Global megatrends such as growing and aging populations as well as better access to healthcare continue to drive the demand for our products. To meet these demands and respond appropriately to the dynamics of our markets, we have significantly transformed our Healthcare business sector in recent years.
Following our successes over the past years, we continue to drive pipeline projects with the aims of bringing groundbreaking medicines to patients, maximizing our existing portfolio, and continuing our expansion in growth markets. Our ambition is to become a global specialty innovator, operating in franchises with significant unmet medical needs and bringing high value to patients. Therefore, we continue to invest in research and development to discover new treatment options and improve existing ones. Together with our stakeholders and partners, we want to ensure that people can access the medicines they need to stay healthy and live longer.
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 while expanding our reach and ensuring the profitable growth of the existing business will be one of the strategic challenges. Fertility and endocrinology, for instance, offer significant opportunities to bring value to patients. Given their high profitability and growth potential, maximizing the commercial potential of these areas will remain important.
The second pillar of our strategy is the focus on specialty medicine franchises. Here, we expect the oncology, immuno-oncology, neurology, and immunology 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 high-quality, first-to-market, and best-in-disease 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 as well as personalized and translational medicine in order to drive continued pipeline success.
In this context, strategic collaborations are an integral part of delivering on our commitment to transform the lives of patients living with serious unmet medical needs. We recognize the value of collaboration in the research and development of breakthrough therapies, as well as in strengthening our current portfolio. Here, we focus on balancing the right blend of internal capabilities and external partnerships (for example, with Pfizer Inc. on Bavencio® and with GlaxoSmithKline plc on bintrafusp alfa) and on building strong collaborations with other leaders in the industry.
Life Science continues to deliver above-market growth and profitability through a strategic pursuit of leading positions in attractive market segments.
We have become one of the top players in the industry and set the standard for financial performance and innovation, with average annual revenue growth of 6% to 8% since 2016. Our Research Solutions business unit holds solid positions across chemistry and biology consumables, which we are enhancing with innovations such as multiplex, high-sensitivity protein detection kits and genome-editing tools. Within our Process Solutions business unit, we offer a complete suite of products for monoclonal antibody production, hold a strong position in single-use systems, and are gaining scale in contract development and manufacturing services. Our Applied Solutions business unit provides the broadest range of reference materials and continues to strengthen our established position in lab water with sustained momentum from recent launches and new digital offerings.
The Covid-19 pandemic, rather than changing our outlook, has reinforced that we are going in the right direction. Our purpose – to solve the toughest problems in life science in collaboration with the global scientific community – has strengthened our resolve to accelerate access to better health for people worldwide. Whether it is in labs, on the manufacturing floor with templates to bring therapeutic breakthroughs to scale, or at the point-of-care as patients worldwide receive vaccines, therapies and diagnostic tests, this year has put our purpose into action.
Our aspiration is to sustain this momentum, which is reflected in our three-pillar strategy:
- Strengthen the core organization by expanding our long-held positions in chemistry, lab water and bioprocessing, as well as enhancing our e-commerce and supply chain capabilities.
- Establish new growth pillars and capabilities in gene editing, cell and gene therapies, contract development and manufacturing services, and digitization while exploring new ways to address bottlenecks and inefficiencies in drug discovery and development.
- Sustain momentum of our core through operational excellence and investments in our capacity and capabilities, such as expansions at our global manufacturing and production sites as well as testing labs.
Staying this course will reinforce our position as a leading, innovation-driven, global supplier of tools, technologies, and services. In 2021, we will continue to serve our customers combatting the Covid-19 pandemic and support research labs in adjusting to new ways of working. Our innovations will enable next-generation bioprocessing, streamline testing workflows, and drive new advances in biology and chemistry. We are investing for our future, especially to build scale in bioprocess services such as contract development and manufacturing services, and testing of monoclonal antibodies, viral vectors, and antibody-drug conjugates. Our pursuit of profitable growth from our strong core positions us to sustain momentum and shape the future of the life science industry.
Performance Materials is currently undergoing a major transformation by repositioning its overall business to that of a global electronic materials, equipment, and service provider. The target markets are attractive due to their long-term growth and value potential. The electronic content of any product is increasing; electronics are now part of nearly every product, and our diversification is securing long-term stability. Effective March 4, 2021, we plan to change the name of the Performance Materials business sector to Electronics.
In 2019, we acquired Versum Materials, a leading industry player, and Intermolecular, a testing and prototyping expert for materials innovation. With those two acquisitions we have further expanded our offerings in innovative and critical technologies for the electronics industry. Based on our best-in-class portfolio of products and services, we are well positioned in high-growth segments. Our industry-spanning customer base with a strong focus on thought and investment leaders in the industry allows us to target growth above the highly attractive semiconductor market.
Megatrends like Internet of things (IoT), AI, and autonomous driving lead to high innovation pressure and drive the growth of data from every side. The global data volume grows exponentially at around 30% annually; the “data explosion” will transform electronics far beyond what today’s systems can handle. Data needs to be generated, transferred, processed, stored, and made comprehensible for humans through smart interfaces. Our strategy is to cover all aspects of this data handling and to enable processes by providing customized solutions for the production of innovative electronic components. We are the company behind the companies, advancing digital living. Performance Materials targets mainly the electronic materials market with a focus on the semiconductor and display industries in order to participate in the growth of data-driven electronic solutions.
The Bright Future program ensures the successful transformation of Performance Materials by driving the realization of our strategy. The main outcomes of the program are the shift of our portfolio into growing electronics segments, safeguarding our margin ambition, and changes in organization and culture within Performance Materials. The absolute growth of Semiconductor Solutions and future growth in OLED are expected to outweigh the decline in liquid crystal sales. We expect to stabilize the EBITDA pre margins at around 30% in the long-term, well above the industry average. Performance Materials expects an organic sales growth in the range of 3% to 4% (CAGR) per year in the mid-term. With Versum Materials and Intermolecular, we are able to obtain a leading position in the electronic materials market. Overall, our strategy realization within the electronics market is well on track, and we are working on measures in Surface Solutions to manage the Covid-19 effects and to stabilize the business.
* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.