Macro­economic and Sector-Specific Environment

In its latest World Economic Outlook published on January 17, 2025, the International Monetary Fund (IMF) projected that global gross domestic product growth would remain approximately stable at 3.2% for 2024. Economic growth was driven mainly by declining global inflation rates, which are projected to fall from an annual average of 6.7% in 2023 to 5.8% in 2024 and decline even further in 2025. Major central banks in advanced economies started to cut interest rates despite high inflation rates for services prices. Increased demand for semiconductors and significant investments in artificial intelligence in emerging Asian markets contributed to economic growth. This economic recovery was partially offset by ongoing supply disruptions due to armed conflict, civil unrest and extreme weather events impacting emerging markets and developing economies in particular.

The IMF highlighted significant risks to the 2024 global outlook, including potential regional conflicts, a further slowdown in China’s property sector and financial market volatility and the associated impact on national debt. Geoeconomic fragmentation would also pose challenges to global stability. Despite these risks, the IMF pointed to key opportunities, such as recalibrating fiscal policies to make public debt sustainable, restoring fiscal buffers and enhancing growth through structural reforms. The IMF also stressed that increased international cooperation could accelerate the green transition, support debt restructuring and strengthen multilateral frameworks, promoting long-term global stability and shared growth.

The development of GDP in selected countries and regions was as follows:

The development of selected sector specific environments was as follows:

Life Science

Our Life Science business sector is one of the leading global suppliers of products, tools and services for research laboratories, pharmaceutical and biopharmaceutical production as well as industrial and testing laboratories. While the direct impacts of the Covid-19 pandemic were resolved, capital constraints and persistent high inventory levels at many customers challenged the growth of life science companies compared with previous years.

Accordingly, the markets in which Life Science operates remained below historic steady-state growth levels. According to the market research firm Frost & Sullivan, the market for laboratory products, relevant to our Science & Lab Solutions business unit, decreased by 1.5% in 2024 (2023: -5.0%). This decrease was below typical growth in the mid-single-digit range. Decisive factors such as high interest rates and a challenging macroeconomic outlook suppressed investment in early-stage biotech companies (venture capital and IPOs), resulting in lower demand for laboratory products. Once the underlying macroeconomic factors normalize, spending on laboratory products is likely to increase again.

In the pharma and biotech production market, in which our Process Solutions and Life Science Services business units are active, demand was driven by the development and manufacture of therapeutic drugs and vaccines. According to the pharmaceutical market research firm IQVIA, the end market for biopharmaceuticals grew by 12.8% in 2024 (2023: 17.5%) to € 555 billion (or 39.5% of the global pharmaceutical market). The number of monoclonal antibodies (mAbs) being investigated in phase I or II development grew by 6.5% (2023: 17.4%). Although the biopharmaceutical market grew in 2024, inventory destocking remained a headwind to growth across the industry in 2024.

Healthcare

In its latest study from September, IQVIA forecasts growth of 8.8% in 2024 (2023: 10.3%) for the global overall pharmaceutical market. The pharmaceutical market growth rates benefit from new product launches, demographic and epidemiological trends as well as improved access to care. This is balanced by generic and biosimilar product uptake together with stricter price policies.

EMEA (Europe, Middle East and Africa) grew by 8.4% in fiscal 2024 (2023: 8.6%) with the EU4 (Germany, France, Italy, and Spain) plus the UK growing by 6.8% (2023: 8.2%). North America grew by 10.0% (2023: 13.7%) with the United States growing at a rate of 10.1% (2023: 13.8%). The United States remains the biggest and most important pharmaceutical market by far. Latin America achieved double-digit growth of 24.7% (2023: 11.9%) impacted by high inflation. The Asia-Pacific region (excluding China and Japan) has 6.2% growth (2023: 6.7%). China has increased investment in healthcare infrastructure and access to innovative medicines as well as extended price regulations (for example, “National Volume-based Procurement“ directive), lowering growth to 1.5% in 2024 (2023: 4.0%).

Not only the growth of the pharmaceutical sector as a whole, but also the market development for biotechnologically produced active ingredients is relevant to our business. According to IQVIA, these products accounted globally for 39.5% of the pharmaceutical market value (2023: 38.3%). The US remains the most important market with 64.5% share.

The developments in the therapeutic areas of relevance to the Group were characterized by different trends in the reporting year. The global market for type 2 diabetes, excluding the United States, followed the high growth trend of previous years achieving 17.6% in 2024 (2023: 18.8%). The therapeutic area of infertility grew 9.0% in the reporting year (2023: 11.5%) and colorectal cancer continued growing by 2.8% in 2024 (2023: increase of 1.0%) with stronger usage of branded products despite biosimilar market penetration. The market for multiple sclerosis therapies declined by -2.4% (2023: -1.5%), driven by competition from generics.

Electronics

The semiconductor industry is the most important market for our business with materials, solutions and services for integrated circuits production (Semiconductor Solutions). Demand for semiconductor materials primarily depends on the wafer area produced for semiconductors, with silicon wafers serving as an indicator for overall semiconductor materials demand.

According to the global industry association SEMI (October 2024 forecast), the delivered silicon wafer area experienced a -2.5% decline in 2024 (-14.3% in 2023). The industry moved past the 2023 cyclical downturn and began to recover in 2024. However, macroeconomic challenges such as high inflation, high interest rates and changing consumer preferences for services tempered the upswing. Semiconductor manufacturers raised capacity utilization rates despite continued high inventory levels and sluggish end-device demand; nevertheless, demand for materials and related services has increased compared with 2023. However, silicon wafers faced significant excess inventory in 2024, decoupling from actual semiconductor production.

We expect a positive development for the Electronics business sector with continued growth in the semiconductor market in 2025, driven by AI solutions, the Internet of Things and rising data volumes from big data.

With our Display Solutions business (named Optronics since January 1, 2025), we are a significant producer of liquid crystal mixtures, photoresists and OLED materials for the display industry. Following the Covid-19 pandemic´s “lock-down boom”, the display industry experienced demand normalization and signs of gradual recovery in 2023. However, sluggish demand in the fourth quarter of 2023 led to a slight decline in annual growth. In 2024, OMDIA forecasts a 6.0% growth in display area, driven by increased demand for larger TV sizes, replacement demand for IT devices and steady growth in automotive displays. Liquid crystals will remain vital in the display industry, while OLED technology is increasingly important in high-end applications. Additionally, there is growing interest in reactive mesogens for anti-reflective films and barrier materials, which could enhance the flexibility, reliability and longevity of OLED devices.

The automotive coatings and cosmetics markets are crucial to our Surface Solutions business. According to GlobalData´s September 2024 report, global automobile production is expected to decline slightly by -0.4% in 2024 (compared with 10.3% increase in 2023) due to de-stocking after a strong production year and slowing global growth, except in China and India. Euromonitor´s November 2024 report indicates that the beauty and care products market is continuing to grow in the low- to mid-single digits in 2024.