Thank you, everyone, for joining us.
Hi everyone.
I'm Patrick Donnelly, the tools and diagnostics analyst here at Citi. Happy to have Gerald from Bruker here with us. Thanks for being here. Obviously, you know, quite a bit to cover here, so we'll dive right in.
Every day is a new adventure.
New adventure, yeah, exactly. But yeah, Gerald, maybe the elephant in the room, we can just start on NIH, U.S. academic, new headlines almost on a daily basis, rarely positive. So I guess what's your sense as to what's happened these last few weeks? You have the NIH, you have the indirect piece. What are you guys hearing from customers? What's the right way to just think about the impact of Bruker? Because again, obviously the sentiment on the U.S. academic piece is negative. We heard from one peer last night kind of saying it got worse as this year started. So yeah, maybe I'll turn it over to you to just give us a quick backdrop.
Yeah, so first of all, a lot of uncertainty. I think that would be maybe the statement of the week. It's not clear to us or to most of our customers exactly on the academic government side how this is going to play out. Our early view is let's sort of frame it in terms of our overall scale of the business. So if you look at the NIH funding, specifically direct funded for Bruker instruments that are funded by NIH research, it's less than 4% of the total. So I think the question for us, and we are primarily in the direct funded category for our instruments, so indirect funding doesn't directly impact us. But I think the obvious, more significant question is what about the collateral issues associated with that? Is there an ongoing knock-on effect to some of the other academic categories?
And I think it's worth talking a little bit about those in a little more detail. Fundamentally, if you look at the way Bruker is positioned, while we do have a fairly large exposure to academic government research globally, if you start cutting it up into the U.S. markets and into the NIH-related government-funded markets, it's actually quite small. In the big picture, we would say academic government research falls into basically four subcategories for us. There's academic, which would be largely university-funded research. There's government-funded, which is direct, generally speaking in our case. We have medical research hospitals and institutions. Here I'm talking about the Broad Institute, Dana-Farber Cancer Institute, the Anderson Cancer Centers, those types of specific hospital centers which are not generally funded by the NIH. And then finally, a fourth category around philanthropic funding.
So there is a number of those categories, and we would argue probably something close to 60% non-government funded in that category of academic government research. So you got to start kind of carving this back. So Bruker's overall revenue profile is about 76%, 77% ex-U.S. So people forget that even though we are a U.S.-based company, generally speaking, most of our operations are European or Asian revenue-based. So again, roughly 20-plus% is U.S. Carve off that 20%, let's say 30% of that 20% is academic government research. And then within that academic government research category, you need to squeeze what's just government-specifically funded research. Now, the broader question I think we're hearing a lot today in this conference is what about the adjacent pieces, especially in the university field? And here, I think it really remains to be seen.
One could argue that the opportunity right now is to squeeze down the indirect funding activities that are going on in NIH and redirect that funding to a direct category. So theoretically, overall, core research funding could actually go up and indirect funding perhaps go down. And I think that's kind of the expectation that we have from the conversations we've had with our customers is that while there's a lot of turbulence in the system at the moment, that fundamentally there'll come out of it a higher overall value of core research funding that actually occurs. And then again, what does this mean for other markets outside of the U.S.? We have not seen any spillover impact in either academic government research segment categories outside the U.S.
I have been having this conversation with quite a few investors today also about what would this mean if there was a more modest or even significant cut in NIH funding. I think the general consensus, at least, and we attempted to measure some of that, Patrick, in the Q4 earnings call, and that was roughly our target was. Let's say we had an 8% reduction in NIH funding. Generally speaking, our view was that that would turn out to be something like $15-$20 million of impact for Bruker, and we would have baked that into our basic overall 25 guide. Now, if this stretches to be much, I think what's more likely to happen is that funding will get itself resolved by Congress.
And some of you may recall in Trump 1.0, there was a bipartisan support, a lot of noise in this area, similar, maybe not quite as extreme, but a lot of noise, and ultimately bipartisan support for additional funding for NIH in that period. So it remains to be seen where this all goes, but I think fundamentally still quite a bit of uncertainty. That will likely lead to some pause in order demand in the academic and government research field. Certainly, I would think for the first quarter until we start to see some clarity around that. So I just think it means for a little more turbulence in the order book for Q1, and then hopefully we start to see some kind of stabilization in the US.
