Revvity, Inc. (RVTY) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the PerkinElmer Life Sciences Event Call. [Operator Instructions] I would now like to hand the conference over to your speaker, Mr. Bryan Kipp, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Sheri. And welcome to those on the webcast to our first broadcasted Investor and Analyst Day event in more than a decade. If I recall, our last full Analyst Day was in November of 2007, so it's been quite some time. And we're truly thrilled to be doing this event today. We have a lot of exciting things on the docket, which I'll detail in a couple of slides. But our hope, as you walk away from today with a better understanding of our portfolio and why we are excited about the future. As a quick heads up before we get started, we recommend people use Chrome for the most seamless browser experience. And for those who want to view the webcast in full-screen mode, please double-click the PowerPoint box, and it should expand. So turning to the safe harbor. As always, please take some time to review the language on this slide and the disclosures on the Investors section of our website. And note, today's presentation contains non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the embedded hyperlink and is available on the Investor Events section of our website at ir.perkinelmer.com. So looking at the agenda for today. Jamey will start with an overview of PerkinElmer and our DAS portfolio. Then Alan Fletcher will walk through our entire Life Sciences franchise at a high level, as well as dig deeper into our best-in-class discovery business. Alan will then hand it over to Kevin Willoe, who will detail our rapidly growing informatics portfolio and Gary Grecsek will take the reins from Kevin to update everyone on our market-leading enterprise business. Following Gary, Jamey will provide some closing remarks before we will take a brief 10-minute break. Then we'll transition to Q&A for approximately 50 minutes. [Operator Instructions] So without any further ado, I'll hand it over to Jamey to get things started. Jamey?

Thanks, Bryan. Good morning, and thank you for joining us. Before we get into the presentation, I'd also like to make a couple of opening remarks and then get into the agenda and what I hope you take away from this discussion. First off, we are all extremely excited to be here with you today. As Bryan mentioned, it's been quite some time since we've hosted an event like this. And we're excited because we want to share with you how we help our customers become more successful in the life science end market. We've built terrific capabilities and technologies, which create true partnerships where we innovate alongside our customers to solve problems. All of those qualities help PerkinElmer generate roughly $1 billion of revenue in the space and provide a strong foundation for continuous growth and value creation. Second, as we have previously stated, one of our goals is to increase transparency to the investment community. And that's why we're here today. We've heard from many of you who would like to better understand our portfolio, capabilities, market positioning and our view on the longer-term outlook of the company. To this end, I believe we've made some strides in 2020. We started the year with our Vanadis and genomics testing business story in January. Additionally, we began to release new quarterly earnings deck throughout the year, and here we are wrapping up the year with today's life science overview. That said, we recognize the importance of a comprehensive Analyst Day, so we commit to hosting one in 2021, even if it needs to be virtual. So here's what we'll walk through today. I'll quickly touch on a look-back on the year, which has clearly been unprecedented on many levels. And this certainly rings true for PerkinElmer as well. Since life sciences sits in our DAS business, I will spend a little bit of time framing the entire DAS outlook in the next few pages. I hope you take away 3 things: First, that DAS is more consistent and faster-growing in a post-COVID world, and our Life Sciences franchise, which makes up greater than 50% of the DAS business is the leading contributor behind that outlook. Second, that there is significant opportunity for margin expansion, while that will be less of a focus today in life sciences, since the businesses have higher margins, I'll still walk through the key areas in DAS with the greatest opportunity to expand margins over the coming years. And third, strategically and importantly, there are vast opportunities to continue to reinvest in life sciences, be it alongside our core capabilities or in more white space areas, which will naturally continue to increase the mix of Life Sciences in DAS and in overall PerkinElmer to drive further value creation. Our hope is that you come away from today with a better understanding of our portfolio, and you are as excited about the outlook as we are. Clearly, it's been a strong year financially due to the hard work of our 14,000 PerkinElmer colleagues across the globe. And I want to take a second to thank them. You have worked tirelessly to aiding the fight against COVID, while continuing to serve our core base of customers in this difficult environment, and we are extremely grateful and couldn't be more proud of your efforts. So now let me move to our financials. While we are not reaffirming our guidance in this meeting, let me touch on our financial performance when combining the first 3 quarters and the midpoint of our fourth quarter guidance. Revenues of $3.6 billion will be up 24% organically, with COVID-related products driving $900 million of revenue and the core book being down 7%. Margins grew substantially on both the gross and operating margin lines, which led to earnings being up almost 75%. And as you all know, we've been hard at work trying to improve our free cash flow performance. Adjusted free cash flow of $600 million, excluding the state of California prepayments, represent 75% free cash flow conversion, up another 5 points sequentially for the second year in a row. When factoring in the prepayments, we will generate close to $800 million of free cash flow, which is closer to 100% free cash flow conversion. And while we're all proud of the financial performance, I think we're more excited about the progress we made on our 3 strategic imperatives around innovation, the customer experience and our people and culture. You'll hear a lot about innovation today, but in general, here's what we've been trying to drive. We will refresh the majority of our DAS product-related revenue in a more consistent manner over the coming years. Starting this year, we will take more shots on a goal at truly transformative solutions. Accomplishing these goals requires a culture of collaboration and speed. So we've been working hard on embedding these qualities into the fabric of our culture. And finally, we are looking at inorganic opportunities to bolster our capabilities. Alan will walk through our pending acquisition of Horizon Discovery in more detail later, but we couldn't be more excited about the highly complementary fit with our discovery business in the fast-growing area of the market. And we are now on track to close by the end of 2020 as opposed to our previously announced guidance of the first quarter of 2021. From a customer experience perspective, we are fundamentally trying to drive 2 things: First, we want to make it easy to conduct business with PerkinElmer. This involves reducing cycle time from quote to delivery of our product to the customer and having a single point of contact at PerkinElmer for all matters. Second, we also wanted to be more engaging. Imagine digital tools where our customers truly understand our product better and can yield their full capabilities. It's also centered around best-in-class product quality. All of this should improve our Net Promoter Score to increase the retention rate and their share of wallet and become a more strategic partner in the scientific community. Last but not least, people and culture. We want our people to enjoy the work they do, to feel passionate about the purpose of our company and engaged to help our customers succeed and to know they add value and can see a path to the career they want. In 2020, we updated our corporate social responsibility report for the first time in 4 years, and we released new core values, which are more contemporary and easier to resonate with. So all in, while 2020 has been a difficult year on many fronts, we are extremely proud of the progress our team has made in many areas of the business. And what's more exciting is that we feel like we're still in the early innings of this journey around these imperatives. So we've stressed this before, but we are a different company than we were 5 years ago or even 1 year ago. I think the pie chart on the left-hand side of this page emphasizes that point. You can see we were rather unbalanced from a business mix perspective in 2015 with Discovery & Analytical Solutions comprising roughly 3/4 of our revenue. As you move to 2020, DAS and Diagnostics will each represent approximately 50% of the company's revenue. Obviously, some of this has been influenced by our strong COVID-19 success in Diagnostics this year. But even coming into the year, Diagnostics represented approximately 40% of the company's revenue, and we believe that mix shift is permanent. Our belief is that the Diagnostics business will represent greater than 45% of the company's revenue in a post-COVID world. As importantly, we are as excited as we have ever been about our DAS business and now how it's positioned moving forward. We play in 3 general end markets, as you can see on the right-hand side of this page, life sciences, applied markets and food. Today's discussion will focus on life sciences, which, as I mentioned, makes up roughly $1 billion of DAS revenues and as you saw on the agenda, we'll detail our 3 businesses, Discovery, informatics and enterprise services, which make up roughly 80% of the $1 billion in revenue. Our applied business is fueled by strength in spectroscopy, both atomic and molecular. We also have capabilities in material characterization and chromatography. All of these technologies serve the 3 end markets you see on the right-hand side of this page. We have about $0.5 billion in revenues in what we call applied markets, which is mostly comprised of industrial and environmental end markets. There's also another $200 million of revenue in life sciences and $100 million in food. Moving to food. Over the past 5 years, we've built out some exciting capabilities. Right now, we are focused on food quality and food safety in the areas of grain, dairy and cannabis. But I'll talk about other potential new areas we're targeting in a few pages. So over the next few pages, I'd like to lay out our DAS value creation game plan. It starts with continued mix shift. Over the past 5 years, we have invested approximately $2.5 billion in acquisitions, mostly in Diagnostics and Life Sciences. This has significantly increased our total addressable market, which now sits at $70 billion to $75 billion. In addition to the attractive financial returns that each business has brought, more importantly, they have opened up the aperture to more white space opportunities. We'll detail the diagnostic opportunities in the near future. But in DAS, you'll hear more today about the first 4 areas listed on the right-hand side of this page. At its core, our Discovery business helps our customers find the right targets, faster and cheaper. And Alan will walk you through how we can build more predictive models with better data to accomplish those goals. We've already started building capabilities in biologics and cell and gene therapy, both in Discovery and informatics, but there is clearly a lot more room to grow when you think about cell selection and separation, QA/QC or delivery mechanisms. In informatics and enterprise, our people work hand-in-hand at our customer sites, and that provides the opportunity to see exciting potential adjacencies to further improve the value proposition those businesses bring to our customers. And we just launched a new LTE and an accompanying CDS, which can serve many end markets, including Life Sciences. From a SAM perspective, you can see we now think we serve approximately half of that TAM. And acquisitions like Cisbio, Meizheng and now Horizon have increased our recurring revenue mix. And when you combine this strategy with what I'll talk about on the next page, the key takeaway is that we have fundamentally changed the growth trajectory of DAS from growing low single digits to mid-single digits organically. When we think about the inherent factors in driving more consistent and better performance in DAS, it comes down to 2 primary dynamics: the customer and innovation. A couple of pages ago, I talked about the spirit of what we're trying to accomplish in those areas. This page will attempt to describe more specifically our actions and results. Starting with innovation. When we reorganized the team in 2019, we combine the capabilities embedded in both businesses of DAS and Diagnostics, to better leverage the scale we have across technology verticals like automation, assays and software. Additionally, to support the cultural shift, we aligned incentives and operating mechanisms to focus on greater collaboration. We bolstered all of this with additional external resources to create speed and flexibility. So let me try to crystallize what this has done by sharing a few examples. Earlier this year, we launched our first ever multi-quadruple ICP-MS, the NexION 5000, which was 3 months earlier than the original plan. So what was different? We ran multiple activities in parallel across R&D, sourcing and the supply chain for speed as opposed to the traditional sequential process that we always took. And the feedback on the product has been terrific. As evidenced by our order velocity and the NexION 5000 winning the Wiley Analytical Science Award. Another example is that we will soon come to market with a new food application. One which we leverage more nimble and cost-effective resources in India as opposed to the developed markets. And lastly, we completely refreshed our new LC platform with a transformational software package using both internal resources and third-party partners. Finally, in a year where DAS revenues will be down mid-single digits, our R&D will be up 5%. So we continue to invest, and we feel like we're hitting the next 3 years better positioned to capture future growth. Moving to customer intimacy. We reorganized our 5,000 global sales and service team members to be one unified front. Our goals were simple: to make decision-making easier with the customer having one point of contact, to accelerate sales by selling more of the full PerkinElmer portfolio and to reduce our cost to serve. And you can see some of the early dividends on the right-hand side of this page. Since March, we've generated over $250 million in leads, which is up over 30% by better incentivizing all team members to sharing commissions. We've reduced the sales cycle of our CapEx sales, which has clearly helped during a global pandemic, but there still is a lot of significant opportunity in front of us. We can be better at customer segmentation and key account strategies. Today, we mostly win in the middle of the market, and we have an opportunity to grow market share with larger accounts. We're investing in e-commerce, where we're only serving less than 10% of what we think the opportunity in DAS could be. But for that 10%, the stickiness in cost to serve is tremendous. And we need to sell the full workflow and range of products across DAS and DX. In biopharma, as an example, we can better bundle our analytical products, our discovery products, diagnostic automation equipment. So all in, we're excited about the investments we're making in these 2 areas. On top of that growth trajectory, there is significant room for margin expansion, which we view as another critical variable in the long-term value creation for DAS. And while we've done a nice job over the past couple of years, growing over 100 basis points on the gross margin line and 200 basis points on the operating margin line, there is still ample room for expansion over the next 3-plus years. The way we think about it, this comes down to 3 fundamental areas, which you can see below, around analytical instruments, our services business and operational leverage and mix. I'll start with the analytical instruments, which makes up about $500 million in product revenue, mostly in applied, but as I mentioned, some in life sciences and food as well. We recognize we are likely 10% to 15% behind our competition on the gross margin line with 4 areas for improvement. The largest opportunity is that our products haven't been fully redesigned in many years. And over the next 2 to 3 years, we will refresh most of this portfolio with an eye towards product platforming to reduce configurations and product redesign to address some of our antiquated specifications. Add to it a refreshed focus on procurement, where we have added new people and tools, and we are already seeing savings heading into 2021. There's a few small sites to be rationalized, and we're investing in better pricing tools. But all in, we think we have plenty of irons in the fire to drive margin expansion in analytical instruments. Turning to services, which Gary will walk you through in more detail later. This represents approximately $700 million in revenue for DAS, where we have been hard at work, and we're starting to see the fruits of those programs. I've mentioned the tool ServiceMax before, which is a cloud-based platform designed to improve productivity and was implemented in all regions by early last year. Fundamentally, it increases the utilization of our almost 2,000 service employees, and it also reduces the leakage we see in contracts from a price perspective. We've also been working hard on increasing our remote technical capabilities, which has again served us well during this pandemic. Lastly, faster growth in DAS should provide solid SG&A leverage, which we plan to reinvest into additional R&D to continue to enhance this portfolio. All in, we're confident we can expand margins to at least 22% by 2023. Add to that, a Diagnostics business, which is closer to 30%, and we should have a margin mix in the mid-20s for overall PerkinElmer by 2023. To wrap up, I want to discuss our value creation framework. It conveys our priorities across DAS and where we're focused to drive strong, consistent returns. We look at 5 levers. How we strengthen our right to win in attractive markets? Where can we innovate faster to create growth accelerators in those markets? Where is there additional room for expansion to add meaningful scale? How do we add operational excellence to drive margins and leverage our infrastructure? And finally, a focus on talent and culture to engage our employees to drive customer outcomes. So let's start with the applied markets. While we believe there's opportunity with all levers, I'll focus on the 2, which have the most opportunity. First, we have a right to win in applied. We have a rich history of high-quality analytical tools. And with the renewed focus on NPIs, we feel like we can take share. Second, I mentioned the margin story on the prior page, and it's never been more clear for us than we just have to execute over time. Moving to food. We can expand into new segments like meat, seafood, poultry with full workflows. We've proven it on cannabis as an example where we centered our offering around our LC/MS but added additional analytical tools, also leverage our liquid handling expertise in hardware from our Diagnostics segment combined with the software cloud capabilities from our informatics business to build a complete testing solution, including assays. And as I've mentioned before, we are hard at work improving our commercial channels in the food business. We have a few initiatives going on here, but this is another area where we can segment the market better to gain a greater share of wallet with larger third-party accounts, third-party reference labs and larger food companies. And in Life Sciences, you'll see today that we are rapidly growing our capabilities in faster-growing portions of the market. After listening to our life sciences story today, I hope you walk away with a better understanding of why we think DAS is positioned to grow mid-single digits with meaningful margin upside, and why we will continue to reinvest in life sciences in a disproportionate fashion. So with that, let me introduce today's speakers. Alan Fletcher is the Vice President and General Manager of our Discovery business. He joined PerkinElmer in 2008. And over the past 12 years, he has held a number of Life Science leadership roles across strategy, marketing and business development. He also has extensive commercial experience, having served as our commercial Vice President for our Asia Pacific region, and he has been in his current role since 2017. Kevin Willoe is the Vice President and General Manager of our informatics business. Kevin has over 20 years of enterprise software experience. He has extensive experience in pharmaceutical, biotech and CRO industries. He joined PerkinElmer in 2016 and has since led both the Americas and global sales teams. Gary Grecsek is the Vice President and General Manager of our Enterprise Lab Services business. Gary has been with the company for over 25 years and has grown this business from scratch in 2005. He's a recognized services expert and serves on the Board of Technology Services Industry Association. They are all extremely excited to walk you through their businesses. And without further ado, let me hand it over to Alan.

