Welcome everyone to Westborough, Massachusetts. Thanks for joining us here at the Paul facility. I'll leave the obligatory weather jokes and how cold the room is for Ryan or Jennifer here shortly. For those of you who haven't met yet, Matt Cugino, Vice President of Investor Relations here at Danaher. It really is an exciting day though for us.
First time really since the acquisition of Pall 3 years ago that we've had folks here at the facility to see the tremendous progress that we've made on the business. First, just forward looking statements. I'm not going to go through all of these, but I do need to say today's presentation may include forward looking statements and actual results may differ materially from these statements. Please refer to the slides for more information. Just on the agenda, we have a great day for you.
First, Rainer Blair, our Executive Vice President of our Life Sciences platform. He's going to come up and give an overview of the Life Sciences platform. Then Jennifer Honeycutt, our President of Pall, is going to come up and give an overview of Pall. And then her team is going to come up and give some more details around the key priorities at acquisition that we really were faced with and how we've executed on those so far. Jennifer is going to finish with a short summary.
Her and Ryan are going to take Q and A. And then a little bit after 2 o'clock, the webcast portion of the event will end. We're going to break into tour groups for our gemba walks. We'll spend about 2 hours going through a couple of stops within the facility, and then we'll head downstairs back in the tent. Hopefully, it's a little bit drier than for a cocktail hour from 4 to 5 P.
M. So I think we have a great day for you. With that, bring up Ryan and get started.
Thank you, Matt, and good afternoon, everybody. Welcome to Paul's Westborough site. This is a working site, which you will see later when we go on our Gemba tour, our tour to where the action is. We have got a warm embrace from the storm Florence here. So thanks for all of you for sticking with your travel plans and getting here.
So why don't we jump right into it. And let's talk about where Danaher sits today. So Danaher today, and these are 2017 full year numbers, is a $18,000,000,000 plus enterprise consisting of roughly 25 operating companies that are organized in 4 reporting segments and 5 operating platforms. Now our operating companies typically operate quite independently. They have outstanding operating models with high installed bases and strong recurring revenues, and they're underpinned by some outstanding secular growth drivers, which we'll talk about in a minute.
Now you might also be aware that in July we announced the spin of our dental business. We look to complete that spin by the second half of next year. One other point, our life sciences business, you'll see that in a minute, is about $6,000,000,000 We have the IDT logo on there, so if you add that, we're well over $6,000,000,000 So how do we create leverage with 25 operating companies? Well we do that both at the Danaher as well as the platform level, particularly with the Danaher business system, which you'll hear a great deal about. Also with our M and A capabilities and talent, and then especially in high growth markets with some additional commercial synergies.
So in essence we're a multi industry science and technology portfolio and we're competitively advantaged by our operating company's centric operating model that we bring additional leverage to. So let's have a closer look here then at the life sciences with our global brands and our high performance solutions, we compete for share gain in about a $40,000,000,000 total addressable market. In fact, as I just mentioned, we're right around $6,000,000,000 well into that, mid single digit plus growth and EBITDA margins that are well above 25%. As you look at our revenue mix, you can see our bias for razor razorbladebusinessmodels with our high consumables to equipment ratio. And we've got great revenue diversification from both geography as well as an end market perspective.
I'd like to call out particularly our high growth market and biopharma positions here. So strong global brands with leading market positions. So how did we build the platform? Well, it all started back in the day and some of you were there with Leica Microsystems. And since then we've acquired over 25 companies and deployed in excess of $21,000,000,000 of capital building out the platform.
And what we typically do is we'll identify an attractive scaled adjacencies with very attractive secular growth drivers, and then we'll take a large position by acquiring one of the leading companies. And there are plenty of examples here Leica, Saix, Beckman, Coulter, Pall and most recently, IVT. And what we'll do then is we'll typically round that portfolio looking to fill specific gaps to improve competitiveness or positioning with additional bolt ons and lots of examples here as well, Zytogen, Agila, Phenomenex and IDBS just to mention, a few. But as important is the application of the Danaher playbook, and we'll talk about that in great detail throughout the day. The Danaher playbook that assembly and thoughtfully applied set of Danaher tools, DBS tools that really drive value.
So how do we apply that? Well here at the platform level, essentially what we do is we simplify processes, we remove waste, we drive down cost of goods sold and G and A. And then with that earn the right to reinvest into the business, both from a sales and marketing as well as an R and D, so innovation perspective. And we accelerate those processes as well. So with that combination, both of being able to execute these M and A transactions, as well as applying the Dan and her playbook, we're able to create tremendous value.
And you can see some of the numbers here, we've more than doubled the revenue of the platform over the last years, changed the growth trajectory from low single digits to mid single digits plus, really changed the structure of the revenue from 35% to 65% recurring and expanded gross margins. Those expanded gross margins of course come from the cost of goods, improvements that we make with various processes, but they also come from pricing. So we're not buying the growth with price. We continue to create value also with the price lever. And all of this, of course, then levers up to the extraordinary EBITDA margin improvement that you see here with those being well over 25%.
So really the application of the Danaher playbook with our Danaher Business System toolset, along with our ability to execute deals, really results in extraordinary value creation, and has changed the growth trajectory as well as the operating, as well as the earnings trajectory of the platform. So how do we win in Life Sciences? Well it's really based on 4 pillars. And as I mentioned earlier, we think long and hard, in fact it's central to our growth strategy to be exposed to the right end markets. And here we're looking for those secular growth drivers, more to come on that.
But as you think about the Biologics market and that transition As you think about genomics, which are the analysis of the basic building blocks of life, which so much have contributed to our understanding of downstream proteins and cell biology and so forth, extraordinary growth central to the growth strategy is being So central to the growth strategy is being exposed to those attractive end markets. From an innovation perspective, here we're really focusing on high performance proprietary solutions that matter. They matter to our customers because we're advancing their science. We are solving for their pain points, as well as they matter to us in terms of driving the top and the bottom lines. So very important.
Now because they're proprietary, they're unusually sticky, they require an extraordinary amount of customer intimacy, and there we see also additional opportunity for price leverage. Now you see we've increased our R and D investment by 10% every year over the last 3 years, again funded by our capabilities through the Danner playbook. From a commercial perspective, our global sales teams, these are high-tech experts that aren't just selling gear, they're helping our customers advance their science. In fact, they're also supported by a Cracker Jack service team that helps our customers succeed in their experiments. In fact, for us service is a high growth aftermarket channel through which we are able to deploy our differentiated service portfolio on the one hand, and on the other hand we also inform our innovation funnel.
So you see that growth that we show here, our service businesses have been growing high single digits for quite some time and contributed significantly to our growth trajectory. Now in high growth regions, we're indexing to China and India as those countries are innovating in their own right and moving from basic research to applied testing, providing great growth tailwind as well. And we've done well here in China with well into the double digits growth over the last 3 years. So this is our winning formula and it's really done well for us here over the years. And we're going to continue to accelerate down this path as we move forward.
So now let's have a closer look at some of those end markets and the dynamics that are driving those since it's so central to our growth strategy. If you look at the X axis you see in percentage terms the revenue distribution of the platform. If you look at the Y axis, you see the different operating companies and where they participate. We talked about Biologics, another 20% plus year over year growth in the approval pipeline of biologics. Gene and cell therapy are the next frontier here in attracting 1,000,000,000 of dollars in research and really driving our growth.
Our exposure here is extraordinary, $1,500,000,000 just in biologics, another half almost $500,000,000 in genomics, so roughly $2,000,000,000 of exposure there. In the industrial markets, we're very keen to focus on the most attractive verticals. Here we're trying to avoid cyclicality associated with high capital expenditure type businesses and really focusing on those businesses that are more consumable or operating cost oriented. And a great example for us here is our microelectronics business. You'll see some of that when we go on our walk and our tour later.
But here we're benefiting from the IoT tailwinds as the entire world sensors up just about anything you can imagine. From the applied market perspective, you're all very familiar with the pressure that population growth is putting both on the food supply as well as the environment. And with that, governments are starting to expand their increasing testing frequency. So we have additional levered growth there as a tailwind. From a research and academic perspective, these are markets that are typically characterized by anemic government or public budgets.
And so we are very precise in terms of our targeting the translational research segment. This is where our high performance solutions are used by scientists with direct applicability in businesses where there is more of a profit driver. Lastly, in the clinical markets, there we're driving our high performance solutions to physicians where they can create significant clinical value to improve the health of their patients. So this topic of really dialing in the portfolio to the appropriate end markets with a good degree of diversification, while ensuring that we have a great exposure to those most attractive end markets is critical to our strategy. Now let's take a closer look at our Biologics business.
You see here the high level industry workflow from left to right. Lead generation and optimization is where the story begins and it goes all the way through drug production. And you see then just below that how attractive the growth rates are in these individual steps and portions of the workflow, as well as our extraordinary positioning there. In fact, our positioning is unique in this market in terms of its penetration on both the development side, as well as the production side. And the value proposition that we bring, credibly bring to our customers is to help them accelerate the time to market of their life saving drugs.
And needless to say, the revenues that are associated with that as well. Once again, we have $1,500,000,000 of exposure here. And if you think about Pall, about a third of Pall today is the Biotech business. It's an A plus business, very sticky, practically 100% consumables. We're going to hear a lot more about that from Jennifer and the team in just a little bit.
Now let's have a look at an example of the role that the Danaher playbook plays in innovation. When we acquired Beckman Coulter some years back, the Life Sciences business was essentially flat, so no growth really. And in fact, only 3 new products had been launched 3 years prior to the transaction. Well, the team there once again in a tailor made fashion took the Danaher toolset and applied it to the specific needs of the Beckman Life Sciences business, reduce the G and A, reduce the cost of goods sold, earn the right to reinvest into the business and deploy additional resources in R and D and sales and marketing. And this has resulted in a veritable bonanza of new product launches, 20 here in the last 3 years, which have fundamentally changed both the growth and the earnings trajectory of this business, mid single digit plus all day long with extraordinary operating margin expansion.
And we've shown here just a couple good examples of some of those innovations. The Biomek I Series, a proprietary liquid handling platform that is top of the heap in the market and readily taking share. The CytoFlex LX flow cytometer, high end flow cytometer for researchers that are looking to improve the efficacy of cell based diagnosis downstream, also proprietary solution really taking a great deal of share. So you see once again the Danaher playbook in action here, driving innovation, driving commercial expansion, and with that extraordinary growth and earnings improvement. So we talk about the Danaher playbook, and we've done that for some time.
