Welcome to PerkinElmer's 2021 Investor and Analyst Day and thank you for joining us. I'm Steve Willoughby, our Vice President of Investor Relations and I want to provide you a quick overview of our plans for the next 3 hours. We're doing things a little different today compared to a typical Investor Day. Before we go into the specifics on each business segment, we really want to ingrain you in the commercial, operational and innovation evolution that has taken in place over the past few years and why we believe these actions position us to drive accelerated growth and share gain in the years ahead. These changes are something I didn't fully appreciate myself when I joined the company 2 months ago, despite covering it for more than a decade.
So by the end of today, I hope you too can see how truly As you see here, The presentations today will cover the first two hours. We will then take a 15 minute break and return for the Q and A, which will be conducted over video. We plan to wrap up the day around 11:30 a. M. As always with the Safe Harbor, statements or comments made today may be forward looking, which may include, but are not necessarily limited to financial projections or other statements of the company's plans, objectives or expectations that involve certain risks and uncertainties.
Our actual results may differ significantly from those projected or suggested by any of these statements due to a variety of factors discussed in detail in our SEC Any forward looking statements made today represent our views only as of today. We disclaim any obligation to update forward looking statements in the future. During this call, we will be referring to certain non GAAP financial measures. A reconciliation of the non GAAP financial measures we plan to use during this call To the most directly comparable GAAP measures is included in the embedded hyperlink and the Investor Relations section of our website at ir.perkinelmer.com. To the extent we use non GAAP financial measures during this call that are not reconciled to GAAP on the website, we will provide reconciliations promptly.
With that, I'd like to turn it over to our President and CEO, Prahlad Singh. Prahlad?
Thank you, Steve. Good morning, good afternoon, and good evening to those of you joining us from around the globe. Welcome to the 2021 PerkinElmer Investor and Analyst Day. It's been almost 14 years since PerkinElmer last hosted A full Analyst Day and Investor event. So this is an excellent opportunity to tell you what we have been up to since then.
The simple answer proudly is a lot. While time certainly flies, I will commit to you today that we will host a more consistent cadence of investor events going forward. The feedback from the Pittsburgh tour in January 2020 and the Life Sciences deep dive last December Was resoundingly positive. And you've all told us that you want to hear from us And the exciting developments at the company. So that I can promise you.
Shifting to the agenda over the next few hours, we will touch briefly on the past, talk about the company today, And most importantly, we will share with you our vision for the future and the confidence we have in our portfolio, our people And our unwavering commitment to support our mission, which succinctly put, is to serve. It is to serve our community, the world around us, our customers And the people who put their trust in us every day. We love what we do. We deliver products and solutions that Transform the potential into reality and maybe into certainty by providing leading technologies that helps Create, sustain and improve human life. My name is Prahlad Singh, and I'm both humbled and excited to share our story today.
Joining me will be our incredibly talented group of leaders That inspire the vision we hold for the future. We have Gintas Vilzius, who leads our global R and D function, Who will provide an insight into how our technology engine is firing on all cylinders And Karen Madden, our Chief Innovation Officer, who will talk about how our innovation success has enabled us To make bigger bets on new and exciting future growth accelerators. We are confident that these growth Accelerators and our R and D capabilities will fundamentally reinvent PerkinElmer. Miriam Victor, who was appointed Chief Commercial Officer at the beginning of this year, will introduce you to our recently created commercial office, and we'll talk about how she envisions it becoming the connective tissue that will drive a further acceleration of PerkinElmer's organic growth profile. Alan Fletcher and Amur Kamath will discuss how our innovation and commercial execution efforts Have transformed our discovery and analytical solutions and diagnostics franchises.
Both Alan and Amar will share with you how our portfolio evolution in both segments Better position the organization for long term sustainable growth. And finally, Jamie Mark, our CFO, will discuss operational excellence and how it will translate into additional Long term value creation. He will then provide a summary of what everything you hear today Means from a financial perspective to our company and will then conclude by summarizing both our near term and Long Term Financial Plan. At PerkinElmer, our mission of innovating for a healthier world is our North Star and rallying cry. It is what impassions our team and attracts top talent.
While it sounds cliche, it is what truly differentiates us. Our mission breaks down into Four critical platforms that are essential to make the world a cleaner, safer and healthier place to live for all. The cornerstones of our portfolio are diagnostics and life sciences. Additionally, We have leading positions in vital segments of food quality and safety. And we round out the portfolio with our applied markets franchise that offers solutions for the pharma, environmental and industrial markets.
The journey to where we are today began nearly 80 years ago. The PerkinElmer Company, Its culture and interests haven't changed. It has always been centered around exploration. Innovation is in our DNA at the company, and it hearkens back to our founders, Richard Perkin and Charles Elmer, and their work with precision optics during the dawn of the Space Age. As our company grew, we continued to push our innovation boundaries, while also focusing our attention Inward to the human body and how we could help improve and save lives.
Whether it's through the launch of the first newborn screening kit in 1985 to more recently Developing the most sensitive diagnostics for COVID testing or instrumentation that can detect up to parts per trillion. Our success has always centered around our passion for exploration and translating ideas into high quality solutions. Overall, we take incredible pride in our 80 years of impactful innovations. Gintas and Karen will go into more detail later about how we've spent an extensive amount of time Refining and honing our innovation muscle over the past few years. But I couldn't be more excited about our Incremental progress and the opportunities in front of us.
We've emerged as a leading global life sciences and diagnostics player, and we are ready to continue being a trusted partner and leader in tackling solutions For the world's greatest needs. Just as we did 80 years ago, we still lead with science today. In my conversations with customers, this is our fundamental differentiator And it is something that resonates with them. We have a strong and established brand with decades of mindshares delivering Best in class solutions. We have a sizable and growing installed base of more than 400,000 active instruments Used by the world's leading research and development organizations, hospitals, clinics and Laboratories every day.
And we have extensive global reach With more than 30% of our revenue coming from emerging markets, This affords us the opportunity to deliver best in class solutions to solve complex problems around the globe. Put simply, we are a different company than we were 5 years ago. Since 2016, we've been executing against our plan to dramatically transform our portfolio With better alignment to faster growing end markets and to dampen our exposure to cyclical end markets. When we started this journey, PerkinElmer had $2,400,000,000 in revenue, with much of that coming from instruments. We've executed well against our plan.
And in 2020, we generated nearly $4,000,000,000 in revenue with leading franchises across our Discovery and Analytical and Diagnostics segment. Our portfolio mix has shifted from instrument heavy to nearly 75% coming from consumables, Software, Services and Reagents. And our growth continues to be balanced around the globe With the 3 regions now nearly equal in revenue, providing a natural hedge to potential fluctuations in the global markets. Further, we continue to expand our addressable market and strengthen our positions to our acquisition strategy. Over the past few years, we have invested more than $3,000,000,000 In acquiring companies which bolster our long term growth potential by bringing critical skills, products, Customers and recurring revenue streams that help move our core competencies to better align with the market growth opportunities of tomorrow.
In total, these acquisitions have helped To triple the total addressable markets we now serve to more than $75,000,000,000 A closer look at our recent acquisitions further demonstrates our commitment to continuing to transform our portfolio And align our businesses with faster growing areas of diagnostics and life sciences. Over the past 12 months, we've added over $300,000,000 in annualized revenue In the attractive areas of cellular analysis tools, expanded specialty diagnostics and Molecular Sample Prep. And more importantly, these acquisitions Provide both the technical and commercial synergies, while also expanding our customer reach, which will be invaluable as we continue to scale the organization. From a portfolio perspective, there remains continued excitement about our current position And additional expansion opportunities, but none of that is possible without our most valuable assets, Our 14,000 global associates that are tirelessly dedicated to our shared mission and Vision for the company. Today's speakers will talk extensively about our strategic initiatives And why they are all important to our near and long term strategy.
But in the end, It all starts and stops with our people. They are our most valuable resources. And without a doubt, the reason why I've been able to make a difference and continue to deliver winning solutions to our markets. I'll share with you a few updates about what makes our team so impactful and how. As leaders, we have to continue to support, invest, nurture and empower our teams to be successful.
1st and most importantly is that our talent reflects the world around us. While it isn't widely recognized, one of our competitive advantages is our talent is incredibly well distributed across With over 2 thirds of our workforce outside of the Americas, This enables us to drive a unique and vital connection of our teams and skill sets. And more importantly, to celebrate the diversity of thought that emerges daily from our leaders and global teams. The connectivity lines that you see on the page are not artistic license, but instead Reflect what makes PerkinElmer unique, boundaryless collaboration which has never been more honed than it is today. But having the right talent alone isn't enough.
A well rounded company must know how to cultivate a culture which inspires all employees to achieve their best. At PerkinElmer, our culture really centers around our core values. We went through an extensive process in early 2019 to redefine and launch our new core values. Through company wide engagement, our top 300 leaders led the charge on these efforts. The process naturally promoted collaboration and engagement around the globe, And our teams discuss the values which are most important individually and collectively, One that we are proud now serve as the cornerstone of our company culture.
The entire process instilled an incredible amount of excitement and support, quickly taking root. And I believe that a lot of our success last year stemmed directly from this effort. And as we look ahead, we will continue to invest back into talent development. We have lofty aspirations as an organization, so we need to empower our teams with the right tools and environment to be successful. We have already started making strides in this area.
First, we have added a Global Head of Diversity and Inclusion to ensure that all employees are supported by an open and inclusive culture when they walk through PerkinElmer's doors. In addition to investing in employees from a personal level, we have also created mechanisms to support them at a professional level as well, Whether that's through the launch of PKI Academy to enhance institutional knowledge and professional skills, Refreshing our global talent review process or offering external tools to help us think critically about talent development As per Kinnelmer, developing, retaining and investing in our talent employee base It's pivotal. Our success fundamentally starts and stops with our people. And as I mentioned earlier, innovation is ingrained in the DNA of PerkinElmer, And acquisitions will continue to be a source of high quality talent for PerkinElmer as well as a way to showcase our dedication to the entrepreneurial spirit of its founders. Since 2015, we have added over 5,000 employees, each of whom are driven to create next cutting edge scientific solutions for our customers.
Often challenging new and existing colleagues across PerkinElmer to think outside the box. They keep us fresh, challenge the status quo and remind us that cultural innovation is as important as Product Innovation. Relative to many of our life sciences peers, we lean on the expertise, Experience and insight of our acquired company's founders and senior leadership As a principle of our acquisition strategy, our commitment to maintaining institutional knowledge can be seen by the fact that But most of them continue to be a part of PerkinElmer today in expanded leadership roles. We believe this is something that truly differentiates us, especially for many founder owners Who want to remain highly involved in the strategy they've built. These leaders bring Invaluable insights to the company and have become part of the PerkinElmer family.
Each offers Fresh viewpoints that help PerkinElmer to grow and create a healthier world. It is one thing to hear it from me. Now let's hear it straight from these leaders as they share their experiences in their own words.
What makes PerkinElmer Unique is the willingness of employees to constantly work on new developments and on improvements. There's never a standstill and exceptional is really The joy of tweaking ideas, trying them out and turning them into innovative products. I'm Wolfgang Schlumberger. I joined the PerkinElmer via the Jugo and Lund acquisition in the year 2017. I stayed following the acquisition because I enjoy doing what I do.
I also I feel an obligation to all my colleagues to work together with them on premium diagnostics for healthier world.
The PerkinElmer Your organization is special in my point of view because of its people, the different cultures, the different countries where PerkinElmer is active. My name is Lothar Arbressin. I'm Managing Director of PerkinElmer Camogen, and I joined the PerkinElmer family via the Camogen acquisition in I stay because Camogen is my baby. I also feel a lot of responsibility for the people I've employed, and I want to see my Maybe developing in the environment of a huge enterprise like PerkinElmer.
Outside looking in, my Perceptions of PerkinElmer was a large company, which was my main competitor, dealing In both with instruments and reagents in the life science field. I'm Eric Franke. I joined the PerkinElmer family to the Cisbio acquisition in 2019. What makes PerkinElmer unique are the values of the company. It's all about people, passion and culture.
What makes PerkinElmer special is how the organization encourages everyone to develop an entrepreneurial The passion and the agility of our talented teams are instrumental in that process. I could not be more excited for what's ahead for PerkinElmer.
It has
We take enormous pride in our talented workforce, and we continue to strive to be better stewards For all of our stakeholders, it simply makes good business sense to create an environment That fosters growth and teamwork. For us at PerkinElmer, corporate responsibility is woven into the Our team is passionate about it. Our mission to serve Isn't just reflected in our products, it is also reflected in what we give back. Our life saving technology ensures that more than 25,000 babies each year Have an opportunity to grow into adults. Millions of people can enjoy safe, clean, Reliable drinking water and communities can realize the benefits of our charity and hardworking employees that sacrifice their personal time to give back each year.
Moving forward, We wanted to focus our efforts in a few areas to make the most meaningful impact. We prioritize the environment and our people and establish lofty but realistic goals over the coming years. With regard to the environment, we will reduce greenhouse gas emissions by 30%, while also reducing total waste by 15%. These efforts are a significant focus for me personally, and we will measure our progress going forward. Equally important is opportunities for all employees.
And we are proud to say that within the next 5 years, More than 40% of our senior leadership will be women. Equality for all, Regardless of age, race, gender or orientation is vital to our mission And our actions will remain consistent. Finally, the benefit of an engaged And committed and inspired global workforce is essential to the retention of talent and to the sustainability of an open Entrepreneur Culture. In this regard, we have placed a renewed emphasis On ensuring our global teams are engaged and committed to staying with PerkinElmer throughout their careers, And we monitor employee satisfaction as an early indicator of where we need to work to improve The PerkinElmer experience globally. We have a great day planned ahead.
It is great in the sense that we have a global forum to share with you our strategy for positioning the company For long term success and increased value creation, we will provide insights into How we look at our leading franchises in diagnostics and life sciences, how research and innovation have been reinvigorated To deliver even more advanced products to the market faster and more efficiently than in the past. We will discuss how our newly formed global commercial team is already changing the way we work with our customers, Strengthening our connections around the world and making PerkinElmer a more efficient and desirable company to do business with. At the conclusion of today's meeting, Jamie will bring this all together And explain how our strategy, portfolio choices and commitment to operational excellence We'll deliver a consistently stronger higher growth company into the future. Given that we are a company that leads with science, I first want to turn it over to Gintas, who leads our R and D efforts. Gintis?
