Good morning. I'm Ken Apicerno, Vice President, Investor Relations for Thermo Fisher Scientific. On behalf of the entire management team, I want to welcome everyone to our 2014 from the Analyst Meeting. We're always excited to be here every May for this event, particularly excited this year given the recent addition of Life Technologies and I think you'll really enjoy the program. I'm going to cover the agenda and a few housekeeping items and then we'll get on with the program.
First of all, just on the agenda Thank you. So we're going to have Mark Casper coming up to speak about our longer term strategic view, tell you about the great progress we've made, but Also about where we think we're going in the future. Pete Wilbur will come up to give you the financial outlook to include a 5 year outlook from a modeling perspective. And we're going to have 5 of our primary business leaders coming up, 3 presentations on innovation, 1 on our extensive customer reach and value proposition and one on the scale that we have in emerging markets and the progress making there. So I think you'll enjoy those.
After Mark Stephenson's presentation, we'll take a short break. And then at the end of the program, we'll have Mark Casper come up to take Q and When we get to the Q and A portion, the event is being webcast. So I ask that you here. Please raise your hand, wait for a microphone to be brought over to you. Please state your name and your organization, so that we catch that on the webcast and then ask your question.
Also, just one housekeeping item, if you have cell phones or any other electronic devices, We'd appreciate it if you put those on mute. And so before we get started, let me briefly cover our safe harbor. Various remarks that we may make in these presentations about the company's future expectations, plans and prospects and I'm Ken Apis, who 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 in the Investors 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 and therefore you should not rely on these forward looking statements as representing our views as of any date subsequent to today.
Also 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 gross margin, adjusted operating margin, adjusted ROIC and free cash flow. Definitions of these non GAAP financial measures and for historical purposes, a reconciliation of the non GAAP financial measures to the most directly comparable GAAP measures is available in the appendix to today's presentations. So with that, it's now my pleasure to introduce our President and CEO of Thermo Fisher Scientific, Mark Casper.
Well, good morning, everyone. It's a pleasure to welcome you here to New York and to our Analyst Day for 2014. What I want to cover this morning is really to give you a sense of the great opportunities we have as a company, both in the short term as well as in the longer term. I'd like to start by welcoming our Board of Directors who are with us here today as they have been in the past years as well. During the course of the morning, you'll get a good sense of our growth drivers and the focus we have on our primary financial metric and success metric, which is growing our adjusted earnings per share.
And you'll get a good sense of how through innovation, our customer value proposition and our presence in emerging markets on the very bright prospects that we have in terms of driving earnings growth.
So let me start
with a quick snapshot of Thermo Fisher today. We are the world leader in serving science, dollars 17,000,000,000 in revenue, 50,000 colleagues working around the world in 50 countries serving customers and their laboratories. Our customers know us for our unique depth of capabilities, which is centered around a very strong track record in innovation, a deep applications expertise so that we really understand our customers' business and what they do. And they see us as the partner to drive productivity in their own R and D, quality assurance and laboratory operations to make them more efficient in their day to day work. We have 4 premier brands, which you can see on the slide and they are extremely well recognized, by our customers in our industry.
In 2011, at this analyst meeting, I presented this slide. It was and it is our vision for 2020. And when you look at the words, what you see is it's about growth and it's about leveraging our value proposition in our technologies and our brands to create value for our customers. Ultimately, you'll see us become even stronger in our emerging markets and become one of the most admired companies. The result of those strategic goals will be for us to continue to deliver strong and consistent earnings growth throughout the period.
And you'll get a sense of that a little bit from me, but also in great detail from Pete in his presentation. To ground us on the historical financials, looking back over the last 5 years, this gives you a sense of the financial track record of the company. And we've delivered 8% top line growth on average. We have expanded margins on average 70 basis points per year, which has resulted in a 17% CAGR in earnings per share growth over the period of time. While doing that, we were able to expand our return on invested capital on average of 35 basis points a year, exceeding 10% in 2013.
A good track record of consistently delivering on our financial goals. If you take a longer period of time, let's say a 10 year period, You would see a very similar set of numbers, high single digit reported growth, leading to a significantly faster rate of growth in adjusted earnings per share. So whichever period of time you take looking back historically, you would see very similar track record of performance. And I think you'll get a good sense from Pete of the exciting outlook we have over the next 5 years as well. It's been a year since our analyst meeting and while we do update on quarterly calls and some investor conferences around the world.
I thought it's useful to spend a moment just taking stock of the progress that we've made over the past year. Starting from the revenue perspective, we've launched a number of innovative products across our portfolio during the past year, Whether it's an analytical instruments, you can see a picture of the Orbitrap Fusion, whether it's in biosciences or specialty diagnostics, A number of high impact innovation launches that really positioned us well for share gain. We continued our momentum in China, delivered 20% growth last year. We expanded our capabilities in Asia Pacific to leverage our scale so that we have an even brighter future going forward. And Sai, it will give you a good sense of our plans for Asia Pacific today.
And we continue to gain share of wallet by using our unique customer value proposition for our customers, including our unmatched Deplet capabilities are leading scale and the fact that we drive productivity for our customers. From a margin perspective, we delivered $250,000,000 in productivity here, leveraging our PPI business system and we manage through the macro environment by keeping a tight control on our cost base. A busy year from a capital deployment perspective. We announced the transaction with Life Technologies just before our analyst meeting last year and we closed the transaction in February, as well as returning about $300,000,000 to our shareholders through buybacks and dividends. And we achieved our on ROIC targets for last year.
All of those actions led to a 10% growth in adjusted earnings per share. So looking forward, you've seen this slide before. In fact, if I was to talk one slide about the Apis. This is the one I would use because everything we do at Thermo Fisher starts with our customers. And it is our mission.
We enable our customers to make the world healthier, cleaner and safer. Whether that's ensuring that a clinical drug will get to a patient that needs it or whether that a researcher has the tools they need to really discover the next breakthrough in the pharmaceutical industry or that a regulator can monitor the quality of the food in the food supply Or that a factory can ensure that the emissions that they have is not having a detrimental effect to the environment. All of those are examples of how our capability, Services and products are used to make a difference in the world. From our perspective, it's a very exciting time for Thermo Fisher Scientific. When you look here at our end markets and our split of business, what you'll see is it's a very similar years past and this includes Life Technologies in the mix.
So very similar, balanced amongst our 4 end markets. Lots of exciting things going on with our customer a base that creates opportunities for growth. And when you look at that, starting with pharma and biotech, lots of progress going on in the area of oncology creating new opportunities that are being invested in and ultimately more demand for life sciences tools. Academic and government, it's good to see that we have an appropriations bill in the U. S.
Funding is starting to flow. And as we've talked about Earlier in the year, we expect to have a much stronger environment in the U. S. From a funding perspective in the second half. Industrial and Applied, There are major opportunities like ensuring that the drinking supplies are safe.
And then there are tactical opportunities that are also significant. And you'll hear from Tom Lowold about some of them, including a minor safety regulation that's gone into effect. That's a good opportunity for our air quality monitoring instrumentation. And then finally in diagnostics and healthcare, you'll hear from Andy Thompson talking about the quest for a lower cost of healthcare to the health system Creates new opportunities both for our customers as well as for our Specialty Diagnostics business. Looking at Thermo Fisher from a competitive landscape perspective, we serve a $95,000,000,000 market.
When you include some of the markets that we had not historically participated in through the addition of Life Technologies, you see the markets a little bit larger. We have a $17,000,000,000 share of that pie. So we're by far the largest player. And here. When I think about it and when we look at it, because of our size, we actually see an incredible opportunity to grow going forward.