And in years past that playbook would have been characterized as a bit rigid on the one hand, and quite a bit focused on lean and operations, so sort of on the shop floor. That's how we used to run the playbook. But over the years and for some time now, we've added additional tools to the tool set, which consists of growth tools, lean tools and leadership tools. And really there are 3 inputs to how we then tailor the Danaher playbook to a specific acquisition. 1, the needs of the leadership team of those operating companies, those come first, they're closest to the business.
2nd, the deal hypothesis that we had at the outset. And then lastly, our findings and due diligence. And those combine then to allow us to apply the Danaher playbook in a tailor made fashion to the specific needs of the acquisition or a specific business. And we've got some examples here, IDT, the deal hypothesis was that we wanted exposure in a scaled fashion in the very attractive genomics reagents business. And at the same time, we found opportunity to build scale globally, taking full advantage of the Danaher infrastructure.
Enhanced commercial execution, we have great tools for that and you'll see some of those today, as well as expand our portfolio with some of those innovation tools that we have. If you look at Phenomenex outstanding high value consumables that are closely adjacent to our mass spec franchise at SCIEX, really an outstanding acquisition for us. But once again, we saw opportunities here to enhance the go to market competency, create more operating leverage, as well as then scale this business globally. And then lastly and very differently, Pall, our largest acquisition to date, which we'll speak of today in much more detail, here we wanted a globally scaled franchise that really exposed us to those attractive end markets that we've been talking about. But at the same time, we saw opportunity to accelerate innovation, improve our overall operational execution, while at the same time reducing cost.
So once again you see how we take that Danaher business system and the associated toolset and we tailor it to the specific needs of any given opportunity here in order to create extraordinary value. So let's talk about that value. You can see here on the left graphically the extraordinary revenue growth, in fact we've well over doubled the revenue here in
the last
years, changed the growth trajectory from low singles to mid single digit plus growth, expanded those gross margins and all of that levers up then to an extraordinary operating profit expansion. Here you see it at well over 8 50 basis points, which results in a well over 20% operating profit CAGR here over the last 5 years. So extraordinary value creation, once again the ability to apply that Danaher playbook with the associated tools and to be able to execute on M and A extraordinary value creation. So let me summarize then. Then.
The life science portfolio evolution has really changed the structure of our revenue significantly, more recurring revenue than previously, and at the same time expanded our exposure to those very attractive end markets. Better commercial as well as innovation execution, once again enabled by the Danner Business System tools and our ability to execute on M and A has enhanced our growth and our earnings trajectory. Lastly, the Danaher playbook is tailor made. And today you'll hear from our Pall leaders how they've taken that set of DBS tools and put them together in a playbook that has significantly improved the business at Pall since acquisition. So with that what I'd like to do is I'd like to introduce the President of Pall, Jennifer Honeycutt.
Jennifer joined us 18 years ago as a lab chemist in the water business back in the day and has since garnered increasing responsibility over the years running several businesses for us. In fact, prior to joining Paul, she was the President of Beckman Life Sciences. You saw some of that innovation story there, Jennifer can tell you that firsthand. And today, we couldn't be more pleased. She joined Paul the 1st January 2017 and hasn't looked back since.
So thank you and Jennifer please join us up here.
Thank you, Rainer. Good afternoon everybody and welcome to Westboro. It's exciting day for Paul and the entire team here to be with you to tell you about our story. The Ira team has done a great job putting this all together for us. I'm not sure, however, whether we should be issuing water wings or inflatable kayaks by the end of the day.
But just bear with us despite the flash flood warnings that keep coming on over the calm here. So, I'm going to talk about 3 things here. The first of which is to give you a high level overview of Pall and the great success we've had in Danaher's largest acquisition. I'm going to talk to you about sort of the key priorities and how we've executed against those priorities through DBS. Give you some of the metrics and financial performance results, and then have the team, several members of my team talk in more detail about those three priorities.
And then we will summarize here at the end. So first a little bit about Pall. Pall is a $3,000,000,000 business split roughly into 60% being in the Life Sciences space. Our largest business there is our Biotech business, which is comprised of conventional stainless steel and single use technologies, along with our medical business and our lab food and beverage business. Our Pall Industrial businesses are comprised of the microelectronics, Aerospace and Process and Industrial businesses and represent about 40% of our overall business.
We have had good growth throughout the cycle, mid single digit revenue growth, that's an improvement over where we were at acquisition at low single digit growth and it's really underpinned by some strong global drivers. The secular drivers of expanding production in biopharmaceuticals, increasing standards in global healthcare, environmental and safety regulations, as well as growing complexity in electronics manufacturing. Much like many of the other Danaher businesses, you see that we've got a high consumable ratio, 85% relative to our equipment or our hardware at 15%. And a nice distribution of the products and business by geography and those attractive end user market segments that Rainer was referring to. So first, let me talk a little bit about the Danaher Business System.
Some of you may be more familiar with DBS than others, but this is the core foundation of who we are and how we do what we do. It starts by fielding the best team for a given business, right? We believe that leadership is key and that we can't do what we need to do without key leaders on the field. We test those leaders with listening to customers, getting the voice of the customer, understanding where their unmet needs are, addressing their pain points and then do so with rigor in terms of continuous improvement or Kaizen. Kaizening anything from a factory shop floor, set of variables through commercial execution.
The metrics that we derive from Kaizen really speak to how we go about improving quality, delivery, cost and innovation. Innovation being our 4th core value driver in terms of innovation defining our future and we believe that there is incredible competitive advantage to be had by talking to customers and identifying how we can go about solving their unmet needs. And then 5th and finally, we do compete for shareholders for those long term earnings and growth gains. Underpinning all of this is the 3 pillars that you see to the right. Reiner talked about back in the day when we were part of the tools businesses with the Fortive businesses, really having that tool set be more of a factory shop floor capability.
That has been transformed over time, being complemented both by leadership tools and growth tools, which we'll talk about today. All of this together really helps foster and fuel our shared purpose here amongst all Danaher companies of helping realize life's potential. We have a bias for action and we think towards the future. So DBS is our competitive advantage in terms of who we are and how we do what we do. As Reiner had mentioned, every acquisition is a little bit different.
There is always lots to do in any acquisition, but the key is really focus. It starts with the strategic hypothesis at due diligence and then transcends into what is it that we need to do for a business that is brought into the Danaher fold. At Pall it was 3 key areas, right. We recognize that with the 70 year history that Pall has had with a very strong technology founder and Doctor. David Paul, that we had technology in spades.
We were a very innovative company, we had all kinds of proprietary competitive advantage. But we struggled in terms of narrowing the focus to the critical few, really getting down to projects and products that mattered to customers. So we could move the ball downfield and start to gain market share. What we did is we brought the Danaher tool system in to help us accelerate innovation through narrowing that focus and really fueling discipline around our R and D processes. Martin Smith, our CTO of Paul will speak a little bit more about this in his presentation.
The second priority was really around improving execution. And this really had 2 dimensions. Operationally, we had a lot of opportunity to improve our customer facing value in terms of quality and on time delivery. But additionally, we had opportunities to improve our commercial execution. It wasn't very long ago where Paul had a little bit of a mindset of build it and they will come, we have great technology, customers will show up and buy it, just because it's cool stuff.
The reality is, is we've been able to use DBS to implement a much more focused approach to building visibility to where those opportunities are, capturing those opportunities in terms of a more disciplined approach to sales funnel management, digital marketing and the like. And having higher quality leads which we can turn into sales. And then finally, there was a tremendous opportunity to reduce costs, both in terms of improving our cost of goods sold through reducing waste, eliminating factory complexity and leveraging our scale, as well as reducing operating costs for non value added costs or non customer facing costs. These are things like extensive management layers and things to that effect. And so we'll talk a little bit more about that.
Again, not a force to march in terms of what DBS is today. This is a tailored approach where we really can pick and choose the tool set that has the most relevance for each of the businesses that are acquired. So let me talk a little bit about accelerating innovation. The situation in acquisition as I mentioned really was a strong innovative foundation with lots and lots of projects, a very long tail of projects that were largely low impact, long development cycle times and lack of project prioritization and focus. And what we were able to do here through Martin's leadership and the rest of the development teams is really deploy DBS tools by way of accelerated product development and speed design review, giving more structure and cadence to our product planning group to really be disciplined around product prioritization, resourcing of those projects and making sure that we were creating a flywheel of accelerated innovation.
We did this all the while, of course, by also preserving the entrepreneurial spirit. Paul had a tremendous technological heritage as I mentioned and it was really important to create that balance between process focused discipline and entrepreneurial spirit. And you can see here that since acquisition, we've been able to increase our on time to market for new product development projects by 1500 basis points. And logically that would allow us to continue to work this flywheel and bring those products to market in a way that will help drive that growth to invest in those things that mattered and really helped propel us to invest in those things that mattered and really helped propel us in terms of increasing our competitive advantage. In terms of improving execution, again, 2 dimensions here.
The first one I'll talk about is our commercial execution. And what we found is with a great product portfolio that we had a great levels of innovation and technology, We had a great portfolio, we had a great brand name, we were well respected in the space, but we didn't know how to sell, So this is where the tool set for the growth tools came into play from the DBS toolkit. And we found when we walked in, we had limited market visibility and contact. We had really no digital marketing presence and kind of an obsolete web platform and the like. And what we did is we implemented some transformative marketing tools, built out our lead handling and funnel management capability along with tailoring our go to market structure.
So that we had more high quality leads, more shots on goal if you will to make sure that we could get more of those in the net in the end. You'll see some of this on your Gemba walk today as well in terms of what we're doing in transformative marketing and how we've been able to move the needle to get better sustainable sales and marketing processes and growth. The other dimension of improving execution was really around what customers care about in terms of quality and on time delivery. Pall has an extensive footprint globally in terms of a very complicated supply chain and production setup. We walked into this at the onset of acquisition with long manufacturing lead times and low on time delivery.
And this is where the Danaher sort of core curriculum of the operations environment and the lean tools really is in our wheelhouse, right. We were able to go in at the time of acquisition and deploy DBS leaders at every plant. John Deon will talk to you a little bit about what that looked like and how we did that, but started a series of lean conversion events at each plant, really to get after inventory management, on time delivery, reduction of complexity of footprint, reduction of the complexity of the supply chain. And what we've been able to achieve since acquisition is 2,000 basis points of improved on time delivery, while focusing on what matters to customers, which is reduced overall manufacturing lead time. Finally, reducing cost.