Thank you, Prahlad. PerkinElmer has clearly evolved over the past 5 years. I am pleased to be here today and really excited about our future. As you noted, we're here to serve and make an impact. To do that, everything starts with our people.
They're relentlessly curious, focused on science. And with compassion as their fuel, they seek to address some of the world's biggest PerkinElmer 6 years ago attracted by PerkinElmer's passion for making a difference. Today with my colleague Karen Madden, We'll share how innovation is foundational at the core of everything we do at PerkinElmer. Let me start with purpose. Just in the time since I started my career over 3 decades ago, the world's population has grown by nearly 3,000,000,000 people.
This rapid expansion has had a profound impact on our planet, our natural resources and the well-being of people across the globe. As we saw in the last year, infectious diseases can have a devastating impact on people, economies and even governments. Aging populations, other diseases and new technologies are accelerating advances in medicine and vaccine developments. And Population growth is pressuring our food, water, air and land resources at an unprecedented scale, With additional stresses being created by climate change. For these life essential challenges, PerkinElmer is well positioned to bring critically needed solutions to the globe.
Every day, our passionate team of 1800 plus professionals is driven to innovate for a healthier world. Just as these needs are rapidly accelerating, PerkinElmer is evolving to meet them head on. We have strong interconnected teams with deep local presence. This allows us to quickly bring solutions to our customers anywhere in the world. And not only do we have scale and reach with our Scientists, engineers and software professionals, but over 55% of our R and D employees have advanced degrees.
Very simply, we understand the science of our customers. We develop value add solutions to empower them and solve their challenges. It may not be widely recognized, but we have strong end to end capabilities across our business, including beyond R and D. This allows us to provide a range of solutions from targeted assays to demanding workflow solutions that span sample to reporting needs. And as Prahlad highlighted, we've been adding new capabilities with acquisitions in areas that align with our growth strategy, gene editing, cell engineering, Allergy and Infectious Disease Testing, viral vectors and more.
These domain areas complement and unlock synergies with our existing strengths in Instrumentation, Detection and Imaging, Data Analytics and Cloud Based Software. In total, this critical mass Allows us to bring novel products to market at scale and speed. While COVID was in the spotlight in the last year And we're proud of the leading testing solutions that we launched. We also introduced over 200 new non COVID products in 2020. These new products span all of our segments.
They include reagents and assays, instruments, automation and Software Solutions. Two examples of this long list of launches are the Opera Phoenix Plus and the Nexeon 5000. Both are highly advanced products with leading performance, which has led to strong accolades in their respective scientific communities. With these types of new innovations that push the boundaries of applications, we are maintaining our competitive edge, empowering our customers, Playing offense and ultimately winning. You will hear more about Opera Phoenix Plus in a few minutes from Alan.
These robust product launches come from a reinvigorated innovation engine. This new DNA will continue to propel us Into the future, let me briefly elaborate. It starts with leveraging our breadth and depth, which truly differentiates us from pure play companies. Without silos, we actively manage our NPI pipeline and flexibly shift resources to the most important programs. And increasingly, we're augmenting our teams with an external partner ecosystem to bring novel innovations to market faster.
The second aspect of our DNA is our focus on customers. Working with Miriam and our commercial teams, we see the world changing more quickly. So we're aligned to innovate at the pace our customers are evolving. Here, our depth gives us an edge. We're able to understand and address the newest and most difficult scientific challenges.
This allows us to be a valued partner, Bringing ongoing strategic value versus simple transactional offerings. Finally, we have not let scale impact our ability to be nimble. We have learned to challenge ourselves, our processes and our tools to ensure we more rapidly deliver New products with leading performance and quality. Maintaining agility will continue to be vital, So we'll tirelessly innovate innovation with an entrepreneurial mindset. Let me take a couple of moments to share some exciting examples to reinforce One good example of our breadth and depth is the Explorer workstation.
This platform brings together our capabilities in automation, robotics, liquid handling, microfluidics, Reagents and Extraction. The system's roots stem from our history of developing fully automated modular workflow solutions to support biochemical high throughput screening applications. Leveraging our capabilities, we quickly adapted the Explorer workstation To emerge as a differentiator in the fight against COVID. As the pandemic raged last summer, customers quickly needed a modular, High throughput molecular diagnostic workflow to scale up testing. Closed workflow solutions had long lead times.
Also labs were generally not built out to support rows and rows of instrumentation. So flexibility became an essential requirement. Understanding these needs and challenges, our scientists and engineers delivered the COVID workstation in just over 10 weeks. What set us apart is our core knowledge of each element of the system and how they could be assembled to meet the specific challenges of the full testing workflow. Amar will talk more about the Explorer's future, but we're already seeing interest in these solutions for molecular testing In a post COVID world, this is breadth and depth making a difference.
As a highlight of customer driven innovation, The recently launched PhenoVu Kits are a great example of PerkinElmer partnering to understand and solve the acute needs in the lab. Working together across sites, our Cisbio and high content screening experts engaged with the Broad Institute and a consortium of pharma companies to develop this highly novel solution. In the end, we successfully replaced a custom and manually intensive lab process with a Fit for purpose solution. Importantly, this is the first in a series of focused innovations that will enable the ongoing transformation of phenotypic based drug discovery. Coupled with our high content platform, AI and machine learning, These kits allow researchers to better understand, fingerprint and interpret data by classifying phenotypic profiles.
This will help unlock drug discoveries based on new models and new modes of action. This is leading with science. Speed to market with highly relevant products is the new normal at PerkinElmer. A great example is our recently launched IndiScope raw milk testing solution. In mid-twenty 20, our Commercial team identified the need for a reliable, accurate and low cost solution for milk testing in India, The world's number one milk market.
The goals were not only to characterize raw milk quality, but also to identify potential adulteration. In just over 6 months, our experts across 5 countries adapted our core infrared technology, Rapidly prototype new hardware, developed new algorithms and software and delivered a market focused product, which quantifies protein, Fat and other parameters in unhomogenized milk samples. This is Innovating with Speed. As Prahlad shared, PerkinElmer has a history of being at the forefront of scientific innovation. I could not be more excited about the future Perkin Alber and our strong innovation engine.
We have an impassioned, talented, broad team. Building on our heritage, we're working with our customers and their challenges to build a healthier world. And we're using our agility to accelerate product developments, enabling profitable growth. With these as a springboard, We have been able to increase our investments in new exciting scientific frontiers. To tell you more about that, I'm pleased to introduce Karen Madden.
She will provide deeper insights into the spaces and markets we are exploring to drive new high growth innovations. This will further transform PerkinElmer in the years ahead.
Thank you, Gintas. You and your team have done a phenomenal job Executing on our innovation foundation over the past few years. This has enabled us to extend our relentless curiosity Far beyond today's products, expanding and exploring the technology and solutions required for tomorrow's new markets and new science. Our recent success has afforded us an amazing opportunity to reimagine PerkinElmer itself in an unconstrained manner and how we can broaden our impact Hi, I'm Karen Madden, Chief Innovation Officer of PerkinElmer, and I'm so privileged and excited to tell you about PerkinElmer's next generation and Growth Accelerators and how we are working at the cutting edge of science and what's next. Although our portfolio affords us almost limitless possibilities, Today, we'll focus on 4 key areas of groundbreaking science that we believe will fuel the growth of the company longer term.
We believe these next generation growth accelerators will not only transform the life sciences and diagnostics industries, but will also Span PerkinElmer's position as a world leading provider of scientific solutions to truly accelerate precision medicine. Importantly, these next generation growth accelerators are at the intersection of cutting edge science, technology and the emerging needs of our and customers within their rapidly expanding markets. Let me start with the cell, gene and biological therapy market. It's hard not to be enthusiastic about a market that's over $3,000,000,000 in size and growing at a rate well north of 20%. But more importantly, our team is inspired by all the possibilities of detecting disease earlier and helping our pharma partners develop novel therapies For previously untreatable conditions.
As you know, last year, we established an important beachhead in this area with the acquisition of Horizon Discovery, Providing us a market leading position in gene modulation, editing and engineering tools including CRISPR. We're incredibly excited about for not just what the business is today, but because of what it can be in the future. Let me tell you a little bit more about one of the research Platforms that we believe has enormous potential. It's a novel based editing technology called pinpoint that was licensed from Rutgers University that will ultimately enable Our customers to more accurately and safely edit genes for gene therapy applications. The technology is unique because the Recruitment of the base editing enzymes is done by RNA aptamers, which are part of the guide RNA as compared to conventional base editing systems Where the enzymes fused to an inactive Cas molecule.
This provides for much more flexible and modular system for more precise gene editing. Importantly, our goal is to not limit ourselves to just one gene editing technology, but to ultimately extend beyond our own horizon, No pun intended, to bring new scientific innovations together to create more complete cell and gene editing solutions for our customers. This means that we're also evaluating novel biological delivery platforms including electroporation, lipid nanoparticles and viral vectors as evident with our recent acquisition of Cerion. We're also exploring potentially disruptive new technologies enabled a rapid and high throughput screening and characterization of biological therapies and vaccines. The need for these new platforms became mission critical this Past year in the race to develop new vaccines and therapies in response to the COVID pandemic.
We recently invested in Arterra, a small company located in Salt Lake City, Utah, whose next generation LSA technology platform played a key role in Eli Lilly and AbCellara developing a COVID-nineteen therapeutic antibody that disrupts the binding of the virus to the human ACE2 receptor And doing it in record time. These are just a few examples, but you can rest assured that we will continue to Expand and explore this important and an exciting area to build a significant new business for PerkinElmer. As we were just touching on COVID and how it has driven growth of the cell, gene and biological therapy market, it has also had a tremendous impact on diagnostics and the drive Towards more decentralized testing. The pandemic very clearly demonstrated the need for point of care testing And health care centers, travel hubs, businesses, educational institutions and even in your home. Well before the pandemic, we had started exploring novel point of care and sensor technologies that have the ability to deliver laboratory quality results In terms of sensitivity and specificity, but in a clinic or in your home at a fraction of the time and cost.
One such solution is our novel Ronia platform that uses unique up converting nanoparticle technology coupled with a mobile enabled readout. We're initially developing the platform for point of care reproductive health applications, but we also plan to deploy this platform across many diverse end markets including infectious nano needles and additional new detection modes, which have the ability to provide exquisite multiplex detection With simplified no wash workflows. Expanding into decentralized testing is a natural extension of our core capabilities. And going forward, PerkinElmer will be able to provide our customers the full range of testing solutions from point care to high throughput solutions to address the world's most urgent public health concerns. As we first Indicated at the JPMorgan Conference earlier this year and now with the agreement to acquire Nexolome, a leading global provider of automated cell counting instruments, We have started expanding from our core capabilities in cellular analysis and applied genomics to enter into the very attractive single cell analysis market.
In our view, biological resolution at the level of individual cells will power the next phase of precision health and medicine, As evidenced by the rapid growth and adoption of single cell technologies. In the span of just the last several years, single cell genomics has gone from a niche approach To an established one, reaching an addressable market of approximately $1,000,000,000 in 2020 and it's expected to more than double in size by 2023. One of our investments we are most excited about is Honeycomb Biotechnologies. Honeycomb is a startup company that's developing a potentially disruptive single cell analysis Technology called the Hive. Honeycomb's Hive device is a portable handheld single use device That enables single cell analysis anytime and anywhere.
Cellular expression changes very rapidly, So the hive locks in signal at the time and point of collection and the gentle sample collection process enables fragile and sparse samples To be successfully captured and analyzed. Additionally, the Hive device requires no special equipment and can be processed in batches Using standard liquid handling workflows, including those we've developed. This opens up single cell analysis to virtually anyone in many different sample types including difficult to analyze sample types. Here's a short video on Honeycomb.
Honeycomb is a start up really focused the single cell genomics market by bringing the power of single cell genomics to any lab in the world to better understand Both health and disease worldwide. Our flagship product is the Hive, which is an array based system that has Over 65,000 nano well compartments in it that are just the size to capture a cell. And so the way the technology works is So I'll get pipetted into the hive and drop into those wells and then we seal them in there with a semi permeable membrane and at that point, all the biological
Our first interaction with PerkinElmer was one of those where we just really hit it off with the PerkinElmer team. Over a period of months, we ended up working
out a structure, which I think was
both novel for them and for us. Sure, which I think was both novel for them and for us to not only invest in an early stage startup like Honeycomb, But to be incubated out of the PerkinElmer lab space here in Oakland. One of the
things we're really excited about in this partnership with PerkinElmer is the ability to take Technology that we've built in our lab and hardening is just something that has the reproducibility of the other products that we've worked with from PerkinElmer in the past. Really what we're trying to do is to simplify single cell genomics, but at the same time to make it something that is not difficult.
Right now, we're more in the discovery phase, but eventually we think it'll be used in diagnostics, in monitoring cellular therapies, and potentially even developing therapeutics.
As you can see, we are very excited about the single and Analysis Space. Honeycomb and the potential synergies with our Applied Genomics business and our newest Horizon and Nexolone family members. Stay tuned as Honeycomb commercially launches the hive later this year and as we continue to expand and explore our portfolio Without touching on the innovation that is happening at PerkinElmer around creating a digitally enabled lab of the future. While not a market per se like the other growth accelerators I've Spoken about, it does touch every single one of PerkinElmer's end markets. At our December Life Sciences Analyst Day, you learned more about our informatics business and our road map ahead.
There we shared how we're using the signals platform and our broader informatics capabilities to manage, curate and combine virtually any data type from any instrument From molecular and immunoassays, imaging data, NGS, proteomics, metabolomics and even clinical patient data. Importantly, these platforms are being developed across our different end markets to enable the use of artificial intelligence to automate Data analysis to find new patterns in large complex data sets and to allow scientists to use their time better and to make better decisions. We're already embedding AI powered analysis engines into our instrument platforms, including our high content screening systems and food analyzers and to enable faster With more seamless data management and analysis solutions, but to ultimately provide a better understanding of disease by taking a multi omics based approach Enabled by data and state of the art digital solutions. So putting it all together PerkinElmer's new technology and innovation engine We'll not only help transform life sciences, diagnostics and precision medicine, but we'll also fundamentally reinvent PerkinElmer. We have a terrific team with exciting new capabilities and we're making the investments to fundamentally shift our portfolio now and for the future.
