Thanks for joining us. My name is Mike Ryskin. I'm on the Bank of America Life Science Tools and Diagnostics team based out of New York. We're excited for our next session. We're joined by John Gialardi, Head of Investor Relations for QIAGEN. John, thank you so much for being here.
Thank you for the invitation.
Format will be a five set chat, but feel free to raise your hand and we'll let you jump in. John, maybe to kick things off a little bit. We're about three quarters of the way through the year. Can we take a step back and sort of review how the year has played out so far relative to your initial expectations?
Maybe what have been the biggest surprises both upside or downside?
I think this year is proving the value of our business in that we are serving the continuum from life sciences through to diagnostics. More than 80% of the products in our portfolio, we are able to sell to life science labs to diagnostic labs. And what we're seeing this year is that one year life sciences will do better than diagnostics, one year diagnostics will do better than life sciences. And that's the way this year is playing out. We're seeing very strong trends in diagnostics, especially with our QuantiFERON test for latent TB detection, doing very well, continuing solid growth, approaching $500,000,000 of sales this year.
We're seeing very good growth in QIAstat Dx, our syndromic test. When you have a person who comes to the hospital or an emergency room, intensive care unit, you want to be able to test a person for a respiratory, a gastroenterological or a meningitis condition and you want to be able to test a sample against one of 20 pathogens, that's doing very well. On the life science side of the business, obviously with the funding pressure in The United States, also in China, concerns about where the budgets, that's been a bit of a drag on the industry this year and that's what's causing the friction and tension in there. But again, we can sell 80% of the portfolio to these different types of customers. Sample prep, for example, and if we go to New York City, we can start with a research lab at Weill Cornell.
They're going to be buying our sample prep products. Let's go across the river to one of the big research centers at a Pfizer or a BMS. They're buying our products as well for sample prep. Then we go to the New York City Chief Medical Examiner's Office or the NYPD. They're buying our products for forensics.
Every 10 there's a crime scene somewhere in the world being analyzed with our kits. And then we go to the big clinical hospitals in the New York City area. They're going to be using our sample prep for products for workflows like liquid biopsy, MRD testing, infectious disease testing. These are products that are getting used across that continuum.
All right. Thanks. That's a great intro, great starting point. I'm actually going to split the conversation One, into two I want to talk about some of the macro and end market view. And then two, we're going to talk about some of the product specific areas you mentioned like QuantiFERON and KRYSTAT.
So maybe on the market, end market macro side of things, how are conversations currently with your major pharma customers? Maybe we can talk about pharma tariffs, we'll get into QIAGEN specific tariffs later. But I mean pharma tariffs, MFN, just sort of budget decisions. It's been a really topsy-turvy year. Sort of what's the latest view on that? Sure.
If you think about the life sciences side of our business, that's where we're dealing with what we call academic customers. These make up about 15% to 18%, 20% of our business. Then we have pharma, that's another 15% to 20% of our business. And then what we call applied testing, would be primarily forensics, that's another 5% to 10% of the business. The other side of the business is diagnostics.
What drives the life sciences discussion with our customers is funding. Where's the budget? In academic, NIH funding, what's happening in the European Union with the Horizon budget, which are actually doing much better than what people are expecting, but the tension is around The U. S. On pharma budgets.
That's the topic you're bringing up about where they are on cost savings, MFN, these types of programs. We're seeing that customers want to continue to do work. So the trends are pretty good with these customers. They're very interested in our sample prep products. Also, that's a key driver for our QIAQV digital PCR franchise.
If you think about QIAGEN, we're a specialty powerhouse company. We have different franchises where customers really aren't wanting and demanding these products. And digital PCR is one of those that's doing very well with pharma. Another area that's very good for pharma is our QDI, our QIAGEN Digital Insights, our bioinformatics business. These companies are swimming and overwhelmed by genomic data.
How do they find the next generation of targets for different types of diseases? That's where they need our software to be able to find these targets and be able to create that next generation of drugs. That's where we're able to support them. And that's where we're able to generate growth with our pharma customers.
Can you talk a little bit about QIAGEN is predominantly a consumables business, relatively small instrument exposure. Can you just talk about what you've seen on the consumables trends so far year to date with pharma versus instrumentation? Any expectation of a recovery on instrumentation as you go into year end?