Thanks, Jamey, and good morning. I'm delighted to have this opportunity today to describe how we are transforming our Life Science franchise to meet the ongoing needs of our customers in pharma and biotech. In the past decade, we have seen a significant change in the drug discovery paradigm. The time taken to bring a new drug to market, either a traditional small molecule or a biologic such as a vaccine is increasing. Similarly, the cost of development has increased disproportionately, putting pressures on the internal rate of return of pharma and biotech companies. Meanwhile, the clinical success rate is declining. And now just under 12% of all drugs entering clinical trials emerged successfully. These are all structural issues that have been and continue to plague our customers. But we're entering an era where we have the knowledge and the tools to tackle these problems and scientists across the world are seeking and developing innovative ways to drive drug development. As you'll hear today, we believe our Life Science franchise at PerkinElmer is uniquely positioned to enable our customers to address the key challenges of speed, productivity and success rates. Through our Discovery capabilities, which can provide more predictive disease models and dynamic phenotypic readouts, our Informatic platforms, streamlining disparate data to enable faster and more informed decision-making, backed and supported by our OneSource enterprise, which empowers our customers through outsourcing an effective lab of operations. All are aligned to address our customer needs. Our Life Science franchise has evolved in the past 5 years as a result of significant investment, both organically and inorganically. We are aligned to attractive end markets, and we lead with science by supporting our customers every day in solving very complex biological questions. The overall franchise is approximately $1 billion, consistently providing highly profitable growth with an addressable market of approximately $13 billion. The portfolio is heavily weighted towards renewable revenue streams with over 70% coming from consumables, software and services. And our ability to differentiate in the market is driven by our #1 or #2 position across each part of the franchise, which, as you can see, includes a sizable slice of our analytical portfolio that aligns to address the needs of our pharma and biotech customers, particularly in the area of elemental analysis and pharma QA/QC. The evolution of our portfolio has paralleled the increasing importance of bio therapeutic or biologic therapies. If you map our discovery revenue, which is by far the greatest revenue in this segment versus the drug discovery process, as shown on the left of the slide, you can see that we've made significant progress to align our revenues to 50-50 between small molecule and large molecule from what it was 70-30 in 2018. This is a trend we expect to continue in the years to come. This transformation is also reflected in the spread of the discovery revenue with the majority being focused on drug discovery. But with the addition of Horizon, we anticipate this contribution from basic research to increase as we progress with the integration. An excellent real-life example of how PerkinElmer can empower our customers across the drug discovery workflow is shown in the next slide. As many of you will recall, remdesivir, which is an antiviral drug developed by Gilead Sciences to treat Ebola was the first to be granted emergency approval in the fight against COVID-19. We are proud to say that PerkinElmer technologies played an active role in the development of the drug, while our broad portfolio in discovery, informatics and automation, combined with our ability to support our customers across the drug development process has proven to be a major differentiator for us in this market. Our Discovery reagents and instruments provide our customers with the tools to better understand the mechanism of disease and are supported by our liquid handling, LabChip and OneSource capabilities to drive speed and productivity improvements across the workflow. And as Kevin will describe later, our informatics solutions act as a bridge between data and decisions by providing the connectivity to enable the visualization and analysis of large volumes of information, empowering our customers to make informed decisions that will ultimately lead to increased rates of success. Our analytical portfolio also plays a key role, particularly in the area of drug manufacturing QA/QC. While we're not going to dive deeply into the analytical portfolio today, it is worth noting that our strength and market leadership in elemental and molecular spectroscopy puts us in an excellent position to address the needs of our life science customers in this attractive market sector. The recent launch of our new ICP-MS platform, the NexION 5000 allows us to advance single cell ICP-MS, and combined with the spectroscopy capabilities of our Spectrum 3 positions us as best-in-class in this market. Pharma manufacturing QA/QC remains a focus for us. And our current capabilities to support protocols have been limited by our lack of presence in the high-end HPLC market. With the launch of our new LC 300 platform, which delivers an enhanced user experience combined with an innovative CDS, we can now support our pharma customers full suite of needs in manufacturing with both spectroscopy and CRO, which, as you can see from the slide, makes up a significant amount of the analytical pharma market, and one that we have to date been under-indexed compared to our peers. By expanding our portfolio of solutions, we are enabling our customers to make informed decisions quicker either today or in the future. We're investing across the portfolio as we look to enable vital research, which can provide more clinical insights of disease, from the genes that cause it to the downstream phenotypic markers in cells and animals to enable the acceleration of the identification of novel therapeutics. These investments aligned with the expansion of our integrated digital and automation capabilities. By empowering our customers with seamless informatics solutions to accelerate decision-making, scalable automation solutions that can adapt to the ever-changing workflow demands and the ability to proactively manage laboratory productivity with remote monitoring or outsourcing. We are positioning PerkinElmer Life Sciences as a trusted partner, able to address our customer needs, today, tomorrow and in the future. So as I said in the beginning, we believe that our Life Science franchise is uniquely positioned to capitalize on the needs of our customers in this market. As you'll hear in more detail from Kevin, Gary and myself, each of our key focus areas in Discovery, informatics and OneSource have a strong value creation path aligned to deliver above-market growth in the years to come, while combining to provide complete workflow solutions that enable our customers to overcome their challenges in speed, productivity and rate of success. I'd like now to switch gears and provide a more in-depth view of our Discovery franchise, which has undergone a significant transformation over the past 10 years. Moving away from being indexed in areas of basic research that have experienced volume decline, such as our radiometric portfolio with a series of organic and inorganic investments to provide the foundation for what I believe is one of the best-in-class franchises in the industry. This transformation is aligned with the need to better understand the nature of disease and the desire for more effective target validation, which is the main factor associated with drug failures in the clinical trials. The key to effective target validation is understanding the changes in the cell phenotype. Induced by either changes in gene expression or changes in the macro environment of the cells linked to disease. The ability to be able to visualize and quantify phenotypic changes in cells and animals is the key not only to a more effective drug development but also to the development of clinically predictive models, which, in turn, can increase the rate of success of a drug in the clinic. Discovery is a $400 million franchise, which has been growing consistently mid-single digits over the past few years. It's a highly profitable business with strong operating margins and an addressable market of approximately $2 billion. And as you'll hear over the coming slides, we are making significant investments to continue to expand both our SAM and TAM, in line with the scientific needs of our customers. So as you think about the discovery portfolio and the alignment across the drug discovery workflow from basic research to drug development, it fundamentally divides into 3 focus areas. We are strong in basic research being a top 5 player, underpinned with our radiometric solutions franchise and more recently by the addition of the Horizon portfolio, which will increase our revenue contribution in this area to over 40% of total discovery. And while the overall portfolio growth has been driven by the declining volume of the radiometric portfolio, we are confident that the infusion of Horizon will transform the growth profile as we expand our focus on fast-growing molecular biology market. We have market-leading positions in detection, with both our top 3 positions in reagents and instruments. Our brand equity and scientific reputation have enabled us to continue to innovate and drive strong portfolio growth, which was reinforced with the acquisition of Cisbio in 2019. And our imaging franchise, both cellular and animal has been a flagship portfolio and continue our success in our phenotypic characterization franchise. We have leading positions across the portfolio and our best-in-class capabilities to visualize and interrogate complex disease models in cells and animals has put us at the forefront of the premier labs across the world. Overall, we are confident that we will continue to deliver above-market growth in imaging and detection, while our investments in the research portfolio have put us in a clear path to delivering an improved growth profile in the years ahead. As I mentioned, our research portfolio has, in the past, been heavily indexed to our radiometric portfolio, where we have over 60% market share and an installed base of over 4,000 instruments. While volume decline is a contributor to the growth profile of this portfolio, the addition of Horizon, combined with our focus on leveraging our legacy expertise in new innovative ways, we believe will enable us to transform the growth profile moving forward. A perfect example of the synergies across the portfolio can be seen on the right-hand side of the slide, with the recent publication from the Nobel Prize winning Doudna lab. It's a great example of leveraging legacy radiometric technology in tandem with pioneering CRISPR technology to investigate novel Cas-12a enzymes. The synergistic nature of Horizon with other parts of our imaging portfolio is shown in the second example, which shows the visualization of Horizon's siRNA and CRISPR-Cas9 reagents used to modulate human lung expression in asthmatic fibrosis. It's the ability to bring together multiple innovative technologies, which is key to maximizing the growth profile of our research portfolio and increasing both our share and brand equity in the attractive molecular biology market. Our ability to differentiate with our science-first approach has also been a key driver to our success in our detection solutions. The portfolio is focused on high throughput, high-value drug discovery in pharma, where we have market leadership with our HTRF and Alpha reagents. And while we have a smaller presence in the luminescence market, there's been a noticeable shift in this less attractive market sector towards more sensitive and higher throughput technologies, which provides us with the opportunity to gain market share, especially in the academic sector. Our phenotypic biomarker portfolio is the broadest on the market, enabling a wide range of validated kits in oncology, cardiovascular, neuroscience and infectious disease. And the Alpha and HTRF technology platforms enable our customers to utilize a homogeneous format to drive significant advances in speed and sensitivity over the more traditional research-based luminescence technologies and all are supported by our market-leading plate readers and software. While our platforms have been used for many years by all leading pharma and biotech companies for small molecule research, we've been working with our customers to expand our applicability in the high-growth areas of biologics and cell therapy. The first example listed here demonstrates our ability to characterize biospecific antibodies using our Alpha technology. These antibodies are a class of therapeutics that act by labeling disease cells such as cancer, so that the body can activate our built-in defense mech pathways to destroy the tumor. And on the right-hand side, it illustrates our HTRF technology was used by researchers in the search for a cheaper and more effective forms of the best-selling skin cancer immunotherapy, KEYTRUDA. The applicability of our portfolio to accelerating biotherapic drug discovery is also reflected in our market-leading imaging solutions. Our ability to visualize subcellular changes in neuronal cell lines, which act as a model of Huntington's disease using our Opera Phenix platform enables researchers to elucidate the mechanism of action of key proteins thought to be associated with the disease progression. Such insights enable researchers to develop targeted biologics that can slow down the progress of debilitating disease. The same platform has been used in the area of cell therapy, where the goal is to empower the body to fight disease from the inside. In this example, we're able to image the impact of Immunocore's immunotech, which is a novel biologic therapy that acts by attaching to a cancer cell, allowing the body's own defense mechanism, in this case, a T-cell, to recognize the cancer as hostile and destroy it. Our platforms enable researchers to optimize the speed and sensitivity of the treatment and reduce the long-term side effects associated with biologic treatments. But our imaging capabilities extend beyond cells into animals, where our in-vivo animal imaging platforms have been at the forefront of research for the past decade, as indicated by the publication chart shown on the bottom left of the slide. We continue to drive innovation in phenotypic characterization and the images on the bottom right of the slide illustrates how our platform can evaluate the effectiveness of an siRNA vaccine in the treatment of cancer. We're able to visualize the tumor using both luminescence to provide location and fluorescence to indicate the active or benign nature of the tumor. Whilst our multimodality portfolio can also provide contextual information, in this case, using micro CT as a mechanism of monitoring the rate of metastasis in bone, which is an index of the effectiveness of the therapeutic. We are looking to continue to innovate by expanding our contextual information using additional modalities, which in turn provides increased predictability of a higher rate of success in the clinic. So we've talked already about how the introduction of Horizon into PerkinElmer aligns with our research and imaging portfolio. And it's rare to identify a portfolio that is 100% complementary with 0 overlap to the existing discovery franchise. This slide highlights why we believe Horizon will be transformational to our research business. It strengthens our capabilities in DNA and RNA, complementing our strong phenotypic franchise while providing entry into the attractive cell engineering market with the strength in cell line production. We'll be looking to leverage their reach in biopharma and academia and to capitalize on the established e-commerce engine across the broader discovery portfolio. Our ability to combine our phenotypic screening workflows with Horizon's reagents and cell lines will enhance our customer experience from day 1, while we look to develop our in-house capabilities together to advance more predictive models of disease and explore the concept of disrupting the bioproduction market with gene-edited cell lines in the year to come. So as you have seen from this presentation, we have made significant progress in transforming our Discovery portfolio but the journey is not over as we look to continue to invest and strengthen the portfolio, particularly in the area of predictive disease models to complement our best-in-class phenotypic readouts. We view these areas as naturally and highly attractive adjacencies and fundamental to supporting our customers as we think about bridging the research and the clinic. So this morning, we talked a lot about leading with science. We talked about the ability to partner with our customers to ease their bottlenecks of speed, productivity and success. But there are 3 fundamental areas that differentiate us from our competition. The breadth of our portfolio, be that reagents, instruments, software and our ability to seamlessly integrate these with automation and informatics. Our technology leadership with our customer-driven innovation approach enables us to maintain our leadership positions in imaging and detection. And our application expertise, which enables us to deliver our customer challenges at a truly scientific level and work with them to understand the best way to advance their research. This is reflected in the loyalty of our customer base, which stands at over 5,000 customers. The majority of our customers lie in pharma and biotech, where we maintain strong relationships across the top 20 pharma, and this will continue to be an area of focus, particularly as we look to expand our portfolio in the area of biologics, which we believe will continue to be a strong growth area for us in the future. The academic and government sector will also play an important role, although this has traditionally been a sector that has been underserved. So we're excited to leverage Horizon's expertise and mindset in this sector as we look to build brand equity. So before I hand over to Kevin, I want to leave you with 4 key thoughts. Our Discovery franchise has one of the strongest presences in the preclinical research in the market today. We offer a unique value proposition, spanning genotype and phenotype with opportunities to expand into new technologies and applications, and we're positioned to deliver significantly faster growth in the years ahead to come. But the overall success of the Life Science franchise of PerkinElmer is built on the foundations of more than just discovery. Yes, we have the capabilities to deliver greater insights into the cause of disease. However, to drive our science-first approach and informed decision-making relies on being able to interpret information in a meaningful way, which is where our informatics solutions play a key role, as Kevin will now describe.

