Good morning. I'm Ken Apicerno, Vice President of Investor Relations. Want to welcome everyone here to our 2015 Analyst Meeting. Great to see a lot of familiar faces. Before we get started, just want to go through a few scheduling issues and some housekeeping items. As you see on the agenda, let me pull that up. We're going to start with the strategic overview from Marc Casper. We're then going to go into our financial outlook with Peter Wilver and Stephen Williamson. Then you're going to hear from some of our primary business leaders for a good update on what's happening in our four business segments. We're going to also have a short break right after the presentation that Thomas Loewald will give on Analytical Instruments. Let me just make sure we're on the agenda.
When we come back from the break, we'll have a couple more presentations. Then we'll get into a Q&A session at the end that Marc Casper will lead. When we get to the Q&A session, we ask that you, if you have a question, please raise your hand, and wait for a microphone to be brought over to you. Please state your name and your organization for the webcast. Because we are being webcast, please ask that you mute your cell phones and other electronic devices so that we have good audio. Final step before we get started, let me read the safe harbor. Various remarks that we may make in these presentations about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's most recent quarterly report under the caption Risk Factors, which is on file with the Securities and Exchange Commission and available on the investor section of our website under the heading SEC Filings. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Therefore you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. During the presentations today, we'll be referring to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP, including adjusted EPS, adjusted operating margin, adjusted ROIC and free cash flow.
Definitions of these non-GAAP financial measures and for historical purposes, a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, is available in the appendix to today's presentations. With that, it's my pleasure to introduce Marc Casper, President and CEO of Thermo Fisher Scientific.
Well, good morning. It's great to see you and great to have everyone here. What I would say is first, I'd like to welcome our board of directors who is with us today and have been with us in years past as well, as well as the members of the management team. Today is a great opportunity for the company to give you an update on the progress that we've made in executing our strategic objectives and talk about the very bright future that we have as an organization. I'm going to set the stage this morning, as Ken said, and then from there, Pete and Stephen will go through the financials, and then our business leaders will hit the highlights on why we're so excited about our growth prospects going forward.
As I get started, I'm going to spend the first few minutes talking a little bit about where we are today as a company, and then from there, what I will do is talk about our future. I think it's good to start with an orientation slide, just to ground you on Thermo Fisher. For most of you, it'll be quite familiar. We are the industry leader in our field. We have a unique scale in terms of 50,000 colleagues working across the globe, serving customers in 50 countries. We have $17 billion in revenue with an unparalleled commercial reach. The size really gives you a huge advantage, particularly in the high-growth regions of the world, the emerging markets. We go to market with five leading brands, Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific, and Unity Lab Services, some of the most powerful in our industry.
We're known by our customers for our unmatched depth of capabilities, whether it's the leading innovation that we drive in our industry, the deep applications expertise, and very interestingly, the substantial productivity that we are able to deliver to our customers that are trying to really get the most impact out of their R&D dollars. We enable our customers to make the world a healthier, cleaner, and safer place. The video, I think, gives you a good sense of how we work in the world today. When we think about our customers, we serve incredibly exciting and dynamic markets. In fact, our served market is about $100 billion, and that market is growing by 3%-5% on an annual basis, and we believe that those are reasonable assumptions in terms of market growth going into the future.
The reason that we have such confidence in that type of growth is really driven by what our customers are working on. In pharma and biotech, looking for the cures for cancer. In academic and government, we provide the tools to solve some of the most challenging research problems. In the industrial and applied markets, really serving the quality control applications to make sure that what is produced is what companies are trying to produce. In diagnostics and healthcare, bringing out cutting-edge new diagnostics to help doctors get the right treatments for their patients. Markets are balanced in terms of the four markets that we serve. They're all attractive, and you know our positions in each.
I always like to highlight our position in pharma and biotech, where we continue to gain share, growing well above the market rates of growth. I will highlight that a little bit later in the remarks. We have four business segments. They are highly complementary. They add to one another, and they really propel us as the industry leader. Our Life Sciences Solutions segment and business, 25% of our revenue, and very incredible capabilities in terms of serving the biosciences, bioproduction, and the genetic sciences space. Mark Stevenson and Alan Sachs will give you an update on some of the things we are working on as well as the very attractive growth prospects that we have in the business and share some thoughts about how, as we are in year two of the integration, how we are doing there as well. Innovation is important to Life Sciences Solutions.
It is also important to our Analytical Instruments and our Specialty Diagnostics businesses, which represent about 40% of the company combined. Tom Loewald and Andy Thomson will highlight some of the areas and some of the things that they are excited about in terms of innovation. Finally, Laboratory Products and Services. 37% of our revenue, the industry leader in driving laboratory productivity for our customer base, and it is the commercial glue that really drives our share gain around the world. Alan Malus and Greg Herrema will give you an update on our unique customer value proposition, how it is resonating with our customer base, and the new customer base that we are targeted to focus on as well. The businesses are attractive. They are industry leaders in their own right, and they add to one another. This slide is one that I always like to show this one.
It is us looking back at our track record, and it is one that has taken an incredible amount of hard work by the 50,000 colleagues across the globe to deliver this. We have delivered very strong financial performance historically, whether you take a five-year period or a longer period of time. Over this five-year period, 13% revenue growth. We were able to take that top line, expand our margins on average of 110 basis points a year, finishing last year at about 22% operating margins. The combination of good revenue growth and that margin expansion, as well as disciplined capital deployment, has led to 19% compounded annual growth rate in our adjusted EPS. All very strong financial measures in terms of our income statement. While we deployed substantial capital over that five-year period, we were still able to improve our ROIC, improving it by 20 basis points to 9.5%.
As Stephen will go through a little later, we deployed over $20 billion in capital in that period of time, so it gives you a sense that in the discipline that we have. I think the historical track record, plus what you will hear today about our exciting growth prospects, gives us great confidence in why our future is so bright and that the next several year period looks incredibly attractive from a financial perspective as well. The last of the slides I wanted to use in terms of looking back is an update on the Life Technologies integration. When we deploy capital, we are very focused on creating value for our shareholders. The criteria, as you know, is strengthening our strategic position, clearly helping our customers, and generating strong returns for our shareholders. We have owned Life Technologies for a little over a year. We planned that acquisition.
We had about a year to plan it as well. It's very well ingrained in the business. You'll be familiar with the slide here in terms of the concept of what we put in the deal model when we announced the transaction, what was the upside case that we articulated a year ago in terms of what we would be driving towards to exceed the return on invested capital targets. Last year, we gave you an update on the cost synergies and the revenue synergies, saying that we were well on track to deliver the upside case. In fact, you'll hear more about the cost synergies from Pete in terms of how we're doing and why we're able to increase our year two target this year and feel good about the momentum there. On the revenue synergies, we spent last year planning them.
We've been implementing them this year. We have good momentum in terms of capturing $60 million of revenue synergies this year, driving $20 million of earnings, and putting us in a position to capture $150 million of revenue synergies next year. You'll get a sense of the work we're doing with our Customer Channels Group, our Fisher Scientific channel. The work we're doing as well across our Specialty Diagnostics business, all helping to drive growth for our Life Sciences Solutions business. Organic growth. When we showed this slide last year, we said it's too early to declare the upside case. In the fanciest graphics I can do, we have a high degree of confidence that we will drive to the upside case as well here.
From our perspective, we delivered 4% organic growth in this business last year. When we look at what we're assuming in the long-term financial model, we're assuming 4% at this point and feel that we're well positioned to do that. We're not stopping there. We continue to focus on innovation, leveraging the commercial capabilities, but feel that we're well on track to deliver the upside case on the three key drivers of value: cost synergies, revenue synergies, and an accelerating organic growth rate. Let's look to the future. This vision should look very familiar to you. We presented it first at 2011 here at an Analyst Day. It's what we're working on for the long term as an organization. These are the things that really set our long-term strategy from a colleague perspective, becoming one of the world's most admired companies.
As an industry leader working with customers that are focused on making the world a healthier, cleaner, and safer place, we have to have the best talent, both recruiting it and retaining it. Being an admired company is very much part of that. We're constantly focused on advancing our position as the industry leader, whether it's the investments we make internally or the moves that we make to strengthen the portfolio, we are always thinking about the chessboard that we're playing on and how do we shape it to create value for our customers, our shareholders, and continue to strengthen the company. We invest substantially in our brands to make them the most powerful in our industry, as well as in our technologies that will make a profound impact on the life sciences, healthcare, and on the environment. We continue to increase our presence in high-growth emerging regions.
Financially, the thing that we're very focused on is really delivering consistent and strong earnings growth. That is adjusted EPS growth really is the primary measure that we've been focused on, and you know what our proven formula is in terms of how we do that. It's done by three key things: organic growth, our Practical Process Improvement business system, and the disciplined and effective capital deployment. In terms of organic growth, the three drivers are high-impact innovation, our unique customer value proposition, and the scale that we have in emerging markets that makes it very rational for our customers to do more business with us.
Our PPI business system takes top-line growth and turns it into expanding margins and improving cash flows, and you'll get a sense of that from both the impact from Pete Wilver as well as Tom Loewald in terms of how our PPI business system creates a bright future for the company. Finally, capital deployment. The combination of strategic M&A and return of capital is the third element of driving our long-term consistent earnings growth. Between myself and Stephen Williamson, you'll get a sense of how we're going to play that out and some of our priorities. That translates into a very bright financial outlook.
What I wanted to do is hit some of the highlights, if you will, on how we think about the period of time through 2018, then Stephen will go into a lot more of the assumptions a little bit later this morning. The first thing that we did was kept the same time frame as we did last year to make it easy from a comparison standpoint, and we'll give you a sense of that a little bit later. When you start with the revenue side of the equation, the first thing that has changed is the growth rate, this is the organic growth rate over this period of time, is 4%-5% versus the 3%-5% that we talked about last year.
We feel confident in our ability to deliver 4%-5% organic growth, simply because as you look at how the Life Sciences Solutions segment is performing and the bright outlook that it has, we feel that in normal market conditions, the 3% growth rate is off the table. That is something that we feel highly confident about. When you look at the earnings side of the equation, starting with the no M&A case, which is using the same basic assumptions as we used last year in terms of leverage, you'll see that the numbers in 2018 are roughly the same exact numbers that we showed last year, with the exception that we're able to offset a $0.70 FX headwind that has transpired since May of last year, and Stephen will walk you through that. That's the second aspect of it.
A high degree of confidence in our ability to deliver very strong earnings growth. The third thing was to try to help quantify what would bolt-on M&A add to that, and using the 2.75x leverage, which is the midpoint of our target leverage ratio, that adds about $0.75 in 2018 of EPS or about 3% to the CAGR. I think that gives you a sense of the three key things. What's our view on organic growth? How has FX affected the numbers? How to think about capital deployment in driving our long-term financial outlook. How are we going to do that? Start with the top line, and I think you'll come away with a great sense during the day of why we're so confident in our ability to deliver 4%-5% organic growth.
From an innovation perspective, we invest $700 million a year, and we focus on two things: enhancing our market leadership, and secondly, creating the exciting new opportunities or next opportunities for growth. When you think about leadership, you can think about mass spectrometry, whether it's the Orbitrap Fusion on the high end or for more of the applied markets, the Q Exactive Focus, whether it's the really great new products we launched in qPCR earlier in April to really grow our very large qPCR business. Those are all examples, as well as our new chromatograph in terms of the Vanquish, in terms of strengthening our market leadership. There are many areas in terms of creating the exciting new opportunities as well, things like our portable instruments, which we've built out a leadership position.
I thought what I would do is highlight three examples from our Life Sciences Solutions segment on some of the things we're excited about. The first of which is in the area of clinical oncology. In all three of these, you'll hear from Alan Sachs and Mark Stevenson in more detail. In the area of clinical oncology, our next-gen sequencing products are very well suited to serve this customer base. The amount of sample DNA that you need to get a relevant result is the best in the industry, and that has given us great momentum in serving that market. The Oncomine Focus Assay is one of our flagship products in terms of driving the growth. The second area that's a very big opportunity for the company is in flow cytometry. It is a large market, a market with good growth.
We are a small player. We've invested substantially in bringing out a great new technology, which is the Attune NxT. We've launched it this year. It is a much faster, easy-to-use, affordable flow cytometer. The product is so exciting that after the product was demoed at one of our key customers, the customer actually reached out to me and thanked me for bringing this product to market, which gives you a sense. That's pretty unusual for one of the customers at the bench level to reach out to the CEO and say, "This thing is unbelievable," in terms of what the impact is. We believe that we will redefine flow cytometry and become a more relevant player in that field, a really good growth opportunity.
The third area, and I was reading the pre-analyst day reports from our great analysts, and one of the things I was laughing about was a quote from a buy-side investor that said, "Mention the cloud three times, and you'll help your valuation." Unfortunately or fortunately, this slide was put together before we got that feedback, and I can tell you for sure that we didn't put cloud computing on the slide to change our multiple. We do have a very big initiative in terms of the Thermo Fisher Cloud. You'll get a very specific example of how industry leadership really makes a difference in terms of using scale to have a much better experience from the customer base and how the cloud helps enable that.
