All right, great. Thank you, everybody. Thanks for joining us today. Welcome to the JP Morgan Healthcare Conference. I'm Casey Woodring from the Life Science Tools and Diagnostics team here at JPM. I'm pleased today to be joined by QIAGEN. We have CEO Thierry Bernard with us. He'll do a presentation, and then we'll go through a Q&A session afterwards. So with that, Thierry, it's all yours.
Thank you, Casey, and good morning, everybody. I know it's just before lunchtime, so I'll try to make it as interesting as possible for you all. It's a pleasure to be presenting again in front of you at JPMorgan. We have also people, I think, on the web, so if they are in Europe or in Asia-Pacific, good afternoon or good evening. You know that traditionally QIAGEN doesn't disclose numbers on the previous year performance at JPMorgan. We won't do that this year, which is probably a good sign as well. We will disclose our full year 2024 performance in something like 15 days, early February. But as you can imagine, we have a good feeling of what we committed to you last year from a sales standpoint and also an EPS standpoint. What I'd like to do today is take you to where we stand today as QIAGEN.
We believe that this has become a much stronger company, a company which is obsessed, I would say, by two mottos. One is execution, and another one is profitable growth. But let me start with a quick movie showing you on how, because of a relentless focus on some key pillars of growth over the last five years, we made this company a stronger company, as I just said. Five years since I presented the first time in front of you at JPMorgan, it's fair to say that in the last five years, the world has become much more volatile on every dimension: politically, financially, economically. But for us, it has been five years of focus, as I said, focus, execution, five years of making improvements in life possible, and five years as well of trying to advance science and improve health care.
The value of biology has never been stronger. Our customers are using it to address crucial issues affecting all of our lives. QIAGEN is supporting them in advancing science and improving health care for people around the world. We are helping customers millions of times a year to gain access to DNA and RNA. Because gaining access to these building blocks of life enables insights. Because tuberculosis kills more people every day than malaria and AIDS combined. Because rapid results matter for patients. Because new technologies lead to new breakthroughs. Because finding critical insights is what matters. And above all, because insights are what enable our customers to take action. Life science research and clinical testing have never been stronger, enabling our customers every day to make improvements in life possible. Advancing science and improving health care, QIAGEN has never been stronger.
So we indeed believe that this company is much stronger than some years ago. And why are we so confident in our future and our performance? I could give you many reasons, but I'm going to highlight four. First, because we play on what is probably the most dynamic, active market in tools and diagnostics, the molecular market. It's a large market. Our total accessible market for QIAGEN alone is probably moving closer to $14 billion. It's a growing market, at least mid-single-digit growth. I know that some of you sometimes are concerned by what I considered short-term events: the evolution of the Chinese market, the evolution of capital expenses in labs. But those are not long-term drivers. The long-term drivers of this molecular market are extremely good. Population is aging, more tests. Unfortunately, infectious diseases are still spreading all over the world.
Cancer is impacting more and more people, more younger. Also the technology drive. Who was talking some years ago about, for example, microbiome analysis, liquid biopsy? Every year, recently, minimal residual diseases in oncology, we are pushed by new frontiers for technology. And this is driven by molecular technologies, either in tools or diagnostics. Second, because QIAGEN doesn't address a narrow band of customers, but we are extremely well balanced between life science, tools, research, and clinical applications. Third, because if you look at the left side of these slides, across different portfolio solutions, sample technology, PCR, or digital PCR, next-generation sequencing, we are building sustainable and profitable ecosystems that are addressing the needs of a fantastic array of customers: academia, research, pharma companies, biotechs, clinical labs, or law enforcement.
Fourth, and potentially one of the key or unique differentiations for QIAGEN, what makes this unique is that we are the leader in the first fundamental step in any run in molecular technology, which is the sample prep. Whether it is manual sample prep or automated sample prep, we are an established leader, sometimes more than 40% of the market. Let me give you an anecdote. Two years ago, I was invited in Cambridge in the U.K. in front of roughly 400 PhDs from all over the world: Asia, Pacific, North America, Europe, you name it. And at a point, I asked, "Who among you have been using QIAGEN's product?" I had 400 raised hands because they all know at least QIAGEN for this.