Thank you, Alan. As Alan said, I'm Kevin Willoe, I'm excited to introduce you to the informatics franchise. Informatics provide software and service solutions across a number of industries such as life sciences, chemical, agro chemical and food and beverage. For the purpose of our conversation today, I'm going to focus on the Life Science market. Informatics provide solutions in each stage of the drug life cycle, which we view as follows: make, we assist companies as they try to determine which materials to make, and in turn, which materials to promote into the later stages of R&D; test, we help companies do analysis around the testing of those materials in order to determine the efficacy and safety; formulate, we help companies analyze data in order to determine the most appropriate delivery method, whether that be a pill, vaccine or topical cream; clinical, providing analytics to help companies move drugs through the clinical trial process safely and efficiently; and lastly, post marketing, providing capabilities that enable companies to track and report on the efficacy and safety of their drugs after they are released. Looking at how we partner with our customers. Our solutions enable our customers to gather and analyze data across research and clinical in order to make better, more informed decisions. These decisions enable our research customers to better identify the drug candidates to promote further through their development process and help our clinical customers move their drugs through the clinical trial process more safely and effectively. Companies face the same challenges across research and clinical. They have large amounts of disparate data, many siloed applications, and they spend large amounts of time and money on IT resources. These issues hamper their ability to look across their business and their ability to be innovative. All of our solutions, we provide our customers with the ability to integrate data from multiple disparate sources, search this data in order to find the information that they're looking for and then do further analysis on this data in order to turn information into insights. This diagram reflects a basic customer environment. Customers typically have multiple disparate data sources, ranging from clinical trial management systems, animal study information and instrument data. Our solutions enable customers to ingest and normalize this data so that could be shared across our solutions. We provide them with search capabilities that enable them to cull through massive amounts of data so they can find the relevant data that they're looking for. Once they find the data they're looking for, they can then analyze this data in order to determine additional insights and correlations. With these insights, they are then able to make better informed, decisive decisions, our platform is open, enabling us to ingest data from many different sources and instruments. If we look at informatics at a glance, the informatics business is roughly $140 million in revenue with low double-digit growth, providing operating margins in excess of 35% and operating with an addressable market of roughly $2 billion. We see tremendous growth opportunities, particularly as the market moves to SaaS-based solutions. We have seen our revenue backlog increased by over 50% in the last 2 years because of our increasing SaaS orders. We operate within the Americas, EMEA and APAC, with revenues at 60% in the Americas, 20% in EMEA and 20% in APAC. We operate as a global organization with most of our customers purchasing and implementing our solutions globally. If we look at improving research outcomes, looking at our offerings in research, our customers face several challenges, as I've mentioned before, challenges such as multiple disparate data sources, multiple siloed applications. These challenges prevent companies from looking at their scientific workflows and processes holistically, which in turn, doesn't provide them with the end-to-end view they need. Looking at our Signals research suite. We provide a suite of best-of-breed products that can be used to solve specific scientific problems. Our electronic lab notebook, also known as our ELN, enables scientists to capture, search and collaborate around experiment data. I was talking to a scientist recently who had been a long-time user of our Electronic Lab Notebook. He told me how we have been using our ELN in order to assist them in determining which drug candidates he was going to focus on developing his efforts. In one particular case, by searching within the ELN, he determined that the research he was about to embark on had already been performed by another scientist in his company and that the drug candidate was toxic. So he refocused his efforts on another drug candidate, which developed into a blockbuster drug and which has generated billions of dollars in revenue to date. His main point was that he could have spent years pursuing a drug candidate that already failed. But because of our ELN, he was able to identify that failure and redirect his efforts to a candidate that had yet to be developed. Turning back to the middle of the slide. Our screening solutions provide high scale screening capabilities, which allow our customers to analyze massive amounts of instrument data. Signal screening is tightly integrated with our instruments, providing our customers with additional capabilities that aren't found with our competitors' instruments. Our lead discovery solution provides customers with advanced analytic capabilities that enable them to better identify the best candidates to promote further into the R&D process. All of these solutions can be enabled by our Signals data factory capability. Signals data factory provides them with the ability to ingest, normalize and share disparate data sources across our portfolio of solutions. All of our solutions can be integrated in order to provide an end-to-end suite of products, which allow customers to manage end-to-end workflows and scientific processes or they can be implemented individually to solve specific scientific problems. Typically, our customers are looking for end-to-end capabilities. It is a matter of whether they choose to start with a particular product and grow into the suite over time or whether they decide to implement the entire suite upfront. Either way, we can provide them with a growth path and with the ability to preserve their investments with us. Looking at a research customer story and some ROI metrics. As you look to the right, a great customer example is someone who had implemented our end-to-end signals research suite within a top 10 pharma company. Their challenges were that they had a lot of disparate data, lots of siloed applications and increasing IT costs. Because of this, they were unable to efficiently identify the most promising drug candidates. By implementing the Signals resource suite, they were able to bring all of the data sources together and eliminate their siloed applications, in turn reducing the number of applications they used and providing them with the ability to better identify their most promising drug candidates. Thinking back to the previous example, spending their time and resources finding the next blockbuster drug, not performing experiments that had already failed. In terms of tangible benefits for this particular customer, the implementation of our suite resulted in a 20% reduction in redundant efforts, since scientists were able to reduce the number of redundant experiments they performed, a 40% productivity increase over their on-premise ELN because of improved search and analytic capabilities and a 60% reduction in their IT footprint since these capabilities were now being provided by our SaaS platform. Improving clinical outcomes. Looking at our offerings in clinical, our clinical customers face the same data and application challenges as our research customers, but they have some added challenges. Lots of data housed by CROs, which add to the challenge of getting and interpreting this data, changing regulatory requirements, the inability to identify safety or data issues earlier in the trial. These challenges impact their ability to move patients to the clinical trial process as safely and efficiently as possible. Looking at our Signals clinical suite. We utilized the TIBCO Spotfire product, a leading product for visualization and analytics, combined with our IP, clinical workflows and additional capabilities to provide our clinical customers with guided workflows that help combine and analyze data in areas such as biomarker analysis, where we enable researchers to identify biomarkers that allow for better cohort selection and improve patient stratification, in turn, better identifying the patients that they believe will benefit the most from this drug. Second, clinical data review, effectively monitor trial safety, efficacy and data quality across the entire portfolio and rapidly respond to protocol amendments, improving safety and ensuring better data quality. There's one particular clinical data review customer example that comes to mind. A couple of years ago, we're working with a top 5 pharma company. They were a customer of ours using our research and clinical solutions throughout most of the organization, but there were a couple of clinical trials that had yet to adopt our clinical solutions. There was a particular group within this customer that was struggling to get their hands around the clinical data associated with one particular trial. They are preparing to go to database lock, which is when they lock down the database so that it can be submitted to the FDA, but they were having some concerns about data quality. We were asked to come in into a short service engagement where we run their trial data through our clinical solutions in order to see if we can provide them with the assistance in figuring out some of the challenges that they were having with their trial data. After a 2-week engagement, we presented our findings and within 5 minutes of showing them the data, they immediately saw a visualization that caused them concern. After months of looking at this data, they had overlooked some key data corruption issues. In one case, where the data was showing an errant correlation between pregnancy and males, clearly a data issue. Because of this error, they wound up delaying their submission to the FDA by a couple of weeks in order to further analyze and cleanse the data. When they did submit the data, they did so with confidence that they were putting their best foot forward. They estimated that if they would have submitted this erroneous data, they would have lost credibility and 2 to 4 months of additional back and forth with the FDA. The drug wound up getting approved, and in 2019, had sales of $3.5 billion. So when real costs, delaying the approval of the drug by 2 to 4 months could have cost them hundreds of millions of dollars in revenue. Turning back to the slide. Our third focus area is operational effectiveness. We help companies identify and communicate milestones, recruitment, site and protocol deviation challenges to the entire team. This helps ensure that trial metrics and protocol metrics are met. As with our research suite, customers can choose to implement a single solution or multiple solutions across clinical, which in turn would provide them with the same look and feel across all of their clinical applications and trials. A clinical customer story and some ROI metrics. Again, as you look to the right, this is an example of a top 20 pharma company who is having challenges adapting to changing FDA reporting requirements. They were slow in responding to FDA requests and they were unable to provide second levels of detail when they did respond. This was causing them delays in getting the FDA the answers they needed, and in turn, delaying the drug approval process. These issues were compounded by the fact that much of this data was managed by their CRO partners. And therefore, there was an additional time lag and costs associated with getting the answers they needed. By implementing our signals clinical suite along with our managed service capabilities, they were able to move these responsibilities away for their CRO partner and on to us, in turn, reducing the amount of time it took for them to respond to FDA requirements, providing them with additional information that could be used to answer follow-on FDA questions and reducing their CRO costs. In terms of tangible results, the adoption of the suite resulted in a $100,000 reduction in average trial costs, a 50% plus productivity gain because they were spending less time looking for answers and a 10% reduction in CRO costs because they were able to reduce the amount of money they were paying their CROs to analyze data and build reports. Looking at our cloud-native computing platform. When we built our signal suite of products, we decided to take the time and put in the work needed to build a true SaaS platform from the ground up, using leading-edge technologies such as Spark and MongoDB, technologies that our customers are familiar with and comfortable with and technologies that allow us to be scalable and secure. Many of our competitors have decided to try to retrofit on-premise technologies to the cloud. This is causing them scalability and flexibility issues and leaving them with technical baggage that at some point, they're going to have to deal with. So how we win? There are a number of ways that we win, but I'm going to focus on 3 particular areas. The first is commercial flexibility. We provide best-of-breed point product solutions, which allow companies to solve specific scientific problems. These applications can be integrated into a suite of applications, which provide them with a growth path to having end-to-end solutions. We ensure that they can leverage their investments with us. Second, we focus on ensuring our customers' success with services, managed services and training. This, combined with great technologies ensures their success. All of this is proven by a renewal rate of 95%. Next, scientific and application expertise. We have 20-plus years of experience. We've been doing this for a long time. We understand the challenges that our customers are facing. We combine our experience, our IP and our technologies in order to ensure our customers' success. 30% of our presales and service team members have PhDs, they come from industry, and they have walked in our customers' shoes. Last, technology leadership. We did the hard work. We built our SaaS platform with leading-edge technologies from the ground up. Because of this, we are seen as a leader in our space, particularly as the move to SaaS continues to accelerate. Currently, 1/3 of our orders come from our SaaS solutions, we expect this percentage to continue to grow rapidly. Looking at our customer base. How we win is reinforced by over 4,000 customers worldwide with the largest market segment being Life Sciences. Within Life Sciences, we have 20 of the top 20 customers using our solutions. These customers are using both our best-of-breed point products as well as our entire suite. Our customers include GSK, Regeneron, Novartis and Pfizer, among others. Although today's focus is on Life Sciences, we also have customers within chemical and agrochemical markets. We have 16 of the top 20 chemical companies and 6 of the top agro chemical companies as customers, companies such as Syngenta, Dow and BASF. We expect to see increased growth in all these areas. We've seen SaaS become a major factor in removing many of the barriers of entries companies have faced when trying to introduce new technologies. Areas such as limited IT budgets, smaller, less diversified IT staff and projects that took months or years to complete. SaaS enabled these companies to be more innovative. Other markets we serve include food, flavor and fragrance and consumer products. So looking at where we're headed. As shown on the left side of the screen, we're focused on the continued innovation of our point product solutions in order to ensure that our customers get the most value out of our individual solutions. Solutions such as ChemDraw, the leading chemical offering software, our Electronic Lab Notebook and data visualization solutions, whether they be on-premise or in the cloud. In addition to this, we will continue to align our products to our customers' needs, particularly as the move to SaaS accelerates. As shown on the right side of the screen, we will continue to collaborate with our customers and expand our suite of solutions in order to provide end-to-end capabilities. We are primarily focused on an agile development process that allows us to take customer feedback and easily incorporate those capabilities into our solutions on an iterative basis. This has been a major benefit of SaaS technologies. No longer do customers have to be beholden to 1 or 2 releases a year with long and expensive upgrade processes. Second, we'll continue our expansion into pharma 21 plus and non-pharma markets. We're going to continue to help our customers innovate through the adoption of our SaaS solutions. Lastly, we will continue to focus on expanding our solutions with an increased focus on biologics, formulations and registration. Capabilities that will allow us to continue to expand our target markets and better serve our existing customers. All of this is powered by a leading-edge SaaS platform. Our major competitors include IDBS, BIOVIA, Dotmatics and Ventling. We compete with all of these companies in slightly different ways. But in general, our keys to success are true SaaS solution, which are secure and scalable, our best-of-breed technologies, our end-to-end solutions, which provide customers with full suite capabilities and our deep domain and technical expertise. So putting it all together, there are a number of great things that we're doing within informatics, but to summarize a couple of key points. We provide best-in-class solutions, both point products and end-to-end solutions, the move to the cloud is still in the early innings, and we are poised to take advantage of the increasing market demand. We are focused on expanding our platform, which will allow us to continue to meet the expanding needs of our customers, enable us to focus on new markets. And because of this and with a proven track record of success, we believe that we are positioned for fast and consistent double-digit growth. Thank you for your time. Now I'd like to introduce Gary Grecsek. Gary will take you through our OneSource enterprise franchise.

