Ambition for the future
Over the past years, our company has grown significantly through a series of strategic moves that have enabled us to develop into a vibrant science and technology company. We have systematically and continuously strengthened and focused our portfolio of innovative science and technology throughout our business sectors.
In Healthcare, we focus on development and commercialization of innovative specialty medicines. To do so we actively managed our portfolio and acquired Serono SA in 2007. Today, we are focusing our R&D efforts on oncology, immuno-oncology, neurology, and immunology.
Within Life Science, we solidified our position as one of the industry leaders following the acquisition of Millipore Corporation in 2010 and Sigma-Aldrich Corporation in 2015.
Performance Materials is currently undergoing a major transformation by repositioning its overall business toward the highly attractive electronic materials market. With the acquisitions of Versum Materials Inc. and Intermolecular Inc., both in 2019, we have achieved a leading position in this market, with a focus on Semiconductor Solutions.
With our Group strategy, we want to become the vibrant science and technology company. By 2022, we aim to have strong, innovative science- and technology-focused business sectors with leadership positions in our areas. We want to be a top-tier company in relation to our peers in terms of sales growth and margin, and we aim to continue to deliver sustainable returns to our owners.
We are now in the growth and expansion phase of our strategy and are well on track. Following the Versum Materials acquisition in 2019, we are giving priority to organic growth while rapidly lowering our debt and pursuing a sustainable culture of cost consciousness until 2022. We do not rule out making large transformative deals, yet in light of our strong business portfolio, it is more likely that we will complement our businesses through a number of small to medium-sized acquisitions after 2022.
In Healthcare, we intend to fully leverage our pipeline’s potential. Our new product launches, Mavenclad® and Bavencio®, are increasingly contributing to earnings. We expect sales performance in our established products to remain at least stable through to 2022. By 2022, we aim to achieve additional annual sales of around € 2 billion with new medicines and see significant growth potential beyond that year.
Life Science’s growth is driven by our robust product portfolio and backed by our global supply chain, our e-commerce platform, and our strong track record of service and innovation excellence. The business sector plans to deliver annual organic sales growth of 6% to 9% (CAGR) per year in the mid-term, continuing to outpace the market. Our strong positions in Process Solutions and selective pursuit of attractive segments in the Research Solutions and Applied Solutions markets all contribute to sustaining our profitable growth.
Performance Materials benefits from strong and long-term growth trends, especially from digitization and the heavily increasing data volumes. We expect Semiconductor Solutions to be the fastest-growing business unit of Performance Materials with annual organic sales growth in the mid- to high-single-digit percentage range in the coming years.
To achieve our strategic ambition of becoming the vibrant science and technology company, we focus on our three Group-wide priorities: Performance, People, and Technology.
Our priority Performance focuses on the financial aspects of our activities. It provides a clear definition and tangible targets of financial success. We focus on organic growth while rapidly lowering our debt and pursuing a sustainable culture of cost consciousness until 2022.
We have made significant progress on this journey in recent years. In the past months, the strengths of our business model with three innovation-driven business sectors have become particularly evident during the Covid-19 crisis.
Our three business sectors have moved forward in delivering on their strategic priorities in recent years. Healthcare has seen increasing sales contributions from the medicines Bavencio® and Mavenclad® and has made good progress with its development pipeline. The Life Science business sector continues to deliver above-market growth and has been operating more profitably than most of its competitors. With the acquisition of Versum Materials, Performance Materials has shifted its portfolio to focus on the high-growth semiconductor business and generates high margins.
The transformation in recent years and our clear focus on science and technology have paid off. All our business sectors operate in highly attractive markets and have excellent prospects for the future. Our Healthcare pipeline, our Process Solutions business with products and services for drug manufacturing, and our Semiconductor Solutions business will be the main growth drivers (“BIG 3”) in the coming years.
To become the vibrant science and technology company, we focus on our people – their talent, their performance, their ideas. Our People strategy aims at building the capabilities we need to shape the future by attracting and retaining the right people as well as creating the right culture for them to collaborate and perform at their best.
The People strategy acts as a basis for our continuous efforts to attract, retain and develop our leaders and our talents. It serves as an illustration of our belief that strategic efforts can only be successful if we maintain a focus on our people.
The delivery concentrates on three key strategic cornerstones – empowered leaders, curious talents, and result driven teams and networks – that all play an instrumental role in distinguishing and focusing our actions.
We drive a high standard of leadership to sustain engaged and curious employees. Establishing a culture of inspiration and inclusion in which leaders set an example through their attitude and behavior, as well as selecting and placing the right employees, is key. To support our growth and innovation course, we need a working environment that actively promotes diversity. One of our strategic goals is to recognize unique voices and strengths and to foster a culture of inclusion by appreciating individual differences.
In this context, we actively engage and challenge our leaders to become “leaders of people”, and we empower them to support our company in its transformation. Our leaders are encouraged to embrace new technologies for data-driven decision-making and development of people.
As “leaders of innovation”, our leaders are encouraged to set a clear, inspiring direction to empower employees and to provide structure, resources, and clear prioritization to achieve our goals.
Curious talents play an instrumental role in achieving our goals in a globally competitive environment. Therefore, we have launched a number of new offerings to stimulate individual learning and deliver company-wide change, such as our new LinkedIn learning platform. By modeling the values and behaviors required to promote a culture of innovation and curiosity, we encourage our people to challenge the status quo, to think critically and to demonstrate a pioneering spirit and a passion for innovation. By doing so, our talents are motivated to break down ambiguous and complex questions and to embrace fast, effective, and unbiased decision-making.