Leveraging that very key leadership in sample tech allows the company to then take further shares or wallets in different other activities: PCR, next-generation sequencing, digital PCR, clinical testing, syndromic testing, tuberculosis testing. This very active market where we are playing, plus this unique positioning, are triggering key facts and key commitments as well. Facts, first and foremost. Leadership position, as I just said, number one in sample tech, number one in tuberculosis testing, between number one and three in PCR, companion diagnostic, forensic testing, digital PCR, syndromic testing. Second, an unparalleled recognition by peer reviews and scientific publication. Third, a very solid P&L with significant gross margin, EBIT margin. This is driven by more than 85% of our revenues made of profitable consumables. Also a commitment, a commitment that we took to you in our last Capital Markets Day in June of 2024.
Those are very simple numbers, simple to remember as well: 7, 31, 2, and 1. 7% is our sales CAGR, above market growth for the coming years. 31% is our objective for EBIT margin. 2 billion is the total revenues that we are going to get from our pillars of growth. And 1 billion, at least 1 billion, is our commitment of return to our shareholders. Let me take you quickly to what we committed six months ago in New York. It's articulated around three key elements. First, a very simple and clear strategy: continue to focus on selected, differentiated solutions. Double down on digitization of our activities and artificial intelligence. Second, proven and factual commitment to profitability. We disclose a plan that we call QIAGEN efficiency, generating more than 250 basis points of operational efficiency through different actions. I can come back to that.
Third, proactive return to our investors, more than $1 billion that we will return until 2028 to our investors. You could say that it's quite easy to set targets, but when those numbers are supported by more than 20 quarters of execution in sales growth, in EPS, or cash flow generations, those are not just targets. This becomes a realistic ambition, and if you look at 2024, again, I said that at JPM, we do not disclose numbers for the years, but I said as well, we feel good about the top line and EPS ambitions. We feel that we have it under control, but it's not just a matter of financial execution. It's also execution in development across our different portfolio.
I'm not going to go through all that slide, but let me highlight, for example, four FDA approvals for QIAstat-Dx, unprecedented, four approvals to the FDA in one year. And you have seen last week the publication of a new one starting 2025 with the QIAstat-Dx GI approval. The fact that our syndromic solution is now endorsed by major pharma companies to develop companion diagnostics tests, for example, on Alzheimer's with Eli Lilly or some chronic diseases with AstraZeneca. More than 100 new tests developed last year and available for our customers on QIAcuity. The launch of QIAcuity, our digital PCR platform to the clinical world, what we call QIAcuity Dx. A year 2024, what again confirms that obsession with execution. So let me take you through also a bit in more details on that commitment to 2028. Again, 7, 31, 2, and 1.
First of all, the what, and then I'll go to the how. This slide is a very good example of what is QIAGEN today. First, a renewed clear focus. We do not invest everywhere. Why do we focus? Why do I relentlessly insist on focus since 2019? Because we are a mid-cap. Mid-caps need to invest and allocate, deploy capital where we can take between a number one and number three position on the market. Below this, it's much more difficult to focus. And when you look at that focus, once again, it's remarkably balanced between two established leadership positions already, sample tech, tuberculosis, and three very growing different solutions, digital PCR, syndromic testing, and bioinformatics. And you look at our ambitions here, it's very factually driven. In sample tech, I will come back to that in a minute.
We want to continue to leverage on our efforts on investment and continue to launch new platforms. We want to focus sample tech also on what we call added value sample tech for liquid biopsy from microbiome for minimal residual disease. I know that many have been talking about rising competition or growing competition on QuantiFERON. It is forgetting that since we have launched QuantiFERON, we are faced with phenomenal competition. One of them is a technology competition, which is skin tests. And as of today, we still have 50% of the market to convert to skin tests. And in addition to that, we are launching new solutions based on QuantiFERON beyond latent tuberculosis with Lyme and also a solution for emerging markets.