I'm not going to make a prediction about the year because we're late in the quarter, but also we want to be able to do an assessment of where the trends are after the third quarter. But what you're seeing is that consumable trends continue to be pretty good. And that's where again for QIAGEN with the business that's 90% consumables, 10% instruments, the instruments trends have been lagging in this environment. People are more reluctant to make capital purchases. At the same time, we say that the demand is delayed right now.
People are waiting for clarity on funding across these customer bases. It's not a hear very strong endorsement about what we're offering in sample prep where we're getting ready to launch three new instruments to customers, especially with the entry into what we call high throughput sample prep. These are labs that are doing hundreds and hundreds, if not thousands of samples a day that they need to process. We see it also with our digital PCR system with high acuity, especially among pharma customers, where they see the demand for this. When you hear people talking about cell and gene therapy, MRD, minimal residual disease testing, see if there's still cancer cells in the patient.
Can I still find that absolute quantification of that target? This is where the demand is there. It's not as strong as what we had anticipated probably two years ago because of the environment, it started to slow down. But that's where we're moving along.
In terms of some of the usual seasonality and timing dynamics with instruments, the usual end of year budget flush, remind us what's assumed in the guide both for academic and government and pharma and biotech?
We don't necessarily get into calling out whether we're expecting a flush or not because again, we're a 90% consumables business. But I think right now, we're seeing the ongoing trends continuing.
And maybe on academic and government more broadly, like you said, a relatively small part of your exposure, especially if you sort of drill down to NIH. But there's been early this year, there's a lot of concern on how NIH would shape out. We've seen better and better data points over the last couple of months, funds being dispersed. Are you seeing that blow through to demand from your customers? Or just what are you seeing on the ground as far as A and G in The U. S?
Well, I think what we're seeing is an ongoing continuation of the trend that we've been seeing at a lower level than what people are expecting for the year. But just because money is flowing or people are saying it's flowing, there's been a lot of burned bridges, a lot of trust that has to be rebuilt. There has to be a lot more consistency in seeing that flow to get that trust back. Once burned, why shy? When you put on a project, I'll tell you that having with your background.
But when you start these projects as a principal investigator, you have a two, three, four year time horizon. You want to have assurance that, that money is not all of a sudden going to be turned off. So that's where you see people watching, but they want to see some consistency of action. And that's the issue right now. For example, in The United States where you see divergence between the Trump administration's proposal for NIH to cut the budget by 40% to consolidate the intramural, all the centers in Bethesda into a handful of them.
Whereas you see Congress on the other hand coming back and saying essentially we're looking for flat funding compared to 25% in the budget. Because 85% of the money at NIH is distributed out across all congressional districts in The United States. So you have bipartisan support for NIH funding. So we have to see how that plays out and that's something we'll see as the administration moves towards getting a budget for 26 through Congress in the coming weeks and months.
So what do you think is necessary? You mentioned some of those burn bridges, some of the caution, the fact that it's multiyear grants. What do you think needs to happen to get us past that hurdle? Is it just having a 20 Just six number in time? Okay.
Time deals once. Okay.
All right. And then maybe on the policy side for pharma, same thing in terms of MFN, tariffs, IRA, just policy clarity, is that what we're waiting for?
In many ways, yes. You solved it overnight where all of a sudden you have a Section two thirty two filing in terms of for this sector. And remember this is one of 15 that's out there in terms of what are being put in place across different industries. We see this as potentially opportunity to be able to show the value of what healthcare can bring to The United States and we'll see what impact that has in terms of the tariff level. And of course everybody is waiting for the Supreme Court decision on the legality of the constitutionality of the tariffs.
You bring up the Section two thirty two news overnight. We've got some questions on what's included and what's not included. It primarily seems to touch on in healthcare medical devices, but there is some dancing around diagnostics. I know it's been a couple of hours. So what's your read on that?
For the Washington policymakers to figure out and we'll see the time.
And more broadly in terms of tariffs, can you talk about TIGEN's ability to offset that or mitigate some of the hit? Remind us your plans for this year in 2026?
So I would say, we are not fortune tellers, but having read the books on Trump and understanding his views on tariffs, as soon as he was elected President, we started to go into action mode to prepare what can we do in the event that we start moving towards tariffs. That included reviewing what are our transfer prices, what are we going to do in terms of safety stocks in moving products into The United States. Also making decisions such as it sounds small, but it has an impact. For example, we ship to Canada from our U. S.