We have a very large installed base of genetic systems instruments, and our customers are able to use that and use the cloud to actually get more valuable information. I think you'll get a sense of why we're so excited about that. Three great opportunities for growth for the future, oncology, flow cytometry, and the use of the cloud. Second driver of growth is our customer value proposition. The chart should look familiar. We've maybe sharpened up the graphics a little bit, but we focus on our customers, and we drive innovation for them and their productivity. We launched this value proposition after the creation of Thermo Fisher Scientific.
We started with large biopharma customers using this, and over the last five years, for example, we've been able to have an 8% compounded annual growth rate serving that customer base, which gives you a sense of much faster than the rate of market in terms of the adoption. Over time, we have expanded the number of customers that we have applied this value proposition to, and Alan Malus will give you a sense of our newest target customer base in terms of the academic, small, and mid-sized biotech customers that are finding this very relevant as well. Lots of good feedback on our value proposition. Continues to drive substantial share gain for us, and we feel well-positioned as our second of our key growth drivers. The third of our top-line growth drivers is emerging markets.
We have 18% of our revenue in the high-growth regions of the world, and you know our success in China. Over the last five years, we've averaged a 30-plus percent growth rate, building out a $1.2 billion business today. You look at the success there, we've had lots of lessons learned over the last 10-plus years. We've been applying those lessons to other parts of the world to really take advantage of them. Just in the last month, we've had significant new openings in the Middle East of our customer demo center, as well as in Brazil in our customer experience center, where we've had a substantial number of customers come and interact with the company, looking at our new capabilities, positioning ourselves for the long term in both Brazil and the Middle East.
The other aspect of emerging markets is when we acquired Life Technologies, Life Technologies had a very complementary set of strengths to where Thermo Fisher was, particularly with great strength in Korea and in Southeast Asia. I thought I would use Southeast Asia to look at how we're leveraging that set of capabilities to drive accelerated growth. Today, we have a $300 million business in Southeast Asia, and we have 1,000 employees serving the region. We have a very large capability in Singapore serving as our Asia headquarters. When you look at it commercially, it's a $2 billion market for us. It's growing at 7%. We have about 15% market share and feel very well-positioned to really create an experience for our customers that makes them really want to work more with us than anybody else.
The way we think about our emerging market strategy is that we want it to be rational for our customers to continue to grow their business with us at the expense of others. That's why we've had great success by having better supply chain, better people, local manufacturing, local R&D, applications labs, using our scale to create competitive advantage, and that's what we're doing in Singapore. You'll get a sense from Tom Loewald how our instruments business is leveraging the capabilities that Life Technologies brought to the company a little later this morning. Let me turn to capital deployment, which is also a significant driver of our attractive and bright financial future. First, by a quick update on what's going on in 2015. We've been active. We bought back a half a billion dollars of our shares.
We acquired Advanced Scientifics in February to build out our bioproduction capability, and we continue to delever as well with our goal of being down at our target leverage ratio, under three by the end of the year. When you look forward through 2018, we have about $15 billion of capital to deploy over that period of time. As you look at the model a little later, you'll get a sense of the assumptions that we've made. About a third of our capital is assumed to be a return of capital to our shareholders, primarily through buybacks, but also through a dividend that will be growing modestly over that period of time once we hit our target leverage ratio. About $10 billion of M&A over this period of time, and bolt-on M&A, a steady cadence of adding to our capabilities.
Our criteria, as I said earlier, is the same, strengthens our strategic position, enhances our customer offering, clearly creates shareholder value. We will continue to be very active in taking the very strong cash flows that we generate and have substantial capacity to deploy that and create additional shareholder value. There's obviously scenarios that are more aggressive than this. We've obviously been willing to go above the 2.75 times leverage ratio over short periods of time, like we did with the acquisition of Life Technologies, should the right opportunity materialize, we obviously don't feel constrained to stop at this level. We think this is a good baseline assumption as you look to the future. Let me close my part of the presentation this morning with one last slide that I think highlights the day.
That is when you look at Thermo Fisher Scientific, we are the unrivaled industry leader serving a large, a fragmented, growing, attractive market. We are very well-positioned in that market as the industry leader. Secondly, we have a strong track record of delivering outstanding financial performance through our proven growth strategy as well as our PPI business system. We're positioned to deliver 4%-5% organic growth over the period and achieve 25% adjusted operating margins over the planning horizon. Our earnings and free cash flow, and the growth that it's providing, will provide about $15 billion of capital to deploy through 2018. We come to work every day continuously strengthening our position to accelerate our growth and create shareholder value.
Before I turn it over to Pete Wilver, our CFO, I wanted to acknowledge that this is Pete Wilver's last analyst meeting, as he's retiring in March of 2016 and handing over the CFO reins to Stephen Williamson on August the 1st. Pete Wilver has been, and continues to be, a phenomenal business partner. He has contributed enormously to our success in everything that you see in terms of the progress that we've made over the last 15 years as a company. Part of that contribution is also in the fact that he developed his successor, Stephen Williamson, who will carry on the tradition of having a world-class CFO at Thermo Fisher Scientific. With that, I'll turn it over to our CFO, and my friend, Pete Wilver.
Thanks, Marc, for the kind words. It's truly been a great run, and watching the video really brought home to me how far we've come together with everybody in the front row here. I know that I'm going to miss being part of such a great company and working under your exceptional leadership. It's not over till it's over. I got a little more than two months in the chair before I hand it over to Stephen, and I don't plan on taking my foot off the gas anytime soon. Not that I think you would allow me to. Good morning. It's great to be here to give you a detailed financial overview of Thermo Fisher Scientific. As you can see, the title of our presentation is Consistently Delivering Shareholder Value.
We chose that title because it's something that we take very seriously, and we work to enhance every day. I'll start with a quick recap of our strong 2014 performance and then give you some insight into how we plan to achieve our 2015 financial goals. Then I'll invite up Stephen to cover our longer-term financial outlook for the company, which I think you'll find pretty compelling. With that, let's begin with a quick recap of 2014. Although it's somewhat old news, our great financial results in 2014 provide a good baseline for how we're thinking about 2015 and beyond. On the top line, we grew revenue 29% on a reported basis, driven by the addition of Life Technologies.
On an organic basis, we grew 4%, while navigating some tough conditions in some of our key end markets and geographies and successfully integrating one of the largest acquisitions in our history. We significantly leveraged that top-line growth and generated 240 basis points of adjusted operating margin expansion. Of course, the acquisition was a big contributor to that. We also once again contributed strong productivity from our PPI business system, which I'll expand upon a little bit later. This all resulted in 28% adjusted EPS growth above the high end of the original guidance we gave you at the beginning of last year. Overall, I think you'll agree we delivered strong strategic and tactical execution last year. Given the significant borrowing that we did to finance the Life Technologies acquisition, I wanted to take a minute to update you on our progress in delevering.
At the end of Q1 last year, following the acquisition, we had $17.4 billion of debt, and we were levered 5.7 times. At that time, we committed to you and the rating agencies that we would aggressively pay down our debt, and we did exactly that. We ended the year with $14.6 billion in debt and 3.6 times leverage. We plan to continue to pay down debt this year and still expect our leverage ratio, as Mark said, to be at or below three times by the end of the year. In addition to paying down debt, as Mark said, we already deployed $800 million of capital at the beginning of the year, $500 million on share buybacks, and $300 million on the ASI acquisition. Stephen will be talking about our capital deployment strategy in a little bit more detail later.
I know all of you are very familiar with our legendary revenue pie charts. This is Ken's favorite chart. Let's take a quick look at our last 12 months profile. On the left, you can see our split by key end market. We remain pretty balanced among our four end markets with a little bit more exposure to pharma and biotech, given our strong growth in that segment over the last several years. With the full year of the Life Technologies results in the numbers, we've seen a little bit of an increase in academic and government, and that's been offset by a slight decrease in industrial and applied. In the middle, our recurring revenue profile remains very attractive with about three-quarters of our revenue in consumables and services.
About half of our service revenue comes from our biopharma services business, where we help our customers with clinical trials logistics. Finally, on the right, we continue to invest in emerging growth markets in Asia Pacific, Eastern Europe, and rest of world to enhance our overall growth profile. As you saw in Mark's presentation, emerging markets represent about 18% of our total revenue at this point. Moving on to our full year 2015 guidance, these are the key assumptions we used in our guidance that we provided you on the Q1 earnings call in April. They're here for your reference, and I won't go through them at this point since I covered them in a lot of detail on the call.
It's important to note that we don't have any additional capital deployment other than dividends included in this guidance other than the $800 million that we already spent on share buybacks and the ASI acquisition in Q1. If we were to deploy any additional capital this year, that would be upside to our current guidance. This is a summary of our full-year guidance. The headline numbers are 4% organic growth, 60 to 80 basis points of adjusted operating margin expansion, $2.6 billion of free cash flow, and an adjusted EPS range of $7.25 to $7.40 for 4%-6% growth year-over-year. At the beginning of the year, we said we would attempt to mitigate the bottom-line impact of any incremental FX headwinds and that we would allow any tailwinds to fall to the bottom line.
We're executing to that plan and actually raised our full year 2015 adjusted EPS guidance in April, despite realizing an incremental $0.09 headwind from FX. We accomplished this through a combination of things. First, we implemented some operational improvements in terms of productivity and incremental synergies. We increased our capital deployment and took some below-line actions that more than offset the incremental $0.09. It's actually a great example of how we actively manage the company to meet our financial commitments. A little later, Tom Loewald will talk in his presentation about how he's managing the FX headwinds in Analytical Instruments. On the right-hand side of the slide, you can see the foreign exchange impact that's included in our current guidance.
To summarize, based on April FX rates, FX is lowering our revenue year-over-year by 6%, diluting our adjusted operating margin by 65 basis points and creating a $0.67 or 10% headwind to our adjusted EPS. On an FX neutral basis, our full year 2015 adjusted operating margin expansion would be 130 to 150 basis points, and adjusted EPS would be growing 14%-16%. Very strong underlying operating performance. To better understand the components of how we expect to achieve our current guidance, let's take a look at our 2015 adjusted EPS bridge. You know I had to put a bridge in my final presentation. Starting on the left, inflation is consistent with prior years, and I've already talked about the significant impact of FX, which is striking when you see it here graphically.
We're driving some good below-the-line favorability through our tax planning as well as lower interest from delevering. We continue to make strategic investments in the business to drive future growth, which are dilutive in the short term, but as we've seen in our past results, drive sustainable long-term growth. Price volume and mix is a significant contributor to our adjusted EPS growth, driven by pull-through on our organic growth. We're also expecting a slightly higher contribution from price this year, primarily as a result of the actions we're taking to mitigate the impact of FX. Net productivity and acquisition synergies combined are the largest contributors to our year-over-year growth, and I'll provide some detail on our productivity cost drivers as well as the cost synergies on the next two slides.
Finally, in terms of acquisitions net of divestitures, we benefit $0.09 from picking up January results for Life Technologies, which was the last month before the one-year anniversary of the acquisition, and adding the ASI acquisition, partially offset by the Cole-Parmer and acquisition-related divestitures that we did last year. The net of all this is year-over-year adjusted EPS growth of 4%-6%, driven by strong operating results. Now let's take a look at our PPI business system. Marc talked to you about how we deliver top-line growth. Our PPI business system is how we improve our quality, increase our customer allegiance, and drive margin expansion. It's a proven strategy that will continue to contribute to our results year after year. We're expecting about $330 million of gross savings this year from our PPI business system.
If you look on the right-hand side, PPI continuous improvement projects are the core of the business system, and they represent about 50% of the savings. These projects help us deliver highest quality products and services to our customers and remove waste and inefficiency from our processes. Even though we've been doing this for a very long time, there's always room for improvement, so we have a long runway here. In our Life Sciences Solutions segment, we continue to be very focused on delivering acquisition-related cost synergies, which are detailed on the next slide. At the same time, we're continuing to ingrain the PPI process into the acquired businesses, and it's beginning to have a meaningful impact on their results. It's great to see the momentum here and the contribution it's making to margin expansion and how the business is run.
Global sourcing, we're expecting about $100 million of gross sourcing savings this year. At a high level, this is driven by three things. We continue to consolidate our company-wide direct and indirect spend with fewer suppliers to leverage our scale and achieve lower costs. As we grow organically and through acquisition, we're able to further leverage our scale. We continue to expand our supply chain into low-cost regions. Next, most of you know our manufacturing facility footprint remains quite fragmented. Despite our facility rationalization efforts over the years, we're still operating in 143 manufacturing facilities worldwide, which is many more than we need. We've consolidated over 90 manufacturing facilities over the past 10 years, so about 8-10 per year. Our expectation is that we'll continue that every year for the foreseeable future.
We continue to make future acquisitions, our number of facilities will obviously keep increasing. I think you can see that we'll continue to have plenty of opportunity here for a long time to come. Finally, we continue to be very focused on expanding our low-cost region manufacturing base. We achieve an average of 20% savings from moving production to low-cost regions, primarily from labor arbitrage. This excludes the sourcing savings we achieve from shifting to local suppliers, which is included in the global sourcing bucket. This year, we're expecting our low-cost region manufacturing revenue to grow to 11% of the total, driven by increases in China, Singapore, Mexico, and Lithuania. Our goal here remains to increase this by about a percentage point every year. The Life Technologies acquisition cost synergies are a great story.
