. Today, we are looking at a bioprocessing revenue for 2021 of about $7.5 billion. Our products are here to help the customer to go faster, bring flexibility to manufacture and also reduce cost, reduce footprints. Now in our industry, I say very often that nobody can do it alone. It is about collaboration. We wrap our product offering with great services. Let me tell you a bit of those services. Cytiva has a Fast Trak services, which is helping customers to improve processes, to make those processes more robust, more efficient and Pall as an equivalent service is -- but a complementary service. Cytiva Fast Trak service is around monoclonal antibody, Pall services is around viral vectors, which are so important for cell and gene therapies. So again, 2 very complementary services. Services, which has been around in the industry for a long time. Next year, we'll celebrate 35 years of Cytiva services, Fast Trak, of which we have been in China for 15 years. So something very well recognized and well appreciated by the customers. But the collaboration is not only on the services that we're offering in addition to our product. It is also about multiple collaboration around the world, Pall and Cytiva has more than 10 collaboration around the world. Recently, we have announced a collaboration with Harvard, MIT and Fuji with the creation of Landmark Bio in order to accelerate the cell and gene therapies in the Boston area. We also have more than 10 R&D centers around the world. And I was talking about those dedicated scientist associates. We have about 1,000 field service engineers that are days in, days out, work with our customer to make sure that their lab-scale equipment or their manufacturing equipment are up and running and reduce downtime. The scale of the Pall and the Cytiva bioprocessing business helped us to continue invest, gain capacity, inorganic and inorganic, and we're going to see that in a couple of slides. Today, when I speak with customers, the #1 preoccupation from our customers is security of supply. With scale, we have been able to accelerate our capacity of manufacturing. We've made recent announcement about the $1.5 billion that we dedicated into improving and deploying more capacity of production in more than 13 sites around the world. I just wanted to take a few examples. You have a picture here on the bottom right, which shows our new Shrewsbury site. This is in Massachusetts. This is a site where we make our bioreactors. Well, this site, last year around May, was a car dealership. The team did an incredible job leveraging the Danaher Business System to upgrade the site, made it to the standard that our customers expect us and transferred the entire biomanufacturing of our accelerate bioreactors there. We opened the site in December. It is up and running. The other picture is actually the 10,000 square feet that we free up from the movement of the bioreactors in Westboro to increase capacity in our single-use technology and so on and so forth. We have many examples around the world where we are accelerating our capacity of deployment in order to stay close to the customers, in order to improve our service level to the customers and ultimately, to gain share. Security of supply today is helping us to gain share. I was talking about the investment that we are doing also organically and inorganically. We are so excited to be part of Danaher. Danaher is a company that knows how to fuel innovation. And this is what we are doing. If we compare with 2019, we are already investing more than $100 million into R&D. And we just launched this year some really, really exciting breakthrough innovation technology. Just a few examples on this slide, the Fibro technology, which is a nanofiber technology, which is allowing the customers to do protein purification in a much more faster way. The Xcellerex Advanced Perfusion System, which is helping the customers to improve the titer inside the bioreactors, so improved productivities. All our R&D are motivated by speed and productivity for the customers. Now over the last 6 months, we've also announced 4 different acquisitions, and I want just to go through very quickly. We spoke about the gloveless fill and finish product from VanRx will help us to penetrate the drug products. But I'd like to speak briefly about GoSilico and Precision Nanosystem. GoSilico has a team of extremely smart people in Germany, which have developed a software, a mechanical modeling system, which helped the customers to deploy a digital train downstream processing. In Silico simulation of the processes, it helped the customer to go faster and help the customers to reduce use of materials. This is the future. Digital is the future in bioprocessing, and we are very exciting to invest and bring the team in board to deploy our digital strategy. Now Precision Nanosystems is helping us to complement the workflow on the cell and gene therapy, in particular, around the messaging RNA. Precision Nanosystems is the leaders of encapsulation of mRNA into a lipid nanosystem. Same approach at Pall and Cytiva, started small with the customers and able to follow the workflow, the customers and the deployment of product for the customers into GMP. Very exciting to have those talented people working with Pall and Cytiva joining the team to offer a better solution for the customers. But we also make investments linked to opportunity such as capacity of production. The industry is in huge demand of buffer. And with the acquisition of Intermountain Life Science in Salt Lake City, we have been able overnight to double our production of buffer for the industry. This was very important to continue to serve the customers and continue to be close to the customers in their needs. What I would like you to remember is the following: Cytiva team has exceeded expectation, but we will continue to deliver and grow fast. With Pall, we will work with passion and determination to create long-term growth. We pride ourselves to always strive to be best-in-class. With DBS, we will continue to improve, improve our services, improve our product, improve innovation for our customers because our mission is to advance and accelerate life-changing therapeutics. Thank you very much. And now, Jennifer, Kevin and myself are ready for our Q&A session.

Thank you, Emmanuel. Shannon, we're ready for our first question.

Our first question comes from Scott Davis with Melius.

My question is for Kevin, if you don't mind. And it's just about the evolution of DBS. And you think about lean, very tangible things to measure with lean, very tangible things to measure even with growth when you evolved DBS to the growth tools. What is it with -- what can you do with the leadership add-on to the DBS tools to know it's working? To kind of know -- obviously, you can measure kind of turnover and things like that. But is there more to it than that, that you can measure kind of success particularly when you think about different geographies, different cultures, leadership styles and such? I'll just leave it at that.

That's a great question because it's been something we've been working on pretty intensely for the last few years. Now we've distilled down the insights of our most experienced leaders into what we call playbooks. And we use those to help our -- whether it's an individual or a team and a work cell or a broader organization, help them understand, based on evidence, what practices we can actually see evidence of, where you stand on the continuum of capability. And we use those to help individuals and their managers identify what are the appropriate development steps for them what kind of priorities they should have for their following year's policy deployment initiatives, all in an effort to build that capability. So that's been something we spent a lot of time on, and we feel like we've got a pretty good handle on how to address these things.

Our next question comes from Tycho Peterson with JPMorgan.

I'll start with a couple for Emmanuel. Obviously, bioprocess has been a big COVID beneficiary. We look out 3 to 5 years, how do you think about the long-term growth profile of the portfolios? Is it high single digit, low double digit? And then on the services side, I know in the past, when you've gotten the CDMO question, you kind of said you're not interested in going down that path. I'm curious as if the thinking has evolved post Cytiva and Aldevron on your willingness to kind of take on CDMO-type work? And then lastly, I know you haven't integrated Pall and Cytiva. I'm curious why that's the right strategy, given that it's a lot of the same customers, a lot of the same workflows? Why keep them as independent? And then one follow-up for Jen on SCIEX. You discontinued the clinical system last year, the Topaz. I'm just curious if there are any lessons learned from that about the clinical markets and that spec in particular?

Thanks, Tycho. So I will start, and then I'll pass it over to Jennifer. And Tycho, I will answer. I think you have 3 parts of the question. If I forget something, just remind me or I will go back to it. So first of all, when we look at the future, well, remember, we've doubled the business over 18 months. So high single-digit growth is on a much greater base, but we're super excited. We're super excited. As I said, the portfolio is incredible. We have the broadest one. We are the only one that can go from vial -- an idea, sorry to a vial and customers want to have that full offering. And this is very important. The technical service that we bring with really excellent scientists is phenomenal. And so the future is super bright. What's going to happen to COVID, I think it's a very, very big question. We don't have all the answers today. I think we've shared with you guys that we think that we will enter -- we're confident that we will enter 2022 with $1.5 billion in the order book. So it's really looking great. We are reinvesting. We are deploying capacity of production. We have leveraged DBS. I mean, I think what -- we were talking about the fact that over the last 18 months, we have been able to really double our single-use product line output for the plant with leveraging DBS and with the effort of the team. I mean, it's just great. I think today, we just announced that in China, we have additional capacity, we tripled our capacity in China of single-use technology. So the story is great. And we feel very, very confident about the future and about the growth. So I think this was your question number one. Your question number two, if I remember, is correct, Tycho, is about the CDMO. I think it's about serving the customers. It's making sure that we stay close to them. So the service industry is something really different than the product. We are very comfortable in the product, and think we'll see what the future looks like. But right now, it's about the product. Right now, it's about serving the customers. Tycho, what was your third point, if you don't mind reminding me?

Just the fact you have, Pall and Cytiva are still separate businesses, it's a lot of the same customers. So why not have a more integrated front to customers?