Hub. So we ship Canada to shipping from Europe and be able to find a way to resolve that issue. What is the longer term impact on manufacturing sites? You can't just willy nilly move manufacturing overnight. It takes time.
Also there are exit taxes when you're leaving different countries. There's also IP issues as well. So what we said for 2025 is that we expect about 90 basis points of margin pressure on the gross margin. And we expect a similar amount for 2026 as we use some mitigation measures to implement. And I think that's why we've said publicly, we feel okay about the consensus for '26 on adjusted EPS at about $2.5 somewhere in that ballpark and we'll see how it moves with FX trends because we're having to face the tariff mitigation issue.
But as a U. S. Dollar reporter with a very strong cost base in euros, we have more cost in euros than we do sales. We have a natural hedge there, but obviously we're going to feel a little bit a currency headwind as well. Those are things we're working on right now.
So as FX can swing, maybe normalize a little bit that will be a tailwind for you?
We'll see if it's a tailwind neutral We'll see how trends go.
Okay. And what's you mentioned that $250,000,000 consensus number for 2026. Mostly that's assuming sort of continuing current operating environment from Yes.
Initial And we'll become more precise with time on where we see 26%. But again, QIAGEN, we've made a commitment out to 28,000,000,000 to deliver $2,000,000,000 of sales from our five pillars. We feel pretty good about achieving that number. Some may come in a little bit better, some may come in a little bit softer in terms of the angle of tax that we're seeing in terms of growth rates. But we're feeling good about the overall progression towards that $2,000,000,000 target. Okay. All right.
And then maybe that's a good chance to pivot to some of those key growth drivers and pillars that you talked about. You touched on all of them earlier. Let's start with sample prep. A little bit weaker this year than I think the LRP or sort of the long term view would point to kind of trending to give or take flattish. Is the hint to that primarily the policy angles we talked about sort of strip out policy and what you're seeing in academic government pharma and biotech.
Anything else to call out for sample prep performance this year?
No, I think you nailed on the head. I'd say, if you think about the backdrop of what was coming out of the U. S. Administration, what's been coming on, people are expecting a much more significant drop in our performance in sample prep. But again, that's a 90% consumables business.
We shipped 2,500,000 to 3,000,000 kits a year to customers. We made a mistake in teaching our customers that we will ship to you UPS overnight, you order or delivery. So this is not a stocking. It's not like you go out and buy all your sample prep for year and load up your lab. They don't have the space for the boxes.
And also there's such a wide heterogeneous mix of samples that people need for different types of sample prep that well over 40 different applications in different sizes. And we have thousands of SKUs in this area. So it's the breadth and depth that we are able to ship to customers. But what we're seeing is that the consumables, it's holding the narrow for all pretty good against in a flat environment is what we're seeing. Instruments, sales, that's tough in this kind of capital environment.
Remember on the diagnostic side of the business where the motivation of the customer is how do I buy these products and make profits. And I look at that reimbursement spread. And I will do reagent rental agreements where I will get the machine, but I'll pay it back over a multiyear period with the commitment to buy consumable kits and burn them. Customers in life sciences, it's a capital purchase. So I had to put the money upfront.
And that's where you're seeing people cautious in terms of buying there. It's delayed.
I mean, light of that, you are launching a number of products in sample prep, mostly towards automation. Can you talk about some of these kind of Symphony Connect, kind of Sprint, just sort of where you see those fitting into the market given that you've got some caution on capital question, why is now the right time? And sort of how big could the speed to the growth engine? Sure.
So if you think about sample prep, whether it's blood, tissue, hair, blood thinning in the carpet, it can even be air that we can pull DNA out of. We did that with a customer here in London. This is the first step in any lab process. That's what QIAGEN is known for. And that's why especially in a couple of weeks with Nobel Prizes, we'll be seeing.
Do we have one, two, three customers that will win a Nobel Prize this year? We've had 35 customers win Nobel Prize in the last ten years or so. And we're seeing our products and that's what gives our people this energy and purpose in terms of what we're doing and sample prep is really for the company. What we're seeing is that majority of our sample prep consumable sales are for manual kits. So if you think about an academic lab, a PhD postdoc or a student, pipetting there and I just mentioned, yes, are doing it manually.