Although science and technology are a true passion, it means nothing unless we can get our great scientific solutions in the hands of our customers. I'm very pleased to pass the presentation to Miriam Victor, who will share our exciting story on how we have changed the customer experience And our vision for the team's evolution and further success in the future. Miriam?
Thank you, Karen. Good morning, afternoon, evening, everyone. Glad to be speaking to all of you today. As we're going through the commercial execution section, I want you to think about the commercial office As the connective tissue driving PerkinElmer organic growth profile. In biology, connective tissue holds things together.
Its function, it's to support, strengthen and connect. In PerkinElmer, we all want our performance numbers To trend up consistently. If we take care of the support, strengthen the commercial infrastructure and connect our regions, businesses And functions with the customer performance will take care of itself and become an HLS byproduct. That's the role of the commercial office. I do believe a successful commercial office has dual facets, internally operating as the connective tissue and externally Owning the customer experience.
My name is Miriam Victor. I'm the Chief Commercial Officer and thrilled To lead the commercial office transformation as part of the new PerkinElmer. During our discussion today, I'll give you an overview of our newly created commercial office, who we are and the rationale of creating 1 as of January 2021, And then walk you through our 3 commercial execution pillars, our journey since mid-twenty 19, what was achieved and what's coming, And at the end, share a testimonial from one of our delighted strategic customers, which reinforces our early progress. As Prahlad mentioned, our portfolio has evolved significantly over the last few years. Moving from niche product lines Requiring very specialized sales force to a broader workflow and solution based provider.
From reproductive health niche market To a diagnostic franchise from food analysis to global food safety and food quality player from DNA extraction, Niche to genomics and proteomics workflow player. With that portfolio evolution, the type of the customers we're addressing Has also changed. Today, PerkinElmer is addressing Big Contract Labs Pharma strategic accounts that tend to consolidate And centralize their decision making. Naturally, our commercial strategy had to evolve too. Two main problems we were solving for during our transformation.
1, embed the customer feedback into our new structure. They asked for seamless interactions, clear accountability and providing tailored solutions across the portfolio, no matter where the product sits. In other words, the PerkinElmer face to the customer, the commercial workforce had to become more agile and simplified. And second, How to drive the big transformation across an organization encompassing around 50% of our workforce, 6,000 employees, while continuing to perform. We had to integrate our commercial workforce into one That is more agile and closer to the customer and faster in making decisions.
Our integration journey that started in July 2019 Was done in 2 phases to minimize business disruption. The first phase, consolidating the regions Rather than DAS and DX and 2 VPs by region, one simplified commercial workforce under one aligned leadership team. 2nd phase was to create the commercial office, consolidating the 3 regions under one roof. We did transform While continuing to perform over the last 18 months. Today, our commercial office consists of 3 regions, Americas and APAC each having about 35% of our organization and Europe at around 30%.
In conjunction with our service portfolio management team and supported by a global commercial enablement team. The latter encompasses pricing, incentives, tools and analytics, strategic marketing and revenue operations. The commercial office is working hand in hand with our 4 businesses, Diagnostics, Life Sciences, Food and Applied. In total, we are 6,000 passionate people working day in and day out, helping our customers innovating for a healthier world. As we're scaling quickly as an organization, we needed to rethink our commercial execution pillars and infrastructure To free up the commercial team time for more customer facing activity to drive consistency in our execution and improve our business cyclicality.
Let's go through them. Channel excellence, clear market segmentation and channel targeting, Maximizing each channel ROI and driving faster growth. Efficiency, By building an internal business ecosystem to drive consistent results. And finally, our main aim is an enhanced customer experience To create greater loyalty. Let's have a closer look at each of the commercial execution pillars that will set the foundation For an accelerated growth profile for PerkinElmer.
We navigate a multichannel world, and the need is to identify the right combination of channels to reach our most important customer segments more cost effectively. Our strength is in managing strategic accounts, Like some of our pharma customers mentioned here and through our enterprise business, we migrated and integrated this channel into the region To help us steer a share of wallet expansion strategy in the right direction. You will hear from one of our strategic accounts later. We have fully merged our sales force across DAS and DX, integrated enterprise into our regional sales structure And strengthened our strategic account management program and improved our coverage. On the e commerce front, We've acquired Sysbio and Horizon, both very strong in e commerce, and we are building on it to expand across all of our portfolio.
Our aim Is to triple our e commerce revenue by 2023. Also, we're not limiting our outreach program only to our own channels, But also leveraging some partners like EverlyWell, which is already growing nicely and we are excited where the future can potentially go For this strong partnership, which opens up the direct to consumer market for genomics and infectious disease. Think about efficiency as our internal business ecosystem that will ring fence our relationship with existing customer base And differentiate PerkinElmer in the eyes of potential customers. Our ecosystem starts with quality data and streamlined systems, Which formulate strategic programs and continuously evolve based on customer feedback. Over the past 18 months, We have invested heavily in our tools and analytics.
We strengthened our master data management across our customers, products, installed base And gained efficiencies from our commercial platforms. Our clean data not only allows us for operational efficiencies, But also for greater insights to our commercial opportunities. And we can now better execute strategic programs Aimed at those opportunities. I'll name a few we are working on. We're running targeted pricing programs driving consumable attach rates As the market share play and bundling to maximize our share of wallet, just think of the opportunity size in front of us With a better understanding of our 400,000 installed base.
The key to it all will be the voice of customer As it will be embedded in everyday decision making and helping us constantly evolve our business ecosystem. At the beginning of the year, we've launched the Competitive Intelligence Center to act as a company repository Of all market and competition dynamic as well as acting as a rapid feedback loop between the region, segments, innovation teams From the customer to the customer. Now improving coverage and or focusing on efficiency programs across Might not lead to better returns on our sales investments unless we match it with superior customer experience. I'll walk you through the 3 main gateways of the customer journey with PerkinElmer. What we achieved, Where we are heading to engage and delight our customers at each step.
Let's start with inquiry. This is where the customer starts thinking about his or her need. They have not selected PerkinElmer yet. The objective here Is maximum outreach with minimum costs, but also to prove our innovation. We have significantly improved our web experience As well as our presence on social media.
Here, I'll focus on innovation and lead generation. We designed a mobile proteomics and genomics lab to travel across Europe where the customers could come with their own samples to process them through our workflow. It was a tremendous success. We visited about 40 cities across 12 countries and generated significant opportunities, While establishing PerkinElmer as an innovative brand focusing on complete workflows. Today, we are running the same mobile lab For Food Workflow in the U.
S. Another example, during COVID times, everything went digital. As you can see on the right side, one of our virtual showrooms using augmented reality showcasing our complete workflow Here again, it's innovation driving our customer outreach. The second major step in the customer journey is purchase. Once they are convinced and they decide to purchase from Perkin Angler, our aim here is to keep them engaged from the minute they place the order Until they receive it and even beyond.
The customer resource portal. This portal includes all information To use with to educate the customer and train them on different instrument and workflow applications, familiarize them with it. So once they receive it, they are already familiar with it, minimizing downtime and maximizing instrument utilization. The last step of our customer journey goes beyond the purchase. How can we increase loyalty and retention to maximize the share of wallet with that specific customer.
Our Customer 360 app provides the customer with full view of their relationship with PerkinElmer, Orders, delivery time, installed base. In the past, they had to call several departments to get the information on where their order is And what its status was, a pretty cumbersome process. Today, they can get all info related to their order delivery in one app With one click. Over the last 18 months, we have achieved a lot in our commercial transformation journey With more opportunities in front of us. Our 3 commercial pillars of channel excellence, efficiency and customer experience This will be the driving force behind us, capitalizing on those opportunities and delivering on our customer needs.
However, our end goal is not to just satisfy their needs, but to delight them in their experience. We believe that differential comes from an increased focus on advocacy and awareness. As an example, Some of you might have seen one of our recent initiatives in Times Square with the newborn screening saves lives reauthorization. But to ensure a consistent increase in focus, in Q1 this year, we created a PerkinElmer Government and Medical Affairs Group To spearhead all advocacy and awareness efforts globally. In this spirit of customer experience, Let's hear from one of our strategic customers describing their journey with PerkinElmer.
Hi, I'm Carrie Anne Quinn, and I'm the Chief Chief of the Life Sciences Hub, Wales. Fick and Almir are world leaders in their fields, but what was helpful is they had a real Appreciation of our local context, Welsh Government asked my organization to take the lead in engaging with industry Globally to identify much needed critical supplies and products to help our health service here in Wales respond literally within Before hours of that initial introduction. So we took forward 2 projects with PerkinElmer through the pandemic. The first was to increase The capacity within our existing public health labs here in Myles. And the second was to support the Lighthouse Labs, which was the mass testing infrastructure that we're supporting the whole of the U.
K. So PerkinElmer's work here in Wales was just fantastic. They They built a new laboratory from scratch. They recruited over 200 members of staff, and they did all of this in a matter of weeks. The teams that we worked with within PerkinElmer, we're able to work in a complex situation, working across Governments working across health systems, and they had a very relaxed and flexible approach to get Thanks, Dan.
We would really welcome engaging with PerkinElmer around the broader precision medicine context, building on the experience
That's PerkinElmer Commercial Office at a glance, driving seamless customer interactions with clear accountability And tailoring full solutions for our customers' unmet needs. I believe by building on the transformation path That started in mid-twenty 19, the commercial office will help drive PerkinElmer accelerated organic growth, And we expect to drive 100 basis points of incremental growth beyond 2023. Thank you. And now I'll hand it over to Alan, who will walk you through Discovery and Analytical Solutions and Portfolio Strategy.
Thank you, Myriam. As Prahlad stated, PerkinElmer is transforming. As you heard from Gintas, Karen and Myriam, over the past 5 years, We've been driving change in innovation and execution. My name is Alan Fletcher, and in my 13 years at the company, I have never witnessed such a rapid pace of transformation. And today, I'm delighted to have the opportunity to describe how we're leveraging this transformation in our Discovery and Analytical Solutions franchise To deliver long term sustainable growth to meet the needs of our customers in life science, food and applied markets.
Our DAS franchise has evolved in the past 5 years as a result of significant investment, both organically and inorganically. Overall, the franchise is approximately $1,700,000,000 consistently providing profitable growth with an addressable market of over 35,000,000,000 The portfolio is heavily weighted towards renewable revenue streams, with over 67% coming from consumables, software and service. We're aligned to attractive end markets, each with a strong differentiated value proposition, driven by our number 1 or 2 position across each part of the franchise. In Life Science, we're leveraging our market leadership to lead with science by supporting our customers every day In solving very complex biological questions and addressing their key bottlenecks of speed, productivity and rate of success. Similarly, in food, our leadership position in grain and protein analysis enables us to actively collaborate with our customers Who values speed to result and high productivity to develop innovative fit for purpose workflow solutions for food processes and contract testing labs.
While in Applied, we leverage our strength in atomic and molecular spectroscopy to provide a complete portfolio of solutions for our prioritized end markets of Environmental, Pharma, Food and Industrial. These investments, both organic and inorganic, have enabled us To reposition the DAS portfolio to capitalize on the attractive life science market, with the life science revenue share on track to exceed 60% in 2021. By over indexing in these high growth markets, we've been able to drive organic expansion from low single digit to mid single digit And set the foundation for continued margin expansion to 22% by 2023. The focus on reagents, consumables, Services and Software has enabled our recurring revenue to increase by over 1200 basis points in the past few years. And overall, we're confident that by executing on our strong value creation strategy, we are positioned to deliver consistent mid single digit growth in the years ahead.
As I mentioned, the key to success is delivering on our value creation strategy, which is aligned in 3 key areas: Strengthening our core right to win, maximizing our growth accelerators and adding meaningful scale. And over the next few slides, I'd like to describe why I believe we have the portfolio, talent and vision to deliver on our customer needs today, Tomorrow and in the future. Starting with strengthening our core right to win. The key to our success is our partnership with our customers, which allows us to leverage our market leading franchises to deliver innovative workflow solutions. Some great examples are shown on the next slide.
As you heard from Karen and Gintas earlier, we have a world class innovation teams across the company, Which combined with our ability to access novel technologies has enabled us to deliver best in class platforms, Which have put us at the forefront of the premier labs across the world. As you heard from Gintas earlier, one prime example is our best in class cellular imaging from the OPERA Phoenix Plus, a truly innovative imaging platform that empowers our customers to better understand the nature of disease And to drive more effective target validation, one of the main factors associated with drug failures in clinical trials. The ability to visualize and quantify phenotypic changes in cells, be they live, primary or 3 d organoids, Is the key not only to more effective drug development, but also to the development of clinically predictive models, which in turn can increase the rate of success of a drug in the clinic. Our platform has been rapidly adopted by leading scientists across the world and now represents more than 1 third of the portfolio revenue, A number we expect to increase in the years to come. Our ability to differentiate with science First approach has been a key driver to our success in increasing our reagent attach rates for our screening reagent portfolio, An area where our brand equity and scientific reputation have enabled us to continually innovate and drive strong portfolio growth, Which is reinforced for the acquisition of Cisbio in 2019 and more recently with Horizon.
Our phenotypic biomarker portfolio is the broadest on market, Enabling a wide range of validated kits in oncology, cardiovascular, neuroscience and infectious disease, Focused towards high throughput, high value drug discovery in pharma and supported by our leading detection plate readers. And while our platforms have been used for many years by all leading pharma and biotech companies for small molecule research, We've been working with our customers to expand applicability in the high growth areas of biologics and cell therapy that Karen highlighted earlier. Over the past 5 years, we've increased our life science revenue contribution to over 50% of the portfolio and expect this trend to continue. However, the overall success of the DAS portfolio is built on the foundation of more than one platform. Yes, we have the capability to deliver greater insights into the cause of disease.