It's a large market. It's a market that's growing 3% to 5% and we use our unique scale to really create opportunities for additional growth and we see ourselves well positioned for long term success. Here are some of the drivers that really drive that 3% to 5% market growth. I'm not going to read all of the points on the slide, but I'll highlight a few. Customers are Increasingly focused on driving their own productivity.
If you think about what's happened since the recession, it's been a world of slower growth across the global economy. And in that environment, every company is more focused on driving productivity to make their bottom line performance objectives and that plays to our strength. So historically, you would think about that in the pharmaceutical industry. But today, more and more industries are actually focused on driving productivity and that is a great opportunity for us to use our value proposition to gain share. The world is becoming more regulated and those regulations need instrumentation and life science tools to be able to really put those regulations into effect.
Every time there's a new EPA standard, Every time there's a minor safety standard, every time a government wants to monitor things, that's an opportunity for Thermo Fisher Scientific and our industry to really capitalize on those growth drivers. From the final point, you'll get a good sense of what's the benefit of having life science tools and diagnostics in 1 company. And what we are continuing to focus on is leveraging our specialty diagnostics capabilities to converge life science tools into new applications. You can think about that in mass spectrometry. You can think about that in next gen sequencing, in qPCR as well as in fields like companion diagnostics.
Great opportunities to leverage the unique capabilities that Thermo Fisher Scientific has. From a competitive standpoint, we continue to evolve our company to meet those needs, right? If you got a sense of the market size and growth, you got a sense of what's driving our customer needs. This gives you a look back over the last 15 years. Thermo Electron 2000, right?
What we did was focused our innovation on dealing and addressing with societal challenges and that allowed us to grow our business. We redefined our industry in 2007 through the combination of Thermo Electron and Fisher Scientific, where we created a value proposition that was unique in our industry, where customers would not only value depth of capabilities, but they would see the benefit of scale as an industry player. And that has allowed us to gain market share. And you'll get a sense of that in a few moments. And today in 2014, we really have transformed those customer relationships such that we are in a unique position across a broad range of industries to drive growth and have an even brighter future.
And we really have perfected that value proposition and now we're leveraging it across a wide set of customer base. What you see on the slide is our proven formula for creating shareholder value. There's nothing on the slide that is new from what drives our value creation model, right. Our primary metric is consistently driving with strong adjusted EPS growth. And when you look at that, we do that organically through innovation, our value proposition and emerging markets.
We do that through expanding margins through our PPI business system and through capital deployment through strategic M and A and return of capital. This slide really will orient you to the rest of my remarks as well as the rest of the presenters today, where you'll get a sense of the organic growth drivers, and Pete and I will cover the other two parts of the formula, which is PPI and our capital deployment approach. So looking at organic growth. Innovation, we spend over $700,000,000 a year on innovation. It's the largest budget in our industry by far and we use that scale to make a real difference for our customers as well as for creating value and returns for our shareholders.
This gives you a sense of how we split out our investments. When you look at our Portfolio today, we've used our R and D dollars to strengthen our leadership positions, whether that's in mass spectrometry, whether that's in portable instrumentation or specialty diagnostics, but we've also added new capabilities over the period since we've talked last, including things that came from Life Technologies as well as strengthening our companion diagnostics offering as well. The second driver of organic growth and Alan will delve into this in much more detail is how we use our unique value proposition to gain market share. And when you look at the biopharma marketplace, represents about Quarter of our revenue. Industry spend over the 2,009 to 2013 timeframe has grown by 1%.
We've grown our business by 7% over that period of time. It gives you a sense of how much quicker and how sustained our growth has been to our single largest customer set. And our customers value the fact that we help them become more innovative and we help them do that innovation more efficiently. We're taking the value proposition and we've been expanding the market that we've been approaching, whether it's food and agricultural companies, whether it's contract testing labs for a number of other market segments where productivity is becoming more important and that creates new opportunities for growth. The final leg of our organic growth drivers is our scale in emerging markets.
Today, emerging markets represents 18% of the company's revenue. That's up substantially and you'll get a sense from Pete on how that will evolve, but we'll continue to increase that by about a point a year. We continue to strengthen our position in markets like China, India, Korea and Brazil. And because of the scale that Life Technologies brought, we have new markets that we now have the scale to invest in and create more opportunities for high growth regions, Places like the Middle East, Southeast Asia, where we now are at the point where we can reach those customers in a differentiated way and in a cost effective way so we can get a good on our investment. When you look at Life Technologies, it complements all of the strengths that I talked about.
From a technology innovation perspective, it deepens and broadens our innovation capabilities and our leadership positions. From a value proposition perspective, it's even stronger today. We just have an even more credible and capable set of offering than we had a year ago through the combination. In emerging markets, as I just mentioned, we have further scale that gives us opportunities for accelerated growth. Looking at some of the details from a cost synergy perspective, in year 1, we're on track to achieve the $100,000,000 that we've talked about in terms of cost synergies.
The second big positive is that when we announced the deal a little over a year ago, we were in a very uncertain time from a U. S. Academic funding perspective and that clearly has improved. So that's one of the risks, is in a much better spot today than it was a year ago. And we wanted to update the fact that from an accretion perspective, we expect to earn $1.25 to $1.30 in 2014 versus the last time we talked about it, which was in the 1st full year.
So a slight improvement in accretion as well. So on the short term perspectives, all good news. But the long term is even better. And what if you recall back to our earnings call or you on call a year ago. We talked about the base case assumptions and getting to a return on invested capital above our cost of capital in year 4.
And what we said back at that point in time was there were 3 major areas that could drive upsides to the base case. And what I wanted to do is update you on 2 of them today. The first of which is cost synergies in year 3. Based on the great work that our teams have done around the world, we are confident that we will achieve $300,000,000 in cost synergies in year 3, which is a $50,000,000 increase from the targets that we have set out over the past year. From a revenue perspective and a revenue synergy perspective, if you recall back at the time of the announcement, we put a placeholder as $75,000,000 of revenue in year 3 coming from revenue synergies.
And now that we have our teams up and running and working the details of our integration plan, we feel a bit more bullish. And it's not our aspiration Appreciate it, but we're confident in year 3, we'll get at least $150,000,000 of revenue synergies and that will pull through $50,000,000 in terms of adjusted operating income. So we will have $350,000,000 in earnings synergies through the combination, which is plus $75,000,000 from the last update that we gave you. So we feel good about that. The final piece is 3% organic growth.
And we said the upside here is doing stronger growth than that. It's too early to make that call. So when you actually look at the outlook for the company over the next the longer term perspective that Pete will outline, What you'll see him do is assume that we're going to grow 3% organically for our Life Science Solutions segment. When you add that into our company's mix, we as a long term view will grow closer to 3% to 5 and 4% to 6%. So we're assuming 3% to 5% growth in our long term outlook at this point in time.
We're working on a number of drivers to accelerate the growth of our Life Science Solutions business and those will be the upsides that we're working towards so that over time we can put a check the box in terms of faster growth in that business. Mark Stephenson will highlight some of those. Some of them are listed on the slide. So a lot of good activity going on and we'll keep you updated periodically about the organic growth outlook for Life Science Solutions segment. Turning to the second driver of earnings per share growth is our PPI business system and the margin expansion that it drives.
You know of our track record of averaging 70 basis points of margin expansion and we have with very bright prospects going forward here as well. PPI is incredibly powerful. Every year we do a number of Kaizen weeks We're around the world, we pick a week and our teams at all of our major sites will actually work on making the business more efficient. And we were excited to have our Life Science Solutions sites participate in our March activities. And this gives you a sense of the impact of the 1st week of training and Kaizen activities at our Life Science Solutions sites.