Moving our bioinformatics business, a profitable business where we are number one already in the world, to a more SaaS model and continuing to invest in artificial intelligence there. Doubling down in resources to push our digital PCR solution with more sales force, more application specialists, more menu. Last but not least, continuing the development of the menu on QIAstat-Dx. Looking into a bit more details, definitely we want to continue to invest in automation, starting with sample tech, where we are on the attack. You see here the plan for the coming two years, very aggressive, launching three new platforms in sample tech. One, upgrading what is the most successful sample tech system worldwide, QIAsymphony to QIAsymphony Connect, available to our customers at the end of 2025, specifically addressing the growing needs of liquid biopsy in sample tech.
Second, the development of the small benchtop system that we called QIAmini, available early 2026. And third, the entry of QIAGEN into high-throughput sample tech, where we are not at the moment. But it's not just about sample tech. As I said before, it's launching also our digital PCR into the clinical world, QIAcuity Dx, but also the higher-throughput version of QIAstat-Dx, especially in the U.S., what we call QIAstat-Dx Rise. The second, obviously, big steps in this strategy is to continue to develop menu, diversified menu across different activities, digital PCR, life science, focusing on quality control for pharma companies, cell and gene therapy. In clinical diagnostic, pushing that solution around LDTs and hemato-oncology.
QIAstat-Dx, this is a confirmation of what we have said many times, the development of the menu, direct identification of positive blood culture, CAUTI, pneumonia, and on QuantiFERON, as I said before, the launch of the Lyme application. Last but not least, let's not forget that we want to leverage on our current leadership position on companion diagnostic PCR to continue to develop solutions for pharma companies based on PCR format, digital PCR, or next-generation sequencing. The what, but also the how. What I also like about this company over the last five years is that we never hesitate to challenge ourselves. After all, on a daily basis, we work on viruses or bacteria. We need to be like them, constantly evolve and mutate. How are we doing that? First, it's about constant operational efficiency.
I talked about QIAGEN efficiency before, but it's constantly trying to optimize our networks of manufacturing sites all over the world. We are not in the business of accumulating sites. Let me give you an example. Two years ago, we closed the acquisition of an NGS-based forensic company in California. But the traditional hub for QIAGEN in next-generation sequencing is in Maryland. We closed California, brought it to Maryland, operational efficiency. Second, it's process optimization, continuing to invest into an enhanced SAP system, SAP HANA, to improve the end-to-end processes and generate more profitability. Third, those are the difficult decisions, but necessary decisions of portfolio streamlining, continuing again to focus, focus, focus. You have seen the difficult decision last year around NeuMoDx. We closed down that site, or more recently, Diurinox. But it's around also the organizational setup.
First, constantly bringing new talents to the company, five new board members in the last three years, three new executive committee members. You see them here on the chart, Nitin, Fernando, Antonio. It is also daring to change the organization. What do I mean by this? For those who have been following QIAGEN for many years, you know that traditionally we have been organized around business units, Life Sciences, Molecular Diagnostics, Bioinformatics. I do not think that this organization is fit for the future. I know that it is sometimes tempting to put companies in boxes. Is QIAGEN a molecular company, clinical, or a Life Sciences company? Our customers are more and more hybrid. They do clinical, but they do also research.
What is important for a company like QIAGEN tomorrow is it to spend or waste time, management energy, to think whether a development on digital PCR should be life science or should be clinical, or rather making sure that we invest enough in digital PCR to make it a very competitive technology against next-generation sequencing or qPCR. This is what counts, so what we are changing the organization for is to build solutions in sample tech, in syndromic, in digital PCR that are answering both the needs of academia customers, research customers, clinical customers, pharma customers, biotechs, or others. Sustainable, profitable, winning ecosystems, and this is why those three business units disappear starting January the 1st, and we are creating two new departments. One is Portfolio & Innovation , which is going to cover from strategic marketing to product development.