That's the majority in life are in automation. That business is involving again life sciences customers is larger than clinical. The clinical side is very simply automated. Think of the Natara, the Gardens, Tempus, these types of labs are doing liquid biopsy, MRD testing. That's where we're seeing nice demand.
What we're trying to do with these three instrument launches is find a way process customer base to drive the growth on the automation side as we're feeling more of that pressure on the manual set. If you think about the instruments, especially QIAsymphony Connect, we're replacing our flagship system that we launched in 02/2008. Again, this is not the iPhone industry. These systems have very long cycle lives. They have very sticky environment.
We have over 3,000 QIAsymptoms out there. So this could be a replacement gain in the market expansion. It could be much more optimized to support our customers working on liquid biopsy. If you think about the QIA Sprint, this is an entry into what we call the high throughput market. These are customers who are doing hundreds, if not thousands of samples in a day.
It's more of a research application environment, not clinical, more of a research application. This is a new market entry area for us. This is an area where we're competing against the Kingfisher system. And that area is ripe for innovation in the new generation of systems. And then we're trying to help this small academic labs with what we call the QIA Mini, which is kind of looks like it looks like an espresso machine in terms of size.
It can do up to 12 samples at a time. And for a couple of thousand dollars, we can get that machine into a lab and we can automate that work at a time when a lot of academic labs are having trouble with staffing and be able to help them automate and make them more efficient. Nobody in the lab wants to do sample prep manually. So that's where we're trying to help them with these customers. These instrument launches take a couple of years to feel the instrument sales kick in.
And then on top of that, you get the cumulative effect of consumables starting to kick in on these systems and then it starts to grow together. It's not an overnight hit, but it starts to create a new wave of growth.
Yes. I mean that's a great background. Thanks, John. Maybe first on the instrument ramp, like you said, this is a market that's been especially on the life science research side predominantly manual for decades forever. How do you break that barrier?
How do you convince people there's value out here? I mean, totally hear you on the labor component of it and the saving technicians and lab personnel for better tasks, but feels like it's still a high lift in terms of like changing customer behavior.
Well, I think not to make it too technical also because I'm not the PhD postdoc sitting here. You're moving also on automation to a different type of sample prep. You're moving from the manuals, are dealing a lot with filters, which was the original invention of Topon to create QIAGEN. Remember before QIAGEN doing sample prep took days if not weeks, it took a little bit of black magic and a lot of luck to make sure that you were going to get reliable results with some pretty toxic chemicals. Menten's invention brought that down to a couple of hours.
And the standardized process that's been done, think about the hundreds of millions of times in the meantime over the last forty years, if not maybe close to 1,000,000,000 of samples. With the automation, moved to magnetic beats. So we're able to move to a new level of precision, accuracy, purity, precision in getting these processes done. You hit on the labor component, but we're able to automate. If you think about a lab that's doing seven, ten, 12 different types of samples, and maybe they're buying half the kits from QIAGEN, think of us as having about a 50% market share.
That gives us the opportunity to see if we can automate and pull more work sample prep. We can automate that work and bring that in. So this is an area that's getting a lot more intensity with our customer engagement, customer communication. That's why right now we're launching what we've launched what we call the build on campaign and a much more stronger branding campaign to remind a new generation of customers, QIAGEN, we're the sample prep people, and you can rely on us to build on our kits for your downstream work. And then from sample prep, we want to be able to talk to them about how do we sell you NGS applications in our bioinformatics, How do we move you into our digital PCR solutions and be able to bring other areas of our portfolio and get a larger share of wallet?
Okay. All right. And then if you think about the installed base growing over time, like you said, this is going to be overnight, it's a multiyear process. Any thoughts on sort of like what the steady state could be eventually in terms of split between automation versus manual?
We're going to see automation grow, but we haven't predicted yet when that switch is coming. Dominica and the team and I are working on a deep dive. Please watch our deep dive series. We've done QDI so far. We've done QuantiFERON and sample prep will be done before the end of the year.
Looking forward to it. That should be exciting. All right. Maybe let's go to QuantiFERON next then. Obviously, a lot of focus here over the last couple of years.