Yes, yes. Absolutely, absolutely. So the portfolio is very complementary, okay? And today, the commercial guys are really working very close to each other and working in collaboration, just to make sure we serve the customers. It's too independent opco. It works very well like this. We need to see what we need to do for the best, for the customers. We will always listen. Within the DBS, there is this incredible value, which is very important, as customers speak we listen. So we'll see how we evolve. But for the time being, 2 independent opco, operating very well together as the team are working very close and winning together, which is the most important. And then your next question was probably for Jennifer.

Yes. Thanks, Tycho. I think your question was really around Topaz and SCIEX and their approach to the clinical market. We see the clinical market as a constantly evolving set of needs that are changing. I think our solution lineup that we've got today is well positioned to give the customers the flexibility that they need to constantly update their assay requirements. Relative to the SCIEX business itself, I think we've made some great plays there relative to reinforcing our position in quantitative mass spec with the 7500 Triple Quad. It's really focused on the bioanalysis market, where speed, sensitivity and reliability manner. Also the ZenoTOF 7600 accurate mass spec for drug discovery, research and characterization. So as we think about the portfolio of products at SCIEX, I think we cover nicely the clinical space, but also those areas where we have fast-growing market drivers within the drug discovery and development markets.

Our next question comes from Vijay Kumar with Evercore.

Thanks for hosting the Analyst Day. I had two for me. I think you guys mentioned $1.5 billion of order book on Cytiva. What is -- I guess, on the COVID side, with boosters, should we be thinking of that as an increment to that $1.5 billion? Any sense in trying to quantify what the magnitude could be? And my second is Cepheid, when you talk about Cepheid business growing low double digits, what is the right base? Is that the pre-pandemic $1 billion base? Or are we looking at $3 billion base and growing double digits?

So thanks, Vijay. I think for the Cepheid, I think we have the team in the second part of the presentation. So I think you should ask this question to our diagnostic team, okay, if you don't mind, on Cepheid. On Cytiva and on the booster or -- there's also a lot of question around the 12 years old plus, the young population. I think Vijay, as I said in my presentation, we need to think that only 1/3 of the world today is vaccinated. So there is still a lot to do. And what we are looking at right now is we're looking at customers' vaccine manufacturing, which are working flat out to serve that demand. So a booster in this country versus a booster in this country right now in the midterms, we don't think it's very materials. It might become a very positive impact and very important for the future of mid and long terms. But right now, we think it's very difficult. It's probably very marginal when we think about what is happening tomorrow. So difficult to quantify the many moving pieces, which population, which area, which country, which vaccine, there's a lot of moving pieces and it's very difficult to quantify, Vijay. So I think right now, where we are looking at, it's entering 2022 with that $1.5 billion of COVID vaccine and therapy backorder. But if it change, we, of course, we'll update you.

That concludes this Q&A session.

So now we're going to take a quick break. But before we jump, I wanted to highlight an Investor Day tradition, similar to past Investor Days, we'll be making a contribution from the Danaher Foundation to the exceptional organizations shown here: City Year, Breast Cancer Research Foundation and Ocean Conservancy. Each organization represents 1 of our 3 new focus areas for community investment, which will be introduced in our upcoming sustainability report. These focus areas leverage the expertise of our platforms, integrate diversity and inclusion and align with our sustainability pillars of people, innovation and the environment. The first is building a diverse STEAM-ready workforce, much like STEM, but with the added element of art, specifically art technology-related fields; next is advancing health care innovation and how we'll explore improving systems and access to health care, healthy communities and research; and third, protecting the environment, aligning with our water platform sustainability initiatives. And today, we're honored to make these contributions to 3 exemplary organizations in each of our new giving areas. So enjoy the break, and we'll see you after. [Break]

Well, welcome back, everyone. Now I have the pleasure of welcoming Joakim Weidemanis to introduce the Environmental and Applied Solutions segment and then spend some time on our product identification platform. Joakim is the Executive Vice President of our Diagnostics, Product Identification and Water Quality platforms. Over to you, Joakim.