But I remind you that the scale of the impact to us is relatively modest on the NIH direct funded, and even in the academic government research category for the U.S., it's still relatively small for Bruker overall exposure.
Yeah, okay. That's a helpful overview. I guess when you think about where you finished there, the turbulence, I think you called it, for the 1Q orders, I guess is that what you're seeing? It's been a couple of months now, I guess, for 1Q. Again, this feels like it's intensified a little bit over the past month or so. I guess what have those customer conversations been like? Is it very much, hey, we need to get some level of certainty before we move forward? What are the instrument conversations like?
Yeah, I mean, most of the conversations that we've been having are largely with non-U.S. players. The market dynamics there in the academic government research category seems quite strong or solid. I mean, we've had stable growth over the last few quarters in that category. I would say in the fourth quarter, we were okay from an academic and government research category. From an orders bookings perspective, good, solid book-to-bill in the fourth quarter. So fundamentally, we feel pretty good about, again, separate the U.S. piece. I know we're sitting here in the United States, but fundamentally it feels like the other parts of the globe are still marching forward with their research work. That's what we're hearing.
Yeah. And I guess just to kind of think about the financial impact, I mean, I know you guys have a backlog. The orders are obviously leading the way. I guess would you think of the near-term revenue and EPS impact being more limited and the impact being more on the bookings backlog side? What's the right way to just frame up what you're seeing and how quickly that could reflect itself?
When we look at the original guide that we have, which I think is at this stage the best information we have, we're pretty positive about it. I mean, basically it shows a step up quarter by quarter, a weaker Q1, a stronger second quarter, a stronger third, and a much stronger fourth. I mean, that's kind of the cadence we're expecting. On the order book, I would, like I just said, I think there'll likely be some uncertainty, especially in the United States related to order performance in the first quarter. Our general view is that we've got some really good positive momentum in a number of areas. We highlighted on the earnings call for the fourth quarter, biopharma. We've seen this is the second quarter in a row where we saw organic biopharma improvement on the order bookings. So these are good signals for us.
I would say looking at the January order book as well, that seemed to be quite solid for biopharma, and this is pretty broad from a biopharma perspective. This is maybe excluding CRO demand across large pharma, smaller pharma, even some biotech improvement, so I would say biopharma looks like it's got some momentum into the semi side of our business, which I think we've talked about with you in the past, continues to perform extremely well for us. We had double-digit organic growth on the revenue line and on the order booking side, and that's all also really quite encouraging. That doesn't seem to be abating in 2025. We highlighted on the call also our MALDI Biotyper and ELITech businesses and molecular diagnostics. Those appear to be quite solid performance, certainly in the fourth quarter, and we would expect to continue to see that.
Those are mostly ex-US, but certainly good signals across those categories.
Yeah. So I mean, I guess just taking a look at what you just said there in terms of the build of revenue as you're working with here, does this the past month and a half in the academic change anything in terms of the level of confidence? Does it change maybe the way how you get there? I know you guys typically build in some level of cushion. Are we now maybe some of that cushion's gone? And again, areas like biopharma and semis, that there was conservatism, those step up and academic eases. Maybe what's the right way to think about just those?
Yeah, I mean, I think it's a little early for us to say. I mean, by the time we get exactly where we're going to go, I don't have any information today that suggests we should rethink what our assumptions were even around the academic and government research side specifically. We've got other markets, other global markets where we can play through that. We haven't talked about China, but sort of we did see some orders coming through in the fourth quarter, and I would expect to continue to see some of that maybe a little abated because of the Chinese New Year in the first quarter. But again, order performance in China could also be a good indicator of a better performance more broadly for the 2025 year.
Okay. And maybe one last one on U.S. academic, and then we'll move plenty of other things to talk about, obviously.
Sure.