We're coming off an excellent year in 2014, where we exceeded our initial full-year guidance by $30 million or 35%. This year, we're driving to $125 million of incremental benefit, which is up $10 million from the initial guidance we gave in January, driven by accelerating some of the synergies to earlier in the year. The cost synergies come from four major buckets, each with a slightly different pacing profile, as you can see here. Generally, corporate and public company synergies come out quickly. We achieved almost half of the savings last year in year one and expect to realize about 80% by the end of this year two. Business cost overlaps take a little bit longer to implement and include combining common business processes in biosciences and bioproduction, as well as leveraging our combined functional support costs like HR, finance, and IT.
We're a little more than halfway through this process and expect to be about 80% by the end of this year in this category as well. Sourcing has a similar progression to the business cost overlaps and represents the savings we're achieving from incorporating Life Technologies into our global sourcing programs. This includes leveraging our spend across our larger combined scale, it can encompass anything from direct materials to shipping costs to our IT spend. Finally, site consolidations and manufacturing synergies take the longest to plan and execute. You can see here that we realized only about 20% of the expected benefit in year one. This category involves optimizing our manufacturing footprint and integrating our supply chain to increase our efficiency in manufacturing, warehousing, and distributing products in the combined businesses.
The result of all this is that we should be in a great position to meet our year three goal of $300 million of run rate cost synergies. I'd like to introduce Stephen Williamson, our vice president of financial operations and my successor, as Marc said, effective August 1st. It's personally rewarding to me and reassuring as a shareholder myself to have someone like Stephen in my succession plan to become CFO. We worked together for over 15 years, and over that time, I've watched him become an exceptional finance leader and business partner. He knows the company's operations as well as anyone, and he's been behind the scenes, but he's been an integral part of our success, he's an ideal choice for the role. With that, I'll invite Stephen up to cover our 2016 to 2018 financial outlook. Thank you.
Thank you, Pete, for those really kind words, and thanks for all of the mentorship and development that you've given me and positioned me to be able to take this role in August. You've done so much for me, and you've done so much for the company as being demonstrated by the financials that Marc outlined earlier. Good morning, everybody. I'm going to take you through two topics today. I'm going to start with capital deployment and then take you through our long-term financial model. We've been very active in terms of capital deployment over the past five years. We've deployed $25 billion, and $21 billion of that capital has gone towards acquisitions. As Marc said, as you think about the scale of the M&A deployment, it's impressive that we've still been able to increase our adjusted return on invested capital over that same time period.
We do that by having our operating businesses fully focused on thinking about where's the best place to put their investment dollars, where will they get the best return, from large investments such as acquisitions, through to small investments like a fixed asset purchase at one of our manufacturing sites, for example. Good focus on return on invested capital, and really strong deployment of the great strong balance sheet that we have and the strong cash flows that we have has created a lot of shareholder value in the past with our capital deployment strategy. Given that we operate in a very fragmented industry, we see a good line of sight to a large amount of acquisition activity in the future. I think you'll see a similar level of capital deployment going forward.
As I transition now into the long-term financial model, the bulk of my discussion is really going to be around a no M&A case. Whilst there's a lot of potential to do this capital deployment, wanted to model on the same basis that we've given you in the past so that you can compare the two. At the end of the presentation, I'll give you more details around that upside that Marc mentioned, where if we deploy capital in a manner similar to the way that we've deployed capital in the past five years. Moving on to the assumptions of the model. Draw your attention to the time period first. This is a three-year financial model, 2016-2018. Ends on the same time period as the model did last year.
A bit later on, I have a bridge of the EPS range from the 2018 model last year to the 2018 outlook this year. Getting to the assumptions, 4%-5% organic growth, over the three-year time horizon. As Marc mentioned, we had a model of 3%-5% last year. One year further on with the integration of Life Technologies, we feel much more comfortable about growth in this range for the long term. Moving to adjusted operating margins. Over the three-year period, averaging 75 basis points of adjusted margin improvements. Slightly higher at the beginning of the period, and then exiting at 40-60 basis points. We still see we have a long way to go in terms of expanding margins for the company. How do we get that growth and the margin expansion?
Well, it's that same proven formula that Marc talked about earlier on. It's the three growth levers that we see have a long run of success ahead for them. Our PPI business system, which has been such a strong driver of our productivity in the past, we see that having a lot of legs going forward as well. Feel very comfortable about the revenue range and the adjusted operating margin range. In terms of free cash flow, the businesses generate really strong free cash flow. One of the other levers that we have at our disposal is a very talented tax and treasury team that enable us to minimize the tax cost for the company.
When you think about modeling in the tax impacts of a long-term financial model, particularly with no M&A, the incremental adjusted operating income dollars come in at a higher marginal tax rate than the 14% that we enjoy on average across the company today. There's general pressure in terms of the tax rate over the planning horizon. Again, one year further on in understanding the capabilities that we bought with Life Technologies, we put in place some good strategies and planning to be able to minimize that increase in tax. It's still a slight increase over the period, but it's not a significant increase over time. In terms of capital deployment, this is the no M&A case, de-levering down to a relatively conservative 2 times leverage. Well below where we need to be to maintain our investment grade rating.
This is basically the same set of assumptions that we used in the model last year for consistency. Dividends increasing, approximately the same as the organic growth rate for the company. All the rest of the capital being deployed towards buybacks. What does that get us? Here for reference purposes, I put the midpoint of our 2015 guidance, then the 2018 ending point for the financial model, and the 3-year averages and CAGRs on the right-hand side. In terms of scale, $18.7 billion-$19.5 billion of revenue by 2018. Adjusted operating margins, approximately 25%, then really strong EPS, adjusted EPS growth over the 3 years, averaging 8%-12% each year through that 3-year period, ending in 2018 in a range of $9.20-$10.30. Free cash flow, as I said, strong free cash flow generation over $3.2 billion by 2018.
Adjusted ROIC growing on average just under 100 basis points each year. You can see with the current composition of the company, we're able to drive really strong financial performance. By increasing the leverage and putting more focus on M&A in terms of capital deployment, we can drive substantial upside to the numbers that you see here on this page. Before I take you to that upside, let me go through 1 page, which I'm following in Pete's footsteps, I have to have a bridge as well. This is a bridge. On the left-hand side is the EPS range from last year's model for 2018 compared to the EPS range for 2018 for this year's model. For clarity, kind of helping you through what's changed over the last 12 months. The net change is $0.10.
That's really represented by the 2nd bar in the chart, which is the positive impact of our Advanced Scientifics acquisition, offset by the dilutive impact of the Cole-Parmer divestiture. All the rest of the items on the page net to zero, there are a lot of puts and takes. Let me quickly take you through them. Obviously, foreign exchange is the big headwind. When you model forward the $0.67 headwind that we're seeing today, that equates to a $0.70 difference in the model for 2018. A significant headwind. When you think about FX environment today compared to this point last year, substantial change for us.
The good news is we have total line of sight to be able to offset all of that FX headwind in terms of the growth levers that we have at our disposal, in terms of the margin levers that we have, and then active management of the below-the-line items of tax, interest, and share count. I think that demonstrates, as Pete mentioned, it demonstrates how well that we manage the company through tough environments, including this FX headwind. My final slide here is about the upside in terms of capital deployment. I prepared a bolt-on M&A case that had the same underlying operational assumptions as the no M&A case. The big difference between the two is that the leverage ratio at the end of the year in each of the three years of the period 2016 to 2018 is assumed to be 2.75 times.
That plus then targeting two-thirds of the actual deployment towards M&A enables us to deploy $15 billion of capital versus the $8 billion in the no M&A case, and in total about $10 billion towards acquisitions. What does that get us in terms of scale? By 2018, an additional $3 billion of revenue. The company will be approximately $22 billion in scale at that point. Adjusted EPS, it would mean an additional $0.75 in 2018, which represents 3% additional growth over and above the 8%-12% that I showed you in the no M&A case. We operate in a very fragmented industry. We see a lot of potential to continue to do acquisitions, and by leveraging our balance sheet and cash flows, we think we can drive this really strong upside to the no M&A case that I presented earlier.
I think you can see from the current composition of the company, plus continuing the track record of capital deployment, we can create significant shareholder value, and it's a really bright financial future for the company. You heard from Mark in his presentation about the strategy of the company and the proven operating formula that we have. Pete talked about the successful year we had in 2014 and the successful year we're going to have in 2015, and hopefully I've laid out the bright financial future. We're now going to transition to a series of presentations by some of our key operating leaders. What they're going to do in the context of their business, they're going to tell you how they're actually going to put that proven formula and that strategy to work to make these financials real.
The first presentation in that series is by Tom Loewald, who leads our Analytical Instruments business. It's my pleasure to hand over the podium now to Tom. Thank you.
Thank you, Stephen, and good morning, everyone. I'm going to take the next 10 minutes or so leading up to the break to talk about the Analytical Instruments business that I lead. I'm going to break my presentation up into two sections. In the first, I'll provide a brief update on the business, on our product lines, on our revenue composition, and our financial profile. My colleagues who are going to present after the break will use a similar format to introduce their businesses. In the second half of the presentation, I'm going to talk about how we run the company, how we apply the proven formula that you heard from Mark and apply it to our businesses. I'll use the Analytical Instruments business to provide those examples.
First, we start with innovation as an absolutely essential element of our success and growth in the Analytical Instruments business. We think about innovation a couple different ways. First, it's providing high impact innovation to extend our customers' research capability and to provide throughput and productivity for our applied customers. Secondly, we take these very powerful analytical technologies and apply them into online and into field applications where our customers are looking for immediate measurement, detection, and reaction. We combine all of that with our total coupled capabilities of scale, depth, and value proposition. The Analytical Instruments segment is made up of leading product lines, all focused on helping our customers solve complex challenges. I won't read all the product lines to you here because I think you're very familiar with them, but let me just talk about the breadth that we cover.
From a high-end mass spectrometer helping our life science customers, to a handheld Raman device used in the field in Africa to detect counterfeit pharmaceuticals, to an online particulate monitor in Beijing measuring pollution levels. Really an extraordinary range of technologies and customer solutions that we cover in this business. The key element to all of these product lines is our innovation leadership, our breadth of product portfolio, and our global scale. Briefly on our financial profile, at $3.25 billion in sales, we are the leader in the Analytical Instruments space. We grew organically 4% last year and achieved adjusted operating margins of just shy of 18%. We spend over $200 million a year in R&D. It's the second-largest R&D budget in the company, all focused, as I mentioned earlier, on driving high-impact innovation for our customers. A few comments on our revenue composition.
We have leading positions in all three businesses that you see on the left side of the chart. We have a huge installed base of instrumentation that is pulling through a very quickly growing service revenue stream. We use our Unity Lab Services business to provide high levels of service for our instrumentation and provide enterprise service capabilities for especially our large pharmaceutical customers. Lastly, you can see our very strong presence in emerging markets, which is based on the fact that we have local production, local sales, local service, and in many cases, local R&D in those regions. The Analytical Instruments business is one that you're most likely quite familiar with. It's got perhaps the longest history in our company.
I'm going to take the rest of my presentation and stay at the company level and talk about how we apply our operating discipline to produce profitable organic growth for my business. That operating formula rests on the following. First, clearly, innovation leadership. Secondly, our PPI business system. Third, our unparalleled commercial reach, and lastly, our talent management. Our company-wide R&D strategy rests on the pillars you see on the left side of the page. We start with the largest R&D spend in the industry, focused on high-impact innovation. We leverage our centers of excellence, places like Shanghai and Singapore and Vilnius, where we have common engineering pools that all of our businesses can use, and I'll give an example of that in a minute. We have deep relationships with key opinion leaders and a very influential and active scientific advisory board.
Lastly, we have a unique depth of technical capabilities that all of our businesses leverage. As one example, over the last two years, we've funded about 20 programs at a corporate level focused on breakthrough innovations and combining technical capabilities across our businesses, something that each individual business would have trouble doing, but we do through these corporately funded R&D efforts. These are the basics of our R&D strategy as a company. We, in Analytical Instruments, take advantage of all the aspects that I just mentioned. As one brief example, we have a leading position in UV spectroscopy based in our site in Madison. We've decided to leverage our Shanghai center of excellence for R&D to develop UV spectroscopy products, going after perhaps one of our fastest-growing application areas, and that's water quality in China.
Taking the capabilities of one team, leveraging it through our total company capabilities in China, and making sure that we're customizing products for a very fast-growing Chinese market. Basis for everything we do is our PPI business system focused on quality products, ever-increasing customer allegiance, and productivity. As you saw in Pete's presentation, identical pie chart, we're going to generate $330 million in savings this year, nearly half of which is coming from the collective efforts of our employees using our PPI business system. I'll give you two examples of our PPI business system in action. The first is the foreign exchange headwinds that you've heard about in a couple of the presentations. All of our businesses have challenges from foreign exchange to one extent or another. In my business, our yen exposure is a particular area of concern and headwind.
What we did late last year is take our PPI business system and focus it squarely on this challenge. We put teams together looking at getting additional price realization from our customers, additional supplier price reductions in negotiations, and additional cost reduction efforts above and beyond what we had already planned for 2015. We applied a PPI leader to each of these teams, and we used our Kaizen method to ensure structured problem-solving, but fast problem-solving, putting teams together across the company to go after this FX headwind squarely. The result all of that, you've heard in multiple presentations this morning, in our first quarter earnings, we increased our guidance for adjusted EPS despite the foreign exchange headwinds that we've seen, all because of the efforts of our teams using the PPI business system.