But it's our informatics solutions, as Karen mentioned earlier, That act as a bridge between data and decision by providing the connectivity to enable the visualization and analysis of large volumes of information, Empowering our customers to make informed decisions that will ultimately lead to an increased rate of success. Our informatics franchise provides a variety of research and clinical solutions and software services. As the market continues to move software as a service or SaaS solutions, we've seen significant growth with the continued expansion of our signals suite. The Signals Research Suite consists of a set of integrated applications that provide our customers with end to end view of their scientific workflows. Our SaaS revenue has increased more than 100% year over year, and in turn, our backlog has significantly strengthened.
The Signal Suite is the technology foundation that we'll be leveraging to expand both our portfolio and our market share in the years to come. It's the ability to combine leading innovative technologies into complete workflow solutions that provides us with a key differentiation in the market today And empowers our customers to really better understand the nature of disease. The success of our Opera Phoenix Plus platform It's due in part to our ability to provide a combined instrument and informatics approach, which is the key to delivering the best customer experience on the market today And the foundation of our leadership position. We've recently enhanced this experience with the launch of our PhenoVu cellular reagents, which Gintas highlighted earlier. And by expanding our portfolio solutions, we're enabling our customers to make informed decisions quicker and positioning PerkinElmer as a trusted partner Able to address their customer needs.
As Miriam described, our ability to consistently delight our customer Starts with the ability to launch the right product to the right market at the right time. Our ability to combine effective market research With extensive voice of customer, enables us to turn opportunity into reality. An excellent example of how we can deliver On the 3 global execution pillars of channel excellence, efficiency and customer experience has been the rapid expansion of our biomarker portfolio, Where innovation and execution go hand in hand in delivering on our customer expectations. Leveraging the Cisbio Center of Excellence and Reagents, We've accelerated innovation for over 140 products in 2020, a number we're on track to exceed in 2021. And the growth of this reagent portfolio, particularly in the Americas, is due to deploying the right go to market model to drive share gain in a highly competitive market.
The combination of a dedicated reagent sales team working hand in hand with our instrument counterparts Has enabled us to significantly increase our customer intimacy and sales velocity, while delivering on our promise to be a trusted partner to our customers. The second key driver is maximizing our growth accelerators. Researchers continue to move their software applications to Cloud and to accelerate their digital transformation initiatives to become more innovative and nimble. In turn, Our signals research suite customer base continues to grow. Our signals suite of products was built from the ground up as a true SaaS platform, Using leading edge technologies such as Spark and MongoDB.
This ensures that our solutions are scalable and secure. Our signals research suite provides signals notebook, the electronic lab notebook, which enables scientists to capture, search and collaborate around experimental data. The signals notebook is the core platform that can be used to anchor the other products within the signal research suite. Signal Screening provides high scale screening capabilities, which allow our customers to analyze vast amounts of instrument data. More importantly, signals screening is tightly integrated with our instruments, providing our customers with additional capabilities that aren't found with our competitors' instruments.
Combined with Signals Lead Discovery and Signals Data Factory, our solutions can be integrated to provide end to end suite of products, Which allow customers to manage individual scientific processes or complete end to end workflows. This approach has enabled us to become the preferred solution for a number of global pharma companies. Another great example is our food franchise, where food processors and contract labs value food safety testing solutions with faster time to result, Which meet the target cost per sample. The recent acquisitions of Bio, Solus and Meijiang significantly enhanced platform synergies, Adding a robust portfolio of chemical and microbiological testing solutions for food matrices. This competency Enables us to provide rapid screening for pathogens and contaminants to our existing customers, which over time will result in a larger share of wallet.
Our customers also need tests that are easy to use, and our innovation is focused on developing simplified methods as well as automation capabilities To ensure the best experience possible for our customers. A good example is the recently certified Microfast test that reduces the previously labor intensive test Down to 3 easy steps: pipette, incubate and read. Our extensive and complementary portfolio across food safety and quality, As well as our extensive channels to market position us as a truly complete strategic supplier for our customers. The final part of our value creation strategy is to drive attractive expansion opportunities in both current and new markets. Over the past 6 months, we've been highlighting why we believe Horizon is transformational to our research business and provides the foundation of our portfolio expansion in cell and gene therapy.
Horizon's strength in DNA and RNA combined with their expertise in cell line production enables us to establish a beachhead in the attractive cell engineering market. The highly complementary nature of our strong phenotypic franchise enables us to combine our phenotypic screening workflows with Horizon's reagents and cell lines, Which will enhance our customer experience from day 1. But Horizon also is the key foundation for our long term strategy As we look to close the chasm between research and clinical markets. And cell and gene therapy is an area where we believe the market is going to evolve over the next several And where we have a right to play. We've been focused on building out a workflow solution around cell and gene therapy, which started with Horizon, Which provided us with the genomic content and technologies to modulate DNA and RNA.
It's been expanded with the most recent addition of Sirion, providing us with the necessary delivery systems to get the horizon content into cells. And Nexlum, which allows us to provide quality control of the cells, Especially during scale up in manufacturing. However, our fundamental goal is the true enablement of precision medicine, Starting with basic research and translating into the clinical setting. Our goal is to build out a suite of capabilities in research, But today in research, but tomorrow in the clinic, that solve the customer pain points in genomics, multiomics, phenotyping, Single cells and epigenetics, and ultimately provide better health care for all. So you've heard me talk about And the excitement around the Horizon integration.
But let's hear from a customer about how they're using the technology today.
I'm Andy Connery, Director of Functional Genomics at Constellation Pharmaceuticals. We are a clinical stage biotech that's interested in identifying novel oncology therapeutics in the areas of epigenetics And Chromatin Regulatory Pathways. We decided on Horizon for a variety of reasons. They had the name recognition. They've kind of been in the functional genomics space already.
In talking with them, they were really kind of showed some flexibility in terms of working with us in the types of systems that we want News for screening. And I think, more generally, they've really shown a commitment to investing and building this best in class platform for target discovery. He works very closely with us from inception of the screen out through hit calling to help us get through the troubleshooting that comes with these more complex systems I really generated high quality data for us. I feel like having a partner like PerkinElmer Horizon would very much enable us to do that, to figure out what those key drivers are, To have confidence in those targets moving forward. I mean, I feel like we've made fairly incremental progress over the past 20 years, but I think we have the tools, The partner is in place to really allow us to transform genomic medicine over the next 5 to 10 years.
I think it's a very exciting time to be in this space.
So what do
I want
to leave you with today? We have a strong portfolio that's consistently growing mid single digit, and we've repositioned the portfolio centered around our life science franchise, where we believe there are a lot Structural Drivers. As you look at the portfolio today, more than 60% is growing at a rate greater than 6%. But this does not reflect the significant channel opportunities that Miriam talked about earlier or the expansion of our capabilities In areas that Karen highlighted in cell and gene therapy and gene editing, which I believe will provide the springboard for significant growth acceleration for DAS in the months and years to come. But DAS is only one part of the story, and I'd now like to hand over to Amar, who will take you through the exciting playbook for our diagnostic franchise.
Thank you, Alan. When you think about diagnostics, people often think about detection, and it makes sense. Early and active detection of clinical conditions is what diagnostics has always been about. So today, we will talk about PerkinElmer's detection platforms. We will talk about how we have developed an impressive set of technologies, and we will also show how we are bringing detection closer to the patient.
How we are decentralizing access to life saving technologies and How we are building a digital ecosystem to protect our business and compete more effectively in the future. But most importantly, I want to talk About our people, how we have developed our leaders that we tested during the pandemic and how this team is emerging stronger from the success fighting the pandemic. Hello, everyone. My name is Amar Kamath, and I lead the Diagnostics business segment for PerkinElmer. Now Let's look at some numbers.
Today, our diagnostics business makes up over 50% of revenue at PerkinElmer and is a fast growing segment, both pre and post COVID. Over the last 5 years, this franchise has evolved from a mainly reproductive health business to a leading diagnostics brand in multiple high growth markets. We hold top positions in prenatal, newborn, allergy and immunology. We are a leader in nucleic acid extraction technologies as well as liquid handling systems. We have thousands of instruments placed worldwide that help patients while generating reagent revenue for us every day.
This is just the beginning, and we will continue to add Both detection capabilities as well as clinical applications on these detection platforms. Now the common theme you may notice It's the time tested razor and razorblade model. And right now, 85% of our revenue is recurring From Reagents Software and Services. So let's look at how we have transformed our business over the last several years. You will notice that over the last 5 years, we have diversified aggressively, added significant new capabilities and which show in our numbers.
The core diagnostics franchise has nearly doubled to over $1,000,000,000 and we are no longer reliant on any one specialty area, which has been achieved, while also expanding our margin profile. Now let me talk about how we are doing this. Detect, Decentralize and Digitize. This is our 3 d strategy for continuing to grow our business over the next several years. We want to build best in class detection capabilities.
We want to make these detection capabilities available to every laboratory in the world, And we want to build a strong moat around our business by digitizing our solutions. As I said in the beginning, detection is key to healthcare decision making. However, these capabilities have been the purview of centralized laboratories due to cost and technical complexities. We are now simplifying, reducing costs and bringing these solutions closer to the patient, thus, decentralizing this market. And the next phase in this market evolution will be digitization.
People will stop thinking about The technologies and instead think about their experience going from sample to answer. And this is the digitization of the market. We are working hard to make this a reality for our customers. We believe that value will be driven from detection in centralized and decentralized laboratories to what we believe will be a new mode of diagnostics delivery, the digitization of the market. This will set us up for faster growth in this multibillion dollar franchise.
Now let's dig into detection. Over the last 5 years, we have added significant detection capabilities. We are now a leader in diagnostics. We have built a strong team and become a true competitor in the global IVD Space. Our capabilities span everything from chemiluminescence to ELISA to PCR.
More importantly, every technology gives us a platform to innovate on, solve more problems for our customers, Provide them a higher ROI and drive more top line growth from every installed system. And we don't just drop boxes and disappear like many of our competitors We deliver fully integrated and thoughtful workflows to our customers based on their space, Throughput and Automation Needs. And we make sure that all of this is done in the shortest amount of time to get the customers up and running as quickly as possible. Detection is important. It's the nucleus of what we do.
But around that nucleus, we have full sample to answer workflows that enable customers to have the best possible experience. While our competitors sell boxes, we deliver fully integrated solutions. Now let's take a look at an example of such a workflow solution. That was our Explorer workstation platform. Gintas talked about this in the Innovation section.
It includes a fully versatile and customizable robot around which we are able to implement the exact molecular diagnostic platforms our customers need. What was originally developed for high throughput drug screening has now become an open platform on which our customers can deploy whatever workflows they wish. What you just saw, A before and after scenario saves our customers time, space and money. And we do it with a fully modular, Pre integrated sample to answer workflow system that is ready to deploy at a moment's notice. Building the coolest box means nothing if no one wants it.
So let's see what's happening on the commercial side. We have now deployed dozens of these to support COVID molecular testing globally, each one able to handle over 10,000 samples per day. Over the past year, we have established a leading brand in multi diagnostics. The genie is out of the bottle and isn't going back in. And we have won over 90% of tenders we have competed in.
And now that we have this proven sample to answer solution, we will continue to evolve the platform, launch tests And partner with our customers to serve their molecular needs both today and in the future. Now let's talk about another opportunity. Oxford Immunotec, which we are proud to have acquired, is a perfect example. Peter and the team have built a phenomenal technology at a franchise that is a perfect fit for our automation and workflow solutions. We are actively working towards Offering the T SPOT TB detection technology on our Explorer and other automated platforms to provide our customers centralized as well as Decentralized Solutions.
Now let's look at another example. Veronist Cell Free DNA Technology. I have been in this space since 2012, and I came from Natera, one of the largest cell free DNA companies. And what I saw in that space was complexity, from DNA extraction to library prep to sequencing to bioinformatics. One had to have a PhD to understand the technologies, let alone run it routinely.
And the evidence is the small number of companies that dominate this market. With Validus, I saw simplicity, an opportunity to decentralize, to bring care closer to the patient, Reduce time to result and ultimately improve health. Validus takes out all the complexity of running a cell free DNA platform and provides a sample to result workflow solution that can be implemented anywhere. No rooms with special air handling needed, No bioinformatician needed and no hand pipetting needed. Oh, and we don't charge extra patent fees like some of our competitors do.
And the evidence is our customers. We have customers from India to Italy to Connecticut. Our customers run Hundreds of samples a week routinely, and we now have data on tens of thousands of samples from all over the world that are in the process of being written up. With one of the lowest no call rates and highly competitive clinical performance, this system is about Truly democratize this market. Now let's hear from a current Vadis customer.
I'm Doctor. Matthew Sadel. I am the Chief Medical of Women's Health USA and Women's Health Connecticut. Our laboratory serves patients across the state of Connecticut. So our goal Was to have a procedure that could be done from beginning collection through reporting in our single laboratory Without the possibility for mistakes and handoffs and also the opportunity to standardize all of our procedures.
We looked At various ways to bring NIPT into our own lab. And we had presentations from all of the names that I'm sure you know. And it always involved a situation where we would be able to do some of the work in our lab and Send it out and get it back and send it out for reporting and upload it to the cloud and all those different things and that wasn't what we When we heard about Vanadis from PerkinElmer, we were very intrigued because it allowed us to for several of our goals. When the people from PerkinElmer came in, they were able to explain it to us in English That we could understand for the first time we felt that we might be able to do this laboratory developed testing on our own. And in fact, that's the way it's turned out.
We're very proud to be the 1st commercial use of this testing in this country. We like to be innovators and leaders in our space. And it was perfect timing for us as we feel we are riding a wave into the future. We believe that this will become a routine part of prenatal care And useful for patients all across the country.
So that was Women's Health Connecticut, and they went from system install to launch in impressive speed. And we will be launching other capabilities on the same platform. In other words, now that we have a razor, we will be adding more blades that can help our customers. So that brings us to the second part of our 3 d strategy, decentralization. Up until 2020, Everything you have seen has been around our detection solutions for centralized and laboratories.
And that's what The Street has given us credit for. What I would like to talk to you about now is decentralization. The COVID-nineteen pandemic was a market shift that accelerate the need for decentralized solutions. We started our decentralization strategy 4 years ago and today are exceptionally well positioned to deliver these solutions across key markets. Let's look at some real examples.