But I guess in your conversations, you mentioned we'll go through the proposal process, which as we saw in 1.0, as you mentioned, there's some big numbers and then what was actually implemented were quite different. I guess from your conversations, from your guys' view, what changes, what gets a level of stability into U.S. academic? It's uncertainty right now. It's these headlines, right? It's the volatility. Do we just need to get past the proposal and then see what's actually implemented? And then even if it is lower, maybe it's higher, just that knowledge and transparency into what's happening, people can step back in. What's your view?
I think certainty is really important here. I mean, at some point, and I've talked about this with a few investors today, the U.S. doesn't want to compromise its leading position in medical research, not only from a funding perspective, but from a scientific community perspective. So I think uncertainty over multiple quarters would really not be in the United States. And certainly, cutting-edge research work is going to occur in other countries. So you need, in order to be competitive, the United States needs to continue to move in this direction. I think it's just a question of how long is this going to take. So certainty would be the number one priority, I think, if I'm guiding and I'm not the administration, that certainty, even bad news, would be better to have it come out if that's what it's going to be.
If it's about reallocating funds between direct and indirect and putting more funding into high-impact research projects for which many of our instruments are properly suited, it would seem to me that we'd want to get that going sooner rather than later in the United States. People forget that China in particular is a really cutting-edge country and doing deep cutting-edge research in the proteomics field. The longer this goes on, I think the more this actually could benefit the Chinese research community in a different way. So we sell our products to those that fund them. So the hope is that the United States will kind of move itself faster in this. I mean, one final thing I talked about is we should not forget that generally speaking, the new leaders of these agencies do have a quite significant science background.
So it's not as if they're coming from positions where they don't understand or appreciate scientific discovery. I think generally speaking, they do. It's going to be a question of getting the clarity faster and deciding on what projects are going to get funded and when.
Yep. So it sounds like maybe a couple quarters of order volatility. Is that the way?
Yeah, I would certainly think the first quarter. I mean, I would hope that the Trump administration will move more quickly to get certainty out there so we stop this kind of pause. But my guess is that some of it may spill into the second quarter.
Okay. Okay, fair enough. And then, yeah, I mean, maybe we can talk about some other parts of the portfolio. Again, you mentioned biopharma, an area I know you guys are leaning into a lot more. It feels like maybe that can pick up and offset some of this. So yeah, maybe talk about what you're seeing in that market, what you're hearing, and what verticals are doing well for you guys there.
Yeah, generally speaking, I mean, as you know, we did a number of acquisitions where part of those were targeted towards a heavier lean into biopharma. We're somewhat underexposed in that space. And I think fundamentally we've seen some really good take-up, particularly from our Chemspeed business, focus on pharmaceutical labs and workflow automation. The digitization of the ability to move samples and liquids around varying instruments across the lab is really a key piece that seems to be resonating well with large pharma in particular. We also saw some improvement in the chemical industry in that category. So I think large pharma just generally have focus on some of our high-end proteomics products, both spatial proteomics and the Canopy area. You just came back from Florida where we talked a little bit about Canopy.
But beyond that, our full timsTOF line, the sort of the high-end proteomics research instruments, workhorse units that are being used for protein identification and discovery. So those, I'd say generally speaking, some pickup in the large pharma space. We also have a few specialty pharma companies that are focused on cellular analysis. And those are, that's more coming out of our former PhenomeX BCA business. And I think we saw some improvement there as well, I would say, in the fourth quarter. NanoString, and you talked a little bit about that with some of my colleagues down in Florida, but NanoString had a good solid fourth quarter from an order bookings perspective. We feel like we're quite favorable and confident now moving forward. We've now moved NanoString Canopy and our Spatial Genomics business into a spatial biology division. And we took out some costs associated with that.
But those businesses continue to do a bit better than where they were, I'd say, a year or so ago. So yeah, I think generally speaking, we saw some improvement in India and in the CRO side, not so much in China. But overall, I think the story for pharma seems to be some recovery, likely a staged recovery over a period of quarters here, but very encouraging from my perspective. That's a market that's important for us.
Yeah, for sure. I mean, and you mentioned NanoString, maybe we could touch on that. I think you guys are run rate a little over $100 million, $110 million.
110 is what we.