Second example on the right side of the page, perhaps a more traditional one that you're used to hearing from us, and one that literally takes advantage of all the productivity leverage you saw on the pie chart. We recently announced in my business that we're moving production of our GC mass spec business from the U.S. to Singapore. We get the following benefits from doing that. First, we reduce our site footprint by one, moving from a high-cost, low-scale facility to low-cost region production, where we get labor arbitrage, as Pete mentioned, and we also get the benefit from a very high overhead absorption going into a center of excellence that Life Technologies had previously built in Singapore. Third, we get access to a very well-established supply base in Asia for components, which is going to lower our costs further.
Lastly, very attractive tax breaks from the Singapore government to move production there. This is a great example where we've checked off the box on every single area of productivity opportunity, we've strengthened a very important business that's growing quite quickly, and improved our margins. There's probably no more obvious source of leverage for all of our businesses than our extraordinary commercial reach. I'll use my chromatography business as the example here. In chromatography, we start with a strong hand. We have leading positions in ion, gas, and liquid chromatography. We have a strong consumables business. We have a great software franchise with Chromeleon, and we wrap all that together with our applications expertise.
We amplify the opportunity to grow in chromatography with our total company commercial capabilities that you see on the left, starting with our extraordinary relationships with big pharma and from our key account program, as well as from our channel relationships. Secondly, we have tremendous website and digital marketing capabilities to make sure we're pulling through consumables off of our chromatography installed base. We use our regional demo centers both to showcase our new products, like our Vanquish UHPLC, but also to develop methods for our customers in the region. As Mark mentioned, we're opening a new center in Dubai, which is a great opportunity for my business to leverage additional company capability in the region. Lastly, we use Unity Lab Services as a tremendous partner for us to achieve very high levels of customer response and service.
All of this adds up to a very compelling growth opportunity for chromatography, and you can see that we had excellent results in 2014. Lastly, and perhaps most fundamental to everything we do, is our talent, our ability to hire, retain, and develop the industry's best talent pool. We do this a few different ways. First of all, we have a mission that's compelling to our employees and to prospective employees, and we have a track record of success, which means we've got great access to the talent that wants to come into this industry. Secondly, we have scale. We have the ability to invest in training programs, whether it's a first-time supervisor or manager, all the way up to our most senior leaders. Tremendous capability for us to grow the careers of our team.
In my business, we benefit greatly from all of these capabilities. I know that a lot of you get to interact with my leadership team at Pittcon and at ASMS and other venues. I hope you'd agree that we put together a very strong team that we can use to scale the business and grow in the future. To conclude my part of the presentation, I hope you've got a sense of how we use our operating discipline and formula to progress all of our businesses, but with the examples in my business. Innovation leadership, our PPI business system, our unparalleled commercial reach, and our talent management, which all combine to mean that our future truly has never been brighter. With that, I'm going to hand it over to Ken, who's going to announce the break.
Thanks, Tom. Thank you, Tom. We're going to take a quick break. We're going to start back up at 10:20. We're going to hear from Mark Stevenson, President of Life Sciences Solutions. Thank you.
Hola, mi amor. ¿Cómo estás hoy? ¿Quieres que pasemos? ¿O que viajamos? ¿Quieres que hablamos? ¿O que escribimos?
We're going to get started with the second half of the morning. It's my pleasure to introduce President of our Life Sciences Solutions business, Mark Stevenson.
Well, good morning to you all. Pleasure to be back with you this morning. I would like to give you a little more details this morning on why Marc and the leadership team feel more confident about the Life Sciences Solutions business, share with you some of that background, and why we believe this can be an exciting growth platform for the company. I am also going to invite my colleague, Alan Sachs, up, who is my Chief Scientific Officer and leads the R&D, and he will give you a couple of examples of some of the high impact innovation, as Tom correctly characterized our model before, that will give you some examples of what we are doing in the company. Just to ground you a little bit in the business, we really do have the market leading Life Sciences Solutions reagents franchise.
It has incredibly strong loyalty with our lab-based customers and our researchers. They do incredibly complex experiments. They rely on the quality and the innovation that comes forward that many brands have been familiar with, and it creates a very strong recurring revenue base for us. We have done a great job positioning our bioproduction franchise. I will talk more about that, and we are incredibly well positioned for what is a great market as we see biotherapeutic companies increasingly focused on protein-based drugs and vaccines. I will talk about that second business area of bioproduction. I will explain our strategy in genetic sciences. Get a lot of questions about this, so be very clear where we are focused on our genetic sciences and how our next-generation sequencing franchise fits into that.
I will finally talk a little bit more and introduce some of the topics that you will hear more from Alan and Greg later as we think about some of the capabilities to reach our customers, expanding those, sharing those across the company, and why that helps leverage our platform to growth. In terms of the profile of businesses, like Tom, I will not go through all the details. We have really got to imagine in front of a customer, we can really bring together this portfolio of businesses to the customer. Whether it is a pharmaceutical customer that is doing experiments, that wants to model more relevant cell types, they then want to analyze the gene expression and then grow that up in a protein model system, whether it is an academic researcher.
We really cut across with our technology platforms, our science platforms, and then our reach to these customers to have very scientific conversations with these customers to offer them solutions across everything from life sciences research, their discovery, into diagnostics to our clinical customers. In terms of our financial profile of last year, you saw this. The year ended. We strengthened, grew faster than we had historically grown to end the year, growing 4%. We continued to invest strongly in R&D, about $300 million, 7.4%. I will talk about some of the changes we have done in that R&D spend and profile.
We delivered very strong operating margin as we executed on our synergy plans we'd put in place and had a very successful year and continue to see that this business can grow above the 3%. I'll give you more details on our strategy and why I believe that's the case. In terms of the attractive profile of this business, we're divided into three business areas, and a large proportion, nearly 90% of our business is consumables or recurring services that we do with our customers. We sell instrumentation really with a mind to automate those consumables and pull through more reagents. As you can see from the geographic split, we're very well diversified with an increasing presence in the Asia-Pacific region, which is a fast-growing region for us as we expand out that Life Sciences Solutions business.
In terms of a year later from updating you here last year, really, integration's gone incredibly well. A very good time of planning we had before closure, very open mind to share best practices, and to really come into this year and deliver on all the things we'd set out to do as we brought Life Technologies into Thermo Fisher Scientific. Some of the key things we've done, to update you one year on, as Tom outlined, the business model, really, we've adopted many of those key processes into the business, the PPI business system, our customer focus metrics, measuring those, ensuring as we made changes in some of the back office integration, we didn't disturb our customers, and getting really focused on ensuring that our R&D spend was very focused on high impact innovation.
As Pete and Mark outlined, we delivered and actually have accelerated the delivery of the cost synergies. During that first year, spent a lot of time outlining where we'd find the right revenue synergies, which I'll outline on the next slide. Really, as we've operated the business, we've really aligned the management team around accelerating organic growth, and so ensuring that our cost structure and the business leaders have full alignment around those P&Ls to drive organic growth. Really making sure we're targeting some of the higher growth markets, such as the bioproduction market.
Making sure that as we maintain a high investment in R&D, but we really focus on where we can get a great economic impact, where we can make a difference with our customers, both to prioritize that spend and then also ensure that we get really effective commercialization and uptake of our new products. The integration, one year on, very much on track with everything we announced and well positioned to achieve not only the cost synergies that have been laid out for three years, but also to start to deliver on the revenue synergies in this year too. In terms of our intense focus on accelerating our growth and consistently achieving above this 3% level of growth, the first is we're really benefiting from this total company value proposition. You heard a little bit from Tom.
You'll hear further from my colleagues presenting, Alan Malus and Greg Herrema. This access to company-wide corporate accounts, particularly the biopharma and pharmaceutical accounts, allows us more and different conversations. Conversations with the business office and the pharmaceutical companies, conversations about projects and problems that they bring to us because we're engaged in the business partner with them. Really a different level of conversation than we would have had previously just at the lab science bench level, expanding out some of the scientific conversations to a wider conversation. Secondly, we've been expanding out not only our direct sales channel, but since the beginning of this year, we've also added many of our products through the Fisher Scientific channels, giving more access, more conversations, where Fisher is very much a partner with the lab and the companies.
Also in the emerging markets, the emerging markets presence and scale allows us again to have more conversations and synergy against some of these high growth areas. Together with Andy Thomson and his business, you'll hear some examples where the knowledge, the regulatory presence, the experience in the clinical markets allows us to think about and start to execute on some opportunities for our genetic sciences, particularly into some of these clinical markets that we see beginning to adopt next-generation sequencing technologies. Finally, we're using our e-business platform that we're very much focused on building up to get more traffic to that, building up greater presence, and as we do that, building up a greater scale, both here in the U.S. and also globally to serve our customers. Those are some of the examples that are driving our company value proposition.
We've also, as I mentioned, targeted our innovation and ensured that our business and commercial teams are really positioning ourselves into the high growth markets, all of which we believe will align ourselves to higher growth than we've achieved historically. Let me spend a word just on each slide on each of the sub-businesses within the Life Sciences Solutions businesses. As I mentioned, our Biosciences portfolio, very strong brands and portfolio with their customers. Really two fundamental changes we're making to accelerate the growth in that area. First is really focused on this commercial reach. The change that we've had in channel scale, in our corporate accounts, in emerging markets and e-commerce allows us to have more conversations, as it's still a relatively fragmented market to grow our share in those markets.
The second deliberate change we've made is to allow this business to invest in R&D to reinvigorate some of our core franchises. We have core franchises, for example, in cell biology, where we have customers wanting to transfect, insert DNA into hard-to-transfect cells like stem cells and developing new reagents that are 10 times more efficient, not only develop that category, but also get us renewed conversations about our cellular biology, our Gibco franchise. Another example in molecular biology, hundreds of millions of dollars worth of business and a core franchise. We reinvigorate that franchise using our core center of excellence that we have in Vilnius in Lithuania, making faster enzymes for that, again, reinvigorate that franchise.
Finally, an example in cell analysis where we built out, increasingly, customers want to functionalize and see the functional work that's going on in the genome and analyze for drug discovery. Developing devices and consumables that again allow us to build out our franchise, build out systems, an example here shown in the Qubit. Really expanding our presence and investing in some of our core franchise will be a third part of our change here. In terms of the bioproduction space, we really had a perfect marriage here of two technologies in the integration, which was a leading presence in single-use technologies, which are increasingly being adopted as in the biotherapeutic manufacturing area, with our leading presence in cell culture, and to bring those two together at scale to create a unique customer value for them.
We've been expanding our capabilities, particularly in the fast-growing regions, China, Korea, India, and building up that scale to support our customers technically. Finally, investing in capacity. We've done a good job executing in this market, but also the business and market is growing fast, so making sure we're able to supply up. We're just opening a new plant this month in Scotland, in Inchinnan, to produce some of our granulated media, getting our key customers through that, and meeting their customer requirements. In addition, as you've heard, we added to our capability in single use, a perfect fit for us to expand out our leadership in that with the purchase of ASI earlier in this year, leverages some of the relationship that we have to expand their presence, and capture synergy together by offering a second-source supplier to our key customers in this area.
We're well positioned to continue our leadership in this very high-growth market. Third, in our genetic sciences, we really have a strong presence already, a $1.7 billion franchise in our genetic sciences. We're really taking a very careful and deliberate approach to the areas and focus that we put to our R&D to ensure that we continue to get a good return and high impact on innovation. A couple of examples that we're doing. Firstly, we're refreshing some of our core genetic analysis platforms. As you heard mentioned, we just introduced a new qPCR system. This replaces something we'd introduced five years ago, and it's a major refresh in the product line. It was released at the American Association for Cancer Research.
We also focused on some key applications that are a perfect fit for high-throughput screening when you have a set number of genetic targets, like pharmacogenomics, where it's a well-known set of markers that you're screening for. We continue to see our customers use our capillary electrophoresis platforms as the gold standard to confirm sequencing mutations in a clinical setting, and also for forensic applications in well set-up databases and in a decentralized setting. Finally, in the fast-growing next-generation sequencing market, our chosen strategy is to focus on clinical applications where we see an advantage in having a low input clinical material box, and we've developed companion diagnostics for oncology that we've announced with key pharmaceutical partners.
Also now built out during this last year CE IVD, FDA-cleared platforms that are really targeting these clinical applications that are a good fit for the rapid and fast technology. With that, I'd like to pass it on to Alan Sachs to actually talk a little bit more and give you some examples of some of the high-impact innovation. Alan, who leads our R&D, will now take you through some of those examples. Alan?
Well, thanks, Mark. The innovation challenge within R&D is to really enhance the market leadership for these core products that Mark referred to, but also create new growth opportunities. What I'm going to talk about today are really each of those. As an example, in terms of our core portfolio and how to enhance it, I'll discuss the QuantStudio 3 and 5 qPCR device, which is shown on the top right. Real-time PCR, qPCR, was something that Life Technologies was a leader in, and Thermo Fisher now is a leader in. Refreshing this is incredibly important to our franchise. We just launched early in May a new device, QuantStudio 3, and later QuantStudio 5, that has several features that really will, in the mid price range, enable our customers in new ways.