We were able to identify 109 issues that got resolved and save over $600,000 just by having the teams focus on Short term opportunities leveraging the tool. So it gives you a sense of it's quick, it's easy to implement and that our 10,000 new colleagues and are already well engaged in using PPI to make the company more efficient and more effective. The final driver of our adjusted earnings per share growth is around capital deployment. If you look back over the 2,009 to 2012 timeframe, What you'll see is about a third of our capital was returned to shareholders through buybacks and dividends and about 2 thirds through strategic M and A. And that is roughly the mix that one would expect going forward, plus or minus a little bit.
Over the 2013 2014 timeframe, we really here for Life Technologies. Over this timeframe, we'll return about $600,000,000 to our shareholders and obviously we deployed about $15,000,000,000 in capital to acquire Life Technologies. Going forward, in 2015 and beyond, we're focused in the very short term on reducing our debt. And once we get back to 2.5 to 3 times total debt to EBITDA, we'll be back to deploying capital through a combination of share buybacks, dividends and strategic bolt on M and A. From a dividend perspective, what we're assuming is growing the dividend here modestly in line with our earnings growth.
So that's the assumption there. So primarily share buybacks would be the return of capital method that we would be focused on. The second aspect of capital deployment is M and A. And you know of our track record As the industry consolidator, as the industry leader, we have very strict criteria that we use and we have a disciplined approach to M and A. And that M and A has created substantial shareholder value over the years.
Our integration methodology is proven. It does a great job of preserving the business and making them better by leveraging the strengths of both companies that we acquire. And when you think about value creation, it's through the cost synergies, through the tax planning and through the revenue synergies that we derive. I I thought I'd spend a moment just talking about revenue synergies to give you a sense of how we approach it across some of the deals that we've done. Here.
Thermo and Fisher, kind of old news at this point, but that strength that you've seen in biopharma is really the product of putting together and leveraging the unique capabilities to drive share gain that neither company would have achieved on its own. And in fact, In our minds, we continue to get revenue synergies today from that combination. Three deals that we've done in the 2,009 to 20 11 timeframe, we wanted where we have a little bit of history, we wanted to pick some examples. Bronze, we will get you'll get a sense from Andy Thompson, How we've been able to leverage our channel around the world to accelerate the growth of PCT at almost no incremental cost. So So we've grown this business incredibly rapidly.
You hear us on almost every earnings call talking about the great growth. But not only has it grown well, but it's expanded margins dramatically. That's one example. Dionix, dramatically changing the connect rate between mass spectrometry and chromatography, leveraging our huge installed base of mass specs to grow our share in HPLC. And Fadia, an allergy testing business, You might not think about it as much, but we've been able to leverage our corporate accounts presence to dramatically improve the competitive position of this business and accelerate growth.
So different examples of how not only do we drive cost synergies and tax planning, but that we really are very focused on driving the top side synergies or top line synergies as well. So I think that gives you a sense of the proven approach and formula that we have in terms of creating shareholder value through our drivers of organic growth, and I think you'll get a good sense of them today through our PPI business system and through our focused approach to capital deployment, all centered around driving earnings per share growth as well as creating substantial shareholder value. Before I turn the call over or before I turn the meeting over to Pete, what I wanted to do is just give you a sense of how we think about the company today. Here. We have grown to the point that we are truly the unrivaled leader in our industry such that we are much larger than any other player.
And the reality is our peers today are the unrivaled leaders in their industries, whether it's the J and Js of the world or the 3 Ms or the Roche's. That's the company that we've really put ourselves in a position to be. And we're excited about our prospects going forward. So I think you'll get a good sense from the team on why we're so bullish about the outlook for Thermo Fisher Scientific. With that, I'll turn it over to our Chief Financial Officer, Pete Wilbur.
Pete?
So I never know if the applause is for Mark or for me, but I'm going to assume it's for me. So good morning. It's great to be here today to provide you with a thorough financial overview of Thermo Fisher Scientific, similar to what I've done in prior years. As you can see, the title of my presentation is focusing on shareholder value. I chose that title because it's something we take very seriously and work to enhance every day.
I'll start with a quick review of the past, then move to an overview of our current financial structure, including the Life Technologies acquisition, and then touch on our 2014 financial commitments. I'll end with our view on the longer term outlook for our company, which I think you'll find pretty compelling. With that, I'll begin with a look back at the evolution of Thermo Fisher Scientific. This slide gives you a historical perspective of how we've grown and transformed since 2000, the year I joined the company. As you can see, we've undergone significant changes since the Thermo Electron days.
Throughout the evolution of the company, as Mark said, our focus has always been on serving customers. And we've grown from an instrument focused company to a partner in science and now with the addition of Life Technologies to an unrivaled industry leader. From a financial standpoint, Our revenue has grown significantly from $2,300,000,000 in 2000 to now $17,000,000,000 annually. And our mix of revenue is now almost 75% recurring, up from about 15% in 2,000. So our revenue base is much more stable.
Innovation was a key driver of our growth strategy in 2,000 and it remains a key driver for us today. You can see the increase in our R and D investment over the years. As Mark said, we plan to spend $730,000,000 on R and D this year. At that level, we're outpacing our competitors and innovating at a rate to ensure that we meet our customers' needs for new technologies Our attractive product portfolio and customer base, along with our geographic mix, Translate to stable and consistent adjusted EPS growth and strong free cash flow, which I'll talk about more later. We had great financial execution in 2013.
Even though conditions in some of our end markets weren't ideal, we were able to deliver 3% organic growth. And unlike many of our competitors, we were able to generate 50 basis points of adjusted operating margin expansion, despite a strong foreign exchange headwind from the Japanese yen. Overall, we were able to complement our top line growth with great contribution from productivity and delivered 10% adjusted EPS growth. And we achieved this with very little deployment of capital compared to years past. So let me quickly review our 2013 adjusted EPS bridge to give you some granularity on how we achieved the 10% growth.
The blue bar at the bottom of the slide shows you the 2013 guidance we gave you at last year's meeting. And this graph shows you what we actually delivered. As you can see, we exceeded the high end of the 2013 guidance we gave you at that time. The 2 major contributors to the beat were stronger top line performance, which resulted in higher pull through and significantly stronger contribution from our productivity initiatives, including our PPI business system. As we've demonstrated in past years, our productivity initiatives gave us the ability to make adjustments as the year unfolded to more than offset FX and other headwinds.
And as a result, we exceeded our adjusted EPS commitment for the year, while continuing to fund our growth investments. So now let's take a look at our revenue profile as it stands today. The pies on this slide are pro form a, as if we had owned Life Technologies for the prior 12 months through Q1 2014. On the left, You can see that with the addition of Life Technologies, we now have slightly higher exposure to the academic and government end market, which is offset by lower percentage in industrial and applied. As I said in my opening slide, about 3 quarters of our revenue is recurring with 13% coming from services, which is a very enviable profile.
Geographically, our reach got a bit stronger in Asia Pac and Europe, offset by a slight reduction in North America. As Mark highlighted, emerging markets now account for 18% of our total revenue, Over $3,000,000,000 annually, again on a pro form a basis. This has grown 2 points from the 16% I showed you at last year's meeting. So we're clearly seeing the benefits of our investments in emerging markets. Going forward, we expect this slice of the pie to continue to grow at a faster rate than the overall company average and at about a percentage point per year.
