Life Science
Our Life Science business sector continues to be a global leader in the ~€ 190 billion life sciences industry, consistently delivering profitable growth through a broad, differentiated portfolio, close customer relationships, solid foundational capabilities, and a well-established global footprint. These attributes, and our response to Covid-19, have strengthened our position as a trusted name and market player.
We also recognize that the life sciences are continuously evolving, with intensifying competition and key growth trends gaining momentum. To sustain our position and deliver profitable growth in the range of 7% to 10%, we have sharpened our strategic focus with a robust, multi-layered plan to achieve significant growth and profitability over the next decade.
Our plan is ambitious, with deep and far-reaching impact. Each business and function within our organization will play a critical role in executing this strategy with a rigid focus. Our newly formed Transformation Office will ensure a consistent, integrated, and milestone-driven approach. We will enhance our performance, further elevate our position as a life sciences leader and, together with our customers, impact life and health with science.
To ensure we remain differentiated as our customers’ needs and expectations evolve, we will build our strong positions in consumables, capitalize on large-volume opportunities, and strengthen our go-to-market approach in academia and the Contract Research Organization area. We will augment our Lab Water business through innovation and expand our pharma QC testing offerings to biologics and novel modalities. We will continue to support products for traditional modalities, such as mAbs and high-potency-APIs as we move toward regionally-balanced manufacturing for high-growth areas like single-use and filtration.
To achieve this, we will add physical capacity and expand our manufacturing network in certain regions to grow key portfolios, leverage customer proximity and reduce business manufacturing risk. This is critical to meet the massive demand surge for our Covid-19 response while ensuring the same emphasis on the many other life-saving therapies we support. We will continue to expand in high-growth segments by building scale in attractive areas currently under-penetrated. This means investing ahead of the curve and setting the standard in new segments as they mature. For example, we will significantly scale up contract development and manufacturing organization (CDMO) activities for antibody-drug conjugates (mAbs), viral vectors, and high-potency APIs. We will also expand further into mRNA.
As we do this, we will develop new business models in areas like services and work toward creating a truly end-to-end holistic offering for our customers.
We will put more emphasis on emerging regions, especially China and other Asian markets, expanding our presence to better address local market needs, establishing our company as a key partner in regional life science ecosystems.
The successful execution of our strategy will be underpinned by key enablers – innovation, digital, and resource allocation.
Accelerating innovation and focusing on science and technology leadership is essential to our future. We have embarked on a digital journey to address customer expectations and evolve our internal capabilities to drive business value, by using data science and AI tools to facilitate and automate decisions. We will continue to invest in our e-commerce platform to enable new growth models. We will target our resources toward high-growth and high-return opportunities, including bolt-on acquisitions to augment organic efforts.
The foundation of our business is critical to all we do. Maintaining the highest quality and regulatory standards and advancing sustainability is essential to our success, and along with our people, is our greatest asset. Attracting, retaining, and developing a diverse workforce is critical to our future growth.
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. 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 (CM&E) 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
With the successful execution of the Bright Future program, our business sector has been transformed to an innovation leader within the electronics industry. In 2021, the business sector was renamed from Performance Materials to Electronics and now targets the strongly growing materials segments of the electronics industry. Our diversified portfolio delivers profitable growth and stable attractive cash flows driven by businesses like Semiconductor Solutions, Organic Light Emitting Diode (OLED) materials and future display applications. Today, our business sector is positioned as a highly appreciated innovation partner for material solutions in the semiconductor and display industries. 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. 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 overcome current chip shortages. 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 over the next five years aligned to the businesses and regions we serve. The investment is an essential part of our sector’s new Level Up growth program to capture these opportunities.
Level Up focuses on four, mutually reinforcing key priorities: Scale, Technology, Portfolio, as well as Capabilities. The priorities Scale and Technology support the massive 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 selected bolt-on acquisitions. Furthermore, Level Up will initiate or accelerate important internal initiatives under the Capabilities priority. Among other things, it will further leverage our data analytics capabilities and invest even further into the safety realm. We believe these initiatives will also strengthen our attractiveness as an employer and help further develop our talent pool.
We have a clear strategy that not only addresses semiconductor and display opportunities, but also improves resilience against market cyclicality and geopolitical impacts. Supporting this, our Surface Solutions business is again aiming for growth, after its successful restructuring. Our overall strategy for Electronics will deliver attractive financial returns, shifting towards an execution and growth phase.
* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.