For example, when our younger customers approach an instrument, they expect the touch screen to behave like a cell phone. They expect to swipe, expand, and touch, and rapidly get response. This new qPCR device accomplishes each of those goals. Likewise, our customers are expecting now for data to be stored in the cloud and for them to be able to analyze information using cloud-based software. This new device is cloud-enabled, and importantly for the customers, they can set up the experiment, monitor the progress of the experiment, and get all the data from the experiment by sitting at their desk connected to an internet. They no longer have to be at the device doing the work, and we think this is a differentiating feature for this very important part of the franchise.
We also need to create new growth opportunities. Next-generation sequencing certainly is a huge opportunity for us. We see the clinical sequencing space as the major area that fits nicely with our technology. We see actionable information as the most important deliverable. Just as in the water quality example that Tom discussed, we want to provide scientists and physicians with information they can do something with. Our next generation sequencing system accomplishes that for many reasons, each of which we continue to improve upon. To begin with, if you have cancer, you really want only information that you can make therapeutic decisions around. The genes involved in driving cancer, we've identified through our Oncomine data database through the acquisition of Compendia, and those genes are then amplified from a tumor sample using our AmpliSeq protocol. The amount of material needed is very small.
It fits in a needle, if you have cancer and you have a needle biopsy, we can pretty much guarantee you can get the information that you're looking for. The clinical labs will take the material from Ion AmpliSeq and put it on the Ion Chef system, which is a hands-free system that allows for the preparation of what becomes the Ion sequencing chip, which is put into one of our sequencers, in this example, the Ion PGM Sequencer. This information, of course, is then analyzed as well in the cloud using our Ion Reporter system and is done very rapidly and very inexpensively. Whereas there are many other applications for next-generation sequencing, we believe that our panel-based approach in the clinical setting will soon enough be providing significant advantages.
As an aside, Tom also discussed the mass spectrometry group and all the work that we have going on with mass spectrometry analysis of biological samples. There too, we're very busy and will soon be releasing cloud-enabled software for analyzing mass spectrometry data. Our customers in one location will be looking at both next-generation sequencing, quantitative PCR, digital PCR, capillary electrophoresis, and mass spectrometry data with all the software solutions they need. The cloud-enabled system has other advantages to our customers that go beyond a device. In this example, we have placed thousands of quantitative PCR instruments around the globe that are used routinely to study outbreaks, both for epidemiologic reasons as well as for security reasons.
In the current world, those data can be put in a folder that may be shared with others around the globe, or in the worst case, have to be shipped as hard copies. Because we now are providing an environment in the Thermo Fisher Cloud, those data can be easily accessed by any of the investigators around the globe in real time to see where these outbreaks are occurring, including investigators at the Centers for Disease Control in the U.S., make rapid decisions about what to do. It isn't only about setting up an instrument or monitoring the progress, it's about the availability of the information in real time for people who may not even be on the same continent, but who are very interested in analyzing the data.
We're very excited about providing this opportunity to all of our customers within Thermo Fisher Scientific, this is an example of that. As I said earlier, the ability to sequence through next-generation sequencing very small amounts of DNA is incredibly enabling. We have all been touched by cancer in our families. We all know the hope, and we all know the prayers that occur when a physician makes a treatment decision for a patient. Today, drug companies are forced to identify patients who have specific DNA mutations in order to prescribe their drugs. The National Cancer Institute has developed a large umbrella program, including many different pharmaceutical companies and their compounds, that will allow for over 3,000 cancer patients to be sequenced, have their DNA sequenced, a drug from one of those companies to be prescribed.
The goal here is to prove that it actually makes a difference to have molecular DNA sequencing done on a tumor sample to improve patient outcome. The National Cancer Institute chose our platform for several reasons. A primary one was its very low input, because the worst thing to happen for a patient is to provide a sample that can't be analyzed, but also the expense and the speed with which we can both gather and analyze the data with differentiation features. A lot of the R&D that we do in innovation, together with this innovative study design led by the National Cancer Institute, truly will impact patient health in the very near future. Finally, a very interesting separate Project that we're involved with Eric Schadt at the Mount Sinai School of Medicine here in N.Y.C., is called the Resilience Project.
There are about 700 genes in the human genome that, when mutated, lead to disease. There are people who are walking around perfectly healthy that contain one of these mutations. This Resilience Project is aimed at identifying who those people are and then understanding what else about their genome or about their environment has prevented them from falling prey to a genetic mutation. This requires a sequencing of hundreds of thousands of people, but it only requires looking at the 700 or so genes that can lead to disease. The Mount Sinai School of Medicine decided to work directly with us at Thermo Fisher because we can very quickly and simply amplify 700 genes and then inexpensively analyze them over the hundreds of thousands of samples needed, again, using the Ion AmpliSeq, the Ion Chef, and the Ion Proton DNA sequencers.
Information that allows us in the medical community to understand why people don't get sick is as important as in understanding why people do get sick, and we're very excited about working with the institute at Mount Sinai to achieve those goals. I'll close by saying that within Thermo Fisher Scientific, our scientists come to work every day to really improve patient health, to make the world cleaner, and of course, to make the world safer. I hope you can see from these types of examples that we really are doing that, and we're passionate about continuing in the future. With that, I'll turn it back to Mark to close on the life science group discussion.
Thanks, Alan. Thank you, Alan. Just a couple of examples. Let me close by just saying the integration's gone incredibly well. I think we are very well-positioned to accelerate and exceed our historical growth. We have a great business here. It's a great franchise in some good markets. We've also adopted, and I think we're running the business better by taking some of the business models that cross Thermo Fisher in the company, and I think we're well-positioned to accelerate our growth as we've demonstrated during last year. With that, I'll thank you and invite my colleague, Andy Thomson, up who leads our Specialty Diagnostics Group to talk about some of the opportunities we have there. Andy.
Good morning. It's a pleasure to be back in front of you all again this year. We've got some really exciting updates to share with you. Similar to past years, we will focus on the growth drivers, but I think what you'll note is different in this presentation is we've taken a deeper look at how we're leveraging the core capabilities across the company to really bring some truly innovative solutions to bear in diagnostics. I'm excited to take you through those. Firstly, and most importantly, our strategy in diagnostics is very clear, and it hasn't changed. We focus exclusively on niche end markets. When we execute well here, we create high barriers to entry, protected either through intellectual property, scientific know-how, or scale in both our manufacturing and our commercial investments. The results are attractive growth businesses, with resulting industry-leading margins.
We remain very excited and optimistic about the emerging opportunities in emerging markets. Increasingly, these growing middle classes are demanding greater access to healthcare, and governments are complying by making this a significant portion of their spend. The last point on this slide is an important one. Because of our focus and our leadership in these niche segments, we gain truly early access and insight to emerging issues that our customers are facing. When we apply our unmatched tools and scientific expertise to this, we really can bring innovative solutions to bear. To our profile. Our diagnostics businesses are split into the six businesses that you know, and what I thought I would use this slide for is to share with you a couple of examples of how the aforementioned high barriers to entry are maintained.
Firstly, on the left-hand side to our clinical diagnostics division, and it's here where in our biomarker business, the team created the industry-leading gold standard test for sepsis diagnosis, PCT. This is an intellectually protected assay that is available throughout the world, either on our partners' platforms or through our own direct commercial teams. This assay has demonstrated incredible clinical utility, saved thousands of lives, and we really are just at the cusp of entering some incredibly important markets, principally in the U.S. Moving next to the immunodiagnostics business. Here we have a leadership position in allergy, and this business is protected through our in-house antibody expertise and our scale, commercial, and manufacturing investments. Skipping to transplant diagnostics, this is an incredibly focused and dedicated market.
The key opinion leaders in this market work very closely with our key scientists, and through that, we develop the next-gen market-leading solutions for that business. Lastly, and of note, is our healthcare market channel. Here we serve 100% of the U.S. hospital and reference lab market, and this gives us unparalleled reach for our own self-manufactured products, but also for our greater than 800 third-party suppliers. Truly a unique advantage in how we reach the market. When we sum the businesses together, it makes for a very attractive picture. Our 2014 revenue topped $3.3 billion, and it grew at a solid 5% organic growth rate. We continue to fully fund our R&D opportunities, and we do all of this with industry-leading margins north of 20%, 27%. Moving to our revenue profile. The first graphic supports my earlier comments.
We are focused on balance in niche markets. You see the $1 billion healthcare market channel on the top right, all the way through to the very focused and high profitability transplant diagnostics business at $200 million. The middle graphic tells an interesting story as well. You see here a greater than 90% of our revenue created from consumable and reagent stream. This is an incredibly profitable annuity that's only enabled through extensive contract and OEM manufacturing agreements that we have in place with virtually all large IVD suppliers. A unique position to be in, and a scenario that we're highly focused on. Lastly, on the right side, you'll note that we've got a significant opportunity in Asia-Pacific and the rest of the world markets. In vitro diagnostics is generally a later to develop need in these markets as they solve some of the primary healthcare needs first.
This is good news for us. This means that these emerging middle classes are starting to demand access to leading in vitro diagnostic solutions, and we're there with those answers. When we think about a growth strategy, it's helpful to think around three major pillars. Starting with the top circle, you've heard me mention before just how important our customer relationships are, and it's here where we gain unique access and insight into their issues. That, in turn, gives us the opportunity to apply our tools and scientific expertise to deliver truly innovative solutions. Lastly, our deep commercial reach, whether to traditional hospital and reference labs or increasingly to niche specialty markets, we are clearly differentiated with our ability to reach our customer base. I'll touch on each of these segments in turn.
While a lot of customers claim deep customer relationships, we live this on a daily basis. For many of our customers, we are their go-to partner when they look to answer their challenges in diagnostics. Whether it's introducing novel and ever-expanding allergy menu to primary care physicians or to helping our food safety lab customers release products with confidence in a timely and cost-efficient fashion, these relationships make us smarter in everything we do. We gain powerful insights into whether specific issues are increasingly how to solve workflow challenges. We gain access and understanding to the regulatory and payer and provider changes in the marketplace. This enables us to help adjust our health economic and our reimbursement strategies to make sure that we're staying at the forefront of our competition.
When we do deliver our innovative strategies, we get rapid adoption, we get key opinion leader support, and we get a very rapid and constructive feedback loop to help us iterate and continuously improve our portfolio as we progress. When we think about innovation, we do so along a few different lines. For many of our customers, innovation comes in the form of new menu extensions, where they can leverage the investments they've made in capital equipment and the infrastructure in their lab. A couple of good examples here you see on the slide. We were the first to market with hydromorphone and hydrocodone. These are two important menu extensions for our drugs of abuse platform. We also look outside a lab to solve needs in workflow. In this case, a great example is our oral fluids drugs abuse system.
Here, we're looking at moving from urine to oral fluid or saliva collection. This greatly eases the burden of collection and greatly reduces the opportunities to adulterate the sample. This has been a breakthrough innovation for our criminal justice and our pain management center markets. Also our customers look to us to solve workflow problems. They see our breadth, and they increasingly want to ask us how that they can do their work in an easier, faster, more cost-efficient manner. A great example here is what we're doing with our food safety lab customers. Here, we combined our highly relevant and accurate menu of PCR assays. This is our SureTect portfolio from our microbiology business. We combine that with the high throughput 7,500 Fast PCR system from our Life Sciences Solutions team.
The result is a market-leading workflow that is helping us rapidly expand our share position in an important and growing segment. We do both of these types of innovation routinely, and it's an incredibly important part of what we do day in and day out to solve our customer issues. Importantly and clearly, not all customer workflows are created equal, and there are times when our customers look to solve unmet diagnostics needs that require leading scientists working with breakthrough technology. This was the case with the bone marrow transplant business. This is a relatively narrow field within transplant diagnostics, but nonetheless an important and up till now underserved segment of that market. The traditional workflow did not provide high enough resolution nor specificity to ensure or give the confidence to the providers that they were getting a high-quality match between donor and patient.
Our solution here was enabled by our leading transplant diagnostic scientists working with breakthrough technology of the Ion PGM Sequencer. The result was full gene coverage, providing the required resolution and specificity to ensure a high-quality match. All this done with a dramatically improved workflow. This solution, introduced in November of last year, is now the standard for the industry. While the bone marrow workflow is exciting, it really is just one of many development opportunities that we have to really leverage the full core capability of the company. Increasingly, solutions to complex diagnostic problems require not one, not two, but often three and four capabilities in order to solve. There are no other companies that are in a better position to deliver on that promise. To illustrate how broadly we're leaning on these capabilities, I've got three examples here on this slide.
Starting on the left, in serving primary care physicians, 50% of the people in this room, or maybe about 80% of the people in this room, know that the diagnosis of prostate cancer in discussions with primary care physician is a very difficult topic. The current standard of care in diagnostics is a prostate-specific antigen test. It's not an accurate test. Many doctors have abandoned it altogether, and it's clearly an unmet diagnostics need. Working with the Karolinska Institute in Sweden and applying our proteomic, genomic, and assay development technologies, we've come up with a novel solution for diagnosis of prostate cancer. This is early days, and more work to come here, but it's clearly very exciting. It would not have happened without the ability to leverage these capabilities across the company.