Thank you, Rainer. Hello, everyone. I'm going to start with the Product Identification platform, and then Kevin Klau will walk us through the Water Quality platform. For background, I joined Danaher about 10 years ago in the Product Identification platform. And I've had the pleasure and honor of so far working with 3 of our business platforms. So let's jump in. These 2 great platforms that are part of our reporting segment, Environmental and Applied Solutions, a $4.5 billion business, highly profitable and mid-single-digit growers. About half of it is Product Identification and the other one is the Water Quality businesses. Great brands with market-leading positions in all the areas that we play. And as you can see here, we share the common business model with the rest of Danaher with a strong growing recurring business, we'll come back to that, serving diverse end markets with mission-critical applications. Product Identification focused on helping consumer goods and pharma brands and their suppliers get more great products to market. And then the Water Quality businesses are really focused on making sure that the quality of the water that we consume or is used by large water users is of the right quality and safe. And this water bottle that I have here on my desk, perhaps you have one on your desk, is an example of what you see every day that we are involved in. And so we've helped this brand here make sure that this product, for you as consumers, is something that you can trust and has all the right consumer information, product safety information on it. And of course, the Water Quality businesses have made sure that the water inside the bottle here is safe to consume. These businesses have healthy macro drivers. Product safety, the safety of the water that we consume, is something that drives more regulation in some countries around the world. Many of our customers are looking for workflow and digital solutions to get more out of the assets that they own. And you'll hear more about that in our presentations. And there are some other drivers which we'll get back to when we jump into each one of the platforms. So let's jump on to the Product Identification platform then. This is a $2 billion business, and you see here, also sharing the common business model with the rest of the corporation. And as I mentioned, the recurring element here is lately growing a little faster fueled by the growth of our software and SaaS businesses. Some of the drivers here, in addition to what I talked about are really about what our customers are trying to do. So many consumer goods companies are trying to grow by bringing more great products to market faster, and that could be new flavors, new packaging formats, et cetera. And as they do that, they, of course, need tools to harness the added complexity that this brings to their organizations. 2021 was so far a very good year for us, solid growth. And we are, I'm pleased to say, nicely ahead of 2019 here so far this year. So let's jump into what we call the packaging value chain and talk about where we are positioned and why these are attractive positions that we have taken here. So for context, and you see here a simple view of what happens from when a product concept is defined in a large consumer goods company until when it hits the retail shelf. For context, there are thousands of consumer goods companies and pharma companies out there in the world and their manufacturing locations are in the hundreds of thousands. So there's a great deal of fragmentation in this space. Now as I mentioned, what's the main goal of our consumer goods process? Well, it's really to get more products to market faster, move through this value chain here quickly. Speed matters a lot. And if you're trying to do more of the added variance flavors, as I mentioned, you have the added complexity of managing all of that. And that's really the goal of our platform is to -- through our various businesses that are positioned in this value chain, is to try and make sure we help our customers move from the left to the right in half of the time that it took historically. So where do we play? Well, we have Esko, our software company, a world leader in packaging design software that's used by the large brands. It's also a company that has digital tools that allows the manufacturers of packaging materials to ramp up their manufacturing quickly and get to the right quality quickly so they can get their packaging materials to where the content then goes into the package in the SC, consumer packaged goods factories. We've got Pantone, which is the de facto color language of the world. We have X-Rite which is the hardware and software player that enables people are going to manufacture packaging materials to get to the right color quickly. It's more challenging than you could imagine. And then we have AVT that inspects the quality of all the good work that's been done by these manufacturers. And then we have Videojet on the right, which is really where this platform got started. This is the company that prints the -- not just the best before dates, but unique traceability information and helps the supply chain as well as us as consumers to know that the products we're looking at in the retail stores are safe to consume. What we do here along this value chain is to help move things faster from left to right, is really to help enable collaboration with digital workflow tools, but also to automate individual tasks and you'll see a little bit later that much of that is based on digital technologies as well. So let's move to the next slide. And I'd like to make sure you understand the strength of the recurring elements of this portfolio here. So as I mentioned, over the last couple of years, we've been growing and investing in our software businesses. And more on the left side of the prior page. And so that's about 10% of this platform today, mostly SaaS. So all of that is recurring and growing very nicely. Very happy with the progress there. And as you can see, a lot of products in the retail stores today are touched by the Esko solutions. 10 of the top 15 CPG brands are users of Esko software, and we're expanding globally here. And then, of course, Videojet, where we started, as you can see top right-hand corner here, in an environment where a Coca-Cola plant is printing 10 million to 20 million cans per day, the need for application-specific inks that they stick to and dry very fast is important and getting these products the unique data that they need. And what we provide is actually rather low cost versus other things that these plants buy, but yet a mission-critical type part of their operations. So a nice recurring revenue stream, which is also very, very sticky here. So that's the business model. Now how have we been winning here over the years? Well, first of all, on the right-hand side, you can see here that we've been winning in our industry for quite some time. And we're very proud of that. But of course, we need to keep moving, we've got competent competitors. And I would like to call out 3 themes here when it comes to how we continue to win. And it's really around innovation. And then you can see here that we -- by applying various DBS tools, we have been able to get product launches to market faster and more accurately, which means that we've been able to lift our growth based on that. And then we have 2 different digital themes here of how we're driving growth. And the first one is really around remote service. Service has always been a very important part of our competitive advantage. And lately, we've been able to grow our installed base of connected printers, which then allows us to service these from remote in addition to maintaining our strong field team, which is really strengthening our competitive advantage. I'll come back to that a little bit more later. And then in Esko, we continue to invest in the software for packaging designs and kind of the digital tools needed to manufacturing packaging materials. And this has driven tremendous and good and differentiated growth over the years here. And really, when you think about then how we're winning here, it's really a combination of these 3 innovation themes, right? It's the speed, it's the connected devices and it's the workflow digitization. So -- and there will be more and more on these things here going forward in this platform, I believe. So let's take a look at a little bit deeper of the Videojet remote service right here. As I mentioned, there are, just in the United States, tens of thousands of factories that manufacture consumer goods and pharmaceuticals. And as you can imagine, they can't shift to their customers if we haven't printed on them this unique manufacturing data and so on. And in their world of high-volume manufacturing, labor shortages, in particular, right now, actually. And then in the COVID world, where they're trying to keep staffing, social distancing to a minimum in the factory, they're really wanting to make sure that they can keep their plants running, keep the retail stores stocked. So they really put a premium on reducing risks of downtime while also being able to run with less staff, more productivity and so on. So this value proposition that we have around remote service really resonates with our customers. And by the way, for reference, that Coke example that I gave, with the 10 million to 20 million -- sorry, cans produced per day. If you lose 1% of production time, now that's 1,000 Coke cans per day. So that kind of gives you a feel for what this value prop is about. So by now, we have tens of thousands of connected printers, a leading position in our industry, thousands of customer plants. And bottom right, you can see a little bit how we leverage that to augment our competitive advantage. We moved from helping our field techs do a better job to being able to serve printers from the office. We're solving now 3x as many problems from the office as we could just 1.5 years ago. And then with all the data that we're getting access to from the printers, of course, we have a much better understanding for how they're used. And that allows us to change the designs of our printers and getting more sensors. And of course, we're on the journey here towards rebuilding predictive analytics and services. And I'm really excited about the journey we have here and our opportunities. And COVID, if nothing else, really confirmed that we're on the right track here. So many of our consumer goods companies are looking at digitizing their factories. And of course, what we're doing here plays right into those kinds of initiatives. Let's go to our second example, digital example here, which comes from Esko. And I think you can see by this simple workflow here, how with our packaging design software solution, we've been able to help our customers cut time to, from concept to hitting manufacturing in half. And we do this not just by helping these different individuals and our customers' organization collaborate, but we've templatized all sorts of things during this workflow here, which just helps them do things much quicker. And those -- the things we've templatized, that's, of course, our domain-specific knowledge about how to do this and in the most fast and effective way. And you can see on the right here that it's so important for them to get help with tools like this because the number of variants that they're dealing with, as I mentioned before, is increasing significantly. And of course, the side benefit here are the reduction in the stakes and the ability to run these processes actually with fewer people. And so here again, we're in tune and in lockstep with our customers' digital transformation journeys and helping them in that. Again, starting to accelerate here as a result of COVID. So how do we do all this? If we go to the next slide here, you'll see that -- and on here that talent, of course, is an essential part of making all this happen as well as leveraging DBS to support the higher speeds of innovation here. So being a little bit longer in Danaher, of course, we've been at -- leading with DBS and building new DBS tools for many years. And what's interesting is that quite a few tools in the DBS library that are used across Danaher today have actually originated in our E&AS businesses. And these -- and of course, those things happen because of the great people that we have. And I'm proud to say we've got a really strong bench. We have low senior leader turnover, as you can see here. And our teams have done a good job over many years to develop and grow talent. And that has allowed us to, what we call, export talent to other parts of Danaher. And what's interesting is that many of the senior leaders you're meeting on this event have at some point in time in their career spent time in one of the E&AS businesses. And on the talent side, we don't just develop people from within. We've -- over the last few years, to help us build digital skills, but also to build more perspectives on innovation opportunities. We've made sure that we've continued to recruit talent from the outside to help us build digital capabilities or people in more diverse backgrounds to make sure that we're able to see innovation and opportunities from every possible aspect here. And some good progress, as you can see here on the right-hand side. So let me move to the wrapping up here. And I'd like to go back to the water bottle example and to remind you that what we do matters in the world, and it's something that touches you and your families every day. This young boy and his family, they are looking for good, safe products to consume, to buy in the retail stores and to enjoy their life and to sustain their way of life. And we think we play an important role in that, and that is what motivates us and our people to continue innovating for you, your families and this family on this picture here. So let me summarize that. And hopefully, you were able to see here that we're well positioned in attractive end markets. We have a strong recurring part of our revenues that's growing for a number of reasons. And with the installed base that we have and the strong commercial coverage, we have excellent positions from which we can continue to grow here. And we are growing, and we want to accelerate market share gains here. And we talk a lot about the innovation side of things today. And of course, digital is playing a bigger and bigger role than as you saw in our future here and it's driving more growth, which we're excited about. And then we're proud to be talent developers for Danaher as well as DBS tool developers and that motivates us. We play a more important role in product identification in Danaher than the $2 billion that we represent here. So with that, I thank you for your time, and I'll hand it back to Rainer.

Thank you, Joakim, and thank you for your leadership. PID is such a great set of tremendous businesses with outstanding long-term returns, and they really have laid the foundation for many of our DBS tools and in our talent incubator for Danaher, including myself and several other Danaher executives. And with that, I'd like to now bring up Kevin Klau, who will provide an overview and update of exciting things going on in the Water Quality platform. Kevin is the Vice President and Group Executive of the Water Quality business.