It's been a phenomenal franchise for you, like you said, dollars 500,000,000 in sales, but a lot of concern about potential competitive entrants over the last couple of years sort of going back and forth. Sort of what's your view on that? How worried are you about it? And should we be worried about it?
My god, I've been at QIAGEN now. This is my fifteenth year. I've been working with QuantiFERENCE since we acquired it in 2011 or 2012. We've had competition from day one with this product on a global basis and on a regional basis as well. We've been pairing since that time on how to improve this product and build the moat against competition.
Quite frankly, we were expecting competition for this product a decade ago. We have improved the automation with our partners, DiaSorin, Kecan and Hamilton. We have now moved from third generation to fourth generation in this test where we improved the clinical profile. We improved the predictability of who could convert from latent to active TB. Now we're working on the fifth generation that we'll start to tell you more about in 2026 in terms of how do we improve the automation, how do we help our customers with the throughput of testing they have to handle with our partners, Deusor and TeakCan and Hamilton.
How can we make this even more efficient and cost effective for labs to be able to process these tests? If you take a step back, this is a product of $500,000,000 of sales. We're talking about a market that is still only 40% converted. There's about 75,000,000 latent TB tests being done around the world. Remember, one in four people worldwide is infected with latent TB.
Of those ten percent will convert from latent to active disease. As part of the STOT TB initiatives by the WHO and the UN to eradicate TB by 02/1935, we have to identify the people not only who are active, there's twelve thousand cases in The United States. But there's fifteen million to twenty million latent TB tests a year in The United States. And these people have to be identified because if you're found to be latent TB positive, they're going to monitor you or treat you with antibiotics to disease, kill so that you don't convert and add to the pool and spread the disease. Remember, TB is leading cause of infectious disease death in the world, if not the leading cause of death.
More people die every day of TB than malaria and HIV combined. This is a global health crisis and that's where we continue to support that. And we're coming with a product as well called QIA REACH in the coming years to help with emerging market testing. But to get to our 2028 target, we took into consideration that we could have some competition. The challenges right now is we haven't seen the signals of clinical trials by them.
We haven't seen the signs of any registrations in Europe. So we're ready, but we've been working on this topic for over a decade to get ready for incremental competition.
Given how big and under penetrated the market is, appreciate everything you said in terms of wait and TV and the conversion risk. Why is the market still so underpenetrated? Why is it only 40% converted? So what's holding people back? And what are the levers you're going have to drive conversion faster?
Changing medical practice takes time, effort and money. If you think about the amount of money that pharma companies spend on these direct to consumer ads in The United States, you're still finding people who are not aware of the TB test. We're finding people the underlying market is still growing 300% in terms of
TB testing. The TAM is growing. So there are new groups we're targeting, type two diabetes, chemotherapy patients. You're seeing also new applications in terms of kidney dialysis patients, who people who if they have a latent TB infection have a much higher risk of conversion than someone with a normal immune system or a more stronger immune system than normal, sorry. So there's this awareness.
You have also seen an equalization in terms of the price difference between the skin test, which is 120 years old and the QuantiFERON test. That gap is narrowed than for the pandemic. That's helping to drive conversion. But people are waking up to the fact that I can take care of my TB testing requirements with one simple blood draw. I can have the results in twenty four hours.
I can get that nurse back to work and not have to go through two skin tests with a risk of a false positive, especially if they're a foreign worker coming into a country. I can do immigration testing. There's just this natural awareness campaigns that we're running that are just going to take time.
So is the view then just to sort of wrap it all up, is the view then that if Roche or someone else comes in with a test, it's not going to be so much we have to choose between QIAGEN and Roche. It's really between QIAGEN and skin test versus Roche and skin test, right? It's more of a beginning, who can convert what?
My counter is look at syndromic testing, which is a far more penetrated market globally. The incumbent in that market can still grow plus all the players in the market are growing because the underlying market, the pie is growing. There's a lot of penetration opportunities for these players. And that's where everything that happened with predecessor tests in the molecular diagnostics industry where you went from more of an esoteric test, which this remains, it takes a lot of time and pressure to sell this versus a commodity diagnostics test, molecular test. We've been working on that for over a decade.