Yeah, I guess maybe talk about the moving pieces, again, some intros down at AGBT Street. What you're seeing there, and we can certainly get into the margins and dilution at some point, but I guess, A, the technology offering and confidence at 110, and then just the litigation IP landscape would be helpful to talk through as well.
Yeah. I mean, it's been a really interesting business. I was in Seattle in the latter part of 2024, and that's where the headquarters of that business is. Really, I mean, I would say coming out of some challenging period for the NanoString employees, it was really encouraging to see how encouraged they were about having Bruker being involved here now. They know we're a leading technology company, and they're very excited to be a part of it. I mean, a lot of consolidation activity has occurred in that business. I do really like the idea that we have now one leader whom I think you met, an impressive guy. From a strategic perspective, having the ability to combine our NanoString Canopy and Spatial Genomics businesses together gives good synergies for us. I think it allows us to take some costs out of the mix as well.
Overall, I was encouraged about what we saw for the fourth quarter performance on both on revenue and certainly on orders. They're working in difficult conditions, both from a biopharma perspective and also on the academic and government research side. So I think they appear to be stable and moving forward in a positive way. I mean, I think the technology platform you saw earlier this week seems to be really well established. We are very confident in the quality of that platform and our ability to do the full transcriptome. It's exciting from a research perspective to be able to have that kind of degree of sensitivity and throughput capability.
I don't think there's another player, including one of the top players that has that kind of capability at this stage, and we're now being able to expand the scale of that technology to be able to look at proteins and other kind of multi-omic elements. So I think the overall technology platform is quite strong, and we're building, as I think you saw in AGBT, we're building more products around that platform. So it's quite exciting. On the litigation front, I would say generally there's been some interesting developments over the last probably five or six months. A lot of what I would describe as the litigation overhang related to NanoString to be washed away. Part of the injunction was lifted, as you know, in Europe for the CosMx products. So no injunctions anywhere in the world relative to the CosMx product. Stabilized the nCounter product in that environment.
I would say relative to what's left, the 10x Genomics approach doesn't seem to have been terribly successful. I guess I would say at least in the European courts, specifically in both the European settings related to the NanoString situation. And I guess we have a slightly different view than they do on the Vizgen situation, but it appears as if that matter has been largely settled. We were an observer there, and so hopefully we're anxious to get our case kind of resolved on the CosMx side. And the genomics piece, there's been a little bit of recent news about that in the early part of February. We have the right to sell consumables in the United States. We continue to think will be a positive for us. That's the bulk of the revenue coming out of that product line.
And whatever the outcome likely is going to get appealed. So there's going to be an ongoing activity, at least with a smaller portion of the revenue for the genomics product. And CosMx feels like we're kind of moving in the right direction with respect to that one.
Okay, and then, yeah, maybe just the dilution. Talking through, obviously, you guys talked a little bit about what to expect for 2025 and then going forward. It'd be helpful just to talk through the levers and the cost side on that.
Sure. Yeah. So coming out of the acquisition that we did with NanoString, we were targeting roughly about $0.15-$0.25 of dilution for 2024. We came in roughly at around $0.20, so a little bit better than what we had initially thought. With respect to 2025, our expectation is around $0.08-$0.10 of EPS dilution coming from NanoString. That's about half of what it was in 2024. So we've taken some really significant cost action there, consolidation of facilities, some reductions in force. We've moved a lot of our R&D and our sales and marketing activities together into this spatial biology division to drive some of the further synergies there. I think generally speaking, that plan has continued.
We have improvements that we are making with respect to the gross margin profile of that business, mostly driven by some insourcing activities that we have planned and some improvements in the whole supply chain procurement area related to NanoString. And then I do think the synergies of being in a broader or a bigger division will also help from a sales and marketing perspective. So the teams are selling the spatial genomics products, the Canopy products, as well as the NanoString products now. So I think we've got kind of the right scale going on in that business, Patrick. And then so we have kind of committed to those targets from an EPS perspective for 2025, and the business is committed to working through those irrespective of kind of how the market dynamics play out for 2025. So it feels good.
I think generally speaking on the NanoString, quite positive about the technology, the people, and certainly the outlook for it.