There was an incredible opportunity to reduce cost, both in terms of cost of goods sold and overall OpEx. We had a pretty extensive inventory with high scrap and logistics costs when we walked into the acquisition and high indirect non customer facing costs, right. So this would be management layers, sales offices, things to that effect. We actually have been able to take out about $40,000,000 through improved supply chain and scrap reduction since the beginning of the acquisition. And we really couldn't be happier with the $250,000,000 overall in savings that we've been able to achieve since acquisition.
I think when we acquired the business, we projected that we would go ahead and save $300,000,000 through the first 5 years of the acquisition. Shortly after we got into it, we saw great opportunities to continue that flywheel and have since made the commitment that we will pull out $350,000,000 worth of cost over that 5 year period. Again, to date we're just a little bit over $250,000,000 But a lot of discipline here around inventory management, lean conversion capabilities and dynamic Kanban, really to get a fast start on these objectives and deliver cost savings that are initially ahead of our expectations. I think at the onset we also were pleased to talk about how Pall as a franchise gives us additional M and A runway and that's still very much the case. One of things we do think about when we are deploying our tool set and our leadership teams to new acquisitions is their readiness to take on more bolt ons, more acquisitions and so on.
And in the last 3 years, we've been really focused on making sure that we had our own house in order and that we were performing well and have a good platform running the Danaher playbook relative to being able to bring in additional acquisitions. So we've been focused on developing the process, building out the M and A team and expanding our in house market work capabilities. We have a large and extensive cultivation funnel, which we're constantly working. And we've done a couple of 3 smaller acquisitions today. In the life sciences, we have acquired Poro Membrane and Senseq and in our industrial business, we acquired AWC Filtration distributor in the Gulf States for our Fluid Technologies business.
So bringing that rigor and that process to our M and A to enhance our capabilities has really given us a good baseline and foundation for being able now to go out and acquire more bolt ons and more businesses that we can build the platform with. So putting it all together, I think the results speak for themselves. We're very pleased with the Pall franchise in terms of what we've been able to deliver here through 3 years of being acquired by Danaher. You can see that gross margin has improved by 500 basis points, allowing for our operating margin expansion to move from the high teens to greater than 25% today. We do this by taking our G and A cost down.
We've reduced it by over 25%. We take those savings, right, in terms of improved leverage on our gross margin line, improved G and A savings and we reinvest that into R and D and marketing. R and D and sales and marketing investments here you can see are actually greater than what our core sales growth is. All the while by still being able to improve our ultimate operating margin over time. And this allows us, this flywheel in effect allows us to go from low single digits to mid single digit growth, which we think we're well positioned to do for the foreseeable future.
Again, rapid adoption of DBS has been critical to Paul's great start that you've seen here. We can't do this without putting the best team on the field. We've got several of my L1 leaders here today, we've invited them to help celebrate with us and then I'm going to be sending them right back to work to finish the Q3. But the Paul leadership team We've got infused Danaher leaders, folks like John Dion, long time Danaher associate. We've got Hermes Gonzales, who you'll also hear from today from Danaher.
But we've also got great retained leaders such as Martin Smith, my CTO and Mario Phillips. And so one of the things that we really want to make sure that we're providing for folks in any of these businesses is an opportunity to grow and develop internally. And oftentimes when you get these large acquisitions with teams that are being built out, it provides an opportunity to sort of move talent around. And in fact, when I vacated my position at Beckman Life Sciences, we took the leader of the lab food and beverage business out of Paul and dispatched him to lead that Beckman Life Sciences business. So it's a great opportunity and creates a lot of momentum in terms of career development and growth and an opportunity to continue to build that flywheel of talent and capability in terms of the cross pollination between Danaher and DBS, as well as protecting the domain expertise and the knowledge that comes with the business that we acquire.
So let me talk a little bit about what you're going to hear today from members of my team. John De Jong is going to talk about how he put together the acquisition integration team and what it was like to execute on those three priorities along with some of the metrics around how we reduce costs and what those numbers actually are. We'll then transition to innovation, obviously when we get those cost savings, we want to use those cost savings right to continue to fuel the growth of the business. Martin will talk to us about what it was like kind of before being acquired by Danaher and after Danaher with regard to the rollout of the DBS toolkit to help us drive innovation and also what it looks like to improve our execution there. Hermes, who is the President of the Industrial Businesses will also talk about the momentum that we're starting to see here in our Industrial Businesses following a strong 2017 lead in and so he'll talk about some of the things we're doing from an innovation standpoint and as well as improving execution.
And then Mario Phillips unfortunately suffered a series of flight delays and ultimately cancellations from the hurricane and didn't make the trip. So I will moonlight as Mario and you get to hear from me more than once today. And I will give you the Biotech overview and then we'll wrap up with kind of summary comments and Q and A. So with that, let me turn it over to John. John Dion is a 20 year 2011.
At that time it was our largest acquisition in Beckman Coulter, to do the integration, build the team, bring things together and implement GBS. And following that we did the next biggest acquisition which is now the largest acquisition here at Danaher at Paul and dispatched him to do the same. And today John leads not only our DBS capabilities, but also our customer service and field service organizations. So with that, John.
Thank you, Jennifer. Good afternoon. I lost count at about 147 times I heard the DBS acronym in the last half hour. It's the bad news. The good news is you're going to hear it a few 1000 more times in the next hour.
As Jennifer teed up, we'll talk about DBS and why that's important to us and how we use DBS in improving our operational execution and in creating the cost savings needed for our owners of the business as well as the reinvestment. But you don't see a dot there where it says accelerate innovation. I'll tell you from my experience, there was lean practices in place at Pall when we acquired Pall, many examples. Continuous improvement in Lean was not new to Pall, well underway in their evolution. And probably the place where I saw the most examples of great lean and continuous improvement was in innovation, in new product development.
In fact, in the months, in the year, couple of years since the acquisition, now 3 years since the acquisition, the new product development initiatives that Paul have fed back some of their processes and tools back into the Danaher playbook, if you will, the DBS tool set. So not a dot there, but there very well could be. You saw this one once before. You're going to see it, I think, again later today. But it's an important slide.
It's probably the one slide that we could put up in front of anybody and tell you the biggest story. Certainly, Jennifer did a great job in doing that. And for those of you, a few in the audience who I recognize, a few could probably write a book on VBS now. Remember the days near 30 years ago where it really was about that lean set of tools, whether it be 5 S or standard work and things that we did a 1 piece flow and basically in the factories. And then that morphed into what we call transactional processes or carpet land and how we use those same exact tools and processes or carpet land and how we use those same exact tools and the transactions that support the rest of the business.
Then about 15 years ago, the inclusion of the growth tools and starting with value selling and funnel management and transformative marketing that you'll hear more about and you'll see some evidence of on your tour later today And how we implemented those and leadership tools, policy deployment, not a new term to many of you, very important how we take strategy through execution, as well as tools under leadership and how we develop the team. So it's important and it matters. And it matters because DBS is not just a slogan here. You rarely I don't you rarely you'll see it on a poster. I really hope there's no posters as you go around later today.
But rarely will you see it on a poster in fact I struggle to see it on poster you won't see it printed on a cap or a T shirt. You won't see any refrigerator magnets. It's not a program of the month. It's really, truly, when we say it's our culture, it's who we are, it's what we do, it's the way in which we do things, that's no fooling here. And it matters because it forms the cornerstone of how we think about our businesses and how we identify and make improvements.
What differentiates it? Well a lot of the tools and some of you most of you probably know a lot of these tools you can see at other businesses. But I challenge you to see it with the rigor and the attention to detail and the engagement by everybody that you see at Pall and at other Danaher operating companies. This common sense vigorously applied that we talk about is really true. And we are always DBS ing DBS.
What the heck does that mean? I used it twice in one sentence. DBS ing DBS, what does that mean? We're constantly looking at the tools. How effective are they?
What lessons learned? Do we improve the training materials? Do we improve how we implement the tools? How do we sustain the events? There's a team of individuals, that's all they do.
I don't mean that's all they do in a negative sense. That's all they do. It's really positive. And it is across all functions. It's not just manufacturing.
It's not just marketing and sales teams. Human Resources, how we recruit, standard work, creating a funnel of recruiting opportunities. There's a series of steps. Finance, I'll talk about a couple of examples around working capital in a few moments. I was teased into saying this, even Investor Relations.
Got one chuckle, even Investor Relations since Kelly joined, Pacino, not so. That one worked. The transition at Pall, as Jennifer said, as Reiner alluded to, we talk often about playbooks. Not every transition is exactly the same. Not every integration of the business or transition of the business into Pall is exactly the same.
But what is the same is the lens at which we first look at the transaction and look at the opportunities. What work streams are really critical to that business? And what leaders do we need on that transition? And we did this with Paul the same way as we did it with Beckman Coulter. We've done it with a number of other acquisitions since both, in which we paired up a senior Paul leader for each work stream with a senior Danner leader who made the Paul leader the focal point.
We went after a series of action plans. What could what do we need to do to recognize opportunities? What do we need to do to capitalize on those? More importantly, how not to screw up the business, how to make this transparent to the customers and keep the business continuity going. We had monthly reviews with Tom Joyce and his team with Dan Comas and others and monthly cadence of those operating reviews then post acquisition turns into the monthly operating reviews that the President of the company conducts every month using the same set of tools.
So it wasn't just through the transition. We have in fact, we had a hard time determining at what point do we call the end of the transition and the beginning of operating the business because there was such tremendous overlap, again, using the same set of tools. And the leaders, amongst the many people who are involved with this, about half of those leaders took on more senior roles within Paul or more senior roles within other Danaher operating companies after the transition. In the 1st 30 days, we took the entire Level 1 team of the company and many of their Level 2 leaders, their next subordinate leaders, and put them through the week long executive champion orientation DBS overview. I'll talk more about some of the training there.
The integration again, a lot of people involved. It says greater than 50, it might even have been triple digits. In the 1st 4 months of owning the business, we had over 300 ties on events. We introduced DBS through a day long DBS introductory class to over 70% of the associates in the 1st 90 days. We took over 2,000 of the employees through our problem solving process as a very critical tool.