Thank you, Kevin, and good morning. So I have the opportunity to be part of the OneSource enterprise business from concept till today. And I look forward to sharing with you the story of enterprise and why we're pretty excited about the future. Enterprise was introduced to the market around 2005 in response to an emerging trend we saw to bring transparency to laboratory operations and simplify complexity. A key business theme for enterprise has always been, change equals opportunity. Our customers are aiming to bring products to market faster, drive increased productivity and have a need to improve both scientific and manufacturing yields. To realize those goals, the operational function of the laboratory must continue to change and evolve. Customers are scrutinizing every operation in the lab as value-add or not. And this leads to an increased need for outsourcing, automation and having access to qualified laboratory personnel. Customers are looking for strategic partners that can demonstrate capabilities to not only deliver today, but also have the vision and innovation capability that continues to evolve and derisk scientific and manufacturing operations in the future. When customers see demonstrated capability in a partner, they look to lean into them and expand scope. And this is exactly what we've seen with enterprise as we started with an asset management solution and then expanded our portfolio and to include broader workflow solutions, which I'll touch on later. So I want to take a moment here to clarify terminology for this business. OneSource seems to be synonymous with our enterprise business externally. When, in fact, OneSource includes both core services and enterprise service capabilities. Combined, core services across PerkinElmer DAS and enterprise is a $700 million business. We characterize OneSource based on service operating model with core being a product attached model, so we sell a product and then attach a service focused on PerkinElmer branded equipment. The market for core is growing low single digits and is highly dependent on PerkinElmer instrument installations. Enterprise is a more complex, holistic service model designed to optimize operations across entire workflows with a vendor and technology-agnostic approach. The market for enterprise has been growing mid-single digits, supported by the favorable outsourcing trends mentioned previously. Our customers' laboratories are undergoing significant change. They are in the midst of a digital transformation and IoT acceleration. Regulatory pressures continue to increase for the lab, and as an example, about 50% of all 483s issued by the FDA have a data integrity association. We provide data integrity services to help assure accuracy and consistency of laboratory data from creation through archival. So the lab has become increasing complex with large diversified asset populations and fragmented workflows. Customers need a trusted and competent adviser to handle this rapidly changing laboratory environment to simplify their focus on what really matters, science. Change equals opportunity. And addressing these key customer laboratory needs has enabled enterprise to establish a leadership position across a broad set of assets and customer programs. So if you double-click into OneSource, enterprise delivers greater than $270 million of revenue and has been growing above market for the past few years in the large addressable market supported by trends mentioned previously. The business is over-indexed in the Americas with expansion opportunities in Europe and APAC, and we see opportunities to strengthen operating margins through portfolio mix shift and leveraging technology, both of which I'll get into later. So I'd like to spend a few minutes sharing the evolution of the business. At a high level, enterprise was built leveraging a very strong service delivery foundation and reputation with core. We knew the infrastructure and process that we built for core were foundational to enterprise, but we need to be agile and move fast. We also recognize that the market might not be ready to have an OEM work broadly on non-OEM assets. So we're very strategic and deliberate with our actions, leveraging our strong delivery reputation in core, we targeted multi-vendor platforms that were similar to those PerkinElmer already had in this product portfolio. We built training, tech support and supply chain offer a comprehensive asset management model that was vendor and technology agnostic. Having PerkinElmer personnel performed this broader scope of service activities, allowed our model to simplify and disrupt the traditional performance measures of response time and downtime, taking those metrics from calendar days to clock hours. Earlier, I shared a slide that highlighted 200,000 assets under our care for enterprise. It's important to note that only about 2% of those assets are PerkinElmer branded. I think you can all appreciate that an OEM is probably a logical choice to provide service on its own assets. The fact that enterprise has gained customer trust and confidence to service this scope of equipment should speak to the value delivered through this model. And remember the words trust and confidence as these are key enablers for our business model. So looking left to right on the slide, as we deployed our asset management services, we recognize the value of technology, both internally and externally. Many customers are unaware of how their laboratory asset population is performing. Simple things like census and density, failure and utilization rates are unknown and difficult to collect and maintain. In response, we've developed a technology portfolio that provides transparency across workflows, buildings, and global sites, enabling data-driven insights for our customers to improve the performance of the lab. And internally, we have and continue to make investments in technologies like ServiceMax and robotic process automation, which enable the business to operate more efficiently and with scale. So as our presence in customer labs increased, we recognize the assets we were servicing were part of a broader workflow. Having gained customer trust and confidence with our asset management capability enabled us to expand our portfolio to asset adjacent services and bring new innovative offerings such as relocation, compliance, laboratory IT and scientific services, which can now you see on the right-hand side of the slide. These services have been growing high teens with attractive margins and represent an increasing percentage of enterprise revenue. Professional services expands our customer touch points and presence into IT, quality and deeper into the scientific community. So we'll continue to make focused investments across the enterprise portfolio to drive innovation really led by customer input and market feedback and is a key component as to why enterprise wins. So our customers are looking for strategic partners that allow them to focus on their critical business objectives and basically outsource everything else. We have a strong global delivery capability with a demonstrated competency to scale, coupled with an organizational structure designed for speed and agility. You'll hear about it shortly. We have multiple customer programs that are in excess of 20,000 assets. Executing a program of that size and scale is not simple. We have done it and done it well for a number of years, building a wealth of experience across our business functions. Additionally, investments in automation improve our efficiency, enables downstream benefit for our customers. So our portfolio also enables a deep intimacy and trust with our customers as our personnel are integrated into customer facilities, workflows and culture. As mentioned previously, this intimacy enables us to change the game with the traditional service performance metrics from calendar days to clock hours and deliver scientific productivity. To give us a little more context, I'll share an example that was published by one of our customers. So this customer had a challenge that the lab manager needed to improve scientific output. They were struggling to meet their scientific objectives. So they conducted a Six Sigma effort and determined a material amount of a lab personnel's time was spent performing activities that were non-value-added and should be considered as part of a service or support workflow. Post this finding, the customer took action to explore market options and ultimately deployed our OneSource enterprise model. One quarter post implementation, they saw a 25% increase in hours returned to science. As an example, one of the service we provided in this scope was a system check. Before enterprise, this check was done by the customer. If there was a failure post this check, science stopped, and the customer would then initiate the service request and a downtime clock would start ticking. With PerkinElmer now performing this check, failures were identified immediately, acted and resolved. Many times happening before the customer was even aware there was a problem. Science accelerated. So we continue to bring innovation to our laboratory service models that improve service delivery, enhances the customer experience and provide data-driven insights on how to optimize laboratory workflows. In the next few slides, I will share 3 distinct examples of how the enterprise value proposition has enabled significant customer relationships, stickiness and share gain for PerkinElmer. This first case study illustrates speed and scale as a large pharma recently looked to identify a strategic partner to not only simplify their laboratory operating model across multiple services, but also ensure the selected partner aligned to and was able to meet their longer-term scientific and laboratory business objectives. In about 6 months, our global team of professionals implemented and executed the go-live of a very large holistic laboratory services program, including asset, professional and technology services across 15 sites globally, displacing multiple incumbents who had previously deeply entrenched service positions. In the second example, I want to illustrate customer intimacy with the relationship that started around 2005. During this time, I was leading the technical support and training function for all PerkinElmer, and we're spinning up this thing called OneSource now enterprise. One of my key responsibilities was building multi-vendor training and technical support capabilities. Our leadership team saw an opportunity to engage a top 5 pharma who was an early adopter of the asset management model. This customer had actually sought another partner, but they weren't seeing the expected impact. So they made a change to PerkinElmer's OneSource enterprise. As you can appreciate, this customer was hesitant to lean into our relationship at first and needed to see us deliver the service to gain trust and confidence. They needed to see the operational benefits and positive impact before taking a bigger leap of faith. So the program started small with 3 on-site service personnel -- service delivery personnel. And as our program delivered value and trust strengthened, this customer had the confidence to expand the program to other sites and adopted more of our professional and technology services. They leaned heavily into our relocation capability. And today, we've helped them relocate more than 75,000 assets around the world. At one point in the relationship, they figuratively gave us the keys to their labs. They wanted to focus on science and needed us to operate their labs. Today, this is our largest and longest customer relationship in enterprise. We have well over 100 personnel that support this customer daily that can be quickly deployed as laboratory needs change. And in fact, when this customer had a cyber event, we trained this dedicated team on laboratory IT, and helped to remediate the cyber event in weeks that would have otherwise taken months or even longer without enterprise. We continue to learn from each other, invest in our relationship and reinvent our model. So this third example highlights how our technology value proposition provided an entry point to another relationship. About 18 months ago, we engaged the company that was looking for a partner who had the technology to give them visibility to laboratory operational performance. Specifically, they wanted a technology solution they could overlay with their existing asset management model to give the visibility to lab asset performance and utilization. We were able to demonstrate asset utilization for PC connected and non-PC connected assets and the broader value of the enterprise technology suite could deliver, consisting of our portal, Asset Genius and data visualization tools powered by TIBCO Spotfire. As we work to implement the technology services program, the customer had the confidence to increase the scope of our engagement to include asset management and professional services. So I've talked a lot about the enterprise business. The portfolio and value proposition, looking through the lens of our customers. Let's focus a bit more on the customers we serve. Enterprise has a strong position in large pharma and biotech as we've seen a very robust market response here with continued opportunities through portfolio and geographic expansion. The flexibility of our portfolio enables us to engage a broader set of customers and end markets as we can deliver a technology-only solution, a specific professional service and asset management program or a holistic model combining it all. If you recall the customer examples, we see that as we enter a new relationship with one service, many times, we see expansion into others. So as I mentioned earlier, our customers' lab requirements do not remain still. We've seen the dramatic evolution of how laboratories are run. When we have discussions with customers, they don't want to be the lab operational experts. We live in a world where research, development and manufacturing requirements are changing constantly and quickly. Just look at what we're all experiencing now with COVID-19. Who knows what will be next, but our customers' laboratories must be able to quickly respond and pivot to new requirements as they emerge. As a strategic supplier of laboratory solutions, we need to continue to evolve, innovate and advance our portfolio to offer solutions that enable our customers to do so. Modularity and instrument design, holistic workflow laboratory services and data-rich informatics to bring it all together, as Kevin mentioned earlier, are no longer optional. We envision a world where all assets are connected, providing diagnostic data and notification when something needs to change. The digital lab of the future is here, and PerkinElmer's enterprise is well positioned with a technology suite and innovation engine to deliver customer needs today and in the future. Last week, we had our annual customer advisory board meeting with our top customers. The expectation from our customer advisory board is that we are leading the conversation around data and digital, and we're pretty excited about that and the ability to continue to leverage our core and enterprise strengths, combined with PerkinElmer's expertise in informatics to solve the challenges of tomorrow. So enterprise is close to $300 million in revenue, supporting more than 200,000 assets with an expanding portfolio and strong customer relationships focused on delivering laboratory productivity. As we look ahead, we see outsourcing and insourcing trends that will continue to provide a tailwind, not only with our top 20 pharma customers, but also increased interest from small, midsized biopharma and other end markets such as food and applied. We anticipate enterprise will continue to grow at market and is well positioned to help take our customers' labs where their scientific and manufacturing needs are going. So thank you. At this point, I'll turn it back over to Jamey for closing comments.