Another one, Commercial Operation, where we are going to continue to specialize our people and decentralize decision-making power as close as possible to customers. At the heart of this strategy, obviously, is cash and the financial strength of this company. For the last five years, we have continuously strengthened our balance sheet, and as you know, as of today, quite no leverage and three major capital allocations. Obviously, investing into QIAGEN, organic R&D model QIAGEN as a company, which will continue to invest around 10% of our revenues in research and development. But with a caveat, it has to be profitable, that commitment to profitability. Second, M&A, but it is not a company that is doing M&A for the sake of M&A. We want to deploy capital for M&A, but it has to be synergistic with our existing portfolio, and it has to be also reasonably quickly accretive.
In my view, two years for accretion. And third, obviously, is proactive return to our shareholders. And as you have seen yesterday, we have decided to proceed with another share buyback of $300 million. This is exactly, once again, executing on our commitment to return at least $1 billion, as I said before, to our shareholders. As a conclusion, what can you expect from QIAGEN in 2025 and beyond? First, the same humility and focus on quarterly execution, both on top line and EPS, quarter after quarter. Second, continue to give objectives and deliver on higher growth than the average market. Third, continue to invest into digitization of our activities on every dimension, sales and marketing, obviously, but also R&D, manufacturing. And fourth, that's very strict capital deployment discipline. In other words, what you can expect is growth, profitability, and return. Thank you.
All right. That was a great overview. Thierry, you hosted an analyst day this past summer where you guided the 7% top line growth over the medium term. That growth rate is against an end market growth rate of 4%-6%. Can you just walk through your confidence both in the sustainability in that end market growth number and then QIAGEN's ability to outgrow that number over time?
First of all, it's based on, as I tried to show on the slide, a track record where we have obviously already outgrown the market. Look at the latest official numbers from QIAGEN Q3. Slightly positive in life science when most of the market was hugely negative at - 6%, - 5%, - 4%. QIAGEN was 1%. And in clinical diagnostic, 10% growth. This is already outpacing the market growth.
We believe, as I said at the beginning, that this market, regardless of what is happening in China at the moment or the softer capital spend context in many labs, the drivers of the market are very solid still. So we still believe in a, let's say, 4%-6%, 4%-5% market growth overall and by focusing on growing market where we believe that we are differentiated, bioinformatics, digital PCR, syndromic, sample tech, tuberculosis, we indeed believe that the 7% CAGR that we committed to is really reasonable. But it's once again proven by what we have been achieving in the last five years. Remember during COVID, many people were telling us, "Yeah, but guys, you are or your numbers are really inflated by COVID." I think we did prove that we were extremely COVID-relevant, but we never became COVID-dependent.
We were the first company to completely decouple our P&L back in summer of 2020 from COVID. And we were the first company to clearly distinguish COVID, non-COVID. And we said at that time, "In 2020, we will grow our non-COVID revenues by double-digit." And we executed on that. We executed on that. So there is no complacency here. There is no arrogance. It's just that I think that we have the right portfolio of priorities. Obviously, we can always increase that by smart M&A. We have the right people. I think we have the right organization now to execute on those numbers.
As we think about 2025, how do you view the current market and market backdrop, and how do you expect that end market to progress over the course of the year? You're coming off of a year in 2024 that saw more cautious spending on the instrument side. And then additionally, in 2025, are there areas of opportunity for QIAGEN to accelerate growth above that 200 basis points above market growth that you normally see?
Well, first, we are not in a guidance call today, but to give a bit of flavor, yes, indeed, 2024 has been impacted in many labs by sluggish capital expense, I would say primarily in life science, more than clinical. And there is a fundamental difference that I hope everybody understands between clinical and more research labs as regard to capital expense. When you have customers more cautious on spending money in clinical, you can always place your system. Why?
Because it's easy to forecast together with them a contracted volume of consumable, and therefore you can basically amortize the price of the system in the price of the reagents. It's very difficult to do that in research and academia because they depend on grants, they depend on research projects. So forecasting a stable level of consumable is quite difficult. This is why we prefer not to place in life science. Never forget that when you place a system, the instrument is still on your balance sheet.
But honestly, I don't think that that situation is going to last forever. Why? First, last year, unprecedented situation. 54% of the world population last year was going under election. This is never good for, let's say, public health or public labs. Uncertainties. It's behind us. I believe, on the contrary, that we have a bit more visibility on financial also forecasting.