Syed will talk to you later about in more detail about the regions we're targeting and our growth prospects in emerging markets, which are driven by our significant scale in-depth of capabilities. So let's take a quick look at the profile of our new segment structure. As most of you know, earlier in the year, we created a 4th reporting segment called Life Sciences Solutions. It includes the former Life Technologies businesses as well as the majority of our legacy Biosciences businesses. The data on this slide is once again pro form a as if we had owned life technologies for all of 2013.
There are a couple of specific points I'd like to point out. First, you can see the dramatic difference amongst the segments in terms of emerging market revenue. On the high end, analytical instruments generates about a third of its revenue from emerging markets. And on the other side of the fence, Specialty Diagnostics is below 10%. We clearly have significant opportunities for growth in diagnostics and health As regions like China move into high gear to build out their healthcare infrastructure.
I mentioned R and D investment earlier, And you can see here how we're allocating the spend, which is more heavily weighted towards our high technology segments. These segments also deliver higher adjusted operating margin, which in part demonstrates the value we create through continuous innovation. As most of you already know, our Laboratory Products and Services segment demands very little R and D investment as it includes our Fisher Scientific Channel and Biopharma Services businesses, neither of which require R and D. So moving on to our 2014 guidance, this is the guidance we gave you on our Q1 earnings call. As you may recall, We increased our guidance in April to reflect the actual acquisition and divestiture close dates, as well as improved FX rates.
In In terms of the quarterly phasing of the year, we also provided some general guidelines to clarify our view 1 quarter out. Specifically, we said that we expected Q2 to represent about 25% of our full year revenue guidance and a couple of points less and in terms of adjusted EPS. I think this year will continue to be challenging for our analysts and investors to forecast by quarter, because we have so many moving pieces with the acquisition and divestitures. So So to provide you with some additional color on the rest of the year, we see revenue in Q3 and Q4 at about 25% and 27% of the full year respectively and adjusted EPS for the comparable periods of roughly 24% 30% of the full year. So I'm not going to read them all, but for your reference, Here are the key assumptions that we used in our current full year 2014 guidance, which are very consistent with the original guidance we gave you back in January.
To highlight a few of the assumptions, we're expecting total company organic growth of 3% to 4% for the year. This will be a year of significant adjusted operating margin expansion, primarily due to acquisition and related synergies. But it's important not to lose sight of the fact that we are very focused on driving margin expansion in the standalone business as well. I'll give you more detail on the key contributors to our 2014 margin guidance in the slides to follow. As you saw earlier, we expect to achieve total revenue growth of 29% to 30% in 2014, which is largely driven by the Life Technologies acquisition.
As I mentioned, we expect organic growth of 3% to 4% for the full year, driven by our continued strength in innovation, emerging market growth and leveraging our customer value proposition, consistent with our formula in past years. From an end market perspective, as we said on our Q1 call, we expect to see a pickup in the second half of the year in academic and government. As our U. S. Customers begin to see funds released from the appropriations bill that was finalized back in January.
Our industrial end markets have stabilized and we've begun to see some bright spots in our short cycle products. So we expect higher growth from industrial and applied this year compared to 2013. We continue to expect our biopharma end market to perform well and grow in the mid single digits. And specialty diagnostics growth should accelerate through the year and be in line with the overall company average for the full year as we expect utilization to increase in the second half of the year. So So turning to adjusted operating margin, our strategy to drive margin expansion is unchanged.
In 2014, We expect operating performance for standalone Thermo Fisher to contribute 50 basis points of expansion, partially offset by dilution from unfavorable FX, mostly as a result of the weaker Japanese yen. The expansion is driven largely by volume leverage and productivity. As you know, productivity is a key area of focus for us. We have 4 main productivity drivers: our PPI Business System, Facility Rationalization and Restructuring, Low Cost Region Manufacturing and Global Sourcing. I'll cover these initiatives in more detail on the next slide, but we expect to drive more than 200 basis points of margin expansion from productivity in 2014.
And this will be the 4th year in a row that we've delivered this level of savings. Our ability to drive productivity has enabled us to deliver solid margin expansion, while continuing to invest in the business. And this year will be no exception. And we anticipate that we'll invest about 100 basis points to drive future growth. Turning to the impact of the acquisition, we expect to see about 200 basis points of expansion this year as a result of adding Life Technologies and achieving the related synergies, partially offset by the dilutive impact of the divestitures.
The result of all this is an adjusted operating margin range of 21.7% to 22% for a very strong 220 basis points to 250 basis points of expansion. And we see a clear path into the mid-20s, as I'll discuss later. Now let's take a look at our 4 key productivity drivers, which I'm sure you're all familiar with. It's a proven strategy that will continue to contribute to our performance and will now be fully integrated into the Life Sciences Solutions business, providing us additional productivity opportunities into the future. I'll talk more about our PPI business system on the next slide, So let me cover the other initiatives here.
Most of you know, our facility footprint is quite significant. And with the addition of Life Technologies, we're now operating in 146 manufacturing facilities, which is more than we need. We typically consolidated about 8 to 10 sites per year and since the 2,000 merger 2006 merger with Fisher Scientific, We've rationalized 80 manufacturing sites. As we continue to make acquisitions, the number of facilities will keep rising. So I think you can see we'll continue to have ample opportunities to reduce our footprint and take costs out of our infrastructure well into the future.
At the same time, we're very focused on expanding our low cost region manufacturing footprint. Currently, a little more than 10% of our manufacturing revenue is produced in low cost regions, specifically China, Singapore, Mexico and Lithuania. Our goal is still to increase this percentage by about 1 point per year. And finally, with our global sourcing organization, We're able to leverage our size and scale with our suppliers to achieve lower costs each year. Our buying power has further been enhanced the addition of Life Technologies and leveraging our combined scale across their spend is one of the synergies that we expect to realize.
So you can see from the chart on the right, which is represents Thermo Fisher standalone only. That our PPI business system is a significant source of savings for the company year after year. Even though we're very focused on delivering acquisition related cost synergies this year, We still expect to take out about $125,000,000 of cost using our PPI business system. PPI is ingrained in our culture and it's a continuous process for improving our company. It helps us to deliver the highest quality products and services to our customers and remove waste and inefficiency from our processes.
We have a very long runway with PPI. There's always room for improvement and our teams are constantly looking for ways to do just that. You heard Mark talk about the PPI projects completed by our Life Sciences Solutions team shortly after the close. It's great to be off to such a strong start this year and really exciting to see our colleagues in that segment adopting PPI so quickly. On the left, you can see our process for introducing the PPI Business System to recently acquired businesses.
The first year is really about training and awareness. It's typical for them to take on Kaizen projects that may be shortened to duration, But yield an immediate benefit. In the 2nd year, we look for them to take on broader projects and tackle more complex opportunities To drive increased savings and an improved customer experience. By the end of year 2, the acquired business is well on its way to fully integrating PPI into their operating culture. So as we look forward to identifying additional cost savings, it's important to note that our cost structure has changed somewhat with the addition of Life Technologies.
I thought it'd be helpful to highlight the major changes here. The column on the left is our 2013 cost structure, which of course excludes Life Technologies. The column on the right shows the cost structure of the combined company based on our 2014 guidance, which reflects the addition of Life Technologies as of early February. As you can see, adjusted Cost of goods sold is about 500 basis points lower as a result of our new combined product mix, which is now more heavily weighted towards self manufactured products and high margin instruments and consumables. This results in higher adjusted gross and operating margins despite investing about 100 basis points more on R and D.