Thank you, Rainer. It's great to be with everyone today. And on behalf of the more than 9,000 colleagues across the Water Quality platform, I'm delighted to be able to share some insights and updates on what we've been working on and what we see as opportunities for the future. As many of you know, today, the Water Quality platform is a more than $2.5 billion business. We're really proud of the distribution, both by geography but also by end market where we've got a nice mix of both the municipal opportunities but also selling quite a bit into industrial and into applied and really a long list of other markets that we serve beyond municipal and industrial. Today, more than 50% of the revenue is recurring. And we continue to add to that and I'll talk a little bit more about that throughout the course of these remarks. The growth drivers continue. Some of you may have seen this before, but I think as we continue to evolve the business and the portfolio, we're just delighted by the opportunities we continue to see. Most recently, we've seen certainly some of the regulatory environment taking shape as it relates to some emerging contaminants, notably PFOS here in the U.S. and in other parts of the world, which is driving increased concern and attention specifically around water quality, both municipally but also as it relates to our industrial customers. We've certainly seen our business model tested over these last 18 months. We'll talk more about that as well. But I think the strong macro drivers, specifically the sustainability of water resources and the demand that we're seeing increasingly from our customers around a more complete workflow conversation, really integrating instrumentation with chemistry, service and software. Increasingly, we think sets us up with a really strong position. We play in what we believe are some of the most attractive areas of water quality across the space. On our flagship brands, you'll see at the top, Hach, Trojan, ChemTreat and then a recent addition of Aquatic Informatics, a business we acquired in July of 2020. And we take these products to customers and really develop deep partnerships in these areas that you can see below. Water, wastewater and environmental testing, this is primarily our Hach business from an instrumentation point of view. But again, more recently, we've been able to couple that position with a strong software offering that we pulled together through Aquatic Informatics and some follow-on acquisition we did earlier this year with a company named Sedaru. Water and Wastewater treatment, this is where you'll see our Trojan business, really ultraviolet disinfection and memory filtration, both in municipal and industrial applications. And then our ChemTreat business, focused on industrial water treatment really spans a wide range of industrial customers and partnerships and plays a critical role in helping our customers achieve a number of critical objectives, including very improving environmental sustainability, helping achieve not only business objectives, but more recently, a host of objectives focused on really ESG priorities as we've seen increase in demand and urgency across the industrial universe. When we think about how we win in water quality, we really love how we bring a few key attributes together. First is our applications expertise. And again, really regardless of the environment we play in, whether it's municipal, industrial or applied, wherever we go, we bring a deep understanding of the problems that customers want us to help solve and how we can do that most efficiently and effectively. I mentioned, we've also partnered. Increasingly taking that strong instrument position and brought it together with ways we can help them achieve more of their tasks in the workflow, whether that's through a service offering or more recently in software. One of our most sustainable competitive advantages is definitely our commercial position, really how we engage and access customers globally. We've done this over the last several years, increasingly as a platform where we can partner with global key accounts, whether that's again on the industrial side or large municipalities. And we're bringing together account management, really deep applications insight regardless of where that customer opportunity might be and the ability to deliver that same value proposition globally, really a unique capability that we're proud of and that we've taken years to build and now sustain. And then with the technology and innovation, a lot of these businesses, as many of you know, were acquired over the past 25 years, and they came with a -- really compelling innovation positions, in some cases, developing the first instruments of their time or solving the first complex problems, writing methods often in different jurisdictions and different focus and application areas. And that continues today. We stood up 2 years ago an Innovation & Technology Board, which is a mix of some internal and external thought leaders. And we're really getting a ton of leverage and impact from that group wrestling with some emerging technologies, things that might be 5, 10 and 20 years out, but also grappling with some creative ways that we can solve problems in some cases that are outside of what we can do today, but they might inform some investment in terms of technology or long cycle investment or maybe even a more near-term open innovation or product partnership that we might be able to inform our businesses. And then I'll get into some more details in a minute about how we really accelerated our pace of innovation over these last several years, something that we're excited about, where we brought the power of the Danaher Business System really to bear here, not just for our own benefit to shorten the cycle time, but really for the benefit of our customers to put more products, more solutions in their hands more quickly. To the right, you'll see the last few years, as we characterize our performance relative to our peer group, I think one of the things we're proud of is that in 2020, we did grow this platform despite some really significant challenges. And I think that speaks to the resilience of our business model. We weren't as exposed to some of the CapEx investment cycles as some others might have been. And I think the combination of some hard work, for sure, some creativity and ingenuity on our part and together with our customers, allowed us to really avoid some of the deeper challenges that some others face, that frankly, a lot of us face, but we were able to face those challenges and still deliver positive core growth. And I think if you look at our performance over the course of the last several years, really over the last cycle, we're really proud of what we believe is a pretty sustained outperformance both in terms of core growth, but also in terms of margin expansion. I know that the progress we made in innovation -- and we showed a version of this slide at a past investor conference, but I think we've updated it in some important ways. So first, maybe turn your attention to the center of the slide. This is really a core view of Hach business which has the widest range of products and offerings across 3 application environments, the lab, the online or process environment and the handheld or recordable environment. And with the broadest product range, that does create some challenges. We have to continue to innovate, both to bring breakthrough thinking and also to refresh the products in these categories. And so we've done that, we've gotten better and smarter. In 2014, launched a breakthrough product, the SL1000 or PPA, really unmatched and unparalleled in terms of what it can do with a whole wide range of parameters and a really unique approach to solving some of our customers' toughest challenges. And that continues today in 2021. Last year and this year, we've really been delighted by the customers who have needed an auto sampling technique to enable them to measure COVID-19 in wastewater. And through some work that we had done and some partnerships we've established, we've really established a leadership position and seeing great uptick, whether it's in communities, whether it's on university campuses, a lot of different application environments where that's providing great insight and enabling increasing COVID decision-making and testing strategies to be deployed based on what they find in concentrations in the wastewater. Above that, though, this is a bit of a different picture. This is really our software story. And we started down the software path many years ago, really close to the instrumentation, how do we make these instruments more competitive and compelling. But over the last several years, I think we got more conviction from our strategy work that we saw the ability to expand our position and our partnerships with our customers, but it was probably going to require some inorganic or acquisition activity. And that really led us to the acquisition in 2020 of Aquatic Informatics, a business we believe to be the best pure water software player in the space. An outstanding group of individuals with great talent, focused on environmental municipal and industrial water quality software across a range of applications. More recently, we added to that with the acquisition of Sedaru, a really exciting business in the asset management space. And together, I think we've built a really sustainable and winning position when it comes to innovation that we're really proud of. And you can see the results, we've double the number of customers using our software and more than 350 basis points of core revenue growth contribution from products launched over the last 5 years. I mentioned the software journey, and we'll just dig into that a bit here on this slide, where -- what you can see on the right side are some of the application environments. But on the left, a little bit of a window into our strategy. We have really driven significant digital transition through our customer base. Really, in some cases, getting some conservative customers to embrace more progressive and advanced technologies. In other cases, we've had customers really pulling us into those applications. It's been exciting. And that's enabled us to sustain low double-digit core growth over the last 5 years and more than 1,000 basis points of increase in terms of our recurring revenue percentage again over that same horizon. What we see is an interest from our customers and from our perspective of needing to go from driving operations impact, really how they run their plants and improving the environmental output of those plants, but also improving the operations and the business performance, whether it's a municipality or industrial customer. So we've been focused on that for a long time, but we really see an exciting opportunity to shift to more of a predictive and prescriptive opportunity where we could help anticipate problems, we can apply some machine learning and artificial intelligence. And we've done this with great success, the team, et cetera, I mentioned earlier, has really done some exciting work primarily in California, something we're excited to start to scale more across the U.S. and over time, internationally. We've also seen Aquatic Informatics and some of the work they've done with some flagship customers. It's really advanced, combining what they know about the water cycle with data science and some advanced capabilities and increasingly see a willingness of customers to embrace some of these predictive and prescriptive solutions. Lastly, what we say is we've learned a lot in the software space. And one of the things that we've learned is it's a unique talent and unique DNA that it takes to be successful here. And so both Aquatic Informatics and Sedaru and some of our folks in Hach are really native software people. These are folks who've grown up with really a cloud-first mindset and a software mindset. And I think one of the things we're proud of is the ability to pull that group together and now have a software center of excellence that can be deployed across the platform based out of Aquatic Informatics in Vancouver a really scalable globally. We're really excited. When you see the picture on the right, we can address the personas, whether it's the person at the top whose holistic enterprise insight that, that general manager or a senior leader might be looking for, together with the woman with the hard hat who's probably more of an operator, where she's looking more at maybe a collective or collection system operations challenge where the person at the bottom or on the bottom right, who are more inside of a plant environment, thinking about how they get that plant to run more smoothly every day. So we think we've got a unique position given the strong instrumentation and applications expertise, but now combining that with what we can do across the enterprise, we're really excited about not just the recent performance, but the trend lines and where we see this business going for years to come. And while we're motivated and excited about the work we've done with our customers, we've also helped -- in our opinion, really start to address some environmental challenges that we've seen in our own enterprise but also through our customers. And as I said earlier, helping them address some of their ESG priorities. This is a great example of where the Danaher Business System has been utilized in a pretty unique and creative way. We've taken what we've learned about reducing inventories or eliminating waste in our earlier days in a factory environment or more recently, maybe in a transactional environment, and now we're putting that to work truly in the environment. You can see some of the things that we've done on the right side where we've driven our energy costs by more than 50%, more than 50,000 tons of CO2 from Hach customers that's been eliminated. And then you can see our ChemTreat work that they've done with the ability to eliminate 20% of the water discharge from cooling towers. So I think it's just a powerful way. We're taking what we know about our customers' challenges, but also in this space, what we know to be an increasing need and urgency around the ESG priorities and really marrying those up as a way, we think, to strengthen our customer partnerships. We're proud to be the longest tenured platform in Danaher. And when we compare where we started in 2001 with $350 million of revenue to where we are today and where we're going, we're just really delighted by the way we've been able to turn the Danaher model with a mix of organic growth and really improving the businesses we have, but yet have a keen eye on where we can add in some bolt-on acquisitions or some adjacencies or more recently extending our position through software, as well as expanding our global reach through some distribution acquisitions in the high growth markets. We just think we've been able to run the Danaher playbook here for a number of years. We've seen the results. We've seen the outperformance, and we're just excited to see that continue for years to come. And while we are energized by the opportunities I just crystallized, we're also inspired and motivated every day knowing we're on the front lines of some of the world's most difficult and challenging topics when it comes to water and the environment. And this is a picture of the young man in Mexico who's benefiting from some safe water, which was delivered to him by way of a nonprofit partner we work with, Water Mission. And so whether it's on the non-profit side or the for-profit side, it can sometimes be easy to get lost in the day-to-day business challenges, but rest assured, we're energized and inspired by the difference we make in the world and really how we help realize life's potential. I'll close with just a few comments here. Again, it's a really sustainable model. We're pleased with the performance we've delivered over time and see the opportunities to enable that to continue on the growth side and really across the range of performance metrics. We think we'll continue to gain share by expanding the position we have with customers. And as I mentioned, I think we're really proud of how we put the Danaher Business System to work and people continue to do that for years to come. Thanks for letting me be part of this today. And with that, I think Joakim and I are ready to answer some questions about PID and Water.