Problem solving process, how we bound problems, how we identify where the problem is occurring, the nature of why it's occurring, go through a deep analysis to get to the root cause and then to countermeasure those root causes. We took over 2,000 people through that in the 1st year alone. We had help, a lot of help. 6 DBS experts from the rest of Dan of our organization. We developed, as Jennifer said, lean DBS leaders within the factories.
And we developed commercial growth and new product development innovation DBS leaders in the business as well. And we've got 44, 45 or so leaders today, hundreds of other people who are participating in on a monthly basis and engaged in DBS. And approaching 1500 Kaizen since we closed the business. And it's not easy, you can't just say I'm going to have a meeting tomorrow, we're going to call it a Kaizen. There's a very rigorous process of prepping for that, getting that approved, doing the necessary pre work, the chartering, selecting the tool, getting the right leadership, getting the right cross functional team involved.
It's not a score keeping exercise. And you see over on the right hand side, you'll see the near 13 or 1300 plus of them in manufacturing. Initial focus on lean conversion and daily management, extending that to variance reduction, implementing our Danaher material systems for inventory, the pull systems from upstream processes or from our suppliers. The Danaher Reliability System using failures in the field and feeding those back in a very logical way back into new product development and into manufacturing to make improvements. The cost savings, Jennifer spoke a bit about this.
I'll say the very first two years about $100,000,000 of cost savings through how we align the businesses, align the business units, align the layers of people and the span of control and how we approach those. And then also continuing year 1, year 2, year 3 and forever, the direct material savings that the team introduces and recognizes through the use of DBS tools. The scrap reduction, $40,000,000 plus year to date and over $20,000,000 in simplifying the rooftops and simplifying the manufacturing processes as how products feed from one part of the organization to another before they hit the end user. Those are things that will keep going. And that's not to say that Paul wasn't successful at this.
At the time of the acquisition, high teens in operating profit margin. But we recognize that through the use of DBS, we could get more and feed that back into investments in the business. I'm going to give a couple of examples of the use of DBS. And usually we start with manufacturing in the work cells. But I'll start with working capital.
And at the time of the acquisition, we didn't have that standard work and receivables and collections. We didn't have that in payables. We probably had a disjointed organization across many business units and geographies. And in inventory, we didn't have the right inventory in the right places at the right time. We had some excess inventory and we had probably what might call less than luster materials management.
But through the use of daily management for the daily and visual management, through the use of what we call the org alignment tool and getting the team situated in the right places and standard work and the Danaher material system of getting the right signals for when we need inventory at the right places in the right amounts. We're able to introduce over deliver over $200,000,000 of working capital improvements, which is not a small number. OTD, our NUKI plant in the U. K, it's a plant where we make products for the medical business unit. Small filters used in the administration of IV drugs.
Patient contact, very critical. Over 9,000,000 filters a year. Over 9,000,000 from that plan. Poor OTD, poor planning, couldn't absorb spikes in demand. Standard work, variance reduction, lean conversion in the work cells, level loading the plant was meant by that term, the Japanese term, highjunka there.
Level loading the flow through the plant helped deliver 150 plus basis percent productivity and OTD now over 90%, where it was shy of 50% when we acquired the business. Scrap reduction, our corrugated lines in DeLand, Florida, That's a plan for our Process Industrial business. Again, many part numbers, difficulty in transitioning those part numbers or sequencing them in the factory. High scrap, poor OTD, variance reduction was the key tool used there as well as some standard work. You might look at the savings, dollars 250,000 in savings and say, well, that's not a real lot of money.
There's a lot more than one cell in that plant. Many cells in that plant and many plants. That $250,000,000 just multiplies over and over again. Not a slogan. VBS is who we are.
It's how we do what we do. It's not optional for us. That's a good thing. It's embraced by everybody. And it's the engine that keeps us going.
It's the engine that helps us to identify the opportunities and then to capitalize on those. Thank you.
Thanks, John. So you can see everything that we do starts with DBS. It's really the cornerstone of where we start in any kind of acquisition and how we run the daily business. Important in any acquisition to put the integration acquisition integration team together, it's important to enlist those folks from the business that you're acquiring, right, get early buy in and then set a journey for those savings and process improvements you're going to make. That in turn allows us to reinvest in the business in areas like R and D, innovation and new product development, Which leads me to my next speaker, Martin Smith is going to talk to you about innovation in terms of what it looked like before the acquisition as well as after.
Martin is uniquely positioned to provide this perspective. He's got a 12 year Paul tenure as Chief Technology Officer and has done a great job deploying the DBS toolset around innovation to yield some of the results that you've received thus far. So Martin, come on up.
Thanks, Jennifer. Hello, everyone. Hope you're doing okay. As Jennifer said, hopefully I can give a little bit of an interesting insight to what it's actually like to receive DBS and actually how you can mobilize it forward for gains, in this case, in innovation. Like I said, I was part of the leadership team at Pall.
I was the Chief Technology Officer before acquisition. In fact, I was part of the selling team that actually eventually led to the Danaher acquisition. Obviously, I'm the CTO today. So I'll give you a little bit of an insight of the before and after, and I'm pretty certain that this is the only time in my life that I'll be the after photograph, but there you go. So we'll talk about innovation and the acceleration of innovation.
What does accelerating innovation mean? This is about getting the right product at the right time to customers that actually want to pay for the stuff, right? So thinking about that flywheel and we'll talk a little bit about what that actually means in terms of execution. Improving execution is about the processes and the metrics that actually help us drive decision and priority. I'm not going to talk about cost savings.
In fact, R and D, as you all know, is an investment. It's a choice a company makes to put into these product developments that define our future. Looking at those two dots though in terms of acceleration and execution, you actually can maximize the efficiency of the R and D investment that we make. So when you think about innovation and this acceleration that we want to do and processizing it and how do we bring DBS in, you need starting points. There's so many things that you can think about in terms of this type of continuous improvement that you want to make.
And so I've chosen four things here just to give you sort of flavor of the way we went about our work. The first area is in the focus. Again, the right product at the right time and so on. It's actually a bit of an embarrassment when you actually think about it and some of the actually a bit of an embarrassment when you actually think about it and some of the journey that we've been on. And that's actually developing products that people want to pay for, And so when you think about our portfolio a few years back prior to acquisition, we were very much into this world of iterative types of product development, versions of last year's product, if you will.
And that's changed, and I'll talk a little bit about that as we go on. Timing. The most important resource you have as a product developer, and I'm a product developer, is time. Talk about money, talk about talent, you can talk about the right tech, but time is the real thing. Getting the products out first before the competition.
What does that do? It drives pricing opportunities. It gets you at the top table of conversation with your customer base. It allows you to lay down all the barriers to entry to your competition. And of course, it drives the leadership position that we strive for as we think about new technologies and we think about new market plays and so on.
We are the go to technology play. So time is the most important thing that you'll see on this page. And you can see the metrics here when we talk about time. Since acquisition, we've driven a 25% average reduction in the cycle time for our product developments. In terms of processes, I could choose any number of processes as you think about the R and D dynamic, choosing a product, developing it, transferring it to manufacturing, nurturing it as it goes into the field.
What I'm choosing to show here is a little bit about the toolbox that we've deployed and actually been part of developing for the Danaher organization. So big thing about DBS, you should recognize and John talked about this. It's not just being a recipient. You actually get to participate, encourage in the participation of that. And we've exported quite a few tools from Paul R and D across the organization.
And one of those tools that we've helped built is called problem to portfolio and this is how we map workflows and I mean workflows, not individual products. When you see the GEMBA tour as you go down there this afternoon, don't take individual product, catalog selling, product A for product B applications. We sell and deliver workflows. Being able to map that workflow through the eyes of the customer, identify unmet need and bring those to product development selections is what I'm talking about. And the easy way to measure that is portfolio funnel size.
And year on year since we've been acquired, we've grown that funnel by 40% every single year. And then the last focus point might be a bit of an odd one to mention here is balance. You think about the engine of innovation, you think about the engine of continuous improvement.
There's a
big word that goes alongside that engine and that's appetite. If you don't have the appetite to go and invest in new technologies and think about how you're going to bring new workflows to customers, then a lot of these tools are for naught. And I'm delighted to say it's a big motivator for me and the team and so on. There's this continual flywheel of investment that come into Pall R and D to help us think about the balance of our portfolio, not just iterative products anymore, but actually the time and the wherewithal to bring new product development and new technologies to bear as we create brand new workflows for our organization and our customer base. So I showed you the 4 ways we might think about continuous improvement in terms of R and D and there's DBS associated with all of those.
But there's other ways you can look at improvement too. The talent, the leadership that we have in R and D, how we organize ourselves, where we might co locate our organizations with manufacturing and so on and which geographies we need to be in. And of course, the big one of all, what do we choose to invest in, the technologies that we choose to deploy and accelerate and drive into the marketplace. And so this diagram that you see here is actually a working diagram. We use this as daily work.
It helps us understand where we want to invest and why. We're in budget season right now and we use things like this to help us as a leadership team understand where we're going to put our dollar. Now this not only gives us a roadmap of where we need to go, but it also teaches us where we can see leverage across the business units. You will hear later about all the business units that we have in Industrial and Life Sciences and they are not the same in terms of end market and customer base. But using tools like this, we can identify what technological value streams can actually feed many business units.
That's leverage. That's efficiency. That teaches us where we want to put our dollars. And actually we spent a lot of time on this and you can see around the edge of circle the types of technological playbook that we look at. And actually in the future, 5 years from now for example, 85% of what we will be selling in terms of new products will be based on a roadmap like this, technological investment, the things we choose to focus on.
And I've talked a lot about processes and people and leadership and DBS and it's just a miasma if you're not careful. So we've spent time in terms of trying to simplify the way in which we will want to message this across our organization and prioritize the tools and the work that we want to do. And so again, work we've done before and associated with the Danaher organization is a really simple banner, if you will, to describe how you go about your work. If there's anything you want to take home in terms of new product development, what matters, it's these 3 metrics. You need to get a sense that your funnel size is relevant and big and growing.
This represents the future, clearly. And there's tools in there that I list that help you select the right source of things. I've already mentioned the portfolio problem to portfolio piece. But we also use tools that allow us to prototype and show customers what we're thinking of, show them and they handle things and ask, would you pay for this? Why would you pay for this?
What do you think can happen if this changed or that changed? And so this lean product development tool is one that's obviously new at Danaher and we've been working. And then of course, technological roadmaps that I showed you, where do you want to drive your investment and why. Since acquisition, as I said, year on year 40% growth of that funnel. And actually when we look 5 years out now at our roadmap, you can see that we have grown since acquisition 4 times the revenue prediction since the acquisition on the back of new product developments.