Adjusted SG and A as a percent of revenue is also higher by about 150 basis points, again consistent with a richer mix of self manufactured high technology products. This larger SG and A cost base should provide us with more opportunities to rationalize cost and generate additional savings down the road, including the cost synergies that we've already identified. So now let's take a look at our 2014 adjusted EPS bridge. I've grouped the Thermo Fisher standalone components, which looked very similar to prior years with the exception of the below the line bar. Unlike previous years, this bar represents a reduction in earnings.
This is a result of the acquisition and us allocating all our available capital to debt repayment rather than a mix that would normally include share buybacks. I spent a lot of time discussing productivity and it's a key contributor to our adjusted EPS growth this year along with volume and mix. In terms of the Life Technologies acquisition, as Mark mentioned, We expect that it will add $1.25 to $1.30 of adjusted EPS in 2014, including synergies and net of the divestitures. The net of all this is adjusted EPS range of $6.80 to 6.95 an extraordinary year over year growth of 25% to 28%. I don't want to get the EPS guidance wrong there.
Now turning to free cash flow. We have a great track record here, driven by our operating earnings growth, effective working capital management and excellent income tax planning. Many of you remember that I updated our free cash flow guidance on our Q1 earnings call. As you can see on the slide, our current 2014 guidance for free cash flow is $2,200,000,000 This amount is net of about $400,000,000 of acquisition and divestiture related cash flows that will affect us in 2014. We're looking ahead to 2015 free cash flow.
It's appropriate to assume it will grow off a 2014 base of $2,600,000,000 which excludes the one time acquisition and divestiture related cash flows. Although you need to take into account That will continue to have a slightly elevated level of one time restructuring costs until we're done executing the acquisition cost synergy actions. Like free cash flow, we have a strong history of effectively deploying capital. From 2,009 to 2013, on average 35% of the capital we deployed was returned to shareholders, mostly in the form of share buybacks. And as you probably know, we initiated a dividend in early 2012.
Our annual trend of returning capital is shown in the graph on the right, split between share buybacks and dividends. The other 65% was used to do strategic bolt on acquisitions such as Dionix, Fadia, 1 Lambda, Fermentis and Brahms. As you may recall, we suspended our share repurchase program in 2013 In order to build cash to partially fund the Life Technologies acquisition, our current strategy is to deploy our free cash flow in excess of dividends to repay debt with a focus on returning to our leverage ratio in our targeted range of 2.5 to 3 times. Now turning to our debt position. As of the end of April, we had $16,300,000,000 in total debt on the balance sheet, which is down more than $1,000,000,000 from our Q1 ending balance.
Our current leverage ratio is 5.4 times, which would be about 4.2 times on a pro form a basis. Of course, we've increased our debt significantly to fund the acquisition, but I'm pleased to report that our debt repayment is very much on track and we still expect our leverage ratio to be within our targeted range of 2.5x to 3x by Q3 2015. This is consistent with our original guidance at the beginning of the year. On the slide, you can see our forecasted total debt levels for year end 2014 and Q3 2015, as well as our projected leverage ratios. Once we get back to our targeted leverage ratio, we'll return to a more normalized capital deployment strategy.
We'll evaluate the current environment at the time to determine the appropriate mix of dividends, share buybacks and strategic bolt on M and A. Now adjusted ROIC. As you know, this is a key metric for us. It governs every decision we make, not just acquisitions. We ended 2013 with an adjusted ROIC of 10.1%, slightly exceeding the guidance that I gave you last May.
As you can see from our 2014 estimate, the Life Technologies acquisition has a slightly dilutive effect, which we will continue over the next 4 quarters through Q1 2015 as it averages into our invested capital base. The good news is that we're on track to achieve our original adjusted ROIC goal for Life Technologies, which was to exceed our cost of capital of 8.5% in year 4, even when you factor in the divestitures. On a steady state basis, once the acquisition has been fully incorporated into the metric, we expect our adjusted ROIC to increase about 70 basis points to 90 basis points per year, assuming no future acquisitions or divestitures. As Mark mentioned earlier, we've increased our year 3 synergy target for Life Technologies to $350,000,000 up from $275,000,000 Of the $350,000,000 $300,000,000 comes from cost synergies and $50,000,000 of adjusted operating income contribution comes from revenue synergies, which represents about $150,000,000 of incremental revenue. I'll give you some detail here on the cost synergies and Mark Stephenson will cover revenue synergies later in his presentation.
After owning the company for 3 months now and beginning to implement our integration plans, we feel very confident in this new target. As you know, our teams have a lot of experience in integrating acquisitions. So we know how to effectively execute in this area. This slide gives you a view of our expected pacing of synergy achievement and the major areas of opportunity. Starting at the top, Generally duplicate corporate costs come out very quickly and a majority of these actions have already been taken.
Sourcing refers to our ability to incorporate life technologies into our sourcing programs along with leveraging our spend across our larger combined scale. This can encompass anything from shipping costs to raw materials to IT spend. These activities start to kick in relatively quickly as well and build over time. Optimizing shared services takes a little longer and can include a wide variety of activities primarily around leveraging our combined functional support costs such as finance, HR and IT. And finally manufacturing and supply chain management takes the longest to plan and execute with benefits starting to accrue midway through year 2.
This involves optimizing our manufacturing footprint and integrating our supply chain to ensure we're manufacturing, warehousing and distributing in the most efficient way. Combined, all these activities will lead to significant savings totaling $300,000,000 in year 3. So let's move on to our longer term view and let me start by giving you the financial assumptions to set the stage for the base case. If you've attended any of our presentations in the past, you can see that our formula for creating value remains very consistent. We've shown that we can deliver strong earnings growth and generate sustainable cash flow in a variety of different macro conditions.
As Mark said, we're starting with 3% to 5% organic growth on the top line. This coupled with our productivity drivers leased to an average of 100 to 130 basis points of adjusted operating margin expansion annually. It's It's important to note that this average includes the 220 basis points to 2 50 basis points of adjusted operating margin expansion we expect to achieve this year, which is primarily driven by the acquisition. When you look to the out years, after we fully integrate Life Technologies and fully realize the related synergies, A more normalized rate of expansion would be 40 to 60 basis points per year. Consistent with our past performance, Free cash flow of the period is expected to be in the range of 90% of adjusted net income after a dip in 2014 as a result of the acquisition.
Our assumption is that we'll continue to use our strong free cash flow to pay down debt until we reach our targeted leverage ratio in Q3 2015. At that point, we expect to return to more normalized capital deployment strategy That would include share buybacks and strategic bolt on M and A in addition to dividends. For this model, as in years past, We've not assumed any additional M and A and we've maintained a minimum leverage ratio of 2 times with the balance of our available cash going to return of capital. And in terms of dividends, as Mark said, we've essentially increased them in line with growth in adjusted net income. Under these assumptions, this model leads to an average annual adjusted EPS growth in the low teens and an average annual increase of 30 to 60 basis points in our adjusted ROIC, which is net of the upfront dilution that I mentioned earlier.
So what could Thermo Fisher look like in 2018? Using the base case assumptions that I just outlined, we'd expect our revenue to grow to around $20,000,000,000 annually, a compound annual growth rate of 8% to 9%. Adjusted operating margin would be in the 24% to 26% range, hitting our mid-20s target. And adjusted EPS would be in the range of $9.30 to $10.40 And by that time, We'd expect to generate strong free cash flow in the range of $3,400,000,000 to $3,800,000,000 a very impressive compound annual growth rate of 14% to 16%. As you can see, our long term outlook is really focused on continuing our strong track record of delivering great earnings growth.