Our decentralization strategy goes from rural hospitals to outpatient clinics all the way to the home. Last year, people worldwide moved from central hospitals to more convenient ways of getting tested. One example is our Superflex system. Superflex is a great fit for a rural hospital, and our China R and D team developed Superflex as a random access immunoassay platform With a menu that's targeted to the local cardiac outpatient market. We now distribute this platform globally for antibody testing and customer feedback has been incredible.
Ronia is another example. Ronia is perfect fit for a small clinic. Minilab is another example. We are developing this low cost platform so that rural hospitals and clinics in India And other developing countries can access the basic diagnostic services in a convenient and cost effective manner. Now as we decentralize our business, there's one other opportunity that is looming on the horizon, and that is the 3rd D in our diagnostic strategy, digitization.
We fundamentally believe that software will play a disruptive role in our tools and test market. All around us, from cars to shopping to eating, are all being driven by software companies that didn't originally play in these spaces. We believe that software is coming to tools and tests, and it will be our responsibility to enter this space first. In essence, software and digitization of our business becomes a key layer around our detection and decentralization strategy. Our customers will experience software and not really care about where the reagents and instruments really come from.
Our customers tell us that they love our user interface. So it's what they touch, see and feel. We believe that customers will move from looking at technologies to looking at clinical performance and user experience. They will not care what the underlying technologies are. And over the last 3 to 4 years, we have built our own strategy around this.
On the tool side of our business, we have learned that the science lab has become a digital lab. Remote mobile monitoring has never been more important. Having the ability to look at instrument errors and control large automated instruments via a smart Not only became essential during the pandemic, but now is an expectation amongst our customers. A year ago, we launched PKI, A full operation software platform deployed on a mobile phone. Users can receive instrument analytics, Updates, errors, interact and record live performance of their platforms.
Our field engineering team is also plugged into this Technology, so they can assess the customers when needed. PKI is currently used across 3 of our major platforms And in next year, we'll be used across all of our systems. On our more regulated markets, we are developing a comprehensive workflow, data management and analytics platform for all our newborn screening modalities. EOIR is an end to end software wrapper that provides an incredibly simple sample to reported results for more regulated markets. Coming first to our newborn screening customers.
In summary, over the last 5 years, we have developed a solid portfolio of detection and automation technologies. We have deployed over $2,000,000,000 in fast growing markets. And with COVID, we have seen that we can execute fast and win big. We have a solid team that knows how to win. We were strong before COVID, but now we are even stronger.
We are implementing our technologies in a decentralized fashion, providing access to communities previously inaccessible, and we are executing on this strategy. We have more than doubled Core kits sold in emerging markets since 2015, and we continue to build out software capabilities around our platforms. While the playbook of Razer and Razer Blade is simple, we are executing this in every corner of the world, targeting major conditions that cause human suffering. This is how we will deliver growth in the next phase of our evolution, and I couldn't be more excited to be a part of it. Now I'll hand you over to Jamie, who will be discussing our operational performance.
Jamie?
Thanks, Amar, and good morning again, everyone. For those of you whom I haven't had the pleasure of meeting yet, my name is Jamie Mok, and I'm really excited to be here with you today. I'll finish up today's presentation by talking about operational excellence, our 5th strategic imperative. Then I'll summarize everything you've heard today and try to illuminate what it means from a financial perspective for our company. Finally, I'll lay out our bright financial outlook in both the near term and from a longer term financial planning perspective.
So first, why is operational excellence important for PerkinElmer? A couple of years ago, we sat down and realized the vast number of opportunities in front of us to drive value creation. You've heard about many of these today with our other 4 strategic initiatives around talent, innovation, commercial execution and our portfolio transformation. Operational excellence supports all of those areas. As we work through our value creation goals, we realized That we needed a measurement system to prioritize our actions and to speak a common language as we execute.
Operational excellence is a way to engage, align and empower our 14,000 employees to make a difference on what matters most. Each focus area takes a systematic approach using our 5 piece, which you can see laid out on the right hand side of this page. And while we're still early in the cultural journey, we are already seeing some dividends with our first projects. So here's where we started, on 4 fundamental areas where every employee across the globe can play a role. I'll walk you through a page on each value driver, but the end goals are pretty straightforward, as you can see laid out on the right hand side of this page.
So first on cost out. As you may already know, we've laid out a roadmap to surpass 23% adjusted operating margin by 2023. And that is not an endpoint. We see plenty of room for margins to expand further. What we tried to lay out on this page Some of the levers that affect our $2,300,000,000 cost base.
And we're using 2019 as a jumping off point, Because I'd call it a more normalized look excluding the impact COVID had on our 2020 margins. First, you can see all the expansion will come from the gross margin line as we impact our cost of products and services, which make up just over 60% of our cost base. To give you a flavor, we have refreshed our procurement processes. We've added should cost analysis and consolidated our buy better, both of which are low hanging fruit. And we're starting to see the impact of these actions in 2021, but likely more so in 2022.
On services, investments in tools like ServiceMax and RPA Are enabling more streamlined scheduling to increase our labor utilization. And as a result of the SG and A productivity, We'll see from headcount leverage and e commerce, we will be able to invest more in R and D. On the integration side, We have synergy plans in place for our recently announced acquisitions to also get to 23% overall on a blended basis. While there are more initiatives, we've attempted to lay out a few, all of which have owners, project plans and targets in place. We are excited about the opportunity and confident in our short term 2023 roadmap with plenty of upside thereafter as well.
Moving to cash, we recognized the improvement opportunity back in the 2018 timeframe, as you can see by our free cash flow performance. While we've been hard at work since that time, we rolled the key initiatives into our operational excellence framework in early 2020 and have seen accelerated improvement. We prioritized our efforts in receivables. Our DSO was expanding in part by market forces, But also due to governance and processes, which we could improve. To touch on a few of the actions we took.
First, we embedded free cash flow into the incentive plans at almost all levels of the organization. Next, we are now using 3 general levers to improve our performance. Linearity helps the timing of sales and we are improving our demand generation and Supply Chain Build Processes. Terms are obvious, but with a higher recurring revenue mix, those sales generally come with lower terms. Finally, we are improving our collections via internal efforts related to invoicing and dispute resolution.
With regards to cash performance, I'll end by saying there are other areas where we can get better, which gives us confidence in our long term goal of a sustainable 85% plus Free cash flow conversion. Next, while we're proud of our quality products, we aspire to be best in class. Historically, our quality groups were fragmented, each with different processes. Furthermore, we want to scale PerkinElmer. And to do so, we knew we needed a more systematic approach to quality moving forward.
So a cross Functional team built a new 4 step workflow, which I'll illustrate using the Avio 5 100, which we worked on in 2020. 1st, instead of treating every part equally, we focused on the critical components, which were quality and customer In the case of the Avio 5 100 that amounted to approximately 25% of the bill of material. 2nd, we needed a communication tool with our vendors. So we implemented a new ERP module. 3rd, we standardized and improved in process control charts to ensure the inventory we were receiving was within the required specifications.
4th, we loop back the findings into the design development for all of our new products. In the end, we enhanced our product performance by 30%. We build a governance process to drive sustainable change. And at the same time, we will lower our cost base of our products. Finally, while we've always had a solid integration philosophy and framework, given the rapid portfolio transformation of late, It was time to build out a dedicated team which focuses on people, playbooks and program governance.
This new team uses our integration framework, But we tailor it to each of the new acquisitions. Zooming in on these tailored playbooks, there are 3 broad categories of decisions or actions. 1st, common must have actions, like employee retention mechanisms, communication plans and SEC reporting. 2nd, what I'd call more nuanced decisions. Will we integrate the Target's ERP?
What's the overall branding strategy as it fits within PerkinElmer? 3rd, foundational synergy drivers. Recent ones include the ability to improve automation, commercial cross selling, overhead reduction and leverage. All of this is backed by program governance to ensure cross functional alignment On expectations and timing for both the newly acquired team and existing PerkinElmer teams. With regards to our recent acquisitions, we've seen great progress to date.
And as both sides learn more about each other, the opportunities for just synergy are even better than we So that is a quick overview of operational excellence and some specifics on what we've been working on. At this point, I think it's more important to hear from our team on the impact operational excellence can have on the company.
So when we
We really think about operational excellence, it comes down to 2 areas, looking at our product portfolio opportunities and really thinking about the great people we have at PerkinElmer. So the first area, as we reflected on our products, we see no shortage of value creation opportunities. Now as we reflect in our organization, We have a highly energized culture of people with can do attitudes and they're highly focused on our customers. So what operational What it does is it creates this framework for us.
So what we have done So we have taken all the individual product quality initiatives that we have across the network and we have combined them into a total quality program. This program looks for systemic opportunities that are going to give us better reliable and robust product. By doing that, we have implemented SPC with statistical process controls. We have done better reliability testing. And we also Have implemented across the network early signal detections.
So we are actually reacting before it becomes a problem. We're going to be We'll help before they think they need our help. And that's what at the end of the day, that's what it matters.
We have $1,000,000,000 of cost in play, dollars 500,000,000 of that is in materials and we think should cost tools will enable
our sourcing to have data driven discussions with our supply base. Transportation has $150,000,000
of cost, We think that there's opportunity from tools to optimize the decisions that are taken globally in our network from method and mode.
Last year, we launched a big project around using operational Excellence to fix our cost through cash process. There is multiple steps in this process. Some of it is related to how do we Fix our credit control. How do we digitize and improve the accuracy of our invoicing? How do we decrease the cycle time on orders input for a better
Over the last 2 years, we kicked off operational excellence And focused on the three areas of quality, cost and cash. We created strong urgency within our organization and we've seen I continue to capture and create value over the next several years.
To close on operational excellence, I hope you take away three things from these efforts. First, it's early days, But the value creation opportunity is clear. We are and will continue to perform better because of operational excellence. 2nd, I hope you saw today that our early focus areas bolster our other strategic imperatives. For example, Best in class quality and receivables processes improve the customer experience.
Cost out enables greater investment in R and D and innovation. And as we continue to transform the portfolio, our efforts around integration are critical. And all of these efforts further engage, Empower and develop our team. 3rd, on the point of people, this is a cultural journey. We've probably indoctrinated approximately 500 employees to date.
We hope to hit approximately 2,500 by 2023 and we'll hit the remaining 14,000 in the years to come. Before I move to our financial outlook, let me try to summarize everything you've heard today and what you can expect from us moving forward as a result. This is a different company than you might remember from just 3 years ago. Much has gone into building a strong foundation after 80 plus years of experience, But I hope you heard today the opportunity in each of these five areas is significant. Our portfolio is clearly different today And continues to evolve as Alan and Amar laid out in their sections.
Gintis and Karen talked about how our innovation engine is being refreshed For faster and more transformative solutions. Our commercial team is the connective tissue for the company And Miriam depicted the opportunities for improving market share with better efficiency. And while our performance has been strong, it will only get better with our operational excellence program. Wrap all of this with a focus on talent and culture as Prahlad has prioritized, And we believe the future is bright for the new PerkinElmer. I'll now drill down on each one from a financial perspective.
With regards to portfolio transformation, we've invested over $3,000,000,000 in the past 5 years, primarily in diagnostics and life sciences. So what does this really mean? We estimate 80% of our portfolio is now in markets, which will grow greater than 6% per year by 2023. That would be up from roughly 45% just 5 years ago. And we've significantly increased our TAM to $85,000,000,000 by 2023, almost 3 times the size in 2015.
We now have the capabilities to grow faster and we are executing on this transformation. We're proving this out through the performance of our acquisitions, which has been terrific. On the left, you can see the 2020 return on invested capital and time since closure of the acquisition. The 4 acquisitions listed represent approximately 90% of the capital deployed prior to the Q4 of 2020. The top 3, for example, have reached high single digits between 1 to 4 years.
And the total of all 26 acquisitions has reached 6% in just 2.7 years on a weighted average basis. On the right, you can see they've grown 11% organically on average since acquisition and added over $1 of earnings. Further examples of our combined execution are on the bottom right. EUROIMMUN has always grown mid teens prior to acquisition, but it was often sporadic. Now they have been a consistent mid teens grower, while improving margins by 400 basis points.
The combination of our Cisbio and Discovery teams Have increased the growth rate from low single digits to high single digits, again, while improving margins by 400 basis points. Portfolio transformation is fundamentally changing the financial complexion of our company. When it comes to technology and innovation, We are investing for today and tomorrow with a renewed rigor and sense of urgency. You can see we launched over 250 new products in 2020, Mostly new reagents with a dozen or so exciting new instrument platforms. We are in the midst of a portfolio refresh as we speak And our revenue vitality is greater than it's been in years.
Equally as exciting, we have invested approximately $75,000,000 Equity Investments and Early Stage R and D in the markets Karen walked you through, where we expect the TAM to be over $10,000,000,000 in 2025 And growing strong double digits. One of our underappreciated competitive advantages is our strong and broad Commercial Reach. Miriam walked you through the logic behind the reorganization and our performance over the past 2 years speaks to the opportunity ahead of us to grow share and drive productivity. We expect e commerce, new partnerships and our key account rep focus to accelerate our top line. Together they amount to an extra 1% revenue growth as we look beyond 2023.
And on the right, you can see we have driven productivity And we will continue to do so by the efforts Miriam laid out earlier. 1% productivity as a percentage of sales enables a corresponding uptick and R and D Investment. I mentioned the value creation opportunity for operational excellence is significant. This is how we think about our current focus areas. 23% adjusted operating margin is worth an extra $100,000,000 to 2023, 85% plus free cash flow conversion will drive more than $2,000,000,000 of free cash flow from our operations over the next 3 years.
Our improvement in quality can drive an extra 25 basis points of gross margin, but more importantly, it will improve the customer experience and stickiness. And hitting our recent acquisition targets will drive $0.65 of earnings per share by 2023. As Prahlad clearly laid out, We are focused on making PerkinElmer a terrific place to grow your career. We have the building blocks and we will continue to invest in them. It starts with a purpose driven culture, which leads with science.
The ability for our people to make a global impact, A focus on developing individual capabilities and a culture which prioritizes diversity. We know what we want success to look like and are starting to measure it every day. We believe the new PerkinElmer focused on the priorities I just walked you through has a promising future financially. I'll walk you through 3 things. First, that while we've historically driven strong financial results, it's accelerating.