Thank you, Kevin. Awesome business, these 2 businesses here. So Shannon, I think we're ready for the first question.

Our first question comes from Doug Schenkel with Cowen.

Thank you for all the details. I actually want to ask a question on the water presentation. Have your customers given you any long-run view on investing more in this area, given things like the Water Spend Bill that was introduced earlier this year? I guess, specifically, what I'm trying to get at is will infrastructure initiatives in the U.S. be incremental to your long-term view on this business, which I believe you view this as a mid-single-digit plus growth business? Even recognizing that you're assuming high single digits this year, I'm wondering if some of these infrastructure initiatives are enough to really potentially change your view on the outlook for water over the next few years? And essentially, I'm trying to get at where you think this is going to land over the next few years. Can water, given what's going on in the world, actually be a higher single-digit growth business?

Thanks, Doug. We will answer that a few different ways. First, just comments on the infrastructure package what we're seeing in the U.S. I'd say right now, it still remains uncertain. So until those details are finished and ironed out, until that legislation gets signed and really goes into effect, it's a little early for us to judge what kind of impact that's going to have. I'd say second, though, we are encouraged and very enthusiastic. It's not just the U.S., we're seeing this in other parts of the world as well. There is a renewed commitment to invest in infrastructure. And again, you see it maybe acutely here right now in front of us inside the U.S. with the infrastructure package. But this is long overdue from our perspective. A lot of the infrastructure is aging, a lot of instrumentation needs to be replaced. And frankly, we had some breakthrough solutions which can help customers reduce costs, improve compliance, reduce risk. And I think there is probably some funding tailwinds here we're likely to see coming through that legislative investment, whether it's in the U.S. or other places. I'd say the last point, just to your question about the growth profile. I would agree with your comments on one hand and say, I think throughout the presentation, hopefully, you had a sense for why we're so enthusiastic about the growth of this business on the industrial side and the municipal side. We think the same macro drivers which have been here for a while, continue. And we think several of those, whether it's climate change, some of the more challenges we're seeing in industrial customer areas and in municipalities, we have every reason to believe that the work we're doing in some of those tailwinds give us confidence in the growth profile for years to come.

Our next question comes from Derik De Bruin with Bank of America.

Actually, it's sort of a follow-on to Doug's question. But you're looking at water quality. I mean what about other environmental areas? What about soil, what about air? I mean, are these areas that could be essentially be avenues of expansion in this business? Just sort of thinking given your strength in these areas, obviously, there's other testing needs that need to be done.

Thanks for the question, Derik. First, I'd say again, just to reiterate, we love the position we have in water. We think we have a lot of room to run here, given our share position and given really that what we think is that large reposition in those most attractive spaces inside of water. We just think there's a lot of room for us here in this space, and we love it. To your question about other adjacencies, air, soil are the 2 that you named, I'd say short answer, yes. We're always looking at adjacencies, and we have certain criteria that they have to meet. And frankly, one of the things we are really proud of, for example, is the recurring revenue mix that we've been able to increase over a long time period. And I think you see that across Danaher, you certainly see that inside of water. And for us, that would be a key part of any potential expansion into adjacencies. It's certainly fueled some of our enthusiasm about our digital offering, is the ability to get into SaaS businesses where that recurring revenue profile is so compelling. So sure, I guess, to answer your question again, we continue to look for adjacencies. We will -- I expect to continue to expand into them for years to come, and they have to meet certain compelling criteria for us, one of them being the recurring revenue mix.

Our next question comes from Luke Sergott with Barclays.

I guess just as I'm thinking about both PID and Water, and you're talking a lot about software. Where -- like can you give us a sense of the attach rate on your existing installed base? Is that the right way to think about it? Or just trying to figure out where -- how big this business could get as a percentage of revenue for you guys?

Yes. Maybe I can take that one, and then I'm sure Kevin, you can add to it. Luke, that's a good question. The attach rate way of thinking is probably the most relevant in our device businesses. So that would be Videojet and Hach for example. And as you heard during my discussion here, we have tens of thousands of connected printers today connected to the cloud and we service them. And of course, there are some software-based solutions that we layer on top of that. Now we had an installed base around the world of more than 300,000 printers, right? So we're still in the very early innings of that game, and we're excited -- really excited about what the longer-term potential is there. We don't see that every single printer in the end will be connected to the cloud, but you can safely assume that the majority of them will be over time, and it will take some time, obviously. So that's in terms of the runway. In terms of some of the other -- and I'll let Kevin comment on Hach, but in terms of the other software businesses that are not so device-centric, it's more about how many of the target customers have adopted our software solutions. And you heard me mention, for example, that 10 of the 15 largest consumer goods package companies have adopted Esko software solutions in their packaging design workflow, right? Now that doesn't mean that we have done 75% of the work there, it means they've adopted some portion of our offering. And typically in software businesses, you go in and you land originally, initially with 1 offering and then a large part of your play is to expand and hook up more users, of course, in the customer's organization, but also offer more value props that you have in your software portfolio. And here again, we're talking about less than 10% penetration, really. So we've got an incredible amount of interesting runway here ahead of us. Kevin, how about for the Water businesses?

Thanks, Joakim. Similar story in Water. Maybe I would just respond to the question really in 3 ways. First, we definitely see the ability to attach software to our instrumentation. Joakim mentioned Hach, that's probably the place where it plays out most notably. It makes the instruments more compelling, gives us, we think, some advantages to win in the instrument game, which we played for a long time, and that's going to continue. The second area that we're excited about is the ability to combine instrumentation from different application environments. So this is from our environmental business, together with our analytics business and then our software businesses. So we ingest lots of data. Some of that from instrumentation, some of that from other parts of the enterprise. And we can then help our customers make valuable decisions, and that's a different game in which case the attachment is probably less relevant. It's more about which use cases we can solve and which personas or decision-makers care about those. The last point I'd make is there are very clear examples that we are winning with today that are software only, senior decision-makers typically, and this is at enterprise, sort of mid to high up the organization where we're able to deploy software, solve valuable problems and in some cases, that is not as connected to instrumentation, as you might think. And for us, back to Joakim's other point about sort of penetration rate, we think the penetration rate in all 3 of these is pretty low. I would agree with his phrase and say we're still in the early innings on the Water side as well.

That concludes this Q&A session.

Great. Well, thank you all for your time today. And with that, I will turn it back to Rainer.

Thank you, Joakim and Kevin. We've clearly got a tremendous set of businesses with PID and the Water quality platform, and we couldn't be happier with the progress you've made, creating long-term value in addition to taking share in the markets we play in. So now I'll switch gears and turn to our Diagnostics platform. We're still proud of these businesses that have been front and center in helping in the fight against COVID and they've also made a great deal of progress across this platform over last several years. Chris Riley, who is the Vice President and Group Executive of the Diagnostics platform is going to provide some insight on the progress made and what makes our Diagnostics businesses truly differentiated. Over to you, Chris.

Thanks, Rainer. I'm excited to be with you here today to discuss the progress of the Diagnostics platform. I'm privileged to work alongside 25,000 committed associates. We work every day knowing that every moment matters. Every diagnostics test is an opportunity to replace the patient's wait and worry with an answer and potentially a path to better health. In addition to living our shared purpose, we have assembled a Dx portfolio that we believe is second to none. The 4 major operating companies in Diagnostics, Beckman Coulter Diagnostics, Cepheid, Leica Biosystems and Radiometer, will generate $9 billion of revenue this year. It's a material step-up from the $6.6 billion we delivered in 2019. We really believe we have an attractive mix here of recurring revenue comprised of assays, consumables and services. And we're nicely diversified across these operating companies, geographies and where we serve in the hospital and more diversified than where we were in prior years. The macro trends really here continue to favor the continued growth of this portfolio, including the high sensitivity of molecular diagnostics and the continued health care investment in high-growth markets. In addition, the well-documented skilled labor shortages in hospitals really favor the type of automation and software solutions that we offer across this platform. Now our strategy over the past several years has included deliberate investments to really orient the portfolio towards the most attractive diagnostic modalities and our Cepheid position, truly best-in-class. Our patient and clinician advantages, reference lab quality, unparalleled ease of use, the largest test menu and truly a scalable architecture has resulted in the largest molecular installed base in this industry. And over the medium to long term, we believe this offering continues to grow at a low double-digit rate. Leica Biosystems and Radiometer, both in excess of $1 billion in revenue, have accelerated their growth rates in recent years. Each has a strong position in their respective areas, the anatomical pathology lab for Leica and point-of-care blood gas analytics for Radiometer, 2 locations that offer opportunities for Danaher to really influence those patient outcomes and help hospitals achieve their health economic goals. Beckman Coulter has been steadily improving through better execution of our DBS playbooks, operationally for customers; commercially for better growth and win rates; and of course, improved innovation to help patients. And really, as a leading player in core lab, we really like the Beckman Coulter position to help hospitals achieve both better patients and health economic outcomes. In summary, the portfolio continues to evolve into a stronger growth orientation. 3/4 of the portfolio is now positioned to grow mid-single digits or higher over the medium to long term. Now I'd like to share a short video that really highlights the advantages of the GeneXpert system. [Presentation]