Okay. All right. Let's keep going down the You touched on QIAQA digital PCR earlier. That's another market we want to touch on. The same thing relatively competitive market, a number of players here, but still very nascent market.
How do you see digital PCR evolving over time? And maybe you could compare that to NGS or PCR opportunity?
If you think about the related growth of QIAGEN sample prep, then we were the HPV company for a while. Then we moved into QuantiFERON as a big driver of growth. You think out ten years, whoever is sitting in the seat then talking about our portfolio and our business, digital PCR, high acuity is going to be a key topic. This is a multiyear, long generational shift in terms of the way PCR is getting used. The analogy we use is this is like going from the Nokia handheld phones to the iPhone.
Same thing, it does a phone call. But it can get so much more power out of the iPhone than it can out of the Nokia. And that's the way we sell and how customers react to the introduction of digital PCR. If you hear about liquid biopsy, MRD, these types of applications, digital PCR plays right into the sweet spot between quantitative PCR, the predecessor generation of testing and NGS. It's a $4,000,000,000 of market that are available for conversion.
The incumbent in this market has done an outstanding job of building this market out over the last ten years. We've come with a very attractive system, scalable system to customers that's finding a lot of resonance with academic customers. You're seeing an increase in the number of peer reviewed journal articles on digital PCR. Pharma companies are relying on digital PCR for cell and gene therapy, CAR T therapies. We have a case study of St.
Jude Medical having switched to our system to be able to come up with life saving therapies, personalized for pediatric patients at their hospital in Memphis. Then you see it moving into forensics with our partnership with the FBI in The United States. Now we're moving high acuity into clinical applications. We signed three companion diagnostic deals with pharma companies that want to use this as a cost efficient way that's profitable for us to be able to do companion diagnostic patient testing. They don't need always a 500 gene panel.
They don't need a whole genome sequence for a lot of these patients. Eighty percent of all cancer patients in The United States are treated at a community hospital where they need quick rapid results, an oncology board to make a treatment decision and move on. That's where this plays right into there, where you want to look at five, ten genes maybe more in the future to make a treatment decision, especially in the first line situation. This is a great opportunity for us. Yes, the level of attack in terms of growth is probably a bit lower than what we were expecting back in 'twenty four because we're seeing that softness in the academic and government markets.
Have acknowledged that. But the market opportunity is certainly there. This is a great platform. The number of players has actually gotten fewer now because the incumbent bought still up. We have full license to operate with our system.
And we're doubling down in this area. We're adding field application specialists to be able to help our customers find there. But we're ready when the funding environment improves, are ready to go.
You mentioned the incumbent in the space. How would you sort of describe the relative strengths of the portfolio kind of how it stacks up in terms of where you see an advantage versus areas you need to improve? And then maybe or put another way, if you look out ten years, like you said, what do you see as the relative market share relative position within digital PCR, but also of digital PCR versus something like NGS?
We're going to have to see how technologically we can expand digital PCR. With qPCR, you look at one or two samples in a run in targets per sample in a run. With digital PCR, we started off looking at, I think it was four or five, and now we're up to 12. Can we increase what's called the multiplexing capability of this up towards 20 or more? So you can add more genes or targets that you want to look at from one biological sample.
NGS is for like 500 and above. Remember NGS cost you thousands for a run, takes you weeks to get the results back. The hospital or the lab often loses control of the sample because it's going to a centralized lab or to a consolidator to get processed. And that's where digital PCR can give you the results in hours for a price couple of $100, let's say, per run. What is the benefit of our system is that our system people don't like it internally when I say this, but the incumbent system is kind of like Boeing aircraft.
You have this collection of different technologies. You have this collection of different approaches and processes and procedures that you have to learn. So there's no harmonization across systems. Our systems are more like Airbus, one plate, four plate, eight plates. Same plates, all the machines.
Same user interface, same. You can use one machine, one plate, you can use the eight plate machine. It's a lot easier and cost efficient. Same chemistry, same plates, same mindset in terms of training. So there's a common procedures across these labs.
The pharma companies tend to like the four and the eight plate versions more. Academic labs tend to like the one in force. And we'll see what the we have a version for MDx customers as well, but they also like the regular versions too, because they want to have that freedom in this non regulated environment. And so that's where we have a system that we can scale. We can help people to easily implement this in their lab.