So thanks, Gary, Kevin and Alan. Let me wrap up with a couple of final slides related to Life Sciences. I hope you saw that we are a proven partner to solve customer challenges. We accomplished this through our breadth of technology, our leading products, which are focused on science and how we continuously innovate with our customers. All of our customers need to identify higher quality drugs faster, at a lower cost and greater success rate. Today, the PerkinElmer portfolio helps our customer achieve that mission through terrific target identification workflows, as you heard from Alan; better integrating research across disparate data sources and remote R&D organizations, as you heard from Kevin; and removing the complexities of lab operations to allow our customers to focus on what's important in that scientific advancement, as you just heard from Gary. But the customer needs are changing, and so are we. I hope you heard these common themes across all 3 of our businesses. Research and therapies are becoming more complex and personalized, and we are retooling our capabilities. We have more data than ever before and customers need to more efficiently mine that data. We will make that easier for them to do so. And the world has changed dramatically in 2020. The ability to be nimbler and more flexible is a must and we are a trusted partner to make that happen. So finally, financially, the past few years in Life Sciences has been very successful. Organically, we've grown over 6% per year. Life Sciences' expanded margins is now -- and is now 4 points higher than the DAS average at 23%. We've improved our recurring revenue mix to over 70%. And by the end of this year, we will have deployed approximately $600 million in capital. But looking ahead, we believe we can grow at least that fast and hopefully better. In Discovery, we have changed the mix with Cisbio and Horizon. More fluorescent and cell and gene therapy reagents and therefore, a reduction of our radiometric reagents as a proportion of the business, will better position us for continued outperformance. In informatics, there are numerous levers for growth, but we will continue to build out our suite of research and clinical solutions, which should help us grow faster than the market. We believe enterprise will be more in line with the market growth rates, as Gary just mentioned. As we better balance our professional services and new account growth with portfolio management to expand margins. And in analytical, we believe we can get back to at least the market average with better NPIs and a renewed commercial focus. Add to all of this additional room for margin expansion and continued reinvestment, and we believe PerkinElmer Life Sciences has significant value creation potential in the years ahead. With that, we very much appreciate you listening today. We'll take about a 15-minute break and get started with the Q&A session at approximately 10:10. Thank you. [Break]

Ladies and gentlemen, I would like to turn the call back over to Mr. Jamey Mock for our question-and-answer session.

Thanks, Sheri. I just wanted to start by answering an off-line question we received. I'm afraid I caused some confusion. I want to clarify one of my earlier remarks, when I said we were not reaffirming our guidance today, that's just to mean that we are not updating our guidance. We wanted today to be about the long-term prospects for both the life sciences business and, to some degree, our DAS business that we think are very exciting. As it pertains to the short term, as we have in the past, if there's a material difference in our performance, we will update that as soon as the quarter closes. So sorry for that confusion. So Sheri, we can open it up to questions.

And our first question will come from Steve Willoughby with Cleveland Research.

Thanks for doing the event today. I guess, I've got a number of different questions. I guess, one, maybe starting with OneSource and the multi-vendor service offering. I was wondering if either you or your teammates there could comment on, you guys created this business 15 years ago. Wondering how the competitive landscape from your perspective has changed, and how the competitive offerings have changed over the last few years? And how important it is to compete in this business by having a large installed base of your own equipment. As you know, a number of your competitors here have potentially larger installed bases of equipment. I'm just wondering how important that is. And then I have a follow-up.

Sure. Thanks, Steve. I'll let Gary take it.

Steve, thanks for the question. Regarding the how important it is for the customers to have a large installed base. We've seen it's not really important. And I talked about that in the prepared remarks earlier. In 98% of the assets that we're servicing are not PerkinElmer branded. So obviously, the [ puts ] has been a little more difficult for us to get the customers' trust and confidence, but we've demonstrated that we can. And the portfolio continues to evolve over time. So I think it's not -- hasn't been that important for us to have a significant installed base of our own equipment. We'd like there to be more clearly, but it hasn't been limiting for the business model. And then the other piece on the competitive landscape, I'd say in the early days, there was a lot of questions on the viability of the model, right? And there was a lot of customers on the fence regarding whether we could actually deliver the service. And I'd say there were a lot of companies that were sort of sitting on the sidelines and deciding whether they were going to go all-in with a multi-vendor model or not. And I think with our success, other companies have decided that they need to get into the game because we were successful and customers wanted a more holistic, comprehensive service model. So maybe you have some comments on the competitive dynamic.

Yes. And then on the offerings, Steve, I think, we did a nice job laying out how that business grew over time, and how it started from asset management and then over time, got into more professional services and we foresee additional ones in the near future, but a lot around technology and data and also things like relocation, et cetera. So we've built that either organically or inorganically over time. But again, as I mentioned earlier, it's nice to have our teams at our customers because they can see what is needed on site.

Gary, are you able to leverage the OneSource business to drive sales of other PerkinElmer, either equipment or consumables, kind of the other way around? Since you're already in those labs, can you help other pieces of the PerkinElmer business? And then I have one question for Alan.

Yes, sure. Great question. So I'd say we absolutely can have that. When we first started the business model, we were sort of hesitant to not have OneSource be, let's call it a Trojan Horse for the rest of the PerkinElmer portfolio. And -- but over time, what we've seen is customers, as they get comfortable with PerkinElmer as supplier, they want to understand more of our portfolio. They want to see more of our technologies, more of our capabilities. So we absolutely are having those conversations now, and we think there is an opportunity for us to leverage OneSource almost as a channel for the rest of PerkinElmer's portfolio.

Okay. And then for Alan or Jamey, and this may be a silly question, but why do you think that the Horizon business was not more expensive to acquire than it was? And I guess with that, how are you thinking about its revenue in 2021 potentially as we're putting our models together?

It's an interesting question, Steve. So since it's still in the preliminary stage, in the pending stage, we don't want to talk too much about 2021 nor can we actually. All we can say at this point is that, that market has been growing high single digits. In terms of the price, we believe Horizon is a terrific business, and we believe that we paid a fair price for it. And we're excited about prospects. I think that's the more important thing. I mean, Horizon Discovery with our Discovery business, I think Alan really laid that out how the 2 can be complementary, all the way from gene expression through protein characterization. I don't know if there's anything else you’d like to add, Alan.