The middle piece, Project OTD, that's the timing. I mentioned the importance of time, Rigor with stage gate. In fact, we exported some of the poor stage gate into Danaher, which again part of that participation piece that I meant. As you go around the laboratories and you see them in the tour today, you'll see visual management allows us to do daily project work. It allows us to talk across functional sites as we develop products.
It's been a very useful tool for us. And of course, the talent and the leadership, good, strong, fundamental project management to get things out of the door. And since 2017, we've actually improved our on time delivery of projects by another 15%. And then lastly, a really important metric, actually the metric that matters the most probably, and that is what revenues we're getting on the back of new products, right? So this is during the course of this product development, we predict a forecast of revenues.
Then once the product development is finished and you launch it, how well to that prediction are you actually performing in terms of new product revenues. And as I showed on the very first slide, and again, the performance that we're exhibiting in 2018, we are at 80% of revenue forecasts versus 35% to 40% at time of acquisition. Huge gains. That's a huge amount of revenue, as you can imagine. Again, a bunch of tools associated with that.
These are the ways in which we interface with manufacturing and the sales force, of course. So tools like Launch Excellence, where we're actually training and educating the sales force in terms of how they position new products, how they consultative sell on workflows, remember workflows not individual products. There's a portal here called continuous validation. This is the thing we invented here, which allows you to go back and continually iterate that the customer is actually expecting your product, wants your product, if there's any change in the marketplace, we can make those adjustments. And as you'll see in one of the OBEA rooms later, transformational marketing is a huge, huge tool for us in terms of our revenue achievement.
We can actually track now how new products perform in the funnel. You don't know at the beginning of a product development what the buying cycle for a new product is going to be. And we can actually see that now as it moves through the funnel in terms of buying decision and buying time. We can actually get a really good strong prediction on the budget and the types of revenues we can expect by month for every new product that we launch. So let's talk a little bit about content.
I mentioned the process side of things, but content is a big piece for us obviously. It's the innovation source that we've talked about so much. You can see a variety of businesses in the orange here that we serve. You'll see a control tower as you walk around. This is the way in which we control workflows.
So think about the bioprocess. It's not just about individual unit operations. You can bring that all together and fully automate it, and we've got that type of control mechanism. And we have an inline diaphiltration. You don't need to know what that is.
It's just a world's first way of concentrating a biomolecule before it hits the patient. It works in a continuous mode. And then we have Cryxis, you'll see that on the tour. This is a world's first smart filter, an IoT driven filter. This is a way in which we can actually monitor the filtration event.
A bunch of sensors in there, you can detect the quality of the oil that it filters, whether it's got particles in it, water in it, whether the filter is actually working. And it teaches the customer and the plant managers remotely whether they need to change the oil, change the filter, does predictive analytics and you name it. In microelectronics, we have a 5 nanometer filter. Does everyone know what a nanometer is? So you know what a meter is, right?
1,000,000,000 times smaller than a meter. That's the size of particles we're now removing with filtration, right? It's critical in microelectronics when you think about what they're doing. They do not need to see damage on their very expensive semiconductor wafers. And down at the nanometer particle size, we're now removing those out.
Homos will talk a little bit more about those going forward. And then Boris, that's just the trade an internal name, but this is a way in which we're enhancing our metallic filter productions, which can be spread across all of our business. Here's a really important fact for us and I was actually astonished when we pulled this number. When we look out into the future, 50% of our year on year growth at par, 50%. You talk about science and technology company, 50% of what we will do in terms of our growth is on the back of new product revenues, right?
That's pretty impressive in my view. Lastly, in terms of a case study here, bio continuous processing. This is the way in which we think about the drug mechanism from the full bioreactor all the way down to the final form of finishing. And what we have here, and Jennifer will talk about this in her talk on biotech, is a way of bringing that all in a continuous manner. Now 35 years ago, there was no such thing as biotech in terms of the type of presence that we see today.
Most of pharma was small molecule. You could boil it, you could steam it, you could solvent extract that. But as we went biologic, you can't do that anymore. You damage the molecule. So filtration came into presence and that's why we participate in this market in the way we do.
That went into stainless steel. We now know about single use. And now we're talking about continuous processing. And you'll actually see that there is a photograph of what you will see downstairs. You know all about the flexibility, the speed, the footprint, the pace that continuous bioprocessing will give versus the current standards that you see today.
The data that's shown on this slide actually is citation, not ours. It's coming from the industry describing the power and the process economics that we think our continuous bioprocessing are going to bring for us. So really, really proud and delighted to show you that today. And then I'll summarize here, just to finish up. Innovation is alive and well and being driven through DBS in collaboration with our own capabilities as we add to that DBS infrastructure, material science leverage, filter designing and of course, that customer workflow intimacy.
DBS, as I mentioned, has helped us with the impact to customers. We have very much a customer led product development cadence here. And then you've seen the sorts of performance we've been able to drive like incremental revenues, on time deliveries and so on and so forth. So I'm looking forward to showing you around on the tour and I'll pass it over to Jennifer.
Thank you, Martin. You can see that Martin's enthusiasm for innovation is second to none. We are lucky to have him as part of our leadership team. And as he mentioned, you will see many of those innovations on the Gemba Tour as we take you there later this afternoon.
We are
going to turn it over now to Hermes Gonzalez. Hermes is the President of our Industrial Businesses. He carries a 14 year Danaher tenure and started back in the day when we were colleagues in the Hach Water Quality business. So he has maintained a variety of different commercial and general management positions through an array of companies here at Danaher. And he is going to talk to you a little bit about how he is using and his team is using innovation and DBS to drive continued improvement in our industrial businesses.
Hermes?
Thank you, Jennifer for the gracious introduction. Just as a matter of additional context, I am also in addition to the 14 years at Danaher 25 year plus veteran of the process instrumentation and controls industry. So I've sort of lived my world in that in this industrial set of end markets. So it's something that is near and dear to my heart. You may say it's almost like in my own DNA.
So hopefully the excitement that we have about industrial businesses is not just part of scripted presentation but it's something that is really happening. We have some great, great stories to share with you. So we'll follow agenda here in terms of the initial priorities that have been highlighted post acquisition by Danaher. We'll talk about innovation, improvement in execution and reduction in cost. I think hopefully what you'll hear from me is really how we've tailor to the specific needs of the businesses.
I think, Rainer explained that the DBS playbook is vast. There are many tools. And maybe there was a bit I don't want to say less flexibility, but it was more prescriptive many years ago, 15, 20 years ago. We have by no means lost the rigor and the discipline around implementation of DBS. But I think what we have gained is a lot of flexibility in how to tailor DBS to the specific needs of the businesses.
So I'll try to do my best to see how we've done that throughout the Poly Industrial businesses. First, I'd like to give you an intro of our 3 companies in the group. We have our process and industrial businesses really focused on the heavier industries, petrochemical, chemical industries, steel, pulp and paper, also deal with a number of OEMs looking after asset protection of equipment of heavy machinery. Our aerospace business is both commercial and dangerous as well as military. And then you've already heard some mention of the microelectronics business from both Rainer and Martin recently.
I think I want to make a couple of points here. I think this is a fundamental slide here. We're not just in the filtration, separation and purification business in these businesses. We're really looking after the needs of our customers to improve their processes, protect their assets and in the case of aerospace really health and safety becomes very important. So I think filtration is really a means to some value propositions that our customers need to have to their end users.
And that's really the business we're in. I think the other element that is very critical is we are on mission critical applications. There is no way that we can just pull over a 40,000 feet when you're flying on an airplane. So the 40 plus filtration points that a commercial aircraft has going on simultaneously as we're sitting inside the airplane that have to work and they have to work all the time. We just can't pull over on the highway and fix something.
So anywhere from nitrogen blanketing of the fuel tanks to prevent sparks and a possible explosion to the quality of air that we breathe in the aircraft. Those are the typical applications that we get involved in. Microelectronics, I think Reiner alluded to sort of the IoT revolution. There are so many elements that go into that. But I just like to bring it down to our daily lives.
We want to make sure that our iPhones and Samsung Galaxy phones are the latest preferred device that you're using are working and are working all the time. There is much more demand not just on display capabilities, but also on data processing. So when you're talking about virtual reality, augmented reality, with these devices you want to make sure that it works and it works all the time. There is no room for impurities in the chemicals and the gases that we use to edge do the etching of the wafers to do cleaning to do polishing. So these are mission critical applications.
So I think it makes the poly industrial businesses very unique in that sense. I think financially speaking, very high consumables ratio coming from some other backgrounds in the past in process instrumentation and controls. Those industrial businesses do not have 75% consumables recurrent revenue streams. Very well diversified from our geographic footprint as well. And this is a real exciting market space.
We estimated about $6,000,000,000 and we are about 20% market participation in this market space and some really great mid single digit growth through the end of the first half this year in 2018. Let's talk a little bit about some additional drivers for this business. Not only are we seeing a strong growth drivers in the marketplace, but I think what is really exciting to us is that we're seeing some longer term trends in the market spaces as well. So these are not by and large short term drivers. If we talk about just going back to my aerospace example here, I know those of us are always eager to get that upgrade or at least the middle seat empty when we're traveling.
It's getting difficult to impossible to get upgraded to get the middle seat empty next to you. The supply of seats is just not available. I mean the commercial aircraft industry is going through a crunch right now. We're looking at about doubling the number of commercial aircraft manufacturer over the next 20 years. Now this is a combination of some modest growth in the marketplace, but also there is an aging fleet of commercial aircraft out there that about 50% is going to have to be retired over the next 20 years.
So these are long term trends that are really supporting our business. More recently, we do see a very different environment in military spending that is also part of our business. So we clearly participate in projects that were recently approved such as the B-twenty two bomber, revamping of the B-fifty two fleet. All of those required the same of filtration as commercial aircrafts. Microelectronics is not just about increase of micro ships or a lot more processing occurring in automobiles for example.
Martin spoke about these ships to getting they're getting smaller. The amount of processing that is happening is just there's much more stuff going on. We're looking to 3-dimensional design and deposition on these micro ships. So the number of steps that are required nowadays to get to a final product is much greater. That means more use of chemicals, more use of gases in the various processes, all of which have to go through these very great level of detail of filtration.