Yep. Okay. And then maybe the semi business. I mean, you mentioned that obviously a nice area to be in at the moment. I think that posted teens growth last year, 8% or so of revs. So maybe just talk through, I guess, what obviously it's pretty clear what the uplifts are. I think it's about half tied to some of the AI stuff that's going on. But what's the right way to think about just the potential for that business as we work our way forward? Again, you mentioned it could be a nice positive offset, if any.
Yeah. I mean, I think it's good secular trends. You've got the onshoring activity in the United States and in Europe, and as some of you likely know, there's nine or so facilities that are being constructed right now in Japan in this space. I think the secular trends associated with not just AI, but just more broadly onshoring activities are really quite positive for the semi space and generally speaking, specifically for Bruker. I think what we are expecting, we're generating above corporate average margin performance from that business and continue to expect to deliver that going forward. We've had quite a bit of growth, I mean, over the last three, four years. I'd say double digit in many cases, well above teens growth.
I don't know that that's overall sustainable for another three to four years, but maybe mostly assuming kind of high single digits growth in that business, but with really good margin profile. That's a great story for us. A good strong business with good order performance and good.
Yep.
Happy to have more of it.
Yeah. No, for sure. I mean, and you mentioned obviously the margin profile of that business. Margin's always a discussion with you guys. I think in terms of the guide, you talked about 140 basis points or so this year. So maybe just talk through the key levers. Again, you mentioned things like semis are going to help, obviously. But yeah, maybe the key levers both on the cost side and then the revenue growth and just the confidence in that margin expansion opportunity.
Yeah. Look, we put up 300 basis points of organic expansion in the fourth quarter. So we're pretty confident that we can do something for sure in 2025. The way we're looking at it right now is if you cut it up, we have some dilution still coming from M&A. We estimate that's probably somewhere in the 50 basis points category. We do have some foreign exchange tailwind that helps us at least on the operating margin line a little bit at the moment. We'll see what happens with foreign exchange going forward. So we're thinking that we're north of 150 plus of organic operating margin expansion, mostly from the core business. And we've got good strong performance in semi. Our microbiology and infectious disease business is performing really well.
Biopharma, assuming we get some continued strength there, generally really helps us on the operating margin line at the organic level. Yeah. I mean, even our industrial businesses have performed quite well, generally speaking, on the organic side. We continue to push hard, especially for new product development, to push down our production costs on those new instruments. And we still have, generally speaking, a number one or number two market position for most of our products. So we have some pricing flexibility, so overall, expect to see some continued gross margin improvement in 2025, especially if some of the other markets, even outside the U.S., continue to improve as we've seen.
Yep. And I guess on the margins, you mentioned revenue, obviously has that more of a second half weight.
Yep.
How do you think about the margins as we work our way through the year? What's the right way to think about it?
Yeah. I think it's going to be just between orders and some of the uncertainty as we've now heard for the U.S., I think the first quarter is going to be weaker. We gained some color on our guide with respect to the first quarter. I think you're going to start to see sequential improvement quarter after quarter on the operating margin line with a very strong fourth quarter. Some of you may know when we get very large volume, we get a very good drop down to the operating margin line. And we saw that for sure in the fourth quarter of 2024. And we would expect to see that again in the fourth quarter of 2025. So more heavily weighted revenue performance to the second half, certainly a strong performance again in the fourth quarter.
Yep. And I know you guys have talked about that you gave that LRP 125 basis points a year of margin. I guess where are the continued opportunities? I think that's a multi-year, three years or so. How do you think about the key opportunities to continue to drive, obviously well above peers in terms of that expansion piece?
Yeah. At the operating margin level, I mean, I think we still have a lot of levers to play with. We're very committed to operating expense management, very disciplined management. I think we showed that in the third and the fourth quarters when we communicated some softness in biopharma in China. We immediately moved to control those OpEx elements, and I think we did a very good job of that in the third and the fourth quarters, so we will continue that, I mean, for sure, as it relates specifically to the forward years. I mean, we're not done with consolidation and even looking at our core businesses. There are some opportunities there for additional OpEx, but it's mostly going to come from the gross margin line, and I think not only is it about having superior products in the innovation side, it allows us to have significant pricing flexibility.
