Life Science
Our Life Science business sector is a global leader in the ~€ 200 billion ex Covid life sciences industry. We continue to consistently deliver profitable growth in this market that is growing ~5 to 7% CAGR. While our strategy has not changed – strengthen our core business and expand in high-growth segments – our priorities now reflect changes in the external environment, with an even sharper focus on our strategy, further enabled by digitalization, innovation, and enhanced capabilities. In February 2022, we announced a new organizational structure focusing on the customer and portfolio, across three distinct business units: Process Solutions dedicated to consumables and instruments, Life Science Services delivering pharmaceutical testing, manufacturing, and development services, and Science and Lab Solutions unifying offerings for the research and applied markets.
Process Solutions is focused on innovation in process development, building a robust supply network, and expanding capacity to capture accelerating market growth. Customers and governments increasingly view bioprocess consumables as a strategic resource and prefer regional suppliers. Our plan calls for a shift from manufacturing centers of excellence to increasingly in-region, for-region production. We will continue to invest heavily in new capacity for key portfolios including single-use, filtration and cell culture media. This will improve customer service levels and increase our resilience. In addition, innovation remains critical. Our deep expertise in monoclonal antibodies (mAbs) and proteins provides a launchpad to offer fit-for-purpose products for the efficient manufacturing of novel modalities, such as viral vectors, and mRNA and cell therapies, which are all growing rapidly.
Science and Lab Solutions unites our strong positions across diverse lab and testing segments, including academia, pharmaceutical R&D and diagnostics, among others. This exposure provides exceptional resilience and predictable, profitable growth. Our strategic focus here is to ensure our long-term competitiveness as customer needs evolve. We are poised to continue our legacy of innovation for the lab, adding digital features and greener alternatives to our expansive product portfolio, and enhancing omnichannel engagement, by providing a seamless customer experience through all purchasing channels, from our sales representatives to our leading eCommerce platform.
We have already unified our service offerings under the Life Science Services business to build our presence in the attractive and growing contract testing, development, and manufacturing organization (CTDMO) segment. Here we have a strong foundation, with more than 25 years of CDMO expertise, a global footprint, and capabilities across the value chain. Our vision is to move from an emerging, multi-modality CDMO and CTO to a full-service and focused, multi-modality CTDMO. To enable this in the near term, we will focus on streamlined sales and a robust customer pipeline, ultimately increasing global scale and reach.
Across Life Science, we are also raising our ambition in the Asia-Pacific (APAC) region. As noted, our plans include establishing additional in-region, for-region infrastructure. At the same time, we will enhance our support level across the APAC region, sharing our technological expertise with customers to become a true partner in this fast-growing market.
Our Life Science business sector is poised to deliver sustained growth in a dynamic market through supply regionalization, a differentiated customer experience, and accelerated innovation – all aimed at shaping the future and fulfilling our purpose to impact life and health with science.
Healthcare
Global megatrends such as growing and aging populations as well as better access to healthcare continue to drive the need for our products. At the same time, the Covid-19 pandemic has accelerated many anticipated industry trends within the healthcare sector such as changes in market dynamics, ongoing healthcare reform, and increased digitalization. In recent months, the macroeconomic and geopolitical external environment has become more volatile, considering, for example, rising inflation or the war in Ukraine. To meet these demands and respond appropriately to the dynamics of our markets, we have significantly transformed our Healthcare business sector in recent years with the objective of delivering focused leadership and sustaining above-market growth through a diversified portfolio that is resilient to long-term volatility.
Following our successes over the past years, we continue to drive pipeline projects with the aim of bringing groundbreaking medicines to patients, maximizing our existing portfolio, and continuing our expansion in growth markets. We are resolute in our ambition to become a global specialty innovator, with a high-growth future in Oncology, Neurology and Immunology, and Fertility – areas where significant unmet medical needs exist and where we can bring meaningful value to patients. We build this ambition on top of a strong foundation and will continue to grow Cardiovascular, Metabolism & Endocrinology sustainably and profitably. We pursue this ambition with a focused leadership approach, concentrating investments on decorrelated opportunities in our pipeline and across therapeutic areas, regions, and payer types.
The first pillar of our strategy is to reinforce our global footprint, bringing the innovation of our pipeline to patients and growing our presence – in the United States and in China, for example. The emerging markets and China are expected to be the largest growth drivers for many of our established products in the future. Managing the balance between delivering innovative new medicines with first-in-class and/or best-in class potential while leveraging our strengths in other markets and ensuring the profitable growth of the existing business will be one of the strategic imperatives. Numerous examples in our existing business offer significant opportunities to bring value to patients, and considering their growth potential, maximizing their business potential will remain important.
The second pillar of our strategy is the focus on specialty medicine franchises. Here, we expect the oncology, neurology, immunology, and fertility markets to remain highly attractive in terms of size, growth prospects, and profitability. Within each specialty franchise, our approach is to develop deep internal expertise and insight, from internal research to commercialization, augmented by external talent sourcing and strategic partnering. In order to optimize the value and focus of our pipeline, we continuously monitor and assess the potential of our pipeline candidates, based on clinical data, strategic fit and financial criteria, to determine the best way forward.
The third strategic pillar is innovation: We aim to develop potential first-in-class, and best-in-class therapies and to build a portfolio in each of our franchises. We have streamlined our pipeline and expanded our innovation capabilities with strong investigational drug candidates and technologies. In order to maximize the output of our R&D investments and increase our chances of success in discovering and developing new therapies, we focus our expertise on specific franchises and are exploiting synergies in disease mechanisms and biological pathways. We are investing in digital technologies and novel modalities such as antibody drug conjugates to drive pipeline growth.
Electronics
Within the last years, the Electronics business sector has transformed into an innovation leader within the electronics industry targeting the most critical materials segments of the semiconductor wafer processing as well as OLED and LC display panels. Our diversified portfolio delivers profitable growth and stable attractive cash flows. We partner with key thought leaders around the world to enable the next generation of electronic devices.
The acceleration of digitization, and its visualization, is fueled by an exponential growth of data and a lasting need for electronics, especially semiconductor chips across all industrial sectors. Highly impactful technology trends like artificial intelligence (AI), 5G networks, big data, and Internet of Things (IoT) require more powerful chips and advanced OLED display platforms. In the mid and long term, this growth is expected to continue through the next decade, as semiconductors have become a critical component in many industries. Unprecedented investments, in the hundreds of billions of euros, are being announced for new chip manufacturing capacity across the world. To produce ever more powerful and energy-efficient chips, innovation in novel materials is essential.
To benefit from the strong electronics industry growth, our plan is to expand our capacities and our capabilities. We have announced investments of significantly more than € 3 billion into innovation and capacities by 2025 aligned to the businesses and regions we serve. These investments are an essential part of our sector’s Level Up growth program, which kicked off at the end of 2021.
We are progressing well in our Level Up program, which focuses on four, mutually reinforcing key priorities: Scale, Technology, Portfolio and Capabilities. With Scale and Technology, we support the ongoing capacity expansion that is happening globally in our focus industries, investing in our footprint in close proximity to our customers while boosting R&D and innovation. Under the priority area Portfolio, Electronics seeks to exploit attractive, external growth opportunities via acquisitions. Furthermore, Level Up is accelerating important internal initiatives under the Capabilities priority. Among other things, it is further leveraging data analytics capabilities and investing even further into the safety realm.
After substantial investments in expanding our production capacities in Surface Solutions, we remain confident to successfully implement its strategic transformation.
* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.