Yes. Thanks, Jamey. As we did point out, it has the key pockets. There is a core business, which aligns very well with our research business and really allows us to broaden into the academic environment. We're able to use their e-commerce engine, and I think long term, we have the ability to disrupt markets as we go forward. And I think that's really going to be the driver behind it. We have a good synergy, the phenotypic play that we have in PerkinElmer today, combined with the genotypic solutions that have come out of Horizon, that's really where the complementation will come forward. And I think as you've heard across the morning, we're driving with science first. Our customers are looking at that ability to look at solving complex scientific problems. And now from a genotypic side and the phenotypic side, we have that capability in-house.

[Operator Instructions] Our next question will come from Dan Arias with Stifel.

Jamey, at the risk of getting overly specific, I kind of wanted to ask about the mid- single-digit range that you talked about overall for DAS. And the reason is I'm just sort of trying to understand what's embedded on the other side of the aisle beyond life sciences because if you do something like 7% or so in life sciences, you called it 6-plus, then that would mean that you could do 2% or 3% for the rest, and that would get you to mid single-digit range, and that doesn't seem heroic. But if we're talking about 5% or 6% or so for the other half, that's not too far off from what you're thinking for life sciences, and that would get you to that mid-single-digit plus range. So again, just trying to understand the growth mix that you envision overall there.

Yes. Thanks, Dan. So I think you're thinking about it right in terms of life sciences, we believe that it has grown 6% and can continue to grow 6% plus. Let me just continue to build that out a little bit. I mean, I think we put this in -- it's not -- the worst-case scenario for life sciences as we look at, is probably 4% to 5%. And the best case can probably be 8% or 9%, maybe even a 10%. So that's why we think 6% is somewhere in the middle. And as you suggest, that would help DAS from a contribution standpoint. If we look at food, I'll go back to what we've said in the past, it makes up 10% or 11% of our DAS business, and we've said those markets can grow or do grow 6% to 8%. And as you know, we've been working on our channel and plan to get it back to at least that growth rate, if not better. You can also factor in cannabis and whatever you think there. Applied markets, which is about 1/3 of DAS is to what we have been kind of low single digits historically here. So we think those markets kind of grow in the 2% to 4% range, and we're hoping to be at least that level or better. Hopefully, the NPI cadence and being more consistent about it, trying to be a little bit more transformative around the products that we're bringing to market over the next couple of years, I think, should help us at least be at market, if not better. So that's how we kind of mix that together in to mid-single digits.

Okay. Yes, apologies for having you talk about the stuff that you didn't hold an Analyst Day on today, but I was just trying to get in picture.

Yes. It was about DAS, too.

That's true. Second one is just on some of the things you've done internally within the company to set yourself up better because there has been some realignment and some re-prioritizations that have taken place inside DAS. So when I look at Discovery informatics, OneSource analytical, which one or ones are set up to grow faster, sort of irrespective of the market and more because you feel like the organization is just in a better place. And I know it's hard to quantify that stuff, but are you able to quantify that? Because it kind of does sound like some of those things are, at least from the outside, important to the growth picture, and why we should feel that confidence should be higher here? I'm curious whether you think that that's the case, too.

Maybe I'll start and then I'll look to any of these guys. But I mean, look, I think we want to sell the full suite of products, and that involves instruments, reagents, software and service. So when we approach a pharma customer as an example, we're bringing the full suite here, including analytical. So maybe a different way to think about that is, first, our historical growth rate, as we try to lay out on the final page of the presentation is perhaps the analytical could start to get a little bit more uptick with NPIs and maybe a greater focus. But I think the team is selling Discovery well, I think the addition of Cisbio and Horizon are very helpful to that. I think e-commerce will be helpful to that. The team is selling informatics very well, but it has traditionally been a stand-alone sales force. But I think as we integrate that a little bit more, it still very much is a very specific sale, but I think the full commercial team now understands informatics better and can at least get an inroads there. And then I mean, I think most people understand the enterprise business, and we're always there to support. So maybe it's a long-winded way of saying all will be better. But if you look at that final slide versus the history, perhaps the analytical could get the most uptick here.

Our next question will come from Steve Beuchaw with Wolfe Research.

I wanted to follow-up on the comment that you made about capital allocation. You sounded to have a pretty specific feeling about a preference for capital allocation toward the DAS business toward life sciences. One, I just want to make sure I hear that correctly. Two, can you speak to the rationale there? How much of that is you feel like you've really got yourself in a great place to hit your growth objectives in diagnostics versus you see some of these areas within life side, whether it's bioprocess manufacturing or any number of other areas that we could talk about that -- where you feel like you just scratched the surface.

Yes. Let me clarify that comment, Steve. I meant the disproportionate amount of capital deployed to DAS will go to life sciences. That is not to say that we are stopping our deployment going to diagnostics as well. That is where we have put a lot of capital, and we'll remain to put a lot of capital moving forward. So this isn't -- that comment was not as a full PerkinElmer portfolio, that was a comment as it pertains to the DAS business. So we see a lot of exciting areas within DAS -- within life sciences to invest in. So I think that could be a little bit better balanced, but diagnostics will still be the lion ship -- well, sorry, diagnostics will still be kind of balanced between the two. So when we look at life sciences, I think we can get around predictive models, as we mentioned. I think we can talk about more cell and gene therapy and biologics. If you think about predictive models, Alan can elaborate a little bit more. What do you need to kind of get there and add to our toolkit? You can think about organ on a chip or whatnot. But that was not to say that life sciences is going to get the bulk of the capital deployment for the entire company. It's just within DAS. I don't know if you'd add anything.

Yes, Jamey, I think you summed it up. I think it's very clear. There is a -- as you've heard in the presentation, the ability for us to leverage this complete solution. And that includes the informatics, the data and analytic tools, the actual support and looking at it, cell separation, cell solutions and cell delivery mechanisms. As Horizon comes on board, that's a real start. If you think about our phenotypic franchise and the genotypic capabilities that we'll have, you're providing that total solution approach to the customer itself. And I think if you then look at that and look at the additional predictive models, we're really trying to drive the ability, going back to what we said. Customers are looking at speed, productivity and success -- critical success rate. Can we provide the tools and technologies that enable them in a preclinical space to really feel very confident that they're going to get the success out of that? That's the bundle that's in place. So you can look at a large number of technology additions that could come into the platform. That really would strengthen us as we look to achieve those 3 objectives.

Got it. I appreciate all the clarity there. And then my one other question is probably best directed to Alan. And it relates to the commentary around the new instrumentation launches in chromatography and your ambitions in QA/QC. It's a very highly regulated market. And these are companies that you know well. It sounds like some exciting innovation there in the product suite. Given the size of that market, though, any market share moves would be certainly interesting for Perkin. Can you talk about how long you think it takes to start to really build a position there with these new product launches?

Yes, that's a great question. I think you're right. We've had a very successful analytical franchise, particularly in spectroscopy. I think that's right. We've tried in chrom, and we've had some changes along the way, but I think if we're really comfortable now that the platform itself with the new LC 300 will allow us to drive it. It really comes down to what we've learned about always learning from the informatics business. It's about the customer experience. How does the customer leverage the use of the instrument? If you think about all portfolios, instrumentation, does it move in terms of sensitivity? It's really moved through multiple areas, size, footprint, sensitivity. They've moved forward. Now it's all about the digital front end, and how a customer use it. But I think you'd appreciate it's not going to be something that we do overnight. Share gain takes a while. I think when I look at all the platforms we have, it's a multiyear investment. But I think that's what our customers are looking for. They're looking for us to commit for the long term. We've seen it with our other portfolio. We've seen it with the discovery portfolio. We commit to portfolios. We stay in that for the long term. We have an innovative pipeline over a platform approach. And it's that support that helps us get the share gain over the competition. And I think we've -- with all the analytical portfolio that we've had, it helps us drive that, the investments there. And I think it's investing in that, investing in the customer experience and really adding the solution around it that will get us the success long term.

Our next question will come from Catherine Schulte with Baird.

I guess, first, just thinking about the planned product refreshes over the next 2 to 3 years, what are the product areas where you see the most pressing need for a refresh? And then do you view this largely as an instrument cycle or is there an opportunity to CLS in the consumables attach rate and the core service business?

So if I have to just break down DAS and instrument revenue or product revenue, I would say the majority sits in analytical equipment. I mentioned $0.5 billion of product revenue there. There's probably a couple of hundred million dollars in Alan's business in imaging and detection, which I think we've done a better job of over time, but that's not to say that there's additional refreshes needed. So to answer your question, I think it's more on the analytical side. I think the LC is a good start on that. I think the GC needs work. I think we recently -- I mentioned the NexION ICP-MS, the NexION 5000, the multi-quadruple. We recently released our IR machines. So we're slowly doing that over time, but I would say it's more on the analytical side. But I'll still let Alan talk about his instruments as well.

Yes. And I think, Cathy, kind of one of the things that comes out of this is when we end up actually leading and having very significant market position, our customers actually look to us to be sort of guiding and innovating. So I think even in the cell -- in the imaging business with both our cell and animal imaging, we will be constantly putting the platform approach in. I think that's one of the things that we've really adapted. It has changed PerkinElmer's innovation over the last few years. The ability to have a platform approach, the ability to really scale that and continue to invest in the portfolios. And you'll see here in the Discovery business, we have a very good rigor of launching new consumables and reagents. Our biomarker kits come out on a quarterly basis, with significant investment in making sure we have the right biomarkers for the customers. And then the detection technologies and the imaging technologies, they're on a natural refresh portfolio. That means that for every 2 to 3 years, there's significant advances in the platforms that come out. And it's that sort of innovation that really allows us to come in place. But it links also to the -- when you've heard the themes today because, as Gary pointed out, as we look at the OneSource business, remote monitoring, the ability to access instrumentation and get more data analytics out of it are the key core technologies that are coming in. And Kevin talked about the analytical side. We're integrating the analytical tools into the platform. So it's not only about the hardware and the investment. It's about bringing together the actual customer experience, which really helps us differentiate from the competition that's out there.

And maybe just to finalize that, and then we'll go to the second part of your question. So I mean, Alan just said it, I think we've been more consistent in life sciences from an NPI perspective and a product management perspective. So I think that has had consistent growth rate over time, whereas analytical has been more choppy. So I think that's where we're learning from that and trying to take that to more of the analytical side. As it pertains to the consumables attach rate, I'll start with analytical and you can talk to life sciences as well. So obviously, chrom comes with a higher consumables attach rate. So again, to Steve's earlier question and Alan's response, it's going to take some time. We're not expected massive share gains out of the gate. I think it will take time to kind of develop that. But that should come with additional consumables or a higher rate of those consumables attach rate versus spectroscopy. I think we've always gotten relatively our fair share. And we've got -- we've done a nice job of kind of iterating on that portfolio. So that's kind of the answer on the consumables side, as it pertains to analytical.

As from a Discovery perspective, we've been very, very fortunate. I think as you saw in the nature of the business. We have a large consumable and recurrable revenue stream. We've spent a lot of time developing those assays. We optimize them for our platforms. But in addition, we remain agnostic. So some of those consumables, the technologies apply to our competitive platforms as well. So our ability to access the customer, understand their needs and convert them is really the driver that gets us a good pull-through. And I would say we are probably hitting above our weight at the moment in terms of our consumer pull-through relative to the platforms that we have.

Right. Great. And then just on enterprise, looking at the geographic mix there and the lower relative APAC exposure. Is that geography a growth opportunity for you? And where do you think that mix should be over time?

Yes, Catherine, so we absolutely do see an opportunity in APAC to expand into the region, particularly in some of the food areas or also in some of the areas where we haven't been sort of leveraged. We've seen some of the pharmas pull out of the APAC regions. And -- but we do see an opportunity to grow in APAC with the portfolio. There is some questions around sort of cultural comments or the cultural thoughts around services in the region. That's probably one of the reasons why we've been a little slower to penetrate that end market, but we absolutely do see growth opportunities in APAC going forward.

Our next question will come from Tycho Peterson with JPMorgan.