We continue to exercise that. Inflation or no inflation, the quality of the product really allows us to increase our pricing power relative to our peers. And then we spend a lot of time on operational excellence, everything from pushing costs down, better procurement, sharing procurement activities across our businesses, looking at opportunities to drive better cost reduction activities. And this is an ongoing operational excellence activity that we handle regularly. So what I'd say about that, there's plenty of room. And as some of you know, we're moving or continue to move pretty heavily into a better mix situation. Our Project Accelerate 2.0 mix is now over 60% of our total revenue profile. Those by nature have higher gross margins and higher revenue profiles for growth profiles. So that's part of the plan. Let's just keep doing more of what we have been doing with respect to that.
Yep, and I guess to your point in terms of having room on the cost side, you mentioned a few other times we were able to pull levers. I guess when you think about this backdrop where there's all this fear, at least from the outside, what's your ability or confidence level on the earnings number to protect that if there is volatility on the orders and top line? Obviously, you guys put out a number this year, so just curious in terms of the confidence level there and how much you do have to protect it on the margins.
I mean, I think we're pretty confident. I look at when you look at the accomplishments of what occurred in 2024, where we did 11 acquisitions and we integrated those in the key acquisitions, Chemspeed, ELITech, and NanoString, I think we demonstrated our ability to integrate those within the organization and generate the kind of expected savings that we needed to hold to kind of the dilution levels that we had set out. So I'm pretty confident. I mean, we generally speaking are pretty conservative in our overall guide for the year. We've got a lot of levers to pull. We are a larger company than we were, almost 20% larger than we were a year ago. And fundamentally, we've got good cost containment in the areas that we know we need to contain. So yeah, we're quite confident about where we are right now.
Yep. Okay. And then maybe you just mentioned ELITechGroup there. That was a deal pretty well received. Again, relatively nice accretion on that front. Maybe just talk about the progress on that deal, what the accretion looks like. Obviously, it was helpful last year. Curious what about it this year is. But yeah, what's the reception been? How's that been?
Yeah. I mean, first of all, I think the street liked that particular transaction, and so did I as a CFO. I like accretion. I mean, the overall performance of the business has been quite good. I think we saw improvements in the overall numbers from a unit placed perspective. I mean, as some of you may know, it's a molecular diagnostics business. It's mostly European focused. It fits really neatly into our overall European profile. So the countries in which we are strong, they had weakness. In the countries they were strong, we didn't have much profile in. So I think it was a really good fit. Fundamentally, more units placed than we expected. Good pull-through from a consumables perspective. It's about 70% of the business is consumables.
One of the targets that we had in acquiring that business was to continue to increase the overall aftermarket elements of our revenue, which is now about greater than 30% of our total revenue base. I think it ticked all the boxes that I was expecting it to. It delivered the revenue growth as we expected in 2024. We got the margin profile that was expected. We've now integrated that with a relatively smaller Hain Lifescience business that we had acquired before. We now have a bigger scale in that business. We've also, I think the basic end market being mid-sized hospitals is also a really good market for that particular business. It's esoteric assays for more unusual viral detection elements. I think it's really got the right market in this mid-size.
So we're not bumping up against the Roches and the Abbotts of the world from a market segment perspective. It's a really good sweet spot. I think generally it's very happy with the acquisition. I mean, you continue to hear more about it, but fundamentally, I'd say we got a little more integration to do in a couple of other areas, but fundamentally, we're well on our way with that particular acquisition. Very pleased with how it's gone.
Again, I mean, the accretion part, it seems like it's been nicely out of there.
Yeah, it has. I'm sorry I didn't respond to that. But generally speaking, I would say it's accretive to EPS probably at the $0.15-$0.20.
Okay. For the.
For 25, so it's significant for us going forward, and this is a business we'll continue to expand. This is a business that's generating high single digits or double-digit revenue growth soon to be organic.
Yep. Yeah. That'll be nice. And then, yeah, we haven't spent a ton of time on China. I know you guys called out some stimulus orders. I think it was about $15 million second half there.
Yeah. That's right.
What's the right way to think about the pace of activity? What's baked in guide? Maybe just walk us through what you guys are seeing there.