Moving to the middle, in the fast-paced hospital environment, they've always asked for the specificity and sensitivity of mass spectrometry, and we're bringing that solution to them with our Cascadion product offering. You've heard me talk about it before. This is an advanced stage development project, where the goal is to have a sample in, result out platform that looks and feels like any analyzer that would not be out of place in a busy, fast-paced central lab. Again, only enabled by our proteomic capabilities together with our leading assay development and automation expertise. Lastly, to the oncologist. You heard Marc Casper in his opening remarks.
You heard Mark Stevenson talk about our Oncomine assay, this incredibly valuable tool for oncologists, where with just one test, one sample, you get results for the 50 or 52 most relevant genes associated with cancers that have either in development or on-market targeted therapies available. An incredibly powerful tool for oncologists. All of these projects, not possible without leveraging the core company capability. All the breakthrough innovation in the world is not of much use if you can't get it to customers, and here our broad scale and reach makes a meaningful difference. There are four examples listed here. I'll touch on two that I think particularly highlight the advantages of our scale and reach. Samsung, in their effort to get into the diagnostics market, dedicated their efforts to point-of-care diagnostics in three areas: in clinical chemistry, in immunoassay, and in hematology.
They created a very compelling portfolio across all three of those lines by combining their expertise in nanotechnology with elegant consumer electronics. They really did have a compelling portfolio. What they lacked was the ability to reach their customers. What they lacked was an understanding of the regulatory and in vitro diagnostic landscape, and what they lacked was content to apply onto these innovative platforms. For all of those reasons and more, they turned to Thermo Fisher Scientific to deliver that promise. In December of last year, we launched a worldwide global distribution agreement with Samsung, and we're off to a flying start. The last example from this page is in Japan. In 2013, we were hearing from our customers that they wanted a screening allergy test.
Working with a key reference lab in Japan, from concept to product launch, in 12 months, we developed our View Allergy product, and 12 months later, we enjoy a leading market position with meaningful revenues in a very fast-growing and attractive segment in Japan. Both of those opportunities don't come about without the commercial reach and the deep customer relationships that we enjoy. I'll leave you where I started. I hope in the brief time I shared with you, I've been able to convey my enthusiasm for these businesses, and I hope I've convinced you of the very bright future that we have ahead of us. With that, it's my pleasure to introduce Alan Malus, the president of our Laboratory Products and Services business. Thank you.
Well, thank you, Andy, and good morning. At this point, you've heard from Marc and you've heard from the rest of my colleagues about how we're using our leadership and innovation, our global footprint, our talent base, as well as our PPI business systems to drive growth for our company. For our discussion, obviously, I'll be discussing our Laboratory Products and Services business. Here, this is really a story about scale, it's about depth of capabilities, and it's how this creates a tremendous platform for growth for the entire company. We'll discuss how when you combine this platform with our unique customer value proposition, we've created a tremendous engine for growth for the entire company.
What I'm going to do is I'll share with you a customer video that brings that to life to give a little more clarity to it, and then we'll discuss how we're continuing to build upon that value proposition and make it even stronger for the future. Greg Herrema will be discussing how we're expanding our presence in e-business, as well as leveraging our channel to grow our Life Sciences Solutions business. I can tell you through all of these capabilities, I feel tremendously confident around our future as it relates to growth. We're clearly positioned better than anyone else in our industry to win with our customers. Let me share a little bit why I feel so strongly about that. First, let's just cover a couple things about the Laboratory Products and Services segment. As Marc said, this is our largest segment.
It's $6.5 billion. It consists of three distinct businesses. In each of those businesses, we have the number one market share position. Second, our businesses are deeply entrenched with our customers on a day-to-day basis. We enjoy really an unmatched customer reach access that enables us to drive growth into a diverse set of end markets. Third, the segment provides a foundation for leveraging our unique value proposition and really acts as a platform to accelerate growth across the entire company. Finally, we've consistently outpaced market growth and grown at two times the market growth rate over time. Let me tell you a little bit more, how we will sustain this growth going forward. First, just a quick overview of our businesses and where they stand. As I said, we have three distinct yet complementary businesses that all have industry-leading depth of capabilities.
Starting with our Laboratory Products business, we're the largest manufacturer of lab consumables and equipment. Essentially here, what we're doing is we're providing everything for our customers to efficiently run their labs so that they can spend more time innovating in their business. Next, our research and safety market channel. Here, we have an industry-leading portfolio, world-class supply chain, a leading e-commerce platform. The combination of all this really makes us an ultimate partner to support customers with essential needs for equipment, consumables, and services. Finally, in our biopharma services business, here we're a best-in-class clinical trials logistics partner. We're helping customers to accelerate their new product approval process and providing a broad set of outsourcing solutions for them.
Essentially what this means is that for patients participating in clinical trials, we're ensuring that their medications get to them when and where they need to be at the time. As you can see from a financial perspective, we've been able to translate all of this into solid growth opportunities and strong performance, which we're proud of. If you look at 2014, for this segment, we had strong organic growth at 5%. We're continuing to invest to build on our lab products portfolio. We're also translating all this into strong operating margin improvement as well. Looking at the revenue profile of Laboratory Products and Services, what I want to point out here really is about scale, its depth of capabilities, and it's across instruments, it's across consumables, as well as services. It's about having a global reach and really driving that through our principal brands.
This gives you a sense of scale and the unique opportunity that we have with our customers. At this point, what I really want to do is transition the dialogue of how we leverage this segment to serve as a platform to drive growth across our entire company. It's the combination of these capabilities, our unmatched access that we have to our customers, that allow us to deliver a value proposition that's unique in our industry. First, let's take a look across Thermo Fisher. We truly have an extensive reach to our customers, and this is a key differentiator for us. Let me just refer to a few different stats that support that. In terms of unmatched commercial capabilities, it really starts with the over 17,000 employees that we have that are interacting with customers on a daily basis.
In addition to that, we're really the industry leader as it relates to being the innovation and technology partner to our customers. We have over 5,000 scientists, engineers who are collaborating and working with key technology partners in our customer base. In addition, we have extensive reach through our e-business platforms to many levels within our customer base, and this is something that Greg will be sharing more details about. Finally, we have over 4,000 on-site supply centers that our customers are using for easy access to inventory and improve their supply chain operations. In addition to our extensive customer reach, through our leadership as an industry leader, we have tremendous access to decision-makers in our customer base. Whether it's Marc, whether it's myself, or any of our executive team, we're interacting directly with the CEOs, all of the key executives, with all of our key customers.
In addition, our teams have access to the appropriate leaders, whether it's in procurement, R&D, manufacturing, and all the other key touch points within our customer base. When you take this and put it all together, we have a tremendous, extensive reach to our customers. What this enables us to do is be really the ultimate partner to our customers and better understand and drive and suit their needs to drive their businesses forward. As far as our value proposition in working with our customers, our customers, like us, are really focused on growing their businesses faster and improving their profitability. Due to that, they have a need to accelerate innovation in their businesses, to drive down costs, and really be more productive.
As Mark shared with you before, we're expanding the impact of our value proposition over the years, and we're doing this with our existing customers. We're also doing it with new customers. Why do they really want to work with us? It's really quite simple, and it's at the heart of how we define our value proposition, and that's to help our customers both from an innovation and productivity perspective. As you can see here on the upper right-hand part of the chart, we've had excellent progress with our biopharma customers over the years. Just recently, to bring this to life a bit, I was having an executive review with one of our largest pharma customers. Through the partnership, it's clear what we've created together. One, they're using our mass spectrometry technology to accelerate discoveries in their proteomics research.
They're leveraging our channel business to deliver key products to their labs and optimize their supply chain. We're managing many of their clinical trials, which is ensuring that their products are appropriately and timely going through the approval process. In addition, they're using our single-use technologies to drive manufacturing efficiencies and manufacturing yields on the production floor. You can see the value proposition we have is really resonating extremely well with large pharma customers, and we've been able to do this at an impressive rate over an extended period of time. Based on this experience, over the last couple years now, we've been managing and tailoring this value proposition so that we can expand it to meet the needs of other customer sets in the marketplace. That includes the small and medium-sized biotech customers.
Let me share a little bit more about these customers and some of the activities that we have going. First, the needs of these customers are somewhat unique. These are companies that are all challenged to rapidly scale and grow their businesses as they develop success in their capabilities. What they're doing is they're leaning on the tremendous capabilities and experience that we have to help them meet the needs of expanding and growing their business. What are we specifically providing them? One, what we bring to the table is applications expertise and extensive depth of portfolio. This is critical as they look to equip and ramp up their lab capabilities. In addition, we're engaged with them deeply from a scientific collaboration perspective, and this is getting at addressing the analytical challenges that they face as they're trying to accelerate their way through their discovery process.
When it comes to bringing products to market, we provide turnkey clinical trial programs, and this is enabling them to meet aggressive timelines for product approval. Finally, we're providing proven solutions as they move into the manufacturing realm and flexible manufacturing capabilities that they can use as they scale the operations of their business. I can tell you, as we engage with these customers, we're really making a meaningful difference as they scale their businesses and drive success in the marketplace. In addition to hearing it from myself, what I wanted to do was share a specific customer video that brings this more to life. On this one, this is about Genomic Health, and this is a great example of a customer that we have that's harnessing the potential of genomics to provide doctors and patients more actionable information.
It's an example with Genomic Health is how they're expanding their business and how those needs align very well with our capabilities and the unique value proposition that we bring to them. As a bit of a background in terms of what Genomic Health is facing and helping to address in the marketplace, last year, there was roughly about $80 billion that was spent on cancer drugs. Of that, there was only about a 25% efficacy rate associated with those products. Obviously, a tremendous amount of waste in terms of spending on treatments in the marketplace. Genomic Health has developed and has marketed a product called Oncotype DX test, and this is the only test shown to predict the likelihood of chemotherapy results in women in early-stage invasive breast cancer.
Why don't we get into the video here, and this is from Genomic Health. This is Senior Vice President Jon Cassel, he'll share some more details on what they're doing and how we're working with them.
For us, scalability is a sort of central issue that we think about every day, all the time, and we think about in connection with Thermo Fisher. We have a big project going with them, one of our largest ever automation projects. Genomic Health is the world's leading provider of genomics-based assays for addressing the over-treatment of early-stage cancer. That's what our test is designed to do and provide them with information that they can't get from any other test or procedure on the aggressiveness of their tumor and therefore, what treatment options they should consider. Many women with breast cancer have tumors that are not that aggressive. On the other hand, there are women who have very high-risk aggressive tumors. Differentiating between those two patients was very difficult, if not impossible, to do well prior to Oncotype DX.
The laboratories that we're conducting the test in are set up as They're sort of industrial molecular biology labs. We have many different pieces of equipment, all kinds of different things. When I think of Thermo Fisher Scientific, the very first thing that comes to mind is breadth of the product offering. I think it's very unusual. It's a real strategic advantage that I think Thermo Fisher Scientific has. I think there's also considerable depth in a number of areas. We make very heavy use of HPLC in our quality control testing. We're intending to do some engineering on our biorepository. Part of that more holistic discussion with Thermo that we've entered into recently includes looking at service. There are obviously not many companies that have that sort of span, providing HPLC equipment and histology consumables and automation robotics.
We've had a really productive dialogue lately about thinking holistically. We'll be interested in a lot of further discussion about that.
Sure. Just a little bit more on some of what Genomic Health is doing. Just over the last few years, they've brought to the marketplace over 500,000 of these Oncotype DX tests, which has obviously contributed to saving a lot in terms of treatments in the marketplace. Now they're positioned to deliver another 1 million over the next two years, and they're also working on an additional set of development tests that obviously we're closely engaged with them in developing those. It's really an exciting position that we're in with the value proposition that we have, and we can work with companies like Genomic Health. They're really doing some very important things as far as advancing treatments in the marketplace. It's the unique value proposition that we have that we can develop and address the special needs of customers like this.
All I can say is that there's really no other supplier in the industry that can bring anything like this to help customers accelerate in the biotech space and meet some important needs for their customers. Now, what I'd like to do is transition the discussion, and I'm going to introduce Greg Herrema. Greg runs our Customer Channels business, and what he's going to be discussing and sharing with you is how we're expanding our market presence through our industry-leading e-commerce platforms and also how we're accelerating our Life Sciences Solutions business by leveraging our channel business. Greg, turn it over.
Thank you, Alan, for the introduction. As Alan indicated, I'm going to wrap up our session this morning with a capabilities update on the channel and how we're leveraging the channel to accelerate growth for the overall company, and in particular, our Life Sciences Solutions business. Before I do that, I want to touch on one really important total company topic, and that is how we are transforming our web and e-commerce capabilities to drive growth in an accelerated way for the future of the overall company. Before I talk about the transformation, it's important to understand that already today, we have the industry-leading platforms in the industry. We already do over $2.5 billion worth of e-commerce revenue. We're starting from a position of strength and looking at continuing to build on that in the future.