2nd, that our near term targets are more than doable. And third, that the longer range plan is quite exciting. We've had tremendous success when you look back on the past decade. Our focus has yielded 8% annual top line growth And 20% bottom line growth. But more importantly, you can see the acceleration with our new priorities.
And even when you strip out 2020 and look at 20 team. Earnings grew 13% annually from 2010 on 6% top line growth. And from 2015, earnings grew 15% annually on 8% top line growth. So we have a track record of success and we are experiencing accelerating momentum. Earlier this year, we set out guidance on how we get to over $4,000,000,000 of revenue by 2023.
The underlying assumptions were as follows. First, our core would grow 5% to 7% organically over the next 3 years. 2nd, we'd have $100,000,000 of durable COVID product revenue. 3rd, we would have $250,000,000 of revenue from M and A announced in 2020. And 4th, we had multiple avenues to close the $400,000,000 gap, including significant capital deployment.
I'm pleased to say that just 5 months later that gap is now closed. Let's walk through our latest view on each of these assumptions. We've updated our 2021 guidance to now include 11% organic revenue growth and the team continues to execute better than anticipated. While we haven't changed our estimate with regards to COVID durability, we're even more confident in hitting at least $100,000,000 Due to some amount of prolonged testing and our installed base utilization. In addition to our 2020 M and A, which amounts to $250,000,000 of revenue, Our recently announced acquisitions of Nexalom, IDS and Sirion will add another $150,000,000 in revenue by 2023.
So we are even more confident in our ability to generate over $4,000,000,000 in revenue and greater than $6.50 of Earnings Per Share in 2023, with the company as it already stands here today. What's more exciting is that we still have over $2,000,000,000 potential capital to deploy to future acquisitions, which should provide upside to this strong outlook. This is the chart we'd like to leave you with. Clearly, the strategy is working and the team is performing. I hope you got a sense of the talent we have in the company and the passion and energy they display.
I see it daily and couldn't be more excited. Looking beyond 2023, this is how we think about our We've moved into markets with improved capabilities to grow mid to high single digits. Over 80% of our revenue is now in the fast growing end markets of life sciences and diagnostics. Combine that with an improved innovation engine and commercial team focus and we will grow even faster. There's ample opportunity to expand margins and we think 50 to 75 basis points per year is foundational, which leads to earnings growth greater than 10% per year without additional capital deployment.
So there is no shortage of excitement in the halls of PerkinElmer. Our purpose inspires us, Our strategic initiatives align us. And while this new PerkinElmer has already started executing on that vision, we recognize there is more to do. Thank you for listening. I'll now hand it back to Steve to walk you through the logistics for the next hour.
When the world needed us, we responded, Taking on the challenge of a lifetime and redefining what it means to be committed to our customers and ourselves, Committed to innovation and delivering game changing solutions that lead to better healthier lives And greater insights with unprecedented speed, accuracy and scale. It hasn't been easy. But together as one team, we are spreading hope around the world For those closest to us and those we've never met. For this isn't the end of the journey. In fact, It's just the beginning.
We can't rest on our laurels. We can't measure our success with past accomplishments. We need to move forward Together, we are saving lives and improving them, using data and technology to unlock the secrets of science, To develop better therapies and cures and make food and water safer than ever before. We search, we question, We challenge and learn from our actions to create the best outcomes possible, funding new ways to create value And a better experience for our customers, diverse in people and skills, making every voice heard, And working seamlessly and inclusively to help our customers and partners discover the next generation of scientific breakthroughs. So when the next challenge comes, we'll be there to solve it.
We are fast forwarding the future. We are PerkinElmer
Welcome back, everyone. So you can tell we're live here with a few little technical difficulties, but I'm glad to see That we hope that you can now see the transformation that the company has been taking over the last few years. And hopefully, you also have a new perspective on what the company looks like going forward. I think it's pretty exciting. We'll now move into the Q and A with the team.
If you happen to have any technical difficulties, please let us know via the chat or email. You can also submit questions via the chat and we'll try to get to them as we go on. Our first question today comes from Vijay Kumar of Evercore ISI. Vijay, please go ahead.
Thanks, Steve. Looks like you've been busy transitioning from sell side to hosting the 1st Analyst Day, so It appears to be here. I guess maybe I'll start with a big question, but a lot to digest here, A lot of growth initiatives, some updates on M and A, operational excellence. Maybe if you could just boil it down Prahlad, just to let down to what are some of the 2 or 3 highlights for you? What excites you here?
And I think I read something about commercial excellence is accelerating growth by 100 basis points. So when you put all of this together, Does that mean LRP of 5% to 7% accelerates beyond 5% to 7%?
Test. Thank you for the question, Vijay. Fundamentally, we are a very different company today. The transformation process To the new PerkinElmer is now bearing fruit. Some of the things that you pointed out around what you heard today Around operational excellence, our execution around it, what I feel is the strongest talent bench that we have in the industry, But most importantly, around the innovation, how we are continuing to innovate around innovation.
All of this gives me extreme confidence in the financial trajectory, not just over the 3 years that Jamie pointed out, But for our long term forecast, and I think it's one thing that you heard from me, It's important for you all to also hear from the leaders and the perspective that they can provide around the transformation process that we are going through. And maybe I'll ask Gintas to begin.
Thank you, Prahlad. For me, the transformation has Touched every corner of the company and it's really been something to be a part of in the last few years. But what's most important that I take away every day is our The speed of our innovation engine has really changed and I touched on some of the factors in our DNA around that. The breadth and depth gives us this ability to put solutions together in a different faster way. Working with Miriam and the commercial teams in a more close fashion, we're hearing these faster evolving needs and responding in a collaborative partnership way even faster.
And this focus on agility is never going to stop. We cannot let scale get in the way of speed. On top of that, We've been increasing our investments in R and D. So between the speed of our engine as well as the increased investments, the Cadence that you will see in the coming quarters will be quite amazing in terms of the new product launches. They'll be differentiated.
They'll be really value add for So I'm really excited about the transformation and the innovation engine. Karen, maybe you want to comment as well?
Yes, I'd be happy to, Gintis. Thank you. Let me start just by I've been at the company for over 10 years and I've never been more excited to be at PerkinElmer and a part of this transformation. To give you a little bit of perspective, my role didn't even exist 3 years ago. So the importance of innovation is really Punctuated by the role that I'm in and what we're doing.
You heard from Gintas, what he's been doing around building Fine tuning and R and D engine, that has really afforded us the opportunity to expand and explore in some of these new areas. As Jamie mentioned, we've already invested $75,000,000 in equity investments in collaborations in Advanced Research Partnering with Quintus' organization. So this is not something that we just started on today. We've been working on it for 3 years. We shared some of the new Opportunities in my section, but these are just a handful of the things that we're working on.
Importantly, we have put together A really strong innovation playbook that we can execute against. And I'd say just the final thing, being a scientist at heart, I've never been more thrilled to be working at the cutting edge of science in life sciences and diagnostic and what's next For PerkinElmer. Miriam, maybe you can provide some perspective on the transformation that's been going on in the commercial organization.
The company today is totally different company. And as the portfolio evolved, our commercial strategy as well has to evolve. So we built it from scratch, combining the 2 teams together, DAS and DX, with 2 objectives, right, maximizing Our coverage, but also ring fencing our existing relationship with our strategic accounts. And let me give you just one example. One of our biggest labs that used to be a neonatal strategic customer for us started working with us during COVID, Generating a multimillion dollar deal and after COVID, we are working with them again with other projects for Vanadis and beyond.
So our focus On the strategic accounts was enhanced with the new transformation that we're going. So not only I am excited about it, but our 6,000 Fashioned Commercial Workforce is excited about it as well.
Thanks, Miriam. Our next question is from Dan Leonard of Wells Fargo. Dan, please go ahead.
Okay. Thank you, Steve. So can you share with us the assumptions around the parts of your business that are levered to Birth volumes. And how much of a drag is that to overcome during your planning horizon with all the R and D and commercial efforts you highlighted?
Great to see you again. Just giving a little time for it to get to me. So, yes, I mean, our assumption has been that birth rates continues to decline and that's been the case The last few years and continuing into our forecasting plan here as well. So we've always overcome that with geographic expansion, menu And that's basically gotten us to a low to mid single digit growth rate. But as we look beyond kind of 2020 it might happen in 2022, but let's say 2023 and Certainly beyond, which is part of our reason why we think the longer term growth rate has increased for the company.
I think the end of this really starts to kick in. So I think that will be you'll see more of an exponential curve there. And I think reproductive health in general becomes more of a mid to high single digit grower moving forward.
Thanks, Jamie. Our next question comes from Josh Waldman of Cleveland Serge, Josh, please
go ahead.
Thank you, Steve. Hi, everyone. Thanks for taking my questions and thanks for the team for all the time today. I had two questions. First, maybe for Jamie.
Wondered if you could further unpack the 23% op margin outlook. I guess, Within the 2 30 basis points of expected expansion, does this now include the impact of, You'll call it $60,000,000 to $70,000,000 or so of COVID tailwind on the operating income. And I guess, Ultimately wondering if you could kind of break down the margin expansion outlook within the kind of the non COVID business.
Thanks, Josh. Yes, so the 23% moving forward does include some amount of COVID. It probably takes us North of 23%. If you really unpack it, I mean, as I mentioned, it comes into the gross margin line. I think it's largely through what we're doing around Tremend, particularly in the analytical business, a little bit in life sciences.
I mentioned a lot around our procurement processes. We're also doing a lot with logistics and transportation. On the services side, what we're doing and how we're using ServiceMax and RPA to improve the labor utilization there. And so overall that gets us to 23%. The acquisitions are also all going to be at 23%.
I think COVID in that extra $100,000,000 probably takes it a little bit above 23% as well. And so that's what's factored into our overall margin line.
I guess a follow-up on that. Within your $100,000,000 of durable COVID revenue outlook, I guess, can you unpack that a bit? I assume that's largely core COVID or are there other aspects coming into play now?
Yes, so it's a great question. So originally when we put out the $100,000,000 of durable COVID revenue, it actually had no testing in there. There was an assumption around all the instruments that we put out and what the utilization of those instruments would be, Even if they went back to pre COVID levels and what are the consumables and services that would go through there. So we're obviously very confident in that. We continue to put out more instruments Stephen, through the Q2 here.
I'd say we're more confident in what we try to portray today that I think there'll be some amount of COVID testing around. Certainly PCR I think is going to be around for a while. I think a little bit of serology or rep be around for some amount of time, which has been in our kind of fundamental run rate number. Maybe there's a little antigen in pockets here. So I think we're more bullish on the $100,000,000 but the original assumption had no testing around it.
Thanks, Josh. Our next question is from Doug Schenkel of Cowen. Doug, please go ahead.
Hey, good morning and good day everybody and good to see all of you and thank you for taking my questions. My first is on, I guess, product it's really a product focused question. So a key theme Across a number of presentations and the one I'm thinking of specifically are in the sections where you talked about cell and gene therapy and cell engineering. But you talked about the need for end to end workflow solutions, specifically in those areas and as well as in a few others. But if we just stick with cell and gene therapy and cell engineering, what areas do you think PerkinElmer still needs to build out to complete rounding out Your efforts to provide users, to provide customers with an end to end workflow solution.
And how do you expect over the next few years to address that need via either organic investment and Returns on that investment versus inorganic solutions.
Hey, Doug, thank you for the question. I think Given the M and A strategy that we've had over the past 6 months, it really plays out in the following manner. Most of our organic focus has been on the research side. And what we've tried to do inorganically is continue to build, Especially around large molecule, the whole workflow solution, specifically around cell and gene therapy. And I'll ask Alan to chime in and provide the details around that.
Alan?
Thanks, Prahlad. And Doug, thanks for your question. I think it's very true. As Prahlad said, one of the things that we've really focused on is how do we build out our workflow solutions. And if you actually look at the most recent reports, I think there are 2,400 drugs, Our biologic drugs in development, I think 1300 of those are in preclinical.
And that's really where we've excelled. If you think about our franchise, We've really been able to provide preclinical workflow solutions. And with addition of Horizon, as I said, you heard in my presentation earlier, the ability then to have The ability to modulate and alter genes with Cerion, the latest addition, we're able then to take that content and really add it into the cells. And then downstream, we have robust solutions of QAQC, particularly in the manufacturing space with the Nexolon portfolio. And I think that's really one of the areas we'll be looking at as we expand.
If you think about cell manipulation, cell separation, that's an area. I think you heard Karen talk earlier. Some of the areas where you're looking at in the innovation side really lay out into that space. I think that's an area we'll be looking at, but certainly at the moment, we're going to be focusing on a full preclinical workflow.
Great. Thank you for all of that. And then maybe if I can just talk about one more thing, and it's really in the context of talking about M and A Related Synergies. Generally speaking, you did a nice job today talking through how you're taking some core technologies And integrating acquired products and services into the core. So one example is what you talked about with T SPOT Via the Oxford Immunotec acquisition, I think you talked about dropping that onto a core platform.
I think it was Element, but again, The more important thing is there are a number of examples that you provided along those lines. So there's some nice technical and product synergies, which you highlighted. What I'm wondering is in areas where you're under indexed, whether it's product categories or geographies, Are there examples of acquired businesses in some of these product categories or geographies where you can either use the core or the Acquired businesses as beachheads to kind of drop in either acquired or core products there and drive essentially geographic driven Sales Synergies. And if so, how important and how prominently are these factored into your long term growth targets?
Thank you, Doug. Again, a great question around the M and A aspect of it. I think Alan and Amar and Karen and Gintas talked About the product synergies and the technology synergies that you see around the recent acquisitions that we have had. But longer term, if you look at the companies that we've acquired, the one benefit that the core and PerkinElmo brings to the table is our global reach, Our channel, as we've talked about, we've got 50,000 square meters of manufacturing and R and D capability in China. We've got more than 2,000 people there on the ground.
I think being able to leverage these products and workflow solutions Into China, into India, into LatAm, into other markets where these acquired entities yet don't have a global presence It's really a near term synergistic opportunities, which Miriam and her team have already started planning and leveraging. So that is one example where I think we will benefit from these acquired companies coming in.