Hopefully, you found that video informative. The GeneXpert system is highly differentiated. And our combination of menu, simplicity of use, speed, assay sensitivity really positions Cepheid to be the molecular partner of choice for today's leading health care systems. The menu of approved tests on the left-hand side is the leading menu in the molecular diagnostics menu. We were best-in-class before COVID-19 and remain so today. The scalability of that architecture, the ability to offer module accounts from 1 to 80 really make us a top choice in helping those health care systems address their testing needs. This allows Cepheid to facilitate standardization, which is an increasingly important goal for health systems across the globe. These advantages will continue to serve us well competitively. And we saw significant penetration opportunity that exists in molecular, long term, which motivates our continued investment and excitement in this business. Now many of you are, no doubt, interested in the status update on our Cepheid progress. Let me summarize both the historical investment and the recent progress as we position Cepheid as the leading provider here. COVID has truly been an accelerant to our strategy. That strategy has been simple: fund menu expansion, add anchor assays that drive share gain and drive adoption and expand our installed base. Through a great application of the Danaher Business System, this team has scaled better than our expectations since the acquisition. By the end of this year, we anticipate almost quadrupling the size of our installed base since Cepheid joined Danaher back in 2016. Pre-COVID, we were growing at a strong double-digit rate. Post-COVID, as Rainer mentioned, we would anticipate low double-digit growth off that larger base. And we will continue to invest heavily to add capability, R&D capacity and manufacturing output. And of course, we're extremely proud of the Cepheid team's contributions to the fight against the SARS-CoV-2 virus. Their contributions have been well documented. We've had the first point of care and near-patient COVID test approved under the FDA's Emergency Use Authorization program and the first 4-in-1 test approved under EUA, combining 4 of the most common respiratory viruses into a single cartridge. Of course, we will continue to innovate to bring more tools to health care systems in the fight against this pandemic. We've really been working tirelessly to expand production over the past few years. We continue to expect to ship 50 million cartridges this year, 2.5x more than the output from 2020. And obviously, we're all watching the Delta variant closely, much like all of you, and we will continue to support customers the best we can. This continues to be a really dynamic environment, and as we move into the rest of the year and into 2022, we'll share what we're seeing on the ground. As I mentioned earlier, the Beckman team continues to improve and gain momentum through better execution. We remain laser focused on transforming Beckman culture into a stronger, more clinically oriented core lab partner. We have continued to invest in R&D and innovation with real notable launch this year in immunoassay, hematology and our automation offering. In immunoassay, we announced in late July the agreement to integrate Access BNP, a core market for heart failure, into our cardiac portfolio. This really simplifies how Beckman brings its cardiac menu to customers. Beckman has also offered a comprehensive response to the COVID-19 pandemic, including serology offerings as well as PCT and IL-6 under EUA, and PCT and IL-6 are really 2 tests that are used extensively to identify infection-related inflammation. In hematology, we've talked to you in the past about the relaunch of the DxH 900, an early sepsis indicator. In 2020, we launched the DxH 690T and, in early 2021, the DxH 560, now refreshing the entire portfolio and bringing new capabilities to medium and small-sized labs. We continue to extend Beckman Coulter's leadership in total lab automation. The launch of the DxA 5000 in 2019 and the extension of that offering, the DxA 5000 Fit for medium-sized labs bring greater capabilities to laboratories. These offerings provide rapid and, what's important here, consistent turnaround time. We also offer pre-analytical sample quality detection, so we know the tube that goes on the automation system is a good one. And we reduced the number of manual processing steps to really improve laboratory efficiency. The DxA 5000 Fit, which we released earlier this year, is the first-of-its-kind total lab automation solution for medium-sized labs. It's truly unique. We're directly addressing skilled labor shortages that are facing those labs. And as you can see, these launches are translating into higher levels of innovation-driven revenue than where we were just 3 years ago, and we're investing even more here that will accelerate these results. Now in terms of commercial execution, the Beckman Coulter team continues to execute the Danaher playbook. And through a combination of efforts, we have materially increased the number of IDN, or integrated delivery network, wins versus our recent tests. And success in these large health care systems is truly critical to winning in the U.S. market. And of course, these are additive, new product innovation plus commercial. So our newest automation solutions, the 5000 to 5000 Fit, are helping us win in those competitive accounts. In the U.S. alone, 60% of our DxA 5000 placements are in competitive accounts as those customers really try to find solutions and answers to their consistent labor shortages. Now high-growth markets has been a big part of the Beckman Coulter growth story for many years. It continues to be a place where we will invest. We are the #2 core lab competitor in China. So when we talk about adding in Tier 1 and Tier 2 cities and service capabilities, this is really about adding customer-facing capabilities to help those labs be better partners within the hospitals that they serve. Now in addition, we broke ground earlier this year on a major manufacturing and R&D center, which will be the centerpiece for our in China, for China strategy. So we're really excited about the growth improvement, fueled by DBS, and we have clear line of sight to mid-single-digit growth performance. Now let me turn and discuss Leica Biosystems and Radiometer, 2 excellent examples where we have demonstrated strong execution driven by DBS. Commercially, both of these businesses are true benchmark businesses within Danaher for running what we've described as our commercial playbook. Daily sales management, growth war rooms, key account management, these have driven significant gains and the most important analyzers that fuel our business. The installed base of the Leica bond instrument, which is our advanced staining platform for immunohistochemistry, that's grown at an average double-digit rate since 2018. Similarly, our Radiometer blood gas installed base has grown high single digits annually over the same time period, really fantastic performance. And both companies are also leaders in applying digital solutions to help accelerate growth. Leica is a leading provider of digital pathology, and the launch of our GT 450 slide imager, which we released in 2019, has been the best-in-class light imager in this space. And with that launch, we've taken the revenue of our digital pathology business by increasing it over 50%. Now on a related theme, the Radiometer business has been applying digital connectivity to really help diagnose instrument issues remotely. Agent faster resolution of downtime events, frankly, makes us a better partner in the lab and helps us place those instruments. So across the portfolio, we're investing in customer workflow solutions like digital connectivity, and you can see the marked increase in the Radiometer-connected installed base. Now this is only a narrow window into the good things occurring within each of these 2 businesses, but perhaps to best measure our progress competitively is what's shown on the right-hand side of the slide. Both LBS and Radiometer, we believe, have taken share versus their peer set over the last 3 years. They both accelerated their core growth since 2018. In closing, we're really excited about the positioning of this platform in the most attractive segments of the diagnostics market, and our portfolio continues to evolve towards a higher growth orientation and higher growth modalities. We're now 5 years into the Cepheid acquisition. We're just incredibly pleased by the performance of that team. Obviously, super proud of their contributions in the fight against the COVID-19 pandemic and really excited about the setup here for future growth and shared gains. And through the consistent application of DBS, including, and importantly, the acceleration of our new product development ambitions, we remain excited about the growth trajectory across the entirety of the portfolio, and that means Beckman Coulter Diagnostics, Leica, Radiometer and Cepheid. So thank you. We're now ready to take some questions.

Thank you, Chris. Shannon, I think we're ready for our first question.

Our first question comes from Jack Meehan with Nephron.

Chris, I was hoping you could talk a little bit more about supply-versus-demand dynamics in COVID right now. We've been tracking a lot of companies talking about a lot of supply when it comes to COVID testing. How does your order book compared to what you can actually deliver from a manufacturing perspective, and just level of confidence that you can grow off of $3 billion in sales as you head into 2022?

Yes. Yes. Thanks, Jack. I appreciate the question. Great to see you again. Joakim, do you want to cover this one?

I'll take that one. Thanks, Jack. Look, as you know, we're ramping our manufacturing capacity aggressively here. And we are not yet able to meet all the demand from our customers today, but capacity is ramping. And we are also investing in parallel, as you saw from Chris' presentation here, on the commercial side of things. So you saw the installed base grow here at -- continue to grow here at a very, very healthy rate and also this year, even though we made a big jump in the installed base last year. On the commercial team side, we are close to doubling our commercial team globally to continue to fuel placement of instruments as well as pull-through of menu, of course. And Cepheid isn't only about COVID, as many of you know or I think you all know. I mean the double-digit growth that we had before COVID was, of course, driven by many other things than respiratory diagnostics, right? So we think we have a very good path here to continue to stay on a solid double-digit growth path here going forward.