Let me start first with what we're doing with the website properties in our self-manufacturing businesses. We'll be combining the lifetech.com website with the thermoscientific.com website to create an all-new website named thermofisher.com, and we'll be using the lifetech.com website as the core platform for that new website. The website will be the go-to destination for all of our self-manufactured products, software, and services, and will be full of rich product content, applications notes, and as Alan Sachs touched on earlier, data and application services that we host in the Thermo Fisher Cloud suite, all of which will be backed by the industry-leading e-commerce platform. We'll be rolling out the platform later this year, and it's a platform that we are confident and a website we're confident is truly going to be a home run with our customers.
We're already launching an entire new fishersci.com website for the channel business that I'm responsible for today, That new website platform will truly be a global platform for the business. We already have the leading e-commerce transaction platform for a channel in our industry today, We'll continue to build on that strength with significant enhancements in terms of product content, search and navigation capabilities. We'll be increasing the capabilities we have for supplier and customer self-service on the website, Very importantly, streamlining and further simplifying the e-procurement practices that many of our customers use the website for today. We take a step back today. Again, we're operating from a position of strength.
We have the two leading platforms in the industry today, We are transforming those platforms to ensure that we maintain that leadership position in the future, that we have platforms that allow us to showcase all of the capabilities in the company and to drive accelerated organic growth in the future. Let me now turn to the channel and provide an update on the capabilities that we have. This is a terrific business. I took over responsibility for the business about a year ago, and truly what I've seen is how powerful it is as the ultimate channel partner in delivering productivity for our customers.
Our channel value proposition has been focused around choice and convenience, We continue to emphasize that, We achieve that through delivering the broadest portfolio of products and suppliers, an industry-leading web and e-commerce platform, Also world-class supply chain infrastructure and services that allow us to deliver superior service levels for the products that we provide to our customers. We're wrapping around and integrating that core service capability, a number of additional differentiated services that we think are going to only increase the value proposition for our customers, enable us to deliver more laboratory productivity. More and more of our customers are outsourcing their entire non-strategic spend to the channel, We're working closely with our Unity Lab Services business to implement high-value on-site services like inventory management and also hazardous chemical tracking on our customers' sites.
Lastly, we're very focused on driving a true global operating platform for this business in terms of operating processes, infrastructure, and the presence we have for the business around the world. We've migrated now to a pan-European business in Europe. We are introducing new global platforms like the fishersci.com website, and we're leveraging the overall company capabilities and presence and infrastructure in emerging markets like China and India to accelerate growth in those areas. As I opened on this particular slide, the channel truly is the ultimate channel partner for many of our customers and really the premier global lab supplies partner and productivity enabler for our customers, and doing so in a way that is helping us to accelerate growth.
Fortunately, with the introduction of the Life Sciences Solutions reagents that we're now selling through the channel, we're further strengthening that overall value proposition and the capabilities we have in the channel. Subsequent to the Life Technologies acquisition, we have by far the strongest overall portfolio in the life sciences space, and really have created a go-to destination for our customers, specifically for the channel that is second to none. I wanted to share with you a little bit more detail around the capabilities we have uniquely within the channel and also the Life Sciences Solutions business, so you can see just how complementary these businesses are and in aggregate, how powerful they are for the business.
If we start with the research market channel, we have the broadest portfolio of consumables and equipment, and now reagents, backed by the leading offering of Life Sciences brand as a channel. We have strong enterprise-level relationships that allow us to really take full advantage of that overall customer value proposition we have in the company and unmatched customer reach with the business serving over 30,000 customers in North America alone. If you take a look at the Life Sciences Solutions business, as Mark Stevenson indicated earlier, we have the leading portfolio of reagents backed by unrivaled brands, as you can see here, also complemented with deep applications expertise and workflow knowledge. We have very strong end-user relationships and a world-class on-site supply center program that Alan referenced a little bit earlier as well. Together, these two businesses really are a marriage made in heaven.
The strength of the portfolio we have now is second to none, it is highly differentiated in terms of the overall portfolio and the capabilities we wrap around that, and is really resonating well with our customers already today. I want to give you a perspective now on just what we're seeing as we've launched the sale of many of the Life Sciences Solutions reagents through the channel earlier this year in January, and what the impact is that we've already seen. First of all, we've seen a measurable step-up in terms of the sales for these types of products through the channel since the beginning of the year and on an end-to-end basis as well.
We're leveraging that broader customer reach and access that we have within the channel to bring these products to customers that have never purchased from the Life Sciences Solutions business before, and already can tally to over 500 customers that are buying these products through the channel that never bought directly from Life Technologies or the Life Sciences Solutions business in the past. We're also growing our business with our existing customers, through a combination of new wins and also conversions from suppliers that are not using the channel today.
As a result of that, we're seeing growth with those core customers and a steadily increasing pipeline of new incremental reagent growth opportunities for the channel and the overall company that we're confident is going to help deliver in a meaningful way to that overall $60 million worth of revenue synergies that we're committed to delivering as a company here in 2015. Now I want to just wrap with a couple closing thoughts relative to the Laboratory Products segment that Alan opened with just a few moments ago. As Alan indicated, we have the number one market positions in all three businesses. The strength of those businesses puts us in a position where we have unmatched customer reach and access that in turn allows us to drive incremental growth within these businesses.
These businesses serve as the foundation for the unique customer value proposition we have across the entire company, and again, then help us in turn accelerate growth for the overall company. Lastly, as Alan indicated, the businesses have been growing two times faster than the overall markets that we serve, and we're confident with the work that we're doing in the businesses that trend is going to continue in the future. Thanks for an opportunity to share with you an update on the channel and our capabilities in the channel and how we're leveraging those capabilities to accelerate growth for the overall company and very specifically for our Life Sciences Solutions business. I'd now like to turn it over to Marc Casper, who will provide a brief closing summary, and then we'll open up to the Q&A section of the analyst meeting. Thank you.
As I had wrapped up my presentation earlier, I think you got a good sense this morning of why our future has never been brighter. We serve great markets. We have tremendous opportunities as the industry leader to deliver, not only on a great track record, but a fantastic future financially. With that, I'm happy to be your emcee for Q&A, and the members of the leadership team will be happy to field the questions. Ken will work the microphones, and we'll start that process.
Thanks, Mark, for the meeting. I think it's been great. Two questions from me. One, you talked a bit about bioproduction and how attractive that market is. Obviously over the last five years, two assets have gone to different firms. I'm just curious on your thoughts, your own scale in that segment, what the challenges to consolidate that market have been, then maybe some of your thoughts around other sub-markets that you think are particularly fragmented and maybe thoughts on asset valuations. Thanks.
Sure. That was Jon Groberg.
Oh, sorry
We'll have the others do that. Thanks for the question, Jon. In terms of bioproduction, as Mark laid out, we have a three-quarter of a billion-dollar business, very strong position. The acquisition of Advanced Scientifics strengthened that capability. We play in two fields. We play in cell culture, we play in single use, of which we're the leader in both. It's a large market. There's areas of process chromatography, filtration, and others, where that's not a big focus. Customers buy best of breed, of which we have the best of breed in two important segments. We think it's a great growth market that will be very well-positioned into the future. Some of the things that happened last week in our industry don't change whatsoever our competitive position from that standpoint. We got a great business there with a good future.
In terms of priorities, M&A, and some of the segments that we have, you got a good sense, in our Analytical Instruments, Specialty Diagnostics, and our Life Sciences Solutions businesses, there are a number of technologies that would be very complementary to what we have and clearly over time will allow us to build out the portfolio. It's going to be in the higher tech, more innovation-driven parts of our business where really M&A dollars will be spent. It leverages the very core strength we have in Laboratory Products and Services, which helps us accelerate growth in the things that we buy.
Great. My other quick one, very encouraging to see increase the organic growth rate for the Life Sciences Solutions business. Can you maybe talk about what drove that conviction? In particular, it seemed to me like maybe you're spending a little bit less on R&D than maybe the historic Life Technologies as a % of sales. Maybe what gives you the conviction in that organic growth rate? Thanks.
Sure. Maybe, Mark, if you'd like to talk about the conviction on the 4% organic growth. I think the group here has heard a lot from me on it, so maybe a good opportunity for you, and we'll pass the microphone to you.
I think there's a couple of things have really changed. As I outlined, and I think Greg did a good job, the access to the additional channels, and presence and customers we weren't at, really drives that change in organic growth. That's the real conviction that we get behind that change and just running the business slightly differently to focus on driving those segments. I think in terms of R&D spend, we're spending on absolute dollars about the same, but we've expanded the total amount of our business and slightly more focused on where we're spending those R&D dollars, to really focus on our innovation and return on that innovation, and that's where you're seeing the change.
Hi, Derik de Bruin from Bank of America. Mark, the 4%-5% organic revenue growth outlook for the 2016 and 2018, typically you say go to the midpoint of the range for that is when you sort of give guidance that's there. That's quite a bit more bullish, I think, than historically I think people have looked at the company. Walk us through the different segments in terms of, I think of Life Sciences, AI, Diagnostics, and LPS in terms of where those segments should go for modeling purposes, just the way we think about the organic revenue growth rates of the individual segments.
Yeah. Derik, in terms of the 4%-5% organic growth, the way I think about it, and you got a sense for last year, the segments actually grew pretty similarly. They're all very well-positioned businesses. They have different drivers of growth, when I think about it right now, we're assuming Life Science Solutions is at the 4 end of that range. If you look at the Specialty Diagnostics business, going to be a little bit on the higher end of the range, and I'd say the Analytical Instruments and Laboratory Products and Services, probably in the middle. That's how I think about it.
Great. That's helpful. Thermo is sort of uniquely positioned in the fact that you have a genomics business, a proteomics business, metabolomics, I guess, and you're sort of talking about the cloud-based. I guess, sort of what are your longer term plans in terms of doing more integrated omics offerings and sort of taking that forward? I guess, this is a question on bioinformatics spend, do you need to boost out your assets in that area?
Yeah. The first thing is, Thomas Loewald mentioned briefly in terms of our R&D priorities, we do a lot of cross-company leverage. We have a program called Intensifying Innovation, actually takes our scientific community that understands the company's capabilities as a whole and pulls it together. You'll see us over time, bring out, using some of our mass spec technology, some of our genomic technologies, solutions that I think will be quite compelling, leveraging the cloud in terms of how customers access the information. That's a high-level example of it. I think that's one that you'll see us take advantage of over time.
Great.
Hey, Mark. Tycho Peterson, J.P. Morgan. Just I wanted to follow up on the earlier question on M&A. When you look at the current dynamics, you do have two consolidators that are kind of on the sidelines now digesting acquisitions. Why do you kind of continue to emphasize bolt-ons? Given the current low interest rate environment, couldn't you be doing more in the near term?
In terms of why bolt-ons, first of all, as a $17 billion scale player, everything is kind of a bolt-on in our industry, right? There's no other player other than the other two consolidators that are anything more than a fraction of our size. The reason that we call it the bolt-on case is that while there are more scale M&A opportunities out there, they don't happen that often. If the right one's there, you'll see us play. What I've said to many of our shareholders in the past, which is very hard to predict when the scale ones happen. We look at them, and when we feel like we're going to create shareholder value, we execute. We've done two very large transactions over the last seven or eight years, and I'm sure at some point in the future, there'll be more.
I think it's good to get the assumption that we'll put $10 billion to work on the M&A landscape, just picking up the fragmented players, should there be more opportunities, you'll see us take leverage up higher for short periods of time and capitalize on those as well.
A question on your comment on customer segments. You highlighted academic and small and medium biotech as an area of emphasis for 2015, doing similar to what you did in pharma and in the reference labs previously. Can you explain what you're doing differently here? You've always talked about moving up the value chain with your customers. What are you doing differently in 2015 for biotech and academic that you haven't done before?
Very different is actually we've scaled up our commercial team that's calling, representing the whole company as a unified capability to that customer set, right? What the difference is, sure, we've been calling on those customers for many years, but what we're doing is like we used to do with our, and still do, with our big pharma accounts and med tech, med device companies. We actually have dedicated a team that comes in, represents Thermo Fisher, helps that customer understand the full suite of capabilities, and really drives growth. I think you got a good example from the Genomic Health one, but we could have picked dozens of other customers to actually go through that same type of capability and say that Thermo Fisher is uniquely positioned to help me from everything from discovery all the way through the clinical trials management process.
Hey, Mark. Mark, can you hear me?
Sure.
Mark, it's Doug.
Doug, I recognize the voice. Let me see.
All right. Right here.
Yeah.
Thanks for taking the question. Doug Schenkel from Cowen and Company. Yeah, I guess it's one four-part question-
on M&A. As you kind of alluded to certainly throughout the presentation and in answering one of the last questions, Thermo's a lot bigger business than it was certainly, seven, eight years ago, and even two to three years ago. When you pull together a large four% grower, together with a large three% grower, it inherently becomes harder to move the needle in terms of growth rate for the business.
You did a good job talking about what you're doing to address that. As we think about M&A, which has clearly always been a big part of the story and will continue to be a big part-
of the story moving forward, to hit that 4%-5% revenue growth target that you detailed, do these deals need to be inherently larger growth? That's really the first part. The second part is, do you need to be more aggressively considering divesting slower growth businesses to hit these targets really for the same reasons? The third part is, in terms of driving share appreciation, these deals are supposed to be strategic, but they're supposed to create investor value
which of course is measured by share performance. Do you have concerns that M&A won't be as welcomed by the investment community and rewarded in the way it once was? If you look at Danaher or Pall, stock's done nothing, and more broadly, Endo Par hasn't been greeted the same way as deals were even a quarter or two ago. Your stock barely budged when it was reported in the journal that you were looking at, Pall.