We'll continue to be good stewards of your capital and the model assumes we'll return amount of capital to shareholders through share buybacks and dividends. We'll also continue to be very focused on increasing our adjusted ROIC and we'll quickly get back to generating strong annual improvement of 70 to 90 basis points, resulting in an adjusted ROIC range of 12% to 13% in 2018. So to wrap it up, I think you got a good sense of our strategy from Mark and my goal is to give you valuable insight into our financial outlook. And now you get some perspective from the rest of the team around our growth drivers. From the impressive depth of our technologies To our industry leading customer reach and the power of our presence in emerging markets.
With that, I'd like to introduce Mark Stephenson, Executive Vice President and President of our new Life Sciences Solutions business. Thank you.
Well, good morning, everyone. It's a pleasure to be with you here this morning in the analyst community. Obviously, with the acquisition going on last year, I didn't have an opportunity to update on Life Technologies business and strategy to the investment community. So it's a pleasure to be here with you and to provide that update this morning. It's also really a pleasure to be part of Thermo Fishers.
Mark and his leadership team have been incredibly welcoming to us and our new colleagues. And I spent a lot of time since the acquisition also out with customers and and incredible new access and welcome reception I've had to those relationships and conversations as I've traveled around the world and see that real focus on the customer come to life for me as I travel around and met with the customers. So I'm very optimistic about our future for Life Technologies and the Life Sciences business as we've now created this segment. This morning, what I'd specifically like to do is give you an update to the integration, a little bit more color on what Mark and Peter went through in terms of the details there. And also then for our 3 businesses, the growth strategies that we're deploying, update you a little bit more specifically on Iron Torrent.
Know there's always questions about that. So update you on the strategy have not been talked about and really outline for you why I think we can accelerate the growth that Mark outlined and get this segment growing very positively going forward into the future. So in terms of the integration itself, I believe the synergies are very well on track Appischer for the 1st part of the year. Very confident we have a very disciplined process in monitoring and tracking that. We had a good time during the time between sign to close to make very detailed plan and we've been executing those in the 1st 3 months.
So great confidence in where we are. As Mark and Pete said, we're just beginning to take some of the more longer term actions in moving some of the manufacturing and Supply chains have a very good sense of where we're up to. I'm confident as we had more time now as one company To actually come together and look at what we can achieve over the 3 year period, the $300,000,000 that we've now raised that target to is very achievable It looks good over the 3 years. In terms of the best practices, so as Mark and Pete outlined, we've implemented that. I personally joined one of the Kaizen sessions that we had, and not only really focused on productivity, but also with our But also with our customers on how could we improve that experience out to our customers, one of the key processes we do in the customer process.
So great experience. We're engaging with the team and driving that through our key sites around the globe. And then in terms of revenue synergies, we really just started on these discussions. These were discussions we couldn't really have in the planning stage for the last 3 months. We really started to look at the key focus areas of where we can drive these revenue synergies.
The first is really this Relationships that exist with the corporate accounts really top down all the way through the procurement to access to those new accounts. And those relationships are opening up new conversations for us that I think will allow greater access to opportunities for our products and services to come into those accounts. The second is to think about new ways on how we use our channels. And that's both in terms of what was the Life Technologies sales, any business channel, What are the products that synergistically fit together that would be sold alongside those products with our customers and also through what is branded the Fisher channel, that greater access into accounts, there may be smaller accounts, larger accounts. There's new access for us to our products and their channels to grow.
And then finally, as we've touched on this increasing presence in the emerging markets, I was just down in Latin America a couple of weeks ago and just the presence that we have in some of those countries that are still growing very fast To expand out into there, you'll hear more from Syed about that in the presentation. So bottom line, integration is going very well. The team feel good about that As we've gone in. Let me just orientate you to the next part of my presentation on the business that exists. Some of you are very familiar with it, Others just orientate you to what's in the business now.
So within the $4,500,000,000 of revenue that is the life sciences segment, The largest segment about $2,000,000,000 is within Biosciences, 5 businesses in there that are recurring everyday essential reagents, very innovative science that is our Biosciences reagents business. Within genetic sciences, about a $1,900,000,000 business led by analyzing the genome and genetic parts of it. I'll Talk about how we grow that business and how we think about that. And then finally, a very exciting area for us, the biotherapeutic production area, bioproduction, and we really now enhanced our capabilities in that space. So let me walk you through those three areas and focus on the strategies and taking for those and some of the innovation and focus we're doing with the investment.
And I'll start with genetic sciences. Before I do that, let me just orientate you to one other thing, which is when you think about the sum total of the businesses, In the last couple of years, we've been growing about 2%. We've had a couple of headwinds against that with a lot of our business being in the U. S. Academic, the sequester It was a strong headwind for us as was a royalty drop off for our QPCR.
This year estimating a 2% to 3% in our guidance And the 4 areas we look to in the long term goal is a stability in the academic funding, A focus on our innovation strategy and where we spend that investment dollars very carefully, increasingly our spend In areas that are growing in faster markets and some of the applied areas. And then I'll end as well talking more about the revenue synergies as well. So starting with our genetic sciences business, this is really we have a range of 4 key technologies that we're investing in. And over the years, what we've done with these technologies is apply them in differentiated ways to very complex problems in genetic sciences. And those are different segmented applications that may be across research or across applied markets and we apply and choose the best technology to apply to create solutions in that area.
What we're doing is investing strongly in the technology platforms And then developing out those applications to grow into these application solution areas that I'll talk about and I'll give you a couple of examples of those. And those start with research, but moving to more of the applied markets outside. And so I'll give you examples of both of those. If you just go to a recent scientific meeting, this was the American Association of Cancer Research. The real depth for a complexity of a disease like cancer is the ability to go across for a laboratory and not only be able to analyze and image those cancer cells with technology we've developed very straightforwardly to image and see those cancer cells, Well then to target panels of those to deeply sequence them to get at very sensitive levels in the cancer cells To analyze in the software, to see which are the actionable mutations and then work with diagnostic companies, therapeutic companies, pharmaceutical companies to develop companion diagnostics.
And it's a very integrated story that we do for our customers and go into depth of how we can help them across a really quite a complex disease. Another example of growth when we talk about thinking about Technologies like qPCR is to take areas like pharmacogenomics, which has really grown over the last 10 years To be very actionable in diseases like pain management, how a patient responds to the dosage of the drug And we can take a really comprehensive sample to solution offering and develop out flexible content for that That can be customized for those applications, very high throughput, really the lowest price per data point. When you think about that very price sensitive solution and a very fast data point that we can turn around the data for these labs and customers, On this total solution, it allows us to develop new applications, new businesses, tens of 1,000,000 of dollars of business in this case, For applications that grow in a consumable run rate for us, and this is one of the examples that's driving our QPCR growth. In terms of next gen sequencing, an area we haven't talked about so recently and I'd like to just update you on what really is our strategy and our focus with the Iron Tyrant franchise.
And it's really in 3 areas we decided to focus on. The first is to focus on really a differentiated segment, we believe, which with the gene panels. And the gene panels area, we believe still is a large market and is growing very fast. The complexity of looking at a gene and sequencing that gene and knowing what's actionable is what's driving for many smaller labs the Penetration that we're seeing in more than 2,500 installations of PGMs and protons. There's more than 500 publications that span work that people are doing on that and that continues to drive that application as a primary focus for us as we go forward.
The second thing we've been doing is taking this disruptive technology and chemistry that when we acquired we knew it was very fast and rapid, We had work to do to improve the performance and the workflow and expand out the types of markets that we could analyze on that. And over the period here, we've been focused on that with our customers. We've launched new workflow solutions like the Iron Chef, we just started shipping in this Q1. We shipped over 150 units. We've launched new chemistry and software for accuracy and expanded out what we're studying.