I'll start with a couple on Horizon. I understand maybe you want to wait till the deal closes for you to give a lot more detail. But I'm just curious where you see the greatest synergies. How do you think about the potential move downstream, the gene-edited cell lines for bio production? How material you think that opportunity could be? And then live cell imaging, you flagged as well. I'm just curious how you think that could compete with some of the in situ approaches we have seen from 10x Genomics and NanoString and even Berkeley Lights on the production side?

Yes. So Tycho, thanks for that. I think it's -- we're very excited about bringing Horizon in. I think if you think about the capabilities that they have, and we touched upon this, it's more -- we have the ability to bring in their siRNA and the CRISPR technology really aligns with what we're capable of doing. And I think the base editing and the innovative bio production disruption that they have, I think, is really where we look at the long term. We need to bring that in-house. The Horizon guys are going to -- a tremendous way of laying that path out. We believe that there's actually opportunity there to -- as we look at the investment path, work out how we will bring the synergies of PerkinElmer's strength brings to that, how we're able to look at the partnerships. And I've already had some major pharma companies ringing and contacting us, looking to see how they can strengthen the partnership. So I certainly think, as we look at the ability for the bio production and the base additive cell lines, I think that's going to be a tremendous opportunity as we put forward, and one of the growth drivers that we will put in play. I think what we are looking at the moment is the time of that growth factor because we need to get more once we get -- Jamey said, once we get it fully integrated and ability to interact fully with the company, then we'll really understand the innovation that's necessary, can we accelerate it? Can we time it? So we'll get some more guidance for that as we go into next year. On the live cell imaging side, I think that's, again, that's where we really see the play. Because if you think about the tools and the technologies, we gave you some examples in there. There already are the ability for us to be able to use our imaging platforms today. And provide that contextual information. And I think it's -- that's where the differentiation comes in because being able to give them the standard contextual information around what we're talking about in terms of the imaging today, adding the generic and the genomic sites to that really, really add to the value. So our phenotypic franchise, which we've developed over the many years, now being complemented by the effect of -- from the genomic side. I think it really adds the differentiation in there, and we'll be looking to expand the imaging and optimize them as we go in the next sort of 1.5 years.

Okay. That's helpful. And then I want to follow-up on one of the earlier questions on the LC opportunity. I'm just curious if you could talk through kind of the rationale for pushing into this market. You don't necessarily have a huge installed mass spec base to leverage like some of your peers. It sounds like you're just really positioned to get your QA/QC, but are you also looking at kind of moving upstream into research for LC. Could you just maybe just talk a little bit about the strategy of entering the market? Why are you doing it now? And how you think about kind of evolving that portfolio over time?

Yes, certainly. I think you summed it up. I think one of the things that's really allowed us to get into this is that our customers are asking for it. We have penetrated the market. We've had a good pharma franchise. I think the work that Gary has done in the OneSource business and how the enterprise have been able to support platforms. That's really allowed us to get in there. QA/QC is a natural entry point for us because it's a good area, but we're actually using part of our other technologies. Our LabChip technology and other parts of the platforms are actually already in there, and we're developing that. But clearly, as we look at the franchise, it's about serving the pharma customer, and then we'll be looking to expand that and expand the needs of -- the capabilities of the platforms, certainly upstream in the pharma environment. And that's really, again, part of the overall solution approach that we're driving to serve the customers in this sector.

And I also serve other end markets like food, Tycho, as well. And I think we see the need, as Alan mentioned, but also the opportunity to better bundle our full analytical suite of products as well. And I think that will help us and bode well moving forward.

And maybe -- this is Gary. I'll just jump in as well. I think this is where enterprise does play a role. We've got visibility to a large number of HPLC systems that we're servicing today. And it's probably not broad-based QA/QC because of the investments and the change that would be required for customers to move over. But the smaller scale of research labs, there's definitely an opportunity. And I think we can help, obviously, pull some of that through as for the earlier question.

Our next question will come from Doug Schenkel with Cowen.

I wanted to start with a question on your positioning in terms of your ability to capture share in large accounts, especially on the biopharma side. You did a great job today describing the breadth of your life science portfolio. That said, my impression is that PerkinElmer has lagged some of its larger peers in top 15 to 20 accounts in large part because at points in your history, your larger peers have just been better positioned to bundle products and services via their high-quality breadth, and that's allowed them increasingly to be treated as preferred suppliers as part of an effort by those accounts to really rationalize and limit the number of suppliers they work with. As you sit here today, do you believe you are positioned to gain meaningful share in top 15, top 20 biopharma? And if so, how are market share gains in these accounts factored into your long-term revenue growth targets?

Thanks, Doug. I hope you're doing well. So look, I think that's fair feedback. And I think what we've said is we've heard from our customers, I won't specifically say it's been all top 10, top 20 pharma that they would like another choice, that they would like a different user experience and that we could be a proven partner -- or we are a proven partner in many things and could build that out to some degree more. How meaningful it will be in top 20 pharma, the 3 businesses we walked through today in terms of Alan's business, Gary's business and Kevin's business are all very meaningful in top 20 pharma already. So I think the question is around the analytical business and whether that will become meaningful on top 20, I wouldn't say that's our base premise, certainly not in the 3-year outlook. I think there are numerous accounts across the globe where we do have a substantial installed base of both analytical equipment in pharma biotech. I think I forget the other day, we might have 5,000 customers or something that we sell some amount of analytical equipment into. And so is this a targeted approach in the next 3 years to say we're going to win top 20 pharma? Probably not and that's not our assumption. But we can be a bigger player in the space and even a small share change for us would be substantial and that's not factored in.

Okay. Thanks for those insights, Jamey. That's super helpful. The second thing I wanted to talk about was specific to your large molecule product portfolio. I'm curious if you'd be willing to articulate what your revenue growth expectations, specifically for large molecules is? And relatedly, I think as we all appreciate, bioprocessing is one of the most exciting and fastest areas of growth in the biopharma end market today. The Horizon Discovery acquisition, of course, brings some really nice assets into your portfolio with its cell lines. But overall, your exposure is still fairly limited. So specific to bioprocessing, I'm just wondering how important you view that as an area where you want to increase your presence. And is that likely to be more buy than build?

So Doug -- let me answer that question. I think one of the things that is certainly an area of focus for us, and it's certainly one of the fastest-growing areas that we're seeing. I think it's a natural drive. As we talked in our presentation about this, we've got a great franchise and we've done a lot of work to get our revenue 50-50 in terms of small and large molecule. That growth rate of the large molecule is coming from customers pulling us there. We are certainly focusing a lot of our work in Discovery on the biomarker kits that are actually very applicable to areas of disease that fit into that -- into sort of the biologics space. And I would say, if you look at all the platform investments that we're making, they are certainly aligned around driving that. Actually, qualitating that going forward, I would say where we've had good growth in the marketplace in the last few years, which probably have been above market because we've been developing our share. I anticipate that to continue for the next couple of years as we really drive and make our presence felt. But quantitative in terms of dollars, I think that's -- we have a very solid franchise that fortunately fits across the whole of biopharma and the whole of pharma as a whole. So we had well balanced -- well, beginning out of Horizon, I think, is actually more insight in the academic area, which allows us to find at the early stages and their downstream capabilities. So I think as we bring that on board, we'll certainly be looking to see if we can extend their relationships, their very good key account program that they've built into the area as they try to penetrate the biopharma market. And as we drive that forward, I think that's where we'll get much greater insights, which potentially could lift the rest of the Discovery portfolio as we go forward.

Oh, I'm sorry, go ahead.

Specific to your bioproduction comment. So obviously, we have on the LabChip side. The HPLC, HPLC plays in that market. There are other capabilities we have. The Discovery reagents can be used more downstream, it's just not as much in a high throughput manner. But I would think of it as an opportunity when we talked about with Horizon and developing cell lines to expand into that market more on the further upstream than what you're historically are thinking about, which is the fermentation. So pre-fermentation, more entering that market there. We'll just have to see what we do beyond that over the years -- over the coming years.

Our next question will come from Matt Sykes with Goldman Sachs.

The preparation for today was very helpful. Just my first question, just maybe for Kevin on informatics. Just given the cloud-native [ success ] you have, I'm just wondering if are you held back at all by your customers transition to the cloud? Or are there certain workloads that are a bit stubborn and not moving to the cloud? Or can you help accelerate that? And then any color on your customer set, particularly large customers, and where they are in their transition to the cloud? I'm just trying to get a sense for how you can accelerate versus being held back by that dynamic.

Yes. Thanks. I think the cloud has presented great opportunities for us and the customers. If we look at our on-premise ELN customer base, most of those customers that we're in conversations about moving to cloud. Now whether that's 6 months or 16 months or something longer, everybody is looking to move to the cloud. Now there is some regional differences. Some markets around the world are a bit slower just because cloud has taken off slower. But I think it's a great opportunity for us to refresh the stack and for them to take advantage of these newer technologies. As for our customer base, I would say if we look at our largest 10 on-premise ELN customers, I would say, 3 or 4 of those have already moved over to our cloud-based product. And I would say the rest of them were currently in discussions. So the top 10 are either moved or in deep discussions about moving.

And what would you say as a percentage of revenue, about 1/3 of your revenue comes of it?

Yes. So right now, about 1/3 of our orders are cloud-based. We're estimating somewhere around 2022, probably 50% of our orders will come from cloud. It's growing rapidly.

Great. And then just more of a general question. Just in terms of how you think about regional opportunities for life sciences, and then maybe within the different businesses that you outlined today, are there certain regions that you think could help augment growth for the overall group based on the opportunities you might have there?

I would certainly say, if you look at the overall growth itself, I think from -- sorry, if you look at the life science portfolio, as we described it today, I would say Asia is the biggest area of growth for us. I think we've been very well served with our applied business in the traditional markets in Asia. I would say if I look at discovery, particularly in the China market, we are making very good progress. We know there's certainly plenty of room for us to get there and drive that headwind up. I think as Gary mentioned, there's opportunities as the cultural differences [ could surface ] a change, there's no again, I would say, those are the biggest drivers. We're very strong in Europe and in the Americas, but I think the Asia Pacific region, particularly offers the best opportunity we have for long-term growth.

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

This is Michael Ryskin on for Derik. I want to start by following up on an earlier question. You guys kind of talked around this a few times, but I want to dig a little bit deeper. Some of the conversations you had on the consumables attach rate in chromatography and the analytical business. When you look at your margin profile in DAS, I mean you had it on Slide 10, I believe, you highlighted that there's a gap in your margin profile relative to peers. And I'm just wondering, over time, Gary, that you're making some gains there. But what do you see as sort of like a structural gap that's type of product mix possibly tied to a lower mix of consumable attachment, chromatography, things like that? And sort of what's the profile over time? Sort of what's the longer-term runway? How much of that is tied to mix shift and new product disruptions versus, as you called out execution and product design?

Good question. So I would say much more of this is tied to product design and procurement and less about consumables mix shift. We don't manufacture a lot of consumables. That is an opportunity, should our success rate go up in this area. But right now, much of what we are anticipating is that we have better product configurations and control that is, better product platforming, an increased focus on procurement, and a lot of this can happen over the next 2 to 3 years as we've redesigned much of this portfolio. A simple example might be that we have 2 detectors on an instrument because it's a 10-year old detector as opposed to 1. And that will naturally have a significant amount of cost reduction and so we're excited about that opportunity. The consumables mix would be upside to kind of how we're thinking about this.

Okay. That's helpful. And then on informatics side of the business. It seems like you've got a pretty strong track record of M&A and rolling up some smaller players to sort of build out that portfolio. If we look at some of the ones that you've highlighted and select competitors, some of them have been taken out by your peers in recent years like IDBS, but there's also still, obviously, a lot of space there to continue to roll up sort of, what do you think -- would you see that strategy continuing? Do you think you can continue to expand, do some targeted acquisitions here? Or is this going to transition to more of an organic story?

Yes, it's a great question, Mike. And while the informatics business was an acquisition strategy, but that was very many years ago. Over the last really 4 years, 3 years, it's been all very much homegrown, let's say, last 5 years. So we increased the investment into the informatics business to make many of the solutions that Kevin talked about as well as move to the cloud. So we still believe that there's a lot of this that can be homegrown. And that’s not to say that we won't look at inorganic acquisitions. We have a game board. We look at it all the time, and that could be an area if we think that's necessary. I think that comes into what's better and faster and what's easier to integrate into our platform. If it's easy to integrate an acquisition into our platform, therefore, that would be better and probably more easy to do. If it's not, we can build it ourselves and kind of continue to build out the suite of products. I don't know if you'd add anything.