Kind of related to that third part of the question, how do you feel about valuations?
I think you got the answers already.
Can you hit your ROIC targets with valuations
Sure
where they are right now?
Doug, if I don't answer them all, then just ask the ones I miss. Starting out with growth and portfolio. We put the 4% to 5% organic growth up there, assuming no M&A whatsoever. Right? We don't need to buy anything. We don't need to sell anything. We have no intention to buy anything or sell anything and deliver that rate of growth. Right? If you look back at the roughly 100 transactions that we've done since I've been at the company, some of them are very fast-growing assets. We've had assets that are very slow-growing assets. That isn't the primary criteria of what we're doing. It's really about, is it going to strengthen the company strategically? Are our customers going to absolutely value it, and will we create shareholder value?
When I think about what we buy, we make those businesses grow faster. I think Greg Herrema and Alan Malus gave you a sense of how we do that. We have an incredible reach to the customer physically with our people, electronically, and from a capability standpoint. When we buy something, we accelerate its growth, but it might be a fast-growing business, it might be a slow-growing business. Right? We don't think about M&A to change that. When you go through all of our segments, they roughly grow at the same rate. Right? Plus or minus a point. When I think about the company, incredible stability. Right? FX is a challenge at some point. We had a global recession. We've had periods of rapid growth in the economy, since this management team has been together.
We deliver really consistent growth, and interestingly enough, incredible earnings power there. That is the story, and we pick and choose when we do M&A. Right? We pick and choose what we think will put an even brighter future. To the question of investor sentiment. There was a period of time where we did a lot of M&A, when anything got announced, it was a negative. Right? Anybody, not just us, it would be a negative. We've enjoyed a period of time when whatever gets announced, the stock goes up a lot. Right? Before you've done any work, you get credit. My guess is that investor sentiment will change sometimes for the positive, sometimes for the negative. We don't worry about those moments, we worry about one year from now, two years from now.
Will our shareholders say, "Did we do the right thing? Are we creating shareholder value for the long term and executing against what we said we're going to do?" Do things like we did today, which is the Life Sciences Solutions upside case and say, "You know what? We financed it on this, but across all the dimensions is better, so it's even better for our shareholders." That's how I would think about the environment. ROICs, the last of the question. There are transactions to do that clearly have rates of return well above our hurdle rates. There are transactions to do that would clearly be very accretive. All of those types of transactions are going to have a more stretched ROIC than that typical year 3 or year 4 that is out there, that we've done historically.
For us to want to do transactions with a longer timeframe, we have to have a very high degree of certainty that in year, what, X, that it's going to be delivering what we think it's supposed to deliver at that point in time. So a transaction with very high conviction that the growth and the earning growth is there, we'd be willing to consider a longer payback. Very speculative transactions, no interest. Hopefully, that gives you a very broad answer on growth and ROICs and how we think about it.
Thank you.
Sure.
Mark, Dan Arias from Citigroup.
Dan.
You talked about pricing and getting a little bit more out of price this year. Do you think you could just sum up for us where in the business you think you have the ability to be a little bit more aggressive, and then where, if you look at customer budgets and competition, you think the pricing environment might be a little bit more difficult?
Sure. Pete, in terms of our assumptions in the model, what do we have in terms of price? I'll give some of the details.
What's in the model is somewhere around 50 basis points. On the upside case, it might be a little bit more than that, and that's really being driven by what we're doing to try to offset the impact of FX. Those regions where we have products that don't have local competition, where we have an opportunity to try to raise price to offset some of the dilution we're seeing from FX, we're planning on getting a little bit of benefit from that.
When we think about pricing, one thing that we don't calculate in that 50 basis points is the impact from innovation. Right? Every time we launch something new, we're launching it at a higher price and capturing the value on it. Part of the way we capture price is actually just launching fabulous products. In terms of the same SKU year in, year out, and you look at the portfolio, the areas where you're going to have great areas of opportunity, clearly in our Life Sciences Solutions businesses, there's some great opportunities, in terms of pricing, as well as in certainly parts of our lab products business as well, where we have very sticky customer base. They really like working with us. There's opportunities in those parts of our business. Sure, Ross.
Hey, Mark. Ross Muken from Evercore. I guess it seems like we should rename the Q&A section the M&A section. I'm going to stick to actually the core business. I thought it was interesting, you provided more detail on kind of the long-term growth plan this year. As a part of it, there were a lot of machinations to make up for, obviously, the FX headwind that was incremental year-on-year. It sort of strikes me the sort of PPI business system and some of the other things you've put in place maybe don't always go appreciated in terms of how hard it is to drive that kind of CAGR on a multi-year basis.
As you think about sort of the pushes and pulls of the economy and FX and all the other various pieces there, do you feel like the company is now at a place to where, depending on the macro environment or independent of the macro environment, independent of the timing of M&A and various things, you can kind of steer the ship
through good and bad markets to deliver on those targets? Because it seems like we had, obviously, this negative FX environment, which was unforeseen last year, and yet we're still roughly at the same number. How do you feel about where you have the flexibility still in this organization to hit those multi-year projections?
We have a great management team. I think you saw that today in the presenters, right? When we presented the numbers last year, you had a high level of commitment that that's what we were going to deliver, right? After May of 2014, we picked up a $0.70 headwind, right? What, as the management team said, is we're going to work to offset all of that. In fact, the team was saying, "How do we get as much of that offset as possible, even in the year 2015?" You see us in some of how we thought about our goals for this year. An incredible level of commitment to do that, and that's because our business system is phenomenal, right?
We even use the methodology, as Tom said, to actually say how we're going to figure out the best way to deal with it and what's the optimal way from price, work with your suppliers, and manage out other costs to do that. When I think about the environment, unless it's something that's incredibly dramatic and sudden, we feel like over this period of time we should be able to deliver this type of numbers. There are scenarios that are more aggressive, and given that we've lived through two recessions over the last 15 years, we know how to deal with those environments as well should they happen, incredibly bright future in terms of the core business we have.
Maybe on the Life transaction, it feels like the messaging has changed a bit. We're kind of entering a new phase, accelerating growth.
Which is quite different. I remember back to writing about this asset not long ago when it was standalone, people didn't even know if it would be a 2%-3% grower.
Let maybe at some point grow at the corporate average. This is the largest deal the company has pursued, at least under your leadership.
As you think about all that went into getting this asset back to a more respectable growth rate and obviously also getting the margins up, what do you think you learned about the organization and the ability to execute on something of this size, and fix something that maybe wasn't broken but certainly didn't have all the same disciplines as the business now does? What did it teach the organization about where you can really add value, and what really moves the needle, and what really matters in this industry.
In terms of getting to a competitive or above-market growth rate?
The single biggest driver of the change in performance of the Life Sciences Solutions business is that the philosophy of integration. The vast majority of the colleagues pre-acquisition are the same colleagues at the organization today. They're just performing at a different level. Why is that? Thermo Fisher continues to evolve all the time. Our job is to make this company the very best company it can be. From day one, we absorbed and soaked in every great idea that the Life Sciences Solutions team had to make the whole company better, right? It wasn't, "You will do it the Thermo Fisher way," but "What is the best way to run the combined entity to make the company stronger and more competitive?" When you go in that way from day one, there's no resistance to say, "You know what? There's some best practices coming our way.
There's some changes in philosophy," we get it because this is about we're going to serve our customers well, we're going to gain market share, and we're going to win together. You look at it, our Biosciences business is leveraging the channel incredibly well, using some different disciplines in terms of how we do R&D to really accelerate growth. The e-commerce capabilities that Greg has articulated came from the Life Technologies capability. We're leveraging those capabilities to grow the company faster, that philosophy has put the business on a much better path. Sure.
Yeah, Jeff Elliott from Baird.
Sure.
Marc, question on the Clinical Trials Logistics business. It's obviously been a very good business for you.
When you look at the end market there's been a lot of changes with the Covance acquisition, some joint ventures.
Does that impact your thoughts on that business, and what's really the growth outlook for that business over the next few years?
Sure. Our Clinical Trials Logistics business, our Biopharma Services business, been a rapid grower. It is a business that has been historically a core capability within the biopharmaceutical industry, and they've outsourced it primarily to us. We don't compete with the CROs. We have our billion-dollar niche, if you will, that we are by far the industry leader. The reason that the pharmaceutical companies and biotech companies have used us is we're lower cost and higher quality, right? Basically, we're just more competitive than the in-house capabilities. We've enjoyed good growth, I'd say that business has been one of the faster-growing businesses, growing well above the company average for long periods of time, and it continues to have a very bright future, Jeff. Sure. Isaac.
Hey. Isaac Ro, Goldman. Thanks. Apologize, I'm going to just drag the conversation back to M&A just for a minute.
Sure.
Hopefully talk a little bit more long term. A lot of what you talked about today was sort of on a 3-year basis. If we look on a maybe 5- to 7-year basis, I was curious, at a very high level, I think one of the things that's interesting is over the last year in healthcare, you've seen some pretty interesting deals across sectors, right? Becton, CareFusion, you had United, Catamaran. You had some deals that people would not have expected.
Just at the size that you're now at, $118 billion in sales and $100 billion addressable market, if we look past the point over the next few years where you bolt on and backfill some of the white space you have, would it be inconceivable to think that you guys might add a fifth leg to the stool five, seven years out, or maybe even sooner?
We serve an incredibly attractive market with huge opportunities to grow. Our focus is to continue to run what we have in a world-class fashion, create a huge amount of shareholder value, and when the right transactions happen in our space, we'll pursue them. I think that'll keep us busy for quite a period of time. When it gets closer to that five to seven years out, we'll see where we are from a market share and look at those, but we'll be plenty busy, Isaac, in the space that we're in today.
That's helpful. Then maybe just to follow up more specifically on diagnostics. We look at the rest of your portfolio, you have some pretty dominant central positions in every part of the lab where you play. In diagnostics, I would argue that you maybe have a little bit more of a tactical positioning.
In the past when I thought about your philosophy there, it didn't seem to centrally revolve so much around having large instrument the way some of the other diagnostics players have. Is that philosophy still hold? How do you think about really dominating the same way you do in other lab markets?
Yeah. We're in it to make money. The way I think about it is, the assets we have are very defendable, as Andy said, great niches, but many of them have very high market share. The point of that, and the portfolio's been logically put together, is we wanted to be in every major medical center around the world. When you think about our allergy business as an example, our microbiology business, these businesses are there, right? These are our customers, basically we then are able to leverage it as there's a convergence of life science tools into the diagnostic realm. We have the commercial footprint to really tap into. That's how we've thought about it.
We always think about industry structure, there have been segments historically in the diagnostics realm that we've just avoided because we see it as commoditizing, therefore, we want to make sure that our business looks even better in the future. Therefore, we try to pick the spots where we like how the industry is playing out. Yeah, sure.
Mark. This may be for Mark as well. The comments you made around gene sequencing, is this more a reference to the technology than we've seen in the past or for a while? Specifically, are these 600 new panels you're talking about proprietary or being done in conjunction with partners?
Sure. Paul, the next-generation sequencing area is an exciting area, I'll have Mark talk a little bit more about it. We basically have been very quiet on it, deliberately because our view is today it's a little more than 1% of the company's revenue. It's a very exciting field. We put a lot of R&D there to develop it. We don't want to overemphasize it from an investor standpoint. From a customer standpoint, we're incredibly focused on it.
We have time for one more, Mark.
I would just add on the panel part of it, so just sort of explaining, I think it's not well understood sometimes the actionability of taking all the information that's being discovered by the large-scale discovery programs and putting it into actionable programs on sequencing specific genes, and that's the explanation we just wanted to give today to make sure some of our customers see that, but just to explain that to the group here.
Miroslava Minkova with Stifel. Thank you for taking the question. Maybe if I could ask, what are the underlying assumptions for the end markets behind the 4%-5% target that you just put out today, and what has changed since last year? You made a strong point that the 3% is off the table. Help us lay out the scenario as to what can push you to the upper end of that range.
Yeah. Long-term end market growth is the same as last year, the same as the last few years, 3%-5%. Underlying the 4%-5% would be a 3%-4% market growth over this period of time. Our assumption here is that we're always gaining a little bit of share. If we were in a period where you were at the high end of the market growth, then you'd see us obviously move higher on the organic growth targets. I think the 3%-5% gives you a good sense of market, and 4%-5% is generally where we think we're going to come out. The reason our confidence is in the 4%-5% is the business is performing well. We're delivering in that range.
We've made a lot of investments to leverage our value proposition, our innovation, and our great strength in emerging markets, and I think that positions us well to gain market share. I think all of the combination gives us an incredibly bright future. Let me thank you for joining us again this year, and I was asked a question last week at an investor conference, which was the last question I had then, and I'll posit that question, which was: What's the most misunderstood thing about Thermo Fisher Scientific? At that point in time, I said our future has never been brighter, and I think we might have demystified that a little bit today of why we're so confident and why our future looks so incredibly well. Thanks for the interest, and we look forward to keeping you updated on our progress.