I have never seen a country, even in the U.S., with all the rumors that we are hearing at the moment, decreasing their public health spending many years in a row. That's why I do not believe in a decrease of the NIH budget in the coming years. This year might be flattish. It was this year already. Next year, but in 2026, I believe that this budget will increase, and facts historically are proving us the same, so what does it mean? We think that Capital Expense in labs, especially in life science, will normalize starting H2 of 2025. Geographically, we believe that the U.S. will remain the most dynamic market for molecular tools or clinical diagnostic. We do not believe in China bouncing back in 2025. We always said the same for the last two years. We spoke about 2026.
And where do we believe that our company has more opportunities in 2025? One, syndromic testing, clearly. Why? Because the performance that we are going to show you in 15 days for QIAstat was not very much impacted by our new approval, FDA approval for QIAstat in 2024. So this should come into play and impact 2025. Second, because we have a case to prove. It's the value of digital PCR in clinical diagnostic. And we are launching our solutions as we speak. And you see more and more publications of labs interested in infectious diseases and digital PCR, hematology and digital PCR. Third, even if the impact will be more towards the end of the year and early 2026, I mean, those launches in sample techs are going to pay off.
If you see why QIAGEN is performing better than competition in sample technology for the last three years, it's because for the last three years, we have already decided to invest into automation. We replaced QIAcube with QIAcube Connect. We replaced EZ1 by EZ2. This is paying off. This is where I see us having extra opportunities next year.
Okay. That's helpful. I wanted to just touch on the adjusted operating margin targets that you put out. You have a 2028 target of at least 31%. That implies more than 75 basis points annually. How should we think about the cadence of that? Is there an opportunity to perhaps outpace that in 2025? Just any comments there on margin drivers?
I mean, it's fair that you always want more. I mean, if you can already execute on 31%, it would be a good performance. We have already an extremely good level of margin, EBIT margin. We can improve that, but we gave you in New York very good details of how we are allocating those 250 basis points. And if you remember, I talked about, for example, the organizational setup. We are like dogs on that. As I said, we are a mid-cap company, 2 billion revenues.
In my view, at this level, the maximum level of layers between an entry position and myself at QIAGEN should be six. If we can do better, we should, but we are already tracing that everywhere, making sure that the span of control of our manager is seven people. When you have below seven direct reports, we need to understand why and correct it. Second, digital investment. Simple example. Everybody knows or speaks about digital in sales and marketing. This is quite easy.
Digital in operation, for example, where you put digital algorithms and cameras all over your production line so that you can see proactively where you have a risk of a default and therefore you reduce crap. This is what we are putting in place. You have seen in our CapEx over the last years a significant investment into that new SAP, SAP HANA. Obviously, we expect this to pay off, especially from an end-to-end process efficiency. We gave some numbers in New York this year. I mean, we are coming to the tail of that investment, and starting 2026, we want to see, obviously, the results of that significant investment into the future of QIAGEN. I spoke about also improvement in operation. A company like QIAGEN is not, as I said before, in the business of accumulating sites all over the world.
If anytime we do an acquisition, we need to add a site. No, anytime we can consolidate, we share. So I think this number is realistic. Obviously, we still need to execute on that. What could help us to go faster? Better results from our investment in digitization, clearly. There are still things that we are discovering in full humility here. We will see with our new organization if we can consolidate activities faster, if we can have better cost synergies. We put clearly an objective, so we'll see if we can beat that. So it's under control if we can do better. Obviously, you'll be the first to know, but it's already a realistically ambitious target. We need to execute on that and deliver on that.
On QuantiFERON, can you elaborate on the strength in the business in 2024 against a tough comp in 2023? And then your medium-term revenue growth assumption for that business is 7%. Why is that the right number to anchor to over the next several years? And curious on how you are factoring any potential competitive threats in that number.