Thanks. And our next question is from the line of Derik De Bruin of Bank of America. Derik, please go ahead.
Hey, good afternoon, good morning. Thank you for taking the question. Hey, Jamie, just to clarify some commentary on 2021, did I hear you that 11% number, is that you're reiterating the non core Organic Revenue Group guide, is that what I heard you do?
Yes. So Derek, we didn't update our full year guidance. All we announced This morning was we're clearly performing well in the Q2. We're proud of the entire team and that we will be above both COVID and non COVID. The 11% on the core was actually our guidance after the Q1.
So you can imagine that since we're beating the 2nd quarter, It will be at least 11% and we'll update our guidance on, I think, July 28 at our next earnings call.
Bharat, we're at 400,000 active instruments in the market. Can you tell us How old is your average installed base? What are you doing to sort of upgrade the replacement cycle? And I guess how does one source sort of trick you into all this? I mean, are you seeing any ability to sort of like push PK products into your customers?
Sorry, I missed the last part, Derek. I heard the initial part of the question on the installed base and what
was that? Basically, it was about the ability to use OneSource to leverage integration upgrade of PKI's products.
Yes. So we mentioned over 400,000 installed base out there, Products that we have, I would say the bulk of that is in analytical. And I think we talked to you a lot today about how we're trying to Fresh that entire portfolio. So it is quite antiquated, particularly on Chrome. We came out with a new LC recently.
GC will be in the future, came Came out with a new triple quad, a new IR recently as well, and we have a product menu across all of our categories moving forward. So I think we have a good product plan in place to upgrade most of the installed base, particularly on the analytical side. As it pertains to enterprise and one source, I That's never really been our strategy. Our strategy on enterprise is to do what's best for the customer and to service their product and to bring new technologies to make sure that Their lab meets what their requirements and that they are the most efficient lab, that they compare themselves globally, that we eliminate some of Professional services that they really don't want to do. We bring technology to the lab.
We've never really used enterprise as a channel to be able to sell all the other Analytical equipment or life sciences equipment that we have, and I think our customers has appreciated that.
Great. One final question, if I may. I saw you won an HHS contract for school testing for COVID in the Western region. I assume you're using your California lab that you helped establish that. Can you talk a little bit about what your sort of expectations are for that School testing and sort of how that and also what else can you use to utilize for testing in that space in California?
Thank you. I'm done.
Thanks, Derek. So, yes, we're quite proud and I think the winning of the HHS award just is another example of how we bring all of our capabilities Across PerkinElmer to help solve the need, similar to what we did in California, which you mentioned and I'll talk about, similar to what we do in U. K. And in many of our end markets. As it pertains to California, we do plan on using the Valencia lab with the California Department of Health for some portion of that, but there will be supplemental labs as well.
This crosses 8 states and we want to make sure we have redundant capacity, so we have other partners in terms of servicing The HHS contract. In terms of the size of it, what we've learned is no contract is the same. Predicting the sample ramp across Thousands of schools and congregate settings is actually very difficult. So we don't really have a good estimate right now, but all I can say with regards to COVID is that We've continued to outperform our original guidance at the outset of the year. We beat the Q1, now the Q2, and we'll take a look at the second half and give you an update come July.
Thanks, Derek. Our next question is from Tycho Peterson of JPMorgan. Tycho, please go ahead.
Hey, thanks. A question on the testing roadmap. Decentralization was a big theme. Obviously, everybody and their cousins kind of rushing into the point of care market today. So I'm curious as we think about Tonya, how you think about timelines, it's lateral flow.
So how do you think that compares to some of the technologies that have PCR like Thermal has it means so or isothermal amplification like Thales has. And then what kind of investments do you need to make in that channel going after the physician office market? And then lastly, there's a push into retail by a lot of your peers. How are you thinking about that as well as you think about decentralization?
Yes. Tycho, great question. Let me start by sort of painting the full picture around decentralization that Amar Talked about, right? If you think of it, right, today, our strength is really in the centralized lab. That is where our focus has been.
But I think as Amar pointed out, we are seeing an expansion of that into decentralized labs. So Superflex, Ronia And my lab, those are three examples of how we are looking at. Specifically around Ronia, our focus is on the reproductive health segment. And as Jamie was responding to one of the earlier questions, what we are using Ronia is as a platform to do reproductive health testing around newborn screening, PLGF, maternal and fetal health in areas Where they do not want to set up centralized lab, for example, in the African continent and India, where the need is not for a big infrastructure To do testing, but to do more point of care or lab setting testing. So that is where we are trying to put Aronia as an example in place.
And that does not require a big channel built for it because we are not looking at taking it And going and competing against the big peers who have a strong channel presence. Amar, do you want to add anything to that?
Sure, Prahlad. So thank you for the question again. So just to add to what Prahlad said.
Yes.
Just to add to what Prahlad said, Our intention is not to compete directly with any of the larger players out there. Our plan and Solution is to go specific to the countries, specific to the geographies and to customers that need these solutions and help. So that's what we'll be focusing on. Thank you.
And then maybe a follow-up question. Similarly on Explorer, you highlighted the kind of industry leading throughput. Can you just talk about menu build out strategy for Or what that's going to look like post COVID?
Sure, Tycho. So as we've pointed out, Jamie and I have pointed out in our earlier quarterly earnings call, Explorer continues to do very well. And from a menu perspective, what we are what our customers are looking at that it's not just for sole assays or tests that we bring to the market. Obviously, we have the molecular platform around the newborn screening pieces that is going into it. We've talked about Oxford Immunotec's product portfolio that could go into it.
But also customers are looking at using it as an NGS platform, right? The big labs that have high throughput testing going in. So there are pieces of Explorer that also fit in there, and that's where our customers and we are looking to focus it.
Okay. And then just one last one on cell analysis. You spun off your imaging business to Aquia and that helped them in the spatial market. How interesting is that market overall spatial as you kind of think about your Cell Analysis portfolio?
Alan, you want to address that?
So Tycho, that's a great question. I think it's one of the areas that we're certainly looking at. And I think if you Think about where our technologies play. We've built a really good franchise around the capabilities in house. And I think we know some of the things that Karen talked about, the informatics solutions and And I think it's one of those areas we look at and understand how it competes with what we have and where it sort of really complements, I would say, the technologies that we have.
So I think It's one of those areas as we look at information, we take feedback from our customers, and I think that's part of the transformation that we've had in the business because with the customer input Really being driven by their requests and their portfolio sort of desires and workflow solutions. So I'd say as we look forward, we'll be Really monitoring what their requests are and really sort of adapting that portfolio to fit those needs.
Okay. Thank you.
Thanks, Feiggo. And our next question is from Dan Arias of Stifel. Dan, please go ahead.
Hey, good morning, guys. Thank you. Jamie, can you just reconcile or compare the There is $150,000,000 that's on the slide for 2020 with M and A contributions to the $400,000,000 that you had on, I think it was the integration Sorry for 2023. What's not in the $150,000,000 is in the $400,000,000 And then on that $400,000,000 the individual pieces there are kind of tough To assign growth rates to with confidence. So I'm just wondering what a good growth rate to think about for that aggregate $400,000,000 is going into 2023 Because it just sounds like the pieces that you picked up via M and A are pretty important here.
So I'm wondering what the incremental benefit to the top line increases that amortizes.
Yes, great. Thanks, Dan. So let me just try to depict the $400,000,000 It's all related to the 6 acquisitions that we've announced since December of last year. So originally in the $250,000,000 that we laid out earlier in the year that included Horizon, we had announced Oxford at the time And our Omni acquisition in Applied Genomics. Since then, we've closed on Nexolome, we announced Syrian 2 days ago, And we've announced IDS.
So that's the $150,000,000 to add to the $250,000,000 Together that's $400,000,000 in revenue at least by 2023. Prahlad had On an earlier chart that together those are about $300,000,000 on a pro form a basis this year. So that lets you understand kind of the growth rate that we're anticipating that those six assets Should be growing well north of double digits over the next couple of years.
Yes. Okay. Thank you for that. And then just maybe when you think about the stickiness that you expect just by having Virtu offered the COVID solutions that you've had in the market, Are you able to put some numbers around that at all? I mean, I know that's a difficult exercise, but I think that's the type of thing that most people are kind of trying to get their hands on, whether it's at the margin line For the organic growth line, because it just feels like most people think you'll be in a better place coming out of the pandemic than you were going in.
Just how much better is Kind of the question.
Yes, I missed the nuance in the question. Was it related to the COVID installed base, Stan?
Well, it's kind of just, yes, so You will be in a better place coming out of the pandemic, presumably because you've established yourself in some labs and maybe you weren't in or you weren't in as meaningfully With your Euromune business and with just the automation that you brought to the table. So I realize this is tough, but I guess I'm just trying to ask you if you can quantify How much of a better position you think you'll be in? You're aware the stickiness is most likely to go up? Or for those of us that have to take things To the investor and say, here's the PerkinElmer of 2023, by virtue of what they did during the pandemic, Where it's most obvious that you're in a better place. That's a very nice question.
Yes.
I mean, I think that's everything we talked about today. It's not just the COVID installed base. We've totally transformed the portfolio. We've invested a ton into new acquisitions that I just walked you through on how they will grow. The innovation engine we've continued to invest in R and D, particularly in the markets that revenue went down last year.
We've shored up the commercial channel in many different spots, Vanadis, our Food Channel. I think we're coming out of this in a much stronger position that I think overall investors should be excited about the next couple of year outlook. We sure are, For sure. On top of all that, we still have another couple of $1,000,000,000 of capital to deploy that we haven't yet spent and we still are at our targets for 2023. So I think that's the real story coming out of this.
Certainly, our brand in Applied Genomics and in immunodiagnostics has gotten better. And I think we have a lot of instruments to go capitalize on and those conversations are happening already. But I don't think anybody really knows the exact post COVID world. We've only got $100,000,000 of revenue tied to that, and I think that can be done just on the utilization if there's any type of pre pandemic utilization on there. I think the big picture on why we are excited is everything else we try to portray today.
Okay. Thank you very much.
Thanks. We're actually going to go back to Vijay as we accidentally cut him off a little early. So Vijay, apologize for that. Please go ahead.
Thanks, Steve. I'm not sure, perhaps some text privileges on my end. So thanks for squeezing me back in, Steve. Jamie, I had one on the numbers for you. Just to clarify, I think you had the 8 ks this morning on the 2Q beat.
Could you quantify what the numbers were? And then, 23%, I think you get to 23% For your fiscal 'twenty two, you get to 22% margin, which is just by gross margin expansion rate. I think When I looked at your SG and A numbers coming down, it almost feels like 24% is possible. So am I doing the math correctly or some comments on margins? And the 100 basis points of revenue acceleration, does that increment to 5% to 7%?
Okay. So there's 3 parts in that. First off, Q2 in 20 And then margins on 2023 and then the longer term outlook on growth rates. So let me address the Q2 first. So we didn't quantify, we just said we were going to exceed our prior Expectations, which were high teens growth on the core and $325,000,000 on COVID.
We believe we'll beat both of those considerably, which we're excited about. I think the team continues to perform well and we're 30 days away from our earnings call where we'll update our guidance and let you know more about that. But we wanted today to be about the long term. We haven't done one of these in over 10 years and we didn't want to focus on specifically the Q2. We want to think about the long term.
So moving to that, in terms of margins, Yes. So the we showed specifically from 2019 to 2023 that all of this can come through the gross margin Which we're excited about. To your point on SG and A, we can certainly get better. What we've assumed in there, BJ, is that we're going to get better by a point or 2, And we're going to reinvest that back in R and D. That's our current playbook.
So our playbook is as a percent of revenue to take up R and D to match our SG and A coming down. And that's why overall, the 23% could get better, and we'll see what happens around R and D and how much we want to spend there. But Got a lot of exciting prospects and we plan to continue to invest in that engine. And then the third part was the longer term growth rate. So I I think I mentioned it earlier, but just to really kind of simplify why we're we believe beyond 2023 will be faster growing than the 5 to 7 The next 2 to 3 years is, one, is our portfolio exposure is totally different.
A greater concentration in life sciences, much Related to the recent acquisitions. I mentioned Vanadis earlier and how that will change and reshape the reproductive health franchise. I think before we had Applied Genomics kind of in the 4% to 6% range. We think our brand recognition there and what's happening It's really going to increase our growth rate there. So that's kind of portfolio mix.
Match that with innovation and everything we've been doing and how we have been investing over the last plus what we've been planning on over the next 2 years to reinvest some of that productivity into more R and D and we think that bodes well. And And I think our 1 commercial office and what we've done has done a terrific job over the last couple of years. But I think Miriam laid out a roadmap on what we're going to work around On many different things, but in particular, e commerce, key accounts, a lot of different partnerships across the globe. And all three of those things, portfolio, Innovation and Commercial, I think leads us to believe that we will be faster growing than 5% to 7% beyond 2023.
Fantastic. Thank you, guys.
Thanks, D. J.
Prahlad, would you like to add something to that?
Yes. I think the one thing that I mean, Jamie pointed it out. In addition, our M and A strategy is not going to slow down. We've got a strong balance sheet, and we've got another more than $2,000,000,000 of capital to deploy. So the path that which we are on In continuing to bolster our presence in the attractive growth end markets, we'll continue.
So I think to wrap that all up, that Part of the process is all that journey is also going to continue.
Thanks. And our next question is from Matt Sykes of Goldman Sachs. Matt, please go ahead.
Thank you very much. I appreciate you taking my questions and thanks for doing this today. Maybe just starting out with a big picture question. Could you talk a little bit about the changes you've made on the commercial side? I think you did a good job of laying out the path of transformation.
But maybe could you talk a little bit more about how the communication between the R and D side and the commercial side has increased sort of marrying what you've said about Making great technologies, but also with the ability to sell it. So essentially enhancing that feedback loop you get from customers to commercial to R and D.
Thanks for the question, Matt. I'll start and then I'll ask Miriam to chime in. One of the things that we have Try to maintain in the company is the agility piece of it. If you recall, we've got a global presence and reach. And what we've tried to do around product development and commercial is to try and keep development and innovation Closer to the customer and closer to the market, whether it's with Tulip in India or SymBio and our Taishan facility In China, we've tried to ensure that, that agility and innovation is connected and is as close to the customer as possible.