And quite frankly, we can generate results in less than half the time that the incumbent can generate results at a fraction of the cost because they don't have while they're getting into the market now, it's been a very expensive proposition to get digital PCR technology before we enter the market for small labs.
But like you said, multiyear conversion cycle, just given people's familiarity with NGS, how well established that is the installed base there, what's special on the clinical side, sort of specked in part of
You've been around a long time. Think about what the NGS estimates were ten years ago in terms of market size. I think back to the Nokia phones, the original forecast for mobile phones a couple of 100,000.
Yes. We've got about five minutes left. I want make sure we still hit on the targets. Maybe we'll go to capital deployment next. You've been busy on that side of things.
Historically, it's been share repo and M and A. Now you've also introduced a dividend earlier this year in May at the Capital Markets at the Shareholder Meeting. Can you talk about the balance between those three? Sure. Why was now the right time to implement dividend?
Just how do we think about capital deployment going forward?
Our capital deployment policy is last ten, fifteen years is focused on three elements: investing in the business R and D at about 9% to 10% of sales also improving and strengthening our commercialization presence, especially on digital channels. Second area has been around targeted M and A, businesses that we can add to our portfolio and strengthen our specialization in key areas. If think about what we've done with bringing in QIAcuity, QIAstat Dx, what we've done in QDI, our bioinformatics business, we're acquiring businesses, strengthening them, getting them ready for commercialization, continuous improvement. On IFERON, we bought it with the three gs, we developed Q4 generation house, now we're on the fifth generation. That's where the tie comes together.
We're really focused on increasing returns to shareholders. We have returned over $2,000,000,000 to shareholders since 2012. Alone since 2024, we've returned $650,000,000 We do what are called synthetic share repurchases under a Dutch system because European law does not allow you to do a U. S. Style share repurchase.
So what we do is a direct capital repurchase sorry, a direct capital payment to shareholders plus there's a reverse stock split. So shareholders get money back and then we cut the share count. So there's an EPS accretion as well. This has served us well in terms of returning cash. We know that our leverage is below one turn.
And we have authorization to do up to 500,000,600 million dollars of repurchases from our shareholders. We introduced a dividend payment in 2025. The first one was $0.25 a share. It was a nominal start, gets us on the table with the dividend. We are hearing from our shareholders.
We want to be able to put you in our yield funds that require a dividend. We also wanted to be able to find another way to return cash to shareholders. And so that's why we decided this was the right time to do that, especially given the strength of our cash flows, the stability of our cash flows, it was the right time.
And given you said you just said you just issued dividend and it seems like you have the $500 $600,000,000 authorization for the standard repo. Should we expect maybe a slight pause in M and A? Can you talk about the funnel there? What it looks like in the market? Or are still a lot of active engagement?
We're looking at all three options. We consider what is the best return on invested capital, where can we get the best return among these three levers. And that's what we're looking at. Right now, obviously, with the valuations for the sector at pretty much all time lows, it's an interesting proposition for repurchases.
We're looking at targeted M and A that will complement and enhance the portfolio. But the question is, is there a good strategic fit? And what's your payback period in terms of accretion there? And then also on R and D efficiency, that's a key focus we're looking at as well. How do we enhance our digital channels to our customers?
So we're always looking at three options, but there isn't an institutional bias towards one of them. We're looking at what are the three. Okay.
All right. Maybe just in the last minute we have, John, anything a lot of moving pieces in the market this year. Sort of what concluding message do you want to leave us with?
What should we keep in mind as we wrap up fiscal year 2025, October 2026?
If you think about QIAGEN over the last five years, we've really turned into an execution and focus story. We're a company that has really sharpened the focus on our five pillars of growth. Again, we're moving towards $2,000,000,000 of sales in 2018 on the base implied base of about $2,600,000,000 compared to where we are now at about $2,000,000,000 of sales. We're a company that's really increased its commitment to disciplined capital employment. You saw that through $650,000,000 return to shareholders in the last two years in terms of value creation.
And I think it's a company that continues to look for growth opportunities across that continuum life sciences, the molecular diagnostics. How can we build our portfolio to really help drive that molecular revolution because that was the core of QIAGEN over the last forty years. And that's why it continues to drive the company forward in terms of that focus.
Great. All right. That's great. I'll send it. Thank you so much. Thank