Results-driven teams and networks
Our activities not only support our people but also the way they work together. In a highly connected world, we put special emphasis on results-driven teams and networks to ensure a stimulating work environment that fosters high performance. To enhance our growth and innovation potential over the long-term and ensure the necessary flexibility to allow us to respond promptly to new trends, we support the development of and collaboration among our employees. Our focus on team collaboration is underpinned by our endeavor to always provide future-oriented solutions. This applies to the way we work and also to the frameworks we provide as an employer to ensure flexibility for individuals and teams to drive results.
Our approach to technology paves the way for discovering and scaling the most exciting technologies. The majority of our innovations come from within our existing business sectors, with approximately 7,900 scientists and researchers working for our company. These innovations include everything from incremental innovations to disruptive opportunities in the fields of Healthcare, Life Science, and Performance Materials.
Generating new business
Complementary to the business sectors, we are also looking into innovations that fall between our business sectors or beyond our company’s current scope. With our Innovation Center in Darmstadt, Germany, and our Innovation Hubs in Menlo Park, California, United States, in Shanghai, China, and in Guangzhou, China, we are discovering new ideas and technologies, then scaling them up to build new businesses.
Propelling innovation fields
We are focusing on our activities within the following core innovation fields of interest: Clean Meat, Artificial Intelligence (AI)-enabled Health Solutions, and Liquid Biopsy.
A growing population, climate change, and the threats of antibiotic-resistant and zoonotic diseases demonstrate the need for sustainable, pathogen-free, and transparently produced animal protein. Our innovation field “Clean Meat” – also referred to as cultured, cultivated or cell-based meat – focuses on the biotechnology required to produce genuine meat and seafood grown in vitro using stem cells taken from animals. This will enable the production of animal protein that is healthier, more ethical, and environmentally sustainable. We aim to become the technology enabler for the emerging cultured meat industry, leveraging our vast expertise in cell culture, advanced materials, bioprocessing and cellular manufacturing. Cell culture media, free of any animal-derived material, is the major cost driver for cultured meat products. One of our projects in this innovation field is tackling this challenge by designing and commercializing custom formulations for the production of different cultured meat and seafood species.
The innovation field of AI-enabled health solutions is the first China-specific innovation field. It includes AI-related products and services, which mainly help our China Healthcare business grow, and focuses on AI solutions for patient journey and clinical trial in our therapeutic areas in China.
This approach is complemented by offering a platform to capture the full innovation potential of our company between and beyond our sectors. An example in this area is our Additive Manufacturing of Tablets project. Producing tablets for clinical trials today is still quite time-consuming and expensive when using traditional tablet manufacturing processes. Through a newly created partnership with AMCM GmbH, a sister company of 3D printing world-market leader EOS GmbH, a GMP (Good Manufacturing Practice)-certified 3D printing solution is being developed that will make tablet production simpler and more flexible, saving time and money. This novel, simplified process in clinical development of drugs can be enabled by using powder bed fusion methods, whereby a laser melts and fuses powder together layer by layer. In addition, 3D printing allows for API formulation to be scalable while avoiding costly reformulations throughout the entire pharmaceutical development and commercial production process.
Investing strategically in innovative technologies
When it comes to external innovation, we focus on investments in disruptive emerging fields adjacent to, in between, and beyond our established business sectors. We strive to transform groundbreaking scientific ideas into businesses with the potential to improve patients’ lives, disrupt industries, and transform the way we live. This includes M Ventures, our € 400 million evergreen corporate venture capital fund. M Ventures has the mandate to drive innovation through equity investments in innovative and disruptive technologies and products with the potential to significantly impact the vitality and sustainability of our core and future business areas. The team invests globally in transformational ideas driven by great entrepreneurs, taking an active role in portfolio companies and teaming up with these entrepreneurs and our co-investors to translate innovation into commercial success. M Ventures has a significant focus on early stage investing and company creation including the creation of spin-offs to leverage our science and technology base. Since inception, M Ventures has invested in over 60 promising startups and companies that could impact our core and future business areas, while at the same time providing our company with strategic and financial returns, such as through the successful IPO of Progyny (October 19, 2019) and the recent IPO of Galecto (October 29, 2020), a phase II biotech developing therapeutics directed at biological targets which are at the heart of fibrosis, inflammation, and cancer. In addition, M Ventures runs multiple incubators in Israel and a China seed fund worth RMB 100 million (€ 13 million) to further foster early stage innovation in this market with strategic importance for us.
A major focus of our innovation efforts is digitalization. We are leveraging related opportunities through our Digital Organization in order to create value for patients, customers, and business associates. To us, digitalization means the digital integration of our entire value chain, the digitalization of our products, services, and communication interfaces to customers, as well as the development of new digital business models.
We believe that responsible data-driven collaboration has the power to transform healthcare and accelerate scientific discovery. Syntropy, our joint venture with Palantir Technologies Inc., is aimed at unlocking the value of scientific data and empowering the world’s leading experts to collaborate in the fight against cancer and many other diseases. Syntropy’s user-centric data integration platform safeguards data ownership while allowing users to structure and analyze data from disparate sources. Following a successful pilot, Syntropy has signed its first collaboration with a major NCI (National Cancer Institute) Designated Cancer Center in the United States. We also recently announced a partnership with MITRE Corporation, United States, to improve the overall quality and consistency of cancer data available to clinicians, patients, researchers, and other stakeholders.
* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.