And that has started bearing fruit. But it was also relevant and important to sort of put the infrastructure And the backbone, and to use Miriam's words, the connective tissue around the commercial office that enabled this to happen. And rather than me speaking to it, I'll let Miriam chime in.
Indeed. The voice of customer has been always embedded in what we're doing, be it from R and D programs, commercial innovation or product innovation. However, what happened over the last two years is we tried to combine all of that together. So rather than every division And combining their own voice of customer and utilizing their own channels, we've created just one channel, one repository of information, Not only for voice of customer, but also for the competitive intelligence. So you've heard me speaking about the competitive intelligence center that was launched in the beginning of the year.
That is just one step in the right direction to harmonize and combine all of the information that we had into one direction. And one great example Guinta spoke about, right, Eiry. Eiry is a great example of how we collected the information from The India team directly to the R and D, very agile method to produce it and get it back to the customer. And you will definitely see the results by the end of this year.
Just maybe just on DAS. At the Life Sciences Day last year, you laid out a target Of 22% plus operating margins for that division by 23%. It seems like a portion of your group margin expansion in the long term can come from DASK. Could Could you talk just a little bit about what specific areas you feel that you can improve upon within DAS? And I'm just assuming you still have that 22% plus operating margin target for that division?
Yes. Let me talk to it about from a portfolio perspective, and then I'll ask Jamie to chime in from a financial perspective. I think on the whole DAS segment, right? You saw Jamie and the team present at the December Life Sciences Day event. Is The extent of our portfolio continuing to move into markets where we have, A, a strong presence or we have a strong portfolio And the evolution that you've seen since December on the life sciences side of that through acquisitions is How do we take what we've done, say, for example, in small molecules research and continue to do that on the large molecule side?
Then similarly around our applied markets portfolio, the launch of the new LC and IR that Jamie talked about and now on GC is something that we are working on. And similarly, on the food portfolio, the acquisitions that we've done in the past 2, 3 years, how do we bring all of them together, integrate it and provide solutions to Those all are now starting to bear fruit. Jimmy, you want to chime in?
Sure. Yes. I'll address margins in Particular, so to answer your question, yes, we still believe DAS will be over 22% and that is the lion's share of the margin expansion over the next couple of years. I I think DX expands a little bit, but certainly we have the most room to grow in DaaS. I would add to that, I've tried to lay out a lot of the levers today on what affects Products and services, but maybe just to take a different approach to that is, particularly in the analytical equipment business, we acknowledge we're probably 10 to 15 points behind Our competition.
And so a lot of that is because we do have rather old products that we are refreshing right now and through that innovation we are launching it at a different cost base. Some of that is due to service levels that I think we can be more efficient with our service organization. So I think DAS in particular has a lot of room to grow from a margin perspective, and
Thanks, Matt. Our next question is from Catherine Schulte of R. W. Baird. Catherine, please go ahead.
Great. Thanks, guys, for hosting today and thanks for taking my questions. I guess first on diagnostics, so far you've focused more on immunodiagnostics and reproductive health. Do you have any interest in leveraging your Applied Genomics division to more directly participate in cancer diagnostics, be it either internally developed or through M and A?
Thank you for the question, Catherine. Again, oncology, For now, our focus on the applied genomics side is to provide tools and solutions to our customers and labs, Agnostic of the disease area that they are working on. Personally, from our sense in terms of will we make a foray into oncology, That's not an area right now we are looking at. Our next forte is really, as I talked about earlier, is around neuromuscular diseases, Especially as it works in relation to Apartment Genomics Lab side of it. But for now, our focus is really around immunodiagnostics, reproductive health And especially in immunodiagnostics as we look at infectious diseases.
So if you also look at the acquisitions that we have done, it has been around cell and gene therapy And infectious disease is an area where we have made a foray in.
Yes. Got it. And maybe going back to Tycho's question on decentralized Testing, how big are those platforms cumulatively today from a revenue perspective? And what kind of menu expansion are you planning in the near to medium term? And how large do you think those businesses could be in your 2023 outlook?
Sure. I'll start with where they are today. And The way to think of it is Superflex, let's start with that. That has just been launched in China about, I would say, about a year or 2 years ago, And then it just got CEIVD last year. So it is just starting in the market.
Ronia has just been launched. So this was more Around decentralization, the intent really here was to give you a peek into what the pipeline or the near term pipeline of product portfolio That is coming out as we look at decentralization as a strategy. So we haven't gone to a point where we can sort of start providing product by product Details around what the market opportunity is. But if you just think of it from a decentralization perspective, it's a pretty large market opportunity, Especially in emerging markets where we have a large presence, but we needed to back that up with the right product portfolio to the marketplace. And I think that is where we are today in terms of the lifecycle of the launches of those products.
Thanks, Catherine. Our next question is from Jack Meehan of Nephron Research. And I'd like to say, Jack, happy birthday. Jack, please go ahead.
Thank you. Appreciate it. Wanted to keep going on the testing side. I was hoping you could Give us an update on the installed base and customer adoption for Vanadis. You mentioned talking about a revenue step up.
Is there any color you can give around what you're thinking for revenue contribution in 2023 and how that's going to trend beyond that?
Sure, Jack. Happy birthday. I mean, you're going to hear from each one of us now that it is your birthday. But the way to think on Vanadis, obviously, 2020 was last year given COVID for Vanadis. But I think maybe 2, 3 things to point out, right?
As travel has opened up and to some extent as the world has opened up, we see a very strong funnel and a very strong pipeline around Vanadis, And we've started shipping products to that. But I what I would like to do at this point to sort of transition it to Amar, Uno, who is leading the charge around Vanadis, and ask him to sort of give a more global perspective of what's going on.
Thank you, Prahlad. So yes, I'm very excited about Vanadis. I joined the company 2 years ago, especially for Vanadis, and I've been deeply involved in that. And what we see now coming out of COVID is that there's a nice bounce back of demand, there's a deep funnel, there's high level of engagement and interest all over the world. We have looked at data from our initial customers.
We have data on over 50,000 patients now. And what we see is that The system and the platform continues to perform extremely well. We have under 1% no call rate and extremely competitive clinical metrics. Now I don't want to go deeper into that because our collaborators are working on publishing these findings, so I will stop at that. But I will tell you that this is a very exciting field and it also goes to the decentralization because if you look at what I said earlier today, All the work that is being done is primarily being done in large centralized laboratories.
And Valens is a way where this can be decentralized and brought Closer to the patient, reducing the turnaround time and increasing access. So we are very excited about Validus and you'll see a lot more from us on this topic.
Great. And as a follow-up, I was hoping to hit on the topic of Cell and gene therapy as well. There's been a lot of activity in the space recently, and you've made some inroads with recent deals. Is this an area that you want to stick as more of a products provider? Or do you see Merit's pushing down the CDMO path?
And if you think it's obviously a very Broad category, are there any niche areas where you think you can dominate?
Alan would be Alan talked a lot about what we are doing in cell and gene therapy. Again, the intent really, Jack, for us is to provide Full workflow solutions to our customers, and I'll let Alan chime in. Alan? Yes.
Thanks, Prahlad. I think as we said before, I think one of the things that we were looking at here is Certainly, the workflow solutions in the preclinical space, the opportunity to address the 1400 drugs that are potentially coming through and driving is one of the real areas for us. And I think as we look at that and certainly as we bring onboard Cyren and look at their expertise in partnering with customers and licensing and enabling our customers, I think that's really where we bring our value add. And I think by leveraging our whole portfolio and really looking at our informatics, our automation and how we can bring that solution I think that's where we really will be driving and focusing in the short term.
Thanks so much, Jack. Our next question is from Dan Brennan of UBS. Dan, please go ahead.
Great. Thank you. Thanks Maybe
first one would just be for Jamie,
back to the 'twenty three margin target. I mean consensus is already like 130 basis points above that 23%. I'm wondering, You kind of pointed to a lot of levers that could get you above that. You kind of said COVID would be upside. Could you just quantify how we think about the COVID margin Benefit to 23%.
And then just in terms of the ability to get, say, above 24%, just what would be the key factors to get you there?
Yes. Thanks, Dan. So what are all the factors? COVID is one of them. I'll come back and answer your question on that.
All the acquisitions we've done, we've obviously got some amount of Energy case that I mentioned gets us to 23%. I think there's a lot of excitement around that. So we'll see if we can do better than that by 2023. So that would be another lever. I'd say when we lay out a target, it's something that we can beat in general.
So when we say we're going to do 23% and a lot will come The gross margin line, I'd say we've got a pretty good history of being able to achieve that and we're excited. So I think just fundamentally that's another lever. Then the R and D, SG and A play and how much we want to invest and that kind of thing is another choice and that's the third one. And then in terms of COVID, so one $100,000,000 of revenue, mostly consumables, so you can kind of think diagnostics gross margin and some amount of incremental on that. So our incrementals could be 40% plus.
And so that's a 4th lever. So overall, we're very confident in 23%. But I think longer term, we see trajectory to the high 20s. So 23% by 2023 is not an endpoint. I think it goes much farther than that.
And we're pretty excited. And I think we're already on our way here.
Great. And then maybe in terms of the ability to get above that 5% to 7% as you kind of pace through 2023, Sounds like diagnostics would certainly be a driver of that acceleration. How about DAS,
talk to you some of
the strength in maybe applied genomics, We've got to tell, like, when the 'twenty two acceleration beyond 'twenty three, how should we think about DAS here in 'twenty three?
Yes. So we're really equally as excited about DAS as we are about diagnostics. So I'll just kind of go through each of the 3 end markets. So Life sciences on a pro form a basis is already greater than 60% of our exposure in DAS and we laid out in last December how it grows greater than 6% in general. So I think we'll continue to add to that portfolio.
I think Syrian, Nexolome, Horizon, they all do such a thing. So we're very excited about our life sciences I think we have leading positions. Informatics is a leading position, OneSource is a leading position, our Discovery business is a leading position and Phenotype Preclinical Research, so we're pretty excited there. I think food is going to recover. I think cannabis will get better.
I think Beijing already has a terrific Outlook here, I think the market has recovered, plus they're a very innovative company. So pretty excited about what we're doing around food. And then on the analytical or the applied side, I think our NPI cadence will also increase the growth rate versus our historical norm. So So it might not be in the 6% to 7%, but it's definitely going to be better than what we've seen over the past few years here. So I think gas is equally as exciting.
Maybe just final quick one just on China. Didn't really hear that come up as much during the discussion as a focal point, but when you think about what's kind of baked in China, just any color how we think about maybe some new opportunities for you to drive more growth there? Thanks.
As I mean, we are as excited about China as the rest of the geographies. In general, I don't think we're it's been kind of a 10% growth rate pre pandemic for us. I think we're expecting that China continues to invest. I think we're growing our life sciences franchise there. So historically, if you look at the DAS side of the house, it's been much more on the analytical and food side.
And I think life sciences will get a lot bigger. I think you add all the acquisitions we've been doing and I think we will sell those a lot into China. So we're pretty excited about that. And then I think on the diagnostics side, our EUROIMMUN business continues to do So I think as we roll out our Xcentis platform that will be exciting for the China team. I think other acquisitions will be exciting for the EUROIMMUN Reproductive Health, I think they're increasing their menu there and continuing their geographic expansion.
And then genomics has also been doing quite well in China as well. So overall, we're equally as excited as it has been in the past and continues to be a strong outlook for us.
Awesome. Thank you.
And our final question comes from Patrick Donnelly of Citi. Patrick, please go ahead.
Yes. Thanks for fitting me in, guys. Probably one for Jamie on the M and A landscape. You talked a little bit about margins being able to kind of drive Towards above corporate average, that's a lever for you guys. How do you think about the pipeline in terms of margin accretion versus growth?
You noted the recent deals have grown maybe 11% organic. So how do you kind of balance those two things? Obviously, it's a bit of a high multiple world right now in terms of some of the deals, again, cell and gene therapy, Areas like that. So how do you balance again kind of the multiples being paid going for growth versus margin accretion and accretion overall?
Yes. Thanks, Patrick. Amit, it's a great question. So What I would say is, if you look at those 6 acquisitions that we're talking about, the gross margin is probably 10 to 20 points higher than our corporate average. So I think we will grow through this.
And I think we will naturally have synergy just to grow overall on the operating margin line, number 1. Number 2, I think there are some amount of corporate overhead that is duplicative that we will naturally take out as well. So I I think we're going to be very sensitive. None of this really impacts the R and D line. I think we will continue to invest in the R and D line and the sales line or the commercial teams rightfully.
So but I think what gives us a lot of confidence is that these are very profitable businesses from a gross margin line perspective. And so When you grow teens, which a lot of these acquisitions will, you're just going to naturally grow the operating margin line as well.
Great. And then maybe a quick follow-up just in terms of portfolio. Obviously, you guys have trimmed a few assets in the past, things like medical imaging. How do you feel about Portfolio at the moment, anything you're looking to prune or are you always kind of reviewing things?
It's a great question. So, I mean, we love the portfolio we have today. I think we've done a lot across all of our end markets and all of our businesses. I think we have a value creation story in every single one of them and they're a little different. Just because we're probably putting more inorganic capital into life sciences and diagnostics doesn't mean we're not putting organic capital Into applied markets in our analytical business or our food business.
We're investing there as well. So we'll look at Small divestitures as well, but I think each one of our businesses and end markets have a value creation story that we're quite excited about.
Great. Thanks, guys.
Thanks, Patrick.
Thanks, everyone. I'd like to now turn it over to Prahlad for some closing comments.
Thank you, Steve. And I wanted to start by thanking everyone for Joining us this morning for our Analyst and Investors Day. I appreciated all the questions. But more importantly, I wanted to take the opportunity To thank our employees for their contribution, not just in putting this together, but also for the tireless efforts, Especially in the last 18 months that we have all gone through. I hope today you got a better appreciation for what the new PerkinElmer looks like.
There are lots of transformation that happened over the past few years, and I and my team and all 14,000 of us Couldn't be more excited for the future that is before us. Thank you again, and have a great day.