The pharmaceutical industry is very interested in studying fusions of genes. And so we're looking at that in RNA that we can now study. The 3rd area we're focused on is investment in clinical menu for oncology. So as we look at what the oncology and the pathology labs look want, They want approved platforms, actionable cancer panels, smaller panels that are reimbursed in the various communities around the world. And so as we register the PGMDx with the FDA and the European registrations, I'll talk about some examples of customers We've been adopting the platform for this application.
Our innovations, as you've seen them come out, are really focused in this area. And so why customers are buying the PGM is they want this low capital cost introduction to this system. It's about $50,000 To do panels that's focused in that area, where they buy the proton, they want the same sensitivity and performance they've got with AmpliSeq Low sample input to apply to exomes. And then the Iron Chef starts a focus for us in automating that workflow. So that's what we see the adoption from our customers.
And I thought at this point, I'd show you a short video on what some of our customers are saying about these products Why they're choosing to adopt this for their research? Could you play the video please?
The thing that got us excited From the very first glimpse of the data is that it really looks to be the most accurate representation that we've seen so far Apicher.
You can get results on 20, 30, 40 genes by using 10 nanograms of DNA for monosix baritone embedded tissue. Wellseq extends by
a couple of logs the dynamic range that we can Quantitate gene expression, it allows us to harness the next generation technology, but in a targeted fashion.
You can describe the sample according to the subpopulations, molecular subpopulations that are inside. And this is impossible Apes. You have the machine and you have also the software associated with the machine. And for me it is Important to have a whole solution in terms of genome sequencing from the tumor to the results. So in summary on Ion Torrent, we're very focused on where we believe we can win in this fast Growing market, there's a lot of opportunities and growth in the coming years.
And I think you'll see us increasingly with this More examples like this final one I'll leave you with. This is a new trial that will be announced at the ASCO meeting upcoming, where rather than the old paradigm of a single diagnostic match to a companion diagnostic, The pharmaceutical industry has decided to pull together their compounds and assays more than 40 compounds. It's from 10 pharmaceutical companies. And then they'll design a panel that we've designed that has all the actionable mutations against it. And in this case, why the scientists community described this is this work is done in a pathology lab, taking fine needle aspirates from lung tissue.
And when you do that, you get very little material. You get maybe 5, 10 nanograms of material and you need the sensitivity that we have in the on Torrent Technology to get that because you can't take multiple tumor biopsies. So these are the kind of results that I think you'll see out in increasing the adoption in these small panels with this kind of solution. Let me finally end on genetic sciences. We're just talking about some of the other opportunities that we continue to see for growth.
In the application of technology into new markets, the DNA forensic market is now well established. It's a market when I first came to the U. S, I helped set up for the company to focus down in this and it's now grown into more than a $500,000,000 business for us and continues to grow strongly for it. It's driven by adoption of DNA forensics globally. It's driven by ours introducing increasingly sensitive, more discrimination Appissant.
It's based on Sanger sequencing. We put in QPCR to test the kits. And we recently started introducing NGS based panels for identity And we have a strong roadmap that will go forward to maintain our leadership in DNA Forensics. Other areas that are also very exciting for us and as part of Combination now with Thermo Fisher bringing together opportunities to disrupt also how microbiology is done. Today that business That marketplace is a $4,000,000,000 highly regulated market, which uses traditional tools and technologies.
And we see the opportunity to take molecular and genetic tools into that market for doing food testing, specifically analyzing what's going on, as well as testing for outbreaks in animal and production animals. And we recently strengthened our channel and presence in that by the acquisition of Preonics in this Q1. So great opportunity I think to extend our tools and build out what we've done in the past in genetic sciences. Let me turn next to our largest segment of our business within the segment, which is our Biosciences, where we're clearly the industry leader in what is still a very fragmented market, but we have the most scientifically cited brands. We have huge customer loyalty with that with very complex experiments that they trust to our scientific innovation and the brands that that are familiar with.
That innovation leads to high profitable business and incredibly run rate business as we go forward. We've built over the years a very strong commercial presence. These capabilities in terms of technical selling, Advising being a trusted advisor to the scientific community, highly effective e business, more than the $1,000,000,000 we're doing through our website, online advising people to how to buy an easy checkout and then cold chain. Many of these products are shipped, next day Cold chain frozen and we've built out those capabilities. What's exciting for me is we've now integrated in the Thermo Fisher Apples.
There was Molecular and Protein Biology and strengthened, particularly in the Protein Biology, but also in some opportunities in the low cost region. It gives us greater access to develop out different product ranges across the biosciences. We have a 3 pronged growth strategy in this business. Firstly, in product innovation, to really look again and afresh what are the areas to innovate in this era and I'll give you a couple of examples on the next slide. To target some key applications that we We're in one part of the application, but our opportunity to expand out the usage of our products against those applications.
And then finally, very excited about new access and capabilities that we have from a global reach point of view. In terms of the innovation, we really focus our innovation around what are some of the unmet customer needs. And these customer needs may be in mature markets that exist today that we can come back and innovate around or they could be in evolving areas. Some examples that we have in terms of the mature markets, for example, in the end of last year, we just introduced in PCR, which is a very mature Market more than 10 years after the patents have gone off. We're still the market leader in terms of instrumentation, reagents, consumables for that.
And it's really all about flexible, easy to use systems that we've innovated around and now connected to our e business in a digital hub sense. In flow cytometry, just yesterday we introduced for the flow cytometry community a new flow cytometer that democratizes Flow cytometry, very easy to use, very affordable and builds on a great imaging franchise that we already have in consumables with our Molecular Probes brand To democratize flow cytometry and bring it into every day cell biology use. Some of the new markets that are also involving in science that we're Very much engaged and in the front of thought leadership is in stem cells, the use of stem cells for regenerative medicine, the use of Cell models in pharmaceutical companies is growing very fast and we're the leader in defining the standards so that different labs can do that work around the world, Can characterize those stem cells, can reprogram them with many of the techniques we both develop and license and make standard for laboratories. And then the second area that's growing very fast is in cell engineering. So to take everything we can do in the exploding information of Understanding what's at the genome level to reprogram the DNA level, those cells to do different things to insert new DNA Appischer.
And great new designer tools that we have in towels and CRISPR technologies that basically allow you with precision to cut and edit where you are in this the DNA. Exploding era for biotech and as we look forward in the next 5 years, it's going to be incredibly important area for our biosciences business. Finally in the business, let me turn to bioproduction. I think everyone knows this is an incredibly important area in business With more of the biotech drugs being at the protein level, therapeutic level, also more engineered vaccines, more biosimilars. And so we serve in a market that is a very attractive market dynamics for us to continue to invest further.
And what we have for that customer base is a really complete offering From the initial development of the cell line all the way through to the development and fill and finish area. And what we've been able to do in this area is to expand that, very exciting with our single use technology that now is in this business area. And so we bring that to our GIBCO cell culture, to the pharma analytics, to purification that we do to really have a very complete offering and conversation with that customer. The customers we've engaged with are very excited about these new capabilities. They appreciate the corporate relationship they have with the company, because it's a big Decisions for them.
And so I think we're incredibly well positioned for continued growth in this business in one of the fastest growing areas for us. And finally, let me end with a discussion on the channel access and A simplified view of our relationship with our customers. But if you think about Life Technologies, That business was built around aggregation with the scientific buyer. And so the channel that we have And the conversations that we have with scientists are every day at the lab bench. They're very engaged with that community on decisions and critical experiments.