We're using China as a proxy here. Obviously, a lot of these products end up a lot of these opportunities back in specific type geographies. But we also have tremendous growth opportunities in other high growth markets. Looking at commercial aircraft, increasing travel for example, you look China, you look at the Middle Eastern or Middle East Airlines, tremendous increase in the demand from those airlines to bring aircraft to those regions. So we're really well positioned for some long term growth opportunities.
I think we're leaving an excellent time for industrial markets. So how do we win Apollo Industrial? I think you heard from John a very detailed and powerful introduction to the Danaher Business System. It is about that rigorous discipline and I do want to add well cadence application of DBS. Not every DBS application and not every company requires the same cadence.
So we may vary from daily management in some instances to maybe monthly reviews, but understanding that cadence and how we apply the different DBS tools is really very important. Now we're doing many things across the board here, but I do want to highlight a couple of areas that I'll be getting into more detail here. Microelectronics is by far our fastest moving market space. It is really about innovation and the speed of innovation. So we'll talk a little bit about how we're applying DBS in this area.
Process and Industrial, we found some great opportunities to really provide superior global commercial and operational footprint or how to best utilize the legacy footprint in the case of operations that we inherited after the acquisition. On aerospace, I do want to go back to that quality and reliability. We cannot pull over a 40,000 feet. Everything has to work when you're up there. So that's an area that we're working hard on, but as well expanding our global or go to market strategy.
I do want to introduce a term here that has not been used yet this afternoon and is about what we refer to as a technical and commercial ecosystem of our customers. I think as we start applying a lot of these DBS tools at the various industrial companies, especially on the commercial side and when we started looking at innovation, the initial mentality was about the end user and clearly the end user is a critical component providing input on what you're doing. But there is an ecosystem that that end user depends on. It could be engineering and construction firms in a refinery that work with licensors. It could be toolmakers in microelectronics for example.
So we're starting to get much better understanding of what the commercial and technical ecosystems look like for our poly industrial customers and really utilizing that especially to get much better in the innovation arena as well as the commercial arena. I'll point to some specific examples here in a minute. So let's talk about some actions and results since the acquisition. I'll point to some specific tools from our toolbox here that we've applied. Start with acceleration of innovation.
This has really been a journey about discipline and rigor. And I just want to highlight those two areas. It's around having a much more disciplined approach on our product development approach. So we've instituted formal product planning groups at each one of our companies. We've also introduced a much more disciplined and more rigorous toll gated product development cycle.
So I think Martin alluded to introducing tens, hundreds of products maybe in the past and missing the mark because perhaps we thought we were innovating. It was something maybe had great potential, great technology, maybe it was someone's pet project. And that really pointed towards a root cause of not having in place a well thought out toll gated product development cycle. So we have instituted those. It is a journey.
There is no end. We're making some really great material progress. And you can see that we have increased 2,000 basis points, our revenue achievement on new products introduced since the acquisition. Around the execution side of the equation here, I'd like to talk more about our commercial aspect. And it's really having a much more disciplined approach on fundamentals.
I think John referred to it as maybe common sense, but sometimes if it's not applied with rigor and discipline that common sense just doesn't happen. Funnel management was done at a regional level at the poly industrial companies by and large. It was highly or heavily siloed and it really didn't I guess facilitate the growth of global key accounts for example. So if I were to approach Samsung Electronics on the microelectronics side of the business and ExxonMobil on the refining side of the business, these are global companies with a footprint that needs to be supported. So if you're not cognizant, if you're not doing a good job of following projects on a global basis as well as understanding the commercial ecosystem that supports those global accounts you're not going to be as successful.
This has been a tremendous success story for us over the last 3 years. We've doubled our revenues of global key accounts at Poly Industrial. And this effort has been really across the board on the process side of the business, the microelectronics as well as the Aerospace business. Last but not least operational improvements. Link conversion, we've taken a look at our main manufacturing facilities.
I think John alluded to a presented actually a specific example on DeLand. DeLand Florida is one of our larger industrial manufacturing sites. So a lot of lean conversion efforts going on in DeLand. But we've also I think been much smarter to deploy our manufacturing to locations which are closer to the customer base. So we have 2 great facilities in Asia.
1 is in Beijing, China serving mostly the Asian market. And then we have another great facility in Tsukuba, Japan, which exclusively services the microelectronics business. So really bringing more capacity into those facilities and being closer to the end users has been a tremendous success story as well. So you can see we've improved our OTT about about 1,000 basis points and our quality has tremendously increased. This is by no means the end.
This is a journey, a lot of hard work that is still going on, but we are making material improvements post acquisition here. I'd like to walk you through a couple of very specific examples and some of the tools that we apply in each one of the businesses. I think microelectronics, this example is specific to innovation. Jennifer talked about the Danner core values. Customer stock we listen is one of them.
And this one in this case was really applied to the technical ecosystem in microelectronics. If you look at some of the VOC that we have here on the left, the customer on top may be someone like Samsung Electronics or Intel as an example as being the end user. And the second bullet point here could be a tool maker. It could be Tokyo Electron as an example. It could also be a chemical supplier like Fujifilm.
And really understanding that ecosystem and talking not just to the end user and what are their needs, but also what is it that Tokyo Electron needs from Paul to make sure that our filtration solution has the necessary form and function for the tool that they are providing Samsung or Intel in this case. And also talking to Fujifilm or other chemical suppliers, what are the type of chemicals that they are developing for some of these newer technologies? What is the corrosion or operation requirements that we need to make sure that we engineer into our filters. What temperatures are they going to work? So really understand that ecosystem has allowed us to really rev up our innovation engine.
You're actually going to see those filters downstairs when you take your walk. And Raj who is our technical leader is going to be there presenting them to you. We have gained about 200 basis points of market share just over the last 2 years in microelectronics. So this is a tremendous story here. Our revenues in China have grown by 50% since 2015, since the time of acquisition.
Process and Industrial, talking about making things tailor made to the specific needs of the business. Many things that we work that we always have to work on a daily basis in the business, but we decided to really focus around operational excellence and commercial excellence for the process and industrial businesses. We inherited a highly fragmented operational and logistical footprint. This is the business that by far covers has the most tentacles in the poll environment because you're covering so many end markets and types of applications and types of users. So the business just grew that way, highly fragmented from an operational footprint and number of acquisitions that happened throughout the history of Pall.
And also the go to market strategy was very inconsistent and regionally driven. So we had a very strong European organization perhaps a strong organization in Japan, another one in the United States, but little communication. So the tools that were being applied were inconsistent and they were very regionally or dependent on individuals in those regions. From an operational point of view, not just the link conversion introductions that have been happening in some of the main facilities, but I also want to touch on a couple of other areas here that have really helped us. We are in the process.
We have already implemented, but we are in the process of continuous deployment of our PSI process to facilitate communication between our sales force and our operations facilities to really make sure that we're driving our operations based on future demand and not just on historical performance of the businesses. There are product mix elements that you need to take into consideration. There are different dynamics in different businesses. And trying to drive your operations based on past performance is not the best way to do this. So we're starting to see some gains throughout implementation of PSI processes and we're bringing our strategic suppliers more in the loop to make sure that we're getting the right quality of not just raw materials, but clearly we buy some semi finish goods or sub assemblies into these businesses.
So we've been able to improve OTD about 1,000 basis points. This translates into margin enhancements as well. So about 500 basis points of operating profit since the acquisition. I think from a commercial point of view, I already talked about global key accounts program. I think here the big I don't want to say a moment, but I think one of the learned lessons has been to understand how and when the rest of the ecosystem that supports the end user comes into play and what role do they play in making a decision to prefer or not prefer your product.
So the earlier we're able to get in and get a specified and get preference from a licensor, technology licensor or an engineering and construction firm as an example, the better off we're going to be in the long term working with those end users. And I think to us that has been really the bigger not sure that is a revelation, but it's something that was not being done as well at Pall at the time of acquisition. And you saw the results on the Global Key Accounts Program. Lastly, Aerospace. I don't know how many of you in the room know, but aerospace is the original Paul business.
So this is how the company was founded about 75 years ago. Doctor. Paul very quick was part of the Manhattan Project. Some of you may know and his filter solution actually was not chosen as the preferred solution for the Manhattan project. So he had a technology, he had a product, where do I go and sell it, how do I make money out of this?
Well, he got into the aerospace filtration business. So this is the original pulp business. And I don't know if it's because it is the original and the older business in the mix, but it's the one that at least within the poly industrial set of businesses came in with probably less of a strategic approach. We found that the strategic approach in the business was more functionally based. It was not as holistic.
So the technical folks had maybe their own strategy and they thought that this is the way that we should do things. And the commercial team had their own thoughts about how to pursue our go to market strategy, which by the way was very relationship based selling. And not only that, but it was in this case solely through OEMs. So this is what we inherited at the time of acquisition. So we have really spending a lot of time in tailoring the DBS applications around the strategic planning as well as revamping our sales force to have a different approach to selling.
In the case of a strategic planning here, we now have a unified or business wide strategic approach. We've just presented our strategic plan a couple of weeks ago here. We're now looking at the different elements that make up the business. So it's not a functionally based strategic plan, but it's a holistic business plan. We're really migrating our sales force, prioritizing end user intimacy.
And by that, we mean what happens to the or American or American Airlines, what are the pain points that they're seeing once that aircraft is delivered to them and is actually in function. So this is working very well. We've initially started these actions in the Americas. We're going to move these into other geographies in the case of the sales force initiative, but some really great promising initial results in the Americas, about 45% sales funnel growth. And more importantly, the winning rate of the projects that are being added to the sales funnel has increased substantially about 2,000 basis points.
I think in summary, we're having a fantastic ride experience with the poly industrial set of businesses. We are applying DBS with rigor, discipline and with the right cadence. I want to add and this is really giving us tremendous success in the marketplace and we see the strong secular drivers across all of these markets. And more importantly, we see longer trends, positive trends in these secular drivers and not a short term lift experience. So great to be here.
Thank you so much for your time and I look forward to catching up with you later on in the day. Thank you.
Thank you, Hermes. So you can see the great progress that Hermes and his team are making in our industrial based businesses, some great businesses in that space and we really like the portfolio that we have there. Combination of lean tools and growth tools, driving DBS, reducing costs and getting us a more competitive position relative to taking share in the market. At this point, I would normally be introducing Mario Phillips, but due to the fact that he is stranded I will present on his behalf. And we'll go ahead and start with just an overview of what I will focus on here is really our Biotech franchise, fantastic franchise here, going to talk to you about how we're going about accelerating innovation as well as improving execution in this particular business.