Yes. And maybe I'll just add, Joakim, to Jack's question, we continue to see really strong demand, and the projections that we gave you just 6 weeks ago at earnings are still here. We still anticipate 50 million cartridges here in 2021.

Our next question comes from Tycho Peterson with JPMorgan.

For Cepheid, I'm just wondering if you could talk a little bit about the decentralization theme that's playing out. What percent of the placements for you guys are now outside the hospital market? And we've seen some of your peers go over-the-counter, direct-to-consumer companies like Quidel and [ Key Health ] . I'm curious if that's a path you would ever go down. And then on Beckman, there's been talk for a couple of years about refreshing clinical chemistry immunoassays. Just wondering, does the DxA 5000 automation alleviate the need for that? Or should we still expect a refresh on clinical immunoassays at some point?

Maybe -- thanks, Tycho, for those questions. Maybe I'll start, Chris, with the Cepheid-related questions. So we are a point-of-care player, but we're not a consumer self-testing player. We -- as you saw from the video here in Chris' presentation, we offer reference lab assay performance in decentralized locations. And those decentralized locations could be within large hospital systems that have acute care or emergency care centers spread around a city. Those could be 50 to 80 locations, for example, for a large hospital system in Chicago, for example, where I live. And then obviously, you have other smaller testing locations as well that don't belong to large hospital systems. The majority of our placements today are not in centralized places and large hospital systems. They are throughout the systems of large hospital systems as well as more and more of smaller providers. And we think that position that we have is a very sustainable one. I think -- and you read about this as well. I think some of this consumer testing may or may not be as sustainable over time. I think that's been well written about. I think there are other positions within molecular diagnostics sitting in the high-throughput labs, et cetera, may not be as sustainable either, depending on external demand. So we're very focused on what we believe is the most sustainable position with a great value prop here for our customers.

And then maybe I'll take the question about Beckman. Obviously, we're excited about the acceleration of the growth of that business being on the trajectory we shared with you back in 2017, now exiting 2019 to 4% and staying on that trajectory here as we exit 2021. The DxA 5000, the DxA 5000 is a big part of that growth improvement. No question. As far as we can tell, about half of decisions in terms of what's driving our growth here recently have been driven in part by the automation decision. We will, of course, continue to invest across the entire portfolio. In fact, in 2018, 2019, we launched the DxC 700 AU, which was a new chemistry instrument. So you'll continue to see Beckman innovate across the entire portfolio. It is the right thing in order to drive the value proposition clinically but also drive the health economic goals of those hospital systems.

Our last question comes from Patrick Donnelly with Citi.

Maybe following up on Tycho there. Obviously, COVID has the potential to change the landscape of testing. I mean do you guys see this as a potential inflection point for point of care to gain significant share for more lab-based testing? Just wondering if COVID can be a validating event for GeneXpert where users aren't going to go back to some of these longer wait times for accurate results. And then on the back of that, what testing areas do you see as key opportunities, given the expanded installed base? And then how targeted were you with placements and facilities that we'll see use beyond just COVID?

Yes. So thank you, Patrick. Chris, I'll start there, if you don't mind.

Of course.

Yes. Absolutely, COVID has helped us because more locations that were perhaps thinking about implementing point-of-care testing, went ahead and did it on the back of COVID, right? So no doubt, it's helped us greatly. But there was a movement to decentralize testing already before COVID, I think you're probably aware of that, which is sort of the reason for existence for Cepheid in the first place here. And the way we thought about our placements, this big rise in the installed base that you saw on one of the slides is we do have an algorithm that would work with our salespeople where we take into account, of course, acute needs in particular parts of the world or parts of the United States, customer needs. But we also factor in what kind of menu needs will they have beyond respiratory testing here going forward. And I think you already know that we have the largest and widest menu when it comes to point-of-care testing here by a factor of at least 50% compared to other options. So where we place these instruments is, of course, then to be able to drive a lot of pull-through of other menu as well, not just COVID here, and that's the reason for some of my statements here around being able to stay at a very healthy growth rate here going forward as well.

That concludes this Q&A session. Back over to you, Joakim.

Thank you. Thank you so much, everybody. And with that, I'll hand it over to Rainer again.

Thank you, Chris, and what a great story with Diagnostics and Cepheid. So let me recap and bring us back to a bit earlier in the day. Our purpose-driven strategic portfolio evolution has really changed our growth dynamics and build us into a better, stronger Danaher, moving from low single digits to low double-digit core growth and durable recurring revenues of right around 75%. We created a very different margin profile with operating margins expanding by more than 800 basis points, both inorganically and with the Danaher Business System; and finally, strong free cash flow generation of over $6 billion with our continued bias for deploying our free cash flow into M&A with our most recent example of putting some of the free cash flow to work with Aldevron, and we couldn't be more excited to have this leading team as a part of the portfolio. So we've evolved into a $28 billion growth, high recurring revenue portfolio of tremendous businesses in highly attractive end markets with an enhanced growth and earnings trajectory. So as I mentioned earlier, we have great businesses and attractive end markets. But how do we run them? The Danaher Business System is how we execute. It's how we do what we do, and it's our ultimate competitive advantage cutting across all of Danaher. You heard Kevin Chance talk in more detail about DBS earlier. So you know that DBS is really focused around 3 main pillars: lean, growth and leadership, having evolved from the manufacturing floor to nearly everything we do. And we keep score on behalf of all of our stakeholders with our core value drivers, which you see on the right. We focus on delivering every day for our customers, associates and shareholders. Now through our evolution and the power of our portfolio and with strong DBS-led execution, our growth expectations have changed. Fundamentally, we think we've enhanced the Danaher growth and earnings profile in a post-pandemic world versus where we were pre pandemic. Pre-2019, we grew 5% to 6% and still owned dental. Cytiva was expected to grow 6% to 7%. And Cepheid was growing double digits but was just about 5% of our business. And the rest of Danaher was growing at a healthy mid-single-digit rate. Now the pandemic tailwinds have allowed us to accelerate organic growth investments across the portfolio as well as to deploy meaningful capital to M&A, including the recent Aldevron acquisition. So we think our growth profile has improved by over 100 basis points to mid-single-digit plus core growth based on Cytiva exceeding our initial expectations and really re-rating to high single-digit growth for the long term. And Cepheid now represents over 10% of the business while maintaining the original double-digit growth and the rest of Danaher is benefiting from the accelerated investment spend. With that higher core growth, and due to the combined power of DBS, disciplined capital allocation and the power of our portfolio, you should expect from us mid-single-digit-plus core growth longer term with 50 to 75 basis points of operating margin expansion annually, free cash flow continuing to exceed net income and investing our free cash flow annually on M&A, all in order to deliver double-digit-plus earnings per share growth. Our application of the Danaher Business System and our strategic approach to capital deployment creates value for our businesses and our shareholders, and we think we can continue to do so in the future at a core growth and earnings profile that has re-rated higher versus where we were just a couple of years ago. Our purpose-driven strategic portfolio evolution has transformed us into a science and technology leader, building strong footholds in great markets with high-quality businesses with Cytiva representing a game changer and far exceeding our expectations. We now have sustainable leadership positions in bioprocessing, molecular diagnostics, and we're excited about our future in genomic medicine, in addition to our leading positions in diagnostics, water quality and product identification. We've also evolved our approach to talent along with the portfolio, creating far more scientific breadth and depth. DBS has evolved and will continue to be our competitive advantage. You heard examples of enhanced innovation from SCIEX and Beckman Life Sciences to Beckman Diagnostics and Videojet. And we've seen the impact it can have an improving performance in recent acquisitions, IDT, Pall and Cepheid are just a few examples. And you've also seen the applicability of DBS to sustainability. We covered our strategic approach to M&A creating long-term value with examples of this across the portfolio from Videojet, Water Quality to Pall and Cepheid. And hopefully, you got a better sense of how we think about creating long-term compounding value for the businesses and shareholders. So we think our future is bright at Danaher and have built a strong foundation for the rest of 2021 and beyond with our flywheel picking up speed and further scale. And with that, I'll take your questions. Very good. Shannon, I'm ready for the first question here. Thank you.

Our first question is from Derik De Bruin with Bank of America.