So, as I said, this year in 2024, in June, we had a capital market day. Some of you might have attended to it. The previous capital market day was in June 2019 in New York. At that time, QuantiFERON was $200 million revenue. June 2019, New York. And I said at that time, I was not the CEO. I was responsible for the clinical business of QIAGEN. I said 10% at least growth rate for QuantiFERON with the target of hitting $400 million by 2024. And most of the market told me it is not realistic. You cannot continue to grow a business at 200 at more than 10%.
Not only did we achieve that, but we achieved it with a blank year in 2020 where nobody was buying anything else than COVID tests. We did achieve that. And why did we achieve that? Is that, first of all, this is still a growing market. Who could imagine that back in 2015, the WHO was not even considering latent tuberculosis testing in the fight against tuberculosis, which is done now thanks to QIAGEN? It's a growing market because every year you have more and more countries moving their guidelines, for example, to mandate that healthcare workers should be tested for latent tuberculosis. Because every year we continue to capture new markets.
You might have seen last year that we published that the state of Oman, it might be a small state population-wise, but it's very significant, decided to systematically screen all their migrants with QIAGEN, what, by the way, the New York state is doing and so many other countries are doing. Fourth, because way before some people were talking about competition beyond skin tests, we proactively decided to protect that brand and that product. There is no complacency at QIAGEN over QuantiFERON. Way before anybody was talking about potential new competitors, we developed that partnership with DiaSorin to automate the backend of the test. We developed partnership with Tecan and Hamilton to automate the frontend of the test. We developed the test itself technology-wise. It's the fourth generation compared to the third. Now, as I said before, we decided to expand beyond TB.
For example, it's the Lyme project that we are submitting to the FDA as we speak. So we feel confident that we will hit, first of all, the guidance that we had for 2024, which was $450 million. And when you see a 7% CAGR to reach $600 million by 2028, it shows two things: that we are realistic. It shows that maybe the market might see some new competitors coming, but we are ready. But it shows also significant ambition because growing a $450 million revenue at 7%, I mean, it's not easy. But I think it's doable. Let's not forget that regardless of any kind of competition, the key target is an antiquated technology called skin tests, which is still 50% of the market. And who is converting those people at the moment is QIAGEN.
Last but not least, I don't want to be facetious, but on QuantiFERON, this company has always been talking with facts, numbers, numbers of publication, IP, delivering. We'll see for 2024, probably again a double-digit growth. What I hear from the rest of the market is assumptions. I never hear about when, what kind of product, what kind of technology, what kind of differentiation compared to the market leader QuantiFERON. So we'll see, but we are prepared.
Got it. Just one more minute here. Just wanted to quickly touch on the announcement you made yesterday about the systematic share repurchase. $300 million this year follows $300 million last year. Just can you talk about what your updated assumptions are for share repurchases and M&A moving forward? And maybe any thoughts on the M&A environment currently?
So we said at least $1 billion, which means that we still have a range because this $1 billion was including the one we did last year, quarter one. So we are at $600 million already. You will see, you have seen in Q3, you will see in Q4 that the cash flow generation is still very good. If we can do more, of course, we will. We need to have the authorization, obviously, from our investors and from our governance. M&A, we do not change. The first priority is bolt-on activities that are complementary to QIAGEN. I've been spending the last five years talking about focus. I'm not going to use M&A to dilute the focus of this company. So it has to make sense from a product portfolio and second, from a profitability. Honestly, valuations were crazy in COVID and post-COVID. They become a bit more realistic.
But in a company like QIAGEN, again, a mid-cap, if in a business case we don't see a reasonable accretion in two years, it's difficult to move. And it's better to walk away. So that's how I see it. The good thing with QIAGEN is that given the strength of our balance sheet and the fact that we have no leverage, we could also look at bigger things than just bolt-on. It could help us to address, for example, a scale issue. Being a mid-cap is fantastic. I love it. But there is always an issue or a challenge with scale and critical mass. So we could look at it. We would be stupid to not look at bigger opportunities. But again, it has to be synergistic and it has to make sense financially.
All right. Great. Well, it looks like we have to leave it there. Thank you, Thierry.
Thank you, everybody. Thank you. Thank you.