Our Biotech business today is the combination I might have mentioned before of our conventional stainless steel business as well as our single use technology business. It's now over $1,000,000,000 in revenue and has certainly a large installed base in small molecule manufacturing vaccines, plasmas and the like, but also a very prominent position and growing position, growing double digits here in monoclonal antibodies recombinant protein type biologics with runway to go in and really make the market in gene and cell therapy. We've got great underlying secular drivers for this business. We really are working with our Biologics partners throughout the world to provide complete solutions from cell culture all the way through form and finish. You will see some of these tools in action downstairs when you get on your gemba tour.
And we are one of the key players certainly in working with customers to develop life saving drugs, Oncological drugs, muscular kinds of ailments, things to this effect. We are really at the forefront of that. We also are really focused on our continuous bioprocessing portfolio today have the only continuous bioprocessing end to end solution available in the market today, which has helped us continue to drive at high single digit and low double digit core revenue growth rates, largely on the back of our single use technology business, which is now a $300,000,000 business growing at strong double digit growth rate. So all in, a leading supplier of integrated end to end bioprocess technologies and the associated support required to tailor make those tools to whatever the application is in terms of the drug being developed. I mentioned there is strong secular growth drivers.
You've got a lot of numbers on this slide. I won't go through every one of them. But it's suffice to say that currently there are only 350 biologic drugs on the market today and yet there are over 2,000 that are currently in the approval pipeline. These are life saving drugs and therapeutic drugs like Humira, Avastin and those drugs that you see on the market on your television every night being advertised. But we've got a growing presence in terms of the amount of research and development that's going in to that biologic space, transitioning from conventional small molecule to large molecule drugs.
We've got very attractive dynamics in high growth markets with China really coming to market now with about 19 known marketed drugs. They have a phenomenal pipeline of development, large obvious population for them to go after and help bring these life saving therapeutics to reality. And We see strong double digit growth in that market for the foreseeable future. Gene therapy and cell therapy, a new and exciting space, really growing strong double digits as well. It's going to continue to increase globally with the specificity in which those therapies go and attack those kinds of gene anomalies that lead to serious ailment disease.
And then finally biosimilars, right. Biosimilars are effectively the generic version of a biologic. They have virtually the same manufacturing process despite being sold at a lower price point. They still are required to go through all of the filtration, separation, purification, concentration steps that any conventional biologic would. And so we expect these to be increasing certainly from 2018 through 2023.
We think we are well positioned and we have a leading position in this space and attractive runway going forward. So how do we win? How do we win in Pall Biotech? What you see on the right is a graphic that shows you all of the steps of a bioproduction process. And what's unique about this is that from the bioreactor all the way through final fill and finish, Pall has a solution for every step of filtration along the way.
Whether it's a separation, a concentration, a purification step. We have all the tools that we can bring to bear and we can put them together in a continuous bioprocessing way. We benefit from focusing on our high growth segments, right, SUT and the next generation of continuous bioprocessing. We also believe we're well positioned as I had mentioned in gene therapy. Martin talked a lot about innovation.
In Ohio, we're driving the flywheel of innovation, streamlining the scientific and bioprocess development while delivering cost savings for customers. And then from a commercial standpoint, a revised go to market approach which allows us to complement our farming sales force with a hunting sales force, very, very important to get in on drug development early, right. Winning the specifications early, proving out that your technological solution early when they're in the development, process development and prototyping stage lends itself effectively for you to be specked in as the production vendor of choice. So we are complemented here with not only having the end to end solution focused on workflows as Martin talked about as opposed to specific products, but also complemented with the high technology and understanding with our technical sales force and our technical applications experts, but also our workflow experts. And you'll have a chance to visit with some of our folks both in our process development capability as well as our scientific laboratory solutions on the tour.
So really it's about driving the process economics of focusing on the highest areas of impact and maximizing that value to customers. We think of biologics in stages of evolution, right? Back in the day 10 years ago, it was monument based stainless steel, huge bioreactors, non flexible, high capital investment, entire buildings, 2 stories high for chromatography columns and the like to be able to mass produce a single drug. And that's great if you are producing aspirin, right? It's not particularly good if you are trying to cocktail and tailor make a biologic for a more narrow population or you're trying to do rapid changeovers of different kinds of drugs.
We think of the SUT business and the SUT space right now, our single use technologies as kind of BioPharm 2.0, right? These are more quick change outs, disposable bags and filters, single use capability, allowing for smaller lot size, lower overall investment and allows us to get a flywheel of continuous bioprocessing going. And then the future will be that end to end solution, fully integrated and automated with continuous bioprocessing. That ultimately allows us to I think take the pole position and being the process economics leader and getting us into very important fast growing markets such as gene therapy through viral vectors and also cell therapy as well. Obviously, these bioprocessing enhancements in terms of improving the facility efficiency, the manufacturing flexibility and the speed to market, while enabling the customer to reduce processing time, operating costs and for customers and share gain in the marketplace.
So really where we are today. We talked a little bit about the future in continuous bioprocessing. Today most manufacturing sites are largely conventionally still stainless steel. There are very few that are end to end single use technology, but they are hybrid systems that are coming into place. And single use technology allows us to deliver meaningful improvements for those customer processes.
In terms of the move from stainless steel to single use technologies, it's about a 30% reduction in average cost of goods sold, about a 50% reduction in CapEx spend, right, that's the brick and mortar you got to put in instead of those big stainless steel tanks and all that piping. You've got smaller footprint, more flexible modular systems and then a 50% reduction in average turnaround time. As I had mentioned about less than 20% of today's marketed drugs use SUT technology exclusively. Everybody generally has some element of SUT use. But I think over time what we're going to see is with the demand in the market, has been a strong double digit grower for the last several years and we believe that trajectory is likely to continue.
So let me talk a little bit about our commercial execution here. I mentioned a little bit that we retooled our commercial organization really around being able to have the complement of hunters, of farmers on the sales side, but also applications expertise and validation services. When we walked into this business at the time of acquisition, we had limited process for improving market visibility. Again, no digital marketing capabilities or repeatable process for generating leads or nurturing those customers who are not yet ready to buy, but looking to specify and contemplate what they were going to buy once they get ready for scale up. So again, you're going to see this on your Gemba tour.
We've got a great stop for you along the tour that will talk about our transformative marketing capabilities in terms of really focusing on getting into those pharmaceutical companies early, working with them to help specify what it is that they need to achieve their results, getting a disciplined marketing campaign in place to improve visibility and account coverage along with better lead handling and streamlined sales funnel management process. You can see the stats on the right here just in terms of what we've been able to achieve and pointing our sales folks in the right direction with the materials they need to be successful in winning those specifications in target accounts and then subsequently arming them with that knowledge so that they can improve their win rate over time. All of this would not be complete without bolting on the great innovations that we've got, these end to end process solutions, these capabilities with the core capability that Pall has relative to the consultative relationship that it has with its customers. And there are a couple of dimensions here that are really important and that is, Pall has always had great technical insight, right. But bundling and packaging that insight in a way that creates partnership with customers and allows that dialogue for solving problems through our scientific and laboratory services.
Again, through a number of centers of excellence that we have spread around the world, gives us that early interaction with customers to help understand or to help them find solutions to their challenges in working with them on our SLS side. We also have a process development capability which you'll see on the tour as well, which is the beginning part of specifying products for designing your downstream manufacturing process when you get into biologics. Again, we continue to build out our capability in terms of our centers of excellence. One is right here in Westborough. We've got a few in Europe are building that capability as well in China.
But we feel that we're really differentiated not only with the products that we bring to bear and the solutions we provide, but additionally with our laboratory scientific and lab services as well as our process development capability. So in summary, you're going to see a lot of this on the tour, but we think we are well positioned with differentiated product portfolio in the most attractive and fastest growing parts of the biopharm market. We are leading, I think in solving many of our customers' most critical bioprocessing challenges and certainly are using DBS to continue to leverage better go to market, better targeting of what customers need and understanding their unmet needs and the problems that need to be solved, thereby allowing us to accelerate growth. Okay, that leads us into the summary. So that was Mario.
Now I'm back again. So you hurdle all of these things today. Hopefully you saw a continuity of theme here, right? DBS is who we are, how we do what we do. It's thematically through every fabric of our existence, but not a forced march.
It is a tailor made approach in terms of which tools are required based on the needs of the business at the time of acquisition and frankly throughout its evolutionary journey, right. Some of the businesses that I have been in at Danaher had been owned by Danaher for 18 years, right. They had been DBS ed a lot. Their needs were quite different than a new business to Danaher. And that's the beauty of the tool set.
In our case, for Paul, we were focused on accelerating innovation, right, and improving execution, taking the cost out, really was required so that we could actually feed that innovation engine and help us continue to improve execution both commercially and operationally. Again, tailored approach, not a forced march and I think we are just incredibly pleased with the results that we've seen here through 3 years and our largest acquisition at Danaher here at Pall. Some of you have seen this graphic on the left before, but the numbers speak for themselves. We spent a lot of time focusing on operational execution in terms of improving our cost of goods sold, taking out waste, getting supplier leverage, working on price, okay, building leverage and scale, using our scale to our advantage. We do that while reducing G and A costs, reducing the complexity in the business, reducing the footprint of the overall structure and factory operation, reducing the number of management layers, increasing span of control.
And we take those savings and we reinvest them in growth, largely around our R and D investments to drive innovation, our sales and marketing improvements to become commercially more savvy and more effective. And in doing so, it drives the flywheel of a continued core growth and improved operating margin expansion. Today, you've seen 500 basis points of gross margin improvement with leading us to operating margin high teens transitioning to mid-20s in terms of the Pall business reducing G and A by over 25%, Those savings going back into R and D and sales and marketing both up at 5% and about 7% respectively, which then leads into our ability to continue to drive growth in mid single digits. So we are very pleased the results we have had through 3 years of being a Danaher business. And I think we are thrilled with the franchise that we have and that we are building.
I think there is a lot of runway ahead in terms of M and A opportunities, additional innovations to be brought to bear on the market, but we are off to a great start. You've seen this graphic, I think this is the 3rd time you've seen this graphic, right, DBS. We started with DBS, we're going to end with DBS. And so, it's clear how we've used each of these 5 core values here to drive superior execution and operational performance here at Pall. Really focused on the 3 pillars of lean leadership and growth.