So Rainer, a couple of questions. So we've seen some assets change hands recently that are more focused on some of the academic and government markets, and it's an area where you're not as heavily weighted in some of the cell biology, molecular biology reagents. I'm just sort of curious on your sort of interest in wanting to expand more into some of these areas to sort of expand that footprint. And then just on the growth algorithm that you sort of laid out. I know you're not giving '22 guidance, but I mean is this a basic framework to sort of think about '22 on that? Or is it -- are you thinking more like as once we get normalized past some of the COVID things this is more of a '23 sort of vision?

Thanks, Derik. Great questions. As you can imagine, we wake up every day looking at all the assets in the markets that are both core to what we do as well as adjacent and are constantly analyzing whether they really fit how we think about M&A, which starts with strategy and being in the right end markets, then identifying those leading companies that have a sustained competitive advantage. And then, of course, the valuation has to work as well. And when all those 3 things align is when we ultimately make our decisions. And so that would be inclusive of a number of aspects of our core business as well as adjacencies. Now if we talk about the growth algorithm, the way we like to talk about this and have for some time is the pre-pandemic world and the post-pandemic world. So as we think about our growth flywheel, which we think is now not only larger, as I mentioned, with the $28 billion estimated in revenues for the end of this year, but also turning faster, so even better with the re-rated growth, we're thinking about that in a post-pandemic world. So we don't talk about that in the context of the dislocations that we've seen here over the last 18 months or so.

Our next question comes from Doug Schenkel with Cowen.

So we've been getting a lot of questions about your outlook on the EBIT margin -- EBITDA margin line. You're tracking above 30% this year. And while intuitively, it seems like this should go back to low to mid-20s levels when COVID-19 revenue recedes, which has been obviously a concern across the investment community, while it seems like that should happen, the reality is with Danaher, it's not clear that COVID-19 revenue has to drop off a lot over the next few years. So that observation combines with the margin profile of your existing and newly acquired higher-growth businesses makes it harder to kind of answer the question of, ultimately, where should margins land, not just the margin targets in terms of how much expansion you can get year-to-year, but essentially, what is the margin profile over the next few years of this company. So I think the question is, do you view Danaher based on where the portfolio is today and also based on your view of a more durable COVID-19 revenue line, do you view this as a high 20s EBITDA margin business? Could it actually be higher than that? And then a second quick part to this. You've focused a lot today on how the growth profile of the business has improved. And we've spent a lot of time learning more about higher-growth businesses that either have or have the strong possibility of having above-average corporate margins. When you look at it that way, it's easy to see how, mathematically, you could do a lot better than 50 to 75 basis points of margin expansion per year. Is the reason that you're sticking with that level of expansion in terms of your long-term guidance target, is that a function of your commitment to keep investing in R&D and growth initiatives? Or is there something else that's holding you back from getting more aggressive there?

Great questions, and thanks for those. So let's start with the topic of EBITDA. And you know that we don't normally speak in EBITDA terms other than saying that this year, we'll probably end up generating over $8 billion of EBITDA. We tend to talk about fall-through, and it's in those terms that I'd like to characterize what you were talking about. As we look at the first half of the year, our fall-through was over 50%, and we talked about that being related to mix; certainly, of course, COVID tailwinds and volume driving that fall-through as well; and then, of course, the lower travel and entertainment and so forth costs that you would expect. But going forward, we would expect that to be more in the 40% range. So as you think about Q3 and Q4 in particular, we think that, that fall-through is probably more in the 40% range as we see some of these costs returning being one aspect of it. But the other thing is that, and this comes to the second part of your question, we always like to have that balance between delivering the fall-through to the bottom line as well as reinvesting the business. And so as you think about our algorithm for the long term, 50 to 75 basis points, that's really built on about that historical average of 35% fall-through, think post pandemic, allowing us really to continue to plow that very, very strong cash flow and those earnings into the flywheel as well as deliver on those double-digit-plus EPS expectations. So it's a little bit of both of what you were talking about.

Our next question comes from Vijay Kumar with Evercore.

I had 2 quick ones, one on M&A. Has the philosophy around M&A changed, Rainer? I mean, historically, when I looked at your DBS examples, these were assets where we either had some product issues or margin issues, and you fixed them. And now when I look at Aldevron, that's a very different type of acquisition for you guys. So I guess my question is would you ever go back to looking at companies which are perhaps growth dilutive on the top line, but perhaps there's more optionality on margins. And related to that, maybe this is for Kevin or you. What can DBS do to a business like Aldevron? I mean it's going 20-plus. Margins are high. Should I think DBS is now going to make 20% into a 30%?

Great question, Vijay, and good to hear from you as well. So let's start with our philosophy around M&A, which has not changed at all. And I just alluded to it in some of the previous questions. It's all about our strategy, finding the right end markets that we think provide outstanding tailwinds and sustainability and then looking at those markets to identify those differentiated assets to be able to look at compounding value, not just in the short term, but in the long term; and then, of course, the valuation equation so that we can deliver on our ROIC expectations. Those remain unchanged. And when those 3 things align that we tend to make our deal decisions. Now as it relates to Aldevron, and I'll come back to the DBS aspect of that in just a second, or any of the other acquisitions that we make, rather than talking about companies having issues, we really do frame that as value-creation opportunity. And that value-creation opportunity sometimes comes in terms of being able to rejuvenate a portfolio that has potential, but the company was unable to execute appropriately for whatever reason or it might be because the company was unable to get into the high-growth markets or it might be because it's a fast-growing company that simply doesn't have the resources and the leadership bandwidth to take full advantage of the potential. And as you think about what's going on in the genomic medicine market where there is extraordinary growth, you'll recall I was talking about a 10x increase in the development pipeline for genomic medicines. You can imagine there are many companies out there that are at the edge of their capabilities and capacities, and that's an opportunity for us. And as we think about Aldevron going forward, this is an absolutely fantastic company and team that has built so much really out of their own capabilities. And how to take that to the next level, both in terms of the existing business scope and globalizing that as well as entering other aspects of the genomic medicines business can really take advantage of our health. And now let's talk about DBS. We see many opportunities. In fact, the Aldevron team is engaging us here already about the opportunities they see in order to adopt DBS in order to improve throughput, productivity, their go-to market, not just structure, but processes. So we see plenty of opportunity around all of these things for resolving issues but really mining the opportunities for long-term value creation.

Our last question comes from Tycho Peterson with JPMorgan.

So I've had a couple of people asking about the guidance update. As you've highlighted in your kind of closing slides, you were growing 5% to 6% before COVID. Obviously, [ you invested at these studies ] [indiscernible] Aldevron. Aldevron will add 50 basis points to core alone, as you noted, it's a timely deal. So adding 100 basis points on the back of all these news seem conservative. I'm just curious if there -- as you look ahead, if there are parts of the business that maybe you're less optimistic about or you potentially could take some warranted caution. And then a follow-up on M&A. I'm just curious, we're starting to see some of your peers running the FTC issues. As you look across your portfolio, are there parts of the business where you're more or less worried about FTC risks going forward?

Thanks, Tycho. So let's start with the growth and the flywheel here. First of all, when we think about that, and this comes a little bit back to Derik's question earlier, we're really thinking about our growth flywheel in a post-pandemic world. So it's really important to know that we're taking all the momentum and the tailwinds that we see here in the shorter term out of that and really talking about what we think we can sustain in a post-pandemic world and do that in a really responsible way. And we think that on this basis, if we can drive the flywheel at the scale that we have it today in a mid-single-digit plus, I think over 100 basis points more growth there, and we can drive that cash flow right back into the businesses, as we have historically and will continue to do, that we can really plot that path into the future. This is as much about a process which drives us into the future successfully as it is about an endpoint. We tend to talk about the process of our flywheel and optimizing that with DBS and the free cash flow that we are generating in order to drive that double-digit earnings growth. So that's how we think about that from a growth equation. Now as it relates to the FTC, the FTC topic has been one that is a common denominator over many years. And it's one that, of course, we always take a look at, but we don't believe that we are in a position here that we would feel constrained in order to be able to execute our growth strategy or drive the kind of results that we're talking about here.

That concludes this Q&A session. Back over to you, Rainer.

Well, thank you all very much for joining us here in our virtual Investor Day. Like we said at the top, it would have been great to have you all together, but we're also happy to be able to keep you safe and healthy here. I hope that we are able to come across and get to you this purpose-driven portfolio evolution that has really modified and re-rated our growth from the mid-single digits to really the mid-single digits plus and has given our flywheel additional scale and speed in order to drive our cash flow back into the businesses and, of course, deliver that double-digit-plus EPS growth. So with that, I ask you all to be safe, keep yourself and your families healthy, and I hope to see you again in person very soon. Thank you very much for joining us.