Yes. No, that's good. That's exactly what I'd say. From an overall market perspective, I think there's a couple of things. You're right. I think there's going to continue to be consolidation in software in general, and particularly in our markets. I think there's a couple of reasons for that. One is customers are truly looking for end-to-end solutions. So if you're a vendor out there and all you have is an electric lab notebook, and you don't have the analytics, you don't have the screening, you don't have everything else. You're seeing less preference to somebody like us who has a complete solution, number one. Number two, I think there's some technologies out there that because they're on-prem trying to go to SaaS, have some technical debt. They're going to either need to be acquired or substantial investments to convert those on-prem technologies to true SaaS platforms. And that is going to be something they're going to have to do, and that may take an acquisition to enable them to do that -- to be acquired, I should say, to enable them to do that.

Our next question will come from Patrick Donnelly with Citi.

Jamey, maybe one for you, specifically on the OneSource op margins, only 10% there. Can you just talk through some of the opportunities over the next few years to leverage that, obviously, expanding into areas like Asia and Europe. Just wondering the margin profile as you shift a little bit geographically into some of those growth opportunities, and just where that number can go, what the key levers are?

Yes. Thanks, Patrick. Hope you're doing well. So yes, we definitely recognize it. We believe long-term that our OneSource enterprise, OneSource business can be closer to 20% and factored into the margin expansion that I laid out on one of my pages. We kind of have that getting to the mid-teens by 2023. And I'd say it really is a handful of things. First is I've been around services for a long time. It is basically a risk/reward, risk/transfer product, the closer you get to your customers, which is the value we want to provide. But sometimes you can go a little too much to the risk side. You might not understand the work scope, both the cost of it, the increasing cost of it, the scope of it, et cetera. And so the reason why we specifically said that we will be in line with our growth rates as opposed to above-market growth like we have seen in the past is that we might walk away from 1 or 2 contracts that would naturally improve the profitability of that business immediately. So that's one lever, but there's certainly other levers that we believe are more all as important. The second is professional services, those come at a higher profitability. You also can upsize once you're at a customer, you can add additional labs. So as Gary mentioned, he gave you an example where we started in one lab, you got to prove it to them and then they kind of roll it out throughout the rest of the lab. So there's upsizing within the customer. Then the last there is probably around digitization, which Gary also talked a lot about, whether that's RPA technologies, AI technologies, which we've invested in to make it easier to report and take, I would call, the overhead cost of our service business down and better insights for our customers. And we have to prove to them that we're adding value, that we're making them more profitable through all the examples that he said that their downtime is less, that their time at the bench is better, that their efficiency across their labs is more normalized as -- and when we prove that value often through those digital tools, that's when the customer gives us more and more share, and our brand continues to increase. So there's a lot of different levers there to improve the enterprise margins, but I think kind of mid-teens in the next 3 or 4 years here is kind of what we're aiming for.

That's helpful. And then maybe I think it was Kevin that mentioned chemicals and agro, smaller area in the informatics side, but a growth opportunity. Can you just give us a sense as to what you're hearing from that customer base over the last few months on general kind of spending plans going forward as we emerge from the pandemic? I know these aren't necessarily big capital expenses, but just curious the tone from that customer base and what are you thinking about there.

Sure. So I think that customer base has been hit more than pharma for a number of reasons. So the tone is that they had pulled back on some of their expenditure plans, the folks that we're dealing with. But I'd say in the last couple of weeks, they have sped up. There was a contract that we closed for 7 figures that was with was with a chemical company that had postponed making the expand, but wind up doing it. I think they also realized a couple of things. The pandemic has shown them that they need to be more mobile. And they need technologies to allow people to work remotely because they're having challenges because they don't have technologies that allow them to do that. Number two, if they really realize that SaaS has taken out, as I said, many of the barriers of entry. So they really want to invest in those technologies now by putting the burden of managing the systems on to us. So we're looking at the business in 2021 and beyond as a growth area. We do think they'll still be cautious about spending, but we've seen many of the projects that we're working on be postponed or delayed slightly, not canceled. So we expect to continue to see that.

Our next question will come from Jack Meehan with Nephron Research.

I wanted to dig in a little bit more on the APAC opportunity, specifically in informatics and OneSource. You guys are pretty well penetrated in both in the Americas at 60% of revenue for both of those businesses. But I was just wondering if there's anything structural around APAC and maybe the nascency of some of those markets around the service and informatics that might make it tougher to close the gap versus more developed markets.

Gary, do you want to start?

I'll start as a follow up to the question that was asked earlier. So anywhere there's large labs, we see the opportunity to deliver value through the model. So I think that's one. But we have absolutely seen a lag in APAC from the other regions, Americas and Europe, around adopting the newer models, right, as well as professional services. Although we are seeing select customers in China, Singapore and Japan, start to look at the professional services like data integrity, win upgrades so the IT services to support the lab as well as compliance relocation. So we are seeing that happen, but it is happening at a slower rate than some of the other regions. But again, from history, we've seen asset management follow a similar path, professional technology services, we expect the same. From an informatics perspective. So if we look at Japan, they are clearly starting to move to the cloud. So that's a great opportunity for us to move those customers over as well as new customers. There's a number of accounts outside of life sciences that are currently not using these technologies but because of SaaS, they will be able to. And in China, we also are able to sell a solution we don't sell throughout the rest of the world. We actually sell our analytics solution into the hospital market. So that's another part of the market that we can sell into China that we're having a lot of success with that we don't have the ability to sell into in North America and in EMEA. So we're very optimistic about those markets continuing to grow for some of the same reasons that we see it in other places of the world, but also for additional reasons that we don't see, again, like China hospital market in particular.

Great. And then I wanted to probe a little bit more on the Discovery side. So Horizon, I agree, you're adding some assets which look pretty complementary. Are there other areas, specifically around service or around research models that you would consider adding -- I'm looking at Slide 20, I see a very friendly looking research model. So I was just curious to gauge your thoughts around maybe areas like safety assessment or research models or are there other service offerings that you think you might be looking to add over time?

Yes. I think that's a great point, Jack. I think we all have been looking at exactly that area. I think we have the capabilities and the skill sets. We've -- our service offering, I think, has really developed because Cisbio first have introduced us to the ability to do custom assay development and the ability to get that niche pole. Horizon extends that with significant ability to take it to the next step. And I think we look at, and we're taking feedback from our customers as to where the particular types of models that we would have to put in place. We talked a lot about the predictability and the ability to provide cellular models and models of human in a nonhuman context like organ-on-a-chip and other areas that align to that. How we extend that up and downstream and where that naturally takes us in terms of providing the services part of the business. We're also working very closely with Gary's business on the professional services side to see how those scientists fit into play. So for the first time, we have the capabilities to do that. I think what we'll be looking now as Horizon comes on board as part of the integration is to really identify the areas where we can be most successful. And I think it goes back to our science first approach, where we can deliver the scientific opportunities to the customer is where we will push the services that we have. And I think we've really tried to add the high-value and bring our scientific expertise to the forefront. And that will really guide us to the areas we think will particularly will get us the long-term growth.

Our next question will come from Dan Brennan with UBS.

Jamey, just a high-level question, I think, Dan, kicked it off earlier. I just wanted to kind of level set. So DAS, I know you had in the deck. DAS, I think, grew 5% over the last couple of years pre-COVID. Is that what assumed going forward? I know this is a life science day, but it sounds like life science accelerating. Food sounds like upper end. I'm just wondering -- wanted to make sure I understood the message and what the outlook is for that?

Yes. The message is that DAS can grow mid-single digits moving forward and has evidenced that over the last 3 years. And combined with the margin expansion that we laid out, we think that there's a lot of reinvestment opportunity that it will yield.

Great. And then just kind of diving in a bit just on the -- within the broader life science segment in development, I think you had on the slide, 10% of the mix today and you discuss some opportunities there. Like how does that opportunity look going forward and the ability to work with CROs given the different products you have a lot, like, mix look a lot different you’re presenting here 3 years from now looking back and why?

So from a CRO perspective, I think we have a pretty good relationship with most of the world's leading CRO relations in terms of the platforms that we have in place, and most of them are using that. I think certainly, as we look to expand that, that's again the areas of capabilities that from a Discovery perspective have led into that. It also opens up the opportunities for both informatics and OneSource to then leverage and to support those because they are, I would say, not quite at the level of pharma companies in terms of their ability to adopt the model that Gary talked about and how we drive that forward. So I think there is a greater potential there. So we're moving along. I think Horizon will actually allow us to, again, strengthen our capabilities in that area and learn internally from their expertise and then be able to address the broader market as we go forward.

Great. And then just one more just on informatics. I know there's been a lot of questions there. But I guess, the last 3 years or so has been double digits. I would assume that business is kind of what's baked into the go-forward guide, are they consistent or we'll be seeing acceleration there just given the opportunity here with SaaS, which you seem to be very positive on but still relatively early with?

Yes. What's baked into our kind of 6% moving forward is a consistent kind of 10%-plus and 10% performance. I certainly think that there are many levers, as I mentioned, that can make that outsized from the 10% or better. So if you think about it, I think, by nature, number one, the market is growing, more cloud, more users, more remote capabilities. Number two, I think we have the ability to upsize all of our current customers, whether that's number of users. We can start off by only using 500 research scientists as opposed to the full 5,000 that might be in the company. Or as Kevin continues to build-out, right now, we already have a suite of solutions, and some customers, as you mentioned, only use a current 1 point or 1 application within the full suite. So we can continue to build from just 1 application to the full suite. And then into new markets. So we will continue to build out our suite in research and in clinical as well as food and agriculture. So I think there's a lot of levers to make this well north of 10%, but right now, it's kind of baked in as a 10% kind of consistent to performance.

And today's final question will come from Brandon Couillard with Jefferies.

Just one question on the core service business. You didn't actually talk about that piece very much, even though it's actually bigger than enterprise service. Can you just talk about attach rates for service contracts there? Where those are today, where they can be? Why that business should actually grow more in line with kind of the broader, I guess, product growth, which at least seem to be sort of more in the mid single-digit range? And maybe touch on the margin profile of the core services business.

So first off, I'll address the attach rates. So we mentioned on the page -- or we wrote on the page that it's an area of improvement. I would say our attach rates are good, but they can be better. I would say, again, going back to the APAC region, that's probably one of the highest areas actually. We sell a lot of analytical equipment into China and the rest of APAC. And for various reasons that we've always talked about that, that it takes a natural longer curve to create that kind of services annuity, both in enterprise and in core services. So I would say our attach rates are in line with market, but not -- there's still a lot of room for growth there, number one. Then you go into the rest of Americas and EMEA, I'd say our attach rates are in line with market, I don't know, maybe a little bit better. But we think that there's still a lot of room for opportunity there. But I would say the larger share is in APAC. As it pertains to margins, margins are good. I still think that much of what I talked about on the overall DAS margin expansion page in the services component, a big portion of that is enterprise, which I just answered in terms of Patrick's question. But the core services rate can still get better. I think ServiceMax, going back to that example, it allows us to really utilize the 2,000 field service engineers better and not only either create new business or efficiency to be applied time to additional service events or whatnot. As well as ServiceMax really allows us to manage all the leakage from a pricing and contract perspective that we have across thousands of contracts across all these instruments in the field. So we probably have maybe a point of increase in core services. I think there could be more than that. I think that can be conservative. But we definitely think core services has room for both the attach rate to improve, largely in APAC as well as margin expansion moving forward here. That was the last question. Okay. So in closing, thank you all for joining. I'll go back to where I started. We believe life sciences, hopefully, you saw today that it is strong franchise with a lot of opportunity for growth and value creation. We have invested in this portfolio, and we will continue to invest in this portfolio. And the performance of the franchise will then influence DAS, as we've just talked about. I think it will be a faster-growing business, a more consistent growing business with plenty of room for margin expansion. So hopefully, you're leaving this meeting as excited as we are about the entire DAS franchise and specifically the life sciences franchise moving forward. We thank you all for listening and spending time with us and hope to see you soon. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.