Couldn't do it without putting the best team on the field, which we work to do day in and day out. So I certainly appreciate the team from IL-one who is here, hopefully enjoying a little bit of this moment in the sun despite the rain. And obviously at the end of the day, DBS is who we are and how we do what we do. With that, I think we will invite Rainer up to take some questions. Yes.
And I think there are some microphones circling about the room, so before you ask your question we will get you a microphone.
We're going to go to the back first. Ross, go ahead.
Good afternoon, guys. Ross Muken from Evercore. So as we think about particularly in the biotech business, you covered a number of the key growth drivers and obviously there is a huge proliferation of molecules that sort of going on currently. But the complexity is also changing. There is a lot of new technologies, gene editing, gene therapy, etcetera.
I guess as you think about the duration of sort of the growth that we see today, given kind of what's in the pipeline, how do you think about it? Is it in terms of years or even a decade or decade plus in terms of how much you can see that's ahead in that portion of the Pall business? And then as you think about the various technologies in some of these more complex molecules and what's required, you have a lot of pieces you touch in the workflow, but there's still some other portions to fill out. How are you thinking about sort of that mix of inorganic and organic kind of growth that Danaher is known for within this business visavis what you've already done with sort of the new product expansion, but also with what's coming visavis potentially other smaller assets you could tuck in?
Yes, thanks for the question. I think there is a very robust trajectory for biologics, particularly given the acceleration of interest in various disease states that are out there. I think we've certainly seen sort of an exponential growth in the amount of spend that's going into biologics relative to small molecules. And so I think probably what we'll see is continued double digit growth for the foreseeable future in that space, which could only be forestalled by a slowdown in FDA approvals, if you will, or if gene therapy, for instance, doesn't take off. But short of those things, I think we see a pretty robust trajectory.
In terms of how we are positioned relative to that space, we continue to innovate and we will always continue to innovate. I think we've got a good set of DBS tools around identifying unmet needs in the marketplace. And I think we are well positioned to bolt on inorganic opportunities as and when we identify that they are needed. So we've got great opportunities both inorganically and organically going forward.
Thanks. It's Steve Bischoff, Morgan Stanley. Reiner, I appreciate that you started the discussion today by giving folks context and thinking about where this fits in a broader offering. I wonder if you could just add another layer on it, take your hat on where you sit over a number of different businesses inside Danaher and give us a sense for where you think you're incrementally winning over the last couple of years with your biopharmaceutical customers. Are there different kinds of conversations that you're having?
And where do you see the breadth that you now have at pharma, which is bigger with Paul, translating to commercial success?
Thanks for that. So we see the nature of the dialogue that we're having changing quite fundamentally. And the reason is because our message around our value proposition to accelerate time to market for those life saving drugs is really gaining resonance. And the reason that we're able to have that dialogue is because the technologies that we have at the front end in the development of these biomolecules are deeply penetrating on the one hand, and on the other hand decisive in terms of accelerating decision making. So if you think of as a concrete example, cell line development, we have an array of solutions there, which we market directly to these biopharma customers, which fundamentally accelerates the development, the testing, the validation, and then the selection ultimately of the cell line, which is subsequently used to develop some of these biologic drugs.
So that would be an example on the development side. And this can play through them to the production side, because a lot of the methods that you develop in order to test these are subsequently used in scale up. And then, of course, once as Jennifer pointed out, once you expect in here from a process development perspective on to commercialization. So once again, we really like the way we're positioned there. We think it's unique versus others in terms of the depth and the quality of our penetration on the development side, as well as the production side, and all that to really speed the time to market of these life saving drugs.
Thanks. Just over here. Maybe a couple of questions on the industrial side. The first one really around microelectronics. That's an extremely volatile industry.
Some of the recent noises out of capital equipment providers has not been very encouraging. So maybe give some update as to what how you see that market and your orders within it? And then secondly, more structurally, a lot of industrial companies in Filtration and other industries trying to move more into software IoT based business models. Just wondered what Paul is doing on that front on the industrial side. I understand that the sensors and chip making sells into that theme.
But how is the business itself changing its own model in that regard?
So, thank you for the question. I think we feel really good about our semiconductor position within our microelectronics business. I had the opportunity to, I guess, you call us an opportunity about 20 years ago to be in the semiconductor business and it was a completely different animal back then, right? Back then it was flat panel display and computers. And when a recession would hit, you'd have a business that would drop by 40%.
That is absolutely not the case now. And why there might be a little bit of cyclicality. I think the incredible demand for handheld devices, the IoT that you see in your homes, in your cars, etcetera, right. The self driving car will have 5 times the number of chips in it as any conventional car that you've got on the market today. So, we recognize that there could be some cyclicality, but the underlying macro there is really compelling in terms of continued demand for 4 chips.
As we see just about everything censoring up as Rainer says. The other question?
No, that was about the data.
Yes, the IoT side of things. One of the things you'll see on the Gemba Tour is some products that are making their entry into IoT and software based solutions relative to booting up data to the cloud in terms of predictive maintenance and monitoring and so on. I think, some of the market is still a little bit early days there. But I think certainly, I think we are well positioned to be able to capitalize on that. We have got core technology there.
And I think one of the things that you'll also see in our bioprocess suite is a move to automating that end to end continuous bioprocess, right, which is press a button, the cells actually are in the bioreactor, they move through acoustic wave separation all the way down to final fill and finish and you got a panel in front of you that says, yes, here is your yield, here is your this, that and the other thing. And I think we are well positioned there.
What about Cliff?
Cliff Ransom Research. I want to repeat a question I asked at the Analyst Meeting and I'm wondering if I have an answer for my own question. And it is that when you go back to the original Toyota production system, principle number 1 or number 2 was respect for the individual. And I think today we measure that as employee engagement. I still think that's a very important metric, but I didn't hear that phrase once today.
And I want to know is it because you think you've moved beyond it, or it's just that it's not something you think you need to do?
Okay, great question. I'll take that one. So in fact the terminals just closed on our 2018 associate engagement survey, where we had a participation rate that we're proud to say is that's well over 90%, and something that we take very seriously, as we always do when we have the chance to see data. So we've been on a journey now for a number of years to address the topic of associate engagement. We see it as critical as you do, Cliff, in the sense that we want our folks to not only work hard, but enjoy the work that they do and grow with us and really achieve life's potential.
That's what it's all about. So whilst you might not heard it directly in the presentations today, it's a critical element of what we do in talent development, talent retention, and just to understand how we can make Danaher a better place to work every day. Absolutely.
Would you also said that you tried things by the metrics that you care about? In the last 5, the Wilson's comp gains, innovation bubbling to the surface. You
or objectives around that. In fact, we do and those vary by operating company, as each operating company has sort of its own starting point, and then they drive for those. But each of our presidents and those leadership teams are very clear about where we want to be from a metrics perspective on engagement as well. Great question. Thanks.
Tycho in the back and Scott here.
Hey, Tycho Peterson from JPMorgan. First question on continuous bioprocessing. Curious if you think we've kind of reached an inflection point here? And then where you think that the adoption goes over the next couple of years? And how much of that's driven purely by cost versus regulation?
I think it's largely going to be driven by cost, the need for rapid changeovers and the array of drugs that are coming down the pipeline. We have customers with whom we are partnering to work with them on using continuous bioprocessing as the first foray in using that process to get an FDA approved drug, right. The process has to be tied to whatever is approved from an FDA basis, right? So it's not a direct substitution for drugs that are already commercialized. It's going to be the next generation of drugs, right, the ones that are in the pipeline right now that we are working on to bring that technology to bear.
And we've got a number of customers with whom we're working to be able to drive that. But I think it's cost. I think it's going to be quick changeovers. I think it's going to be the need for manufacturing the terms of working with them to socialize the benefits of continuous bioprocessing. It's new for them, right?
And so they are coming to speed.
Okay. And then maybe a follow-up to the question earlier, Ross's question on the demand side. If we go back a year ago, we went through a destocking period as biosimilars were coming into the market. As we think about some of your customers are still putting up 5,000 liter and above capacity, how do you think about maybe volatility and supply demand dynamics and the risk of going into another destocking period? And then separately, I'm just curious as your thoughts on getting into contract manufacturing.
We've seen some of your peers do that. At this point, you haven't, just curious as to your appetite there.
Yes. So, in terms of the destocking question, we did see some of that last year, right. We saw a little bit of a slowdown. I think our customers are sort of properly stocked now. We have a proprietary way of measuring sort of the ingestion rate, if you will, of filters and usage thereof, such that I think we can probably anticipate better
if there
is destocking behavior in the marketplace. We don't foresee it. It's not that it couldn't happen, but we don't foresee that. With regard to CMO, I think we like very much the portfolio that we are in today. What you will see is a continued focus in our process development capability, which is the early phase specification and design of what that manufacturing scale up is going to look like.
And we partner with a number of small, medium and large biologic companies to help them do that. But we're always looking at opportunities going forward. Don't think it's a strategic imperative for us to be in CMO, But we are always looking for opportunities going forward and we will continue to evaluate the space.
And our last question is going to come from Scott
here. Hi, over here guys. One of the things after I've covered Danner for a long time. One of the things that's always tough to really picture is how you take G and A costs out so aggressively. Paul had already spent I guess about 2 years taking G and A costs out before Danner came in.
Give us some examples, I guess a little bit more tangible examples of how you can take that out without disrupting your day to day, particularly in a business that's still growing.
You want me to start? I'll start with one. Those were the early days of the Blair days there at Pall. So I'll just give you a concrete example here in the finance organization. Pall at the time of acquisition had right around 400 folks in the finance organization and closed the books in 6 weeks.
Today we are at 180 to 200 folks in that finance organization, we close the books in 3 days. Okay, so as you think
Is that software deployment?
No, that's all about banner business system and shortening processes, removing waste, getting directly to the answer. In fact, what we did find at Pall is after what was a bumpy SAP implementation, which was remediated still under the previous ownership, that there's plenty of data systems and information. So it wasn't a lack of data, but it was perhaps a lack of process organization. So that's just one of many examples along those lines. If you think about all the rooftops that John mentioned, that's all G and A, a great deal of rooftops.
You might recall the headquarters down there in Port Washington, we no longer own that. We've downsized that sold and now lease back the portion that only we need. So there are very
Thank you. Thank you.
That's it. All good? Yes. Thank you.