Yeah. So I guess with respect to China, sort of a mixed story. With respect to 2025, we're mostly assuming moderate growth off of relatively low base. I mean, I think that's the way to think about this. It's not very aggressive. If you layer on a little bit of stimulus program for China, which we've seen some in the fourth quarter, we hope to see a little bit in the first and the second quarter. I think that could be helpful from a growth perspective for Bruker ultimately. Actually, our overall business in China has been reasonably healthy. Again, if you steer away from the stimulus program from 2023 and you carve that off, we've continued to see non-stimulus related orders in industrial, in the academic and government research field, in the semi space. So there are still signs of life in China.
I think the overall economic performance of that country has been a little bit underestimated, I think. Our expectation is going to be kind of moderate growth for 2025, starting to strengthen thereafter. That's kind of our general view. We've been talking with a lot of investors today about made in China. I would say we sort of have a mixed story there. We do not have production activities in China. We have no R&D going on in China. So fundamentally for us, there's still an interesting market opportunity. I would say that we're very sensitive to the intellectual property elements being as we are. So China continues to be a challenge for us on that front. But we do have some more mature products that we could consider potentially for production in China.
And that could ultimately be an interesting option for us going forward. I don't expect us to ever have the scale that some of our peers do in that environment. But nonetheless, there could be some selected pockets of products where we could have production activity, which would open at least some government research markets where RFP restrictions are. If you don't have a made in China stamp on those products, you have some restrictions. So.
Yeah. I guess to that point, I mean, I know when there were the import licenses in January, it was a big discussion point around you guys. I guess what I know it's always been there's always been delays shipping into China for you guys. It's particularly new. But what have you seen since then? Is it incrementally disruptive or what's the right way to describe it?
Yeah. Not a lot of difference actually for us on the China side. A lot of our products that are shipped into China are actually not coming from the U.S. So there were some export restrictions out of Germany that have been mostly resolved. But I'd say 90% of our revenue performance in China is coming from Europe or Malaysia, not from the United States. So not as much kind of noise activity, if I can say it that way, with respect to U.S.-China pieces. And you may have been referring to sort of the top-down question here in the United States. And that sort of got resolved as our products are designed and engineered for bottoms-up proteomics purposes. So that wasn't really impacting us at all.
But yeah, I mean, even in the semi space, we've had some impact, but a relative impact in restrictions or the ability to sell products back into China seems okay so far.
Yep, and then maybe just on the tariff side, both China and then there's rumors and headlines about Europe as well. Obviously, you guys have a significant presence in Europe. How are you kind of handling what the headlines say? What's the right way to just think about the potential impact if there ever is?
Yeah. So again, this is another area of pretty significant uncertainty. One week there's tariffs on Canada, and then maybe it's not, then it's off again perhaps. With respect to your question about the tariffs, it's actually kind of difficult for us to judge. Relative to the China-U.S. dynamic, I think we've sized that. And as I said, generally speaking, there's not much risk to Bruker because there's a limited amount of U.S. product going into China direct. The issue of European tariffs are really also a little foggy. It's not clear exactly what products would be swept in. This hasn't been, as far as we know, at this stage. It's pretty early days. We have roughly, as I said before, say 23% or so of our overall business is U.S.-based.
How much of that would be impacted really depends on the nature of product restrictions or what the tariffs would be, and then someone asked me today, "What do you think about the size of the tariffs?" Again, I don't set those policies. If those tariffs were relatively modest between Europe and the United States, we would probably simply do price adjustments for those. If this was a much more significant tariff to be applied to European products and they were impacted on our products, we would take a good hard look at whether or not we would consider manufacturing activities in the United States. Some of you may know Bruker prior to my time, but at some point did have manufacturing facilities in the United States related to our NMR systems and also our mass spec systems.
So we would, of course, consider depending on the economics, potentially moving some of that manufacturing back to the U.S., similar to what some of the other large technology-based companies have done in the U.S. So we'll look at that when we know basically what our products are, but we're able and willing to do that under the right economic circumstances.
Okay. We're right at the end of time. Covered a lot of ground. Thanks, Gerald.
Good to see you. Thank you all.