We add to that the ability through the Fisher channel to have conversations with procurement, the start up companies for every day, through the purchasing agents, which is really not an area we'd engaged with greatly before from a legacy Life Technologies point of view. And then through the strong Thermo Fisher Corporate accounts program, we can really bring this together with the top accounts to really have deeper relationships that involve all the breadth of opportunities there, Both of the products they're buying today and what they're going to be interested in and work with us going forward in the future. And so this is the area that we're most excited about as we look at Revenue synergy opportunities to really leverage those commercial opportunities to grow our revenue even faster. So let me leave you here before the break with a great positive outlook, I think, for the Life Sciences Solutions business. The integration track with my colleagues is going well.
The synergies are on track and I have great confidence on delivering on that. The innovation we're refocusing down into what is the most important thing for our customers, where we can leverage the strength we have. There are some good new opportunities to diversify outside of what you might regard as our traditional markets of academic and pharma in some new faster growing molecular diagnostics and I've shown some examples of that. And I'm very excited about increased channel access and leveraging that for more conversations about our product and our breadth to accelerate our revenue growth. With that, I'll turn it back to you Ken to introduce the break.
Thank you very much. Thanks, Mark.
We're going to take a very short break, 10 minutes. We're going to start back up at 10:35. Thank you. Okay. Our next presentation is from Tom Lowald, President of Analytical Instruments, and it's the next presentation on innovation.
Tom?
Thanks, Ken. Good morning, everyone. So as you heard in Mark Stephenson's presentation right before the break, innovation is a central element of our growth strategy. And you're going to hear a very similar theme from my presentation on the Analytical Instruments segment that I lead. I'll provide you a very brief overview of the product lines within the segment and then I'll talk about the 3 Key components of our innovation strategy for delivering customer value and new growth opportunities for the company.
So first, you can see the 3 main businesses that reside within Analytical Instruments segment, chromatography and mass spectrometry, chemical analysis and environmental and process monitoring. And you can see the product lines that are within each of these 3 main businesses.
Now I won't go through any
of these in detail, but as I go through the rest of the presentation, I'll reference many of these product lines as I talk about our important new innovations and new product launches. The important message Is that across all of these businesses, we have industry leading product lines and a very strong focus on our innovation leadership. So our innovation leadership rests on 3 key components. 1st, bringing best in class state of the art New products to our customers. Secondly, it's leveraging our depth of product portfolio.
And third, applying our applications expertise. And I'll go into detail on each of these three elements and provide examples along the way. And first, I'll start with our focus on high impact innovation.
So for those of you
who have followed our company For many years, you know we have a very strong track record of new product launches. And you can see a representative sample here on this page of launches that we've announced over the last 12 months. Now since I'll be talking more about chromatography and mass spec in the following slides, What I'd like to do here is reference 3 new product launches recently announced at Pitcon and at Analytica that highlight different elements of our innovation strategy and areas of focus. The first one I'll call out is our new Raman microscope. This is a great example of leveraging a core longstanding capability that we have in molecular spectroscopy and Raman analysis, But extending it into a new application area, in this case visual compositional analysis.
This is used in applications like understanding the distribution of an active pharmaceutical ingredient in a medicinal tablet. 2nd example That I'll reference here is a Delta Ray isotope analyzer, which shows our ability to take traditionally analytical technologies from a lab setting into a robust field application. And our Delta Ray isotope analyzer is used to better understand greenhouse carbon emissions by measuring the carbon ratio measurement. And then lastly, our new RID I radiation handheld Device highlights our ability to take complementary acquisitions, in this case, the purchase of Princeton Gamma Tech back a couple of years ago and greatly expanding the commercial possibility of this technology given our depth of customer relationships and our scale. And this product is sold into the Homeland Security and Defense markets.
So now let me switch to mass spectrometry. Through a series of very successful product launches over the last 10 years, We have built an industry leading franchise in mass spec starting with the Orbitrap back in 2,005, an extension of the Orbitrap line in 2,008 and then the highly successful launch of our Q Exactive Quadripole system in 2011. This has been a huge success for us and represents over $200,000,000 in annual sales and still growing at a very healthy clip. And then lastly, our team did it again in 2013 with the launch of the Fusion Tribid mass spec, which combines 3 mass analyzers into 1 for truly remarkable resolution and ease of use. The reception of this product has been fantastic and it will represent over $100,000,000 in sales in 2014.
So our innovation leadership In mass spectrometry is having a significant impact on life science research and the space of proteomics. And I think it's always best to hear directly from a customer of how our technology is impacting their work. So in this case, we'll hear from Doctor. Stephen Giege, Professor of Cell Biology at the Harvard Medical School and he will talk about the profound ways that the fusion charbit is impacting his proteomics research.
Here at Harvard Medical School, we've just established in January a new Thermo Fisher Center for multiplex proteomics. It's based around The idea that we can simultaneously look at 10 samples at once and collect lots of protein measurements on those, be they differences in cancer state, be they differences In drug state, maybe differences in species, whatever that is, can we make those measurements? This new center is based around a combination of New instrument, which is the Thermal Scientific Orbitrap Fusion TriBRID and these multiplexing technologies, which my lab has helped to pioneer. You're able to really increase the sensitivity of the measurements that you're doing, and it really allows us to make accurate and sensitive Measurements across thousands of proteins from these samples. Someone could say, we'd like to look at 8,000 proteins expressed across Apischa.
We could take those samples. We could treat them with these reagents, which can allow us to look Simultaneously at all ten samples and to collect quantitative measurements to compare them. So it's very valuable because in the past, we couldn't look at 10 things. We could look at Two things. And so we're now seeing twice the sensitivity, twice the speed that we had before, combined with the ability to use The multiplexing reagents, which is 10 times different than we had before, this is really a gigantic leap forward.
And that is why we've established dispensers to help push This technology out for the world.
So as you heard from Doctor. Giege, our Mass Spec Technologies having a profound impact on his research, and we're very excited about the prospects going forward. However, we never rest on our laurels, and we've got ASMS coming up in Baltimore in a few weeks. And we're very excited about our new instrument launches, quantitative workflows, as well as other extensions of our mass spec line. So we look forward to seeing you at ASMS.
So now I'll switch to the second key component of our innovation strategy and that is leveraging our industry leading portfolio to support our customers through their workflow. A great example of how our customers leverage our DEPA capability is in the field of chromatography. As you know, we purchased Dionix back in 2011, and we've seen great growth from that portfolio ever since. And Mark mentioned this a bit in his presentation, but let me just expand upon it a little bit. First, we've increased our connect rate between our mass spec and our chromatography instruments.
Secondly, we've increased our share in HPLC and protected our very important position in ion chromatography through new product launches. We've accelerated growth of our GC and our GCMS line by leveraging our modular instrument platform and by launching important new products like our pesticide analyzer. And then lastly, we've leveraged software as an enabler, taking advantage of our leading position in Chromillion Software, but now combining data analysis and instrument control for both chromatography and mass spec all in one software launch, which we announced back at Pittcon. And this has got significant impact and productivity gains for our customers. So now we'll look at a case study of a customer and an industry taking advantage of that depth of capability across both chromatography in Mass Spec.
And here we'll talk about field environmental water testing. This is an application that we love. It's got it's tough, It's got big societal impact and customers truly leverage our full depth of capability. Now while water analysis is not a new field, the concerns About pharmaceuticals, personal care products and industrial toxins in our water supply is an increasing area of concern. You can see here in the case of Doctor.
Lee Ferguson from Duke University that he uses the full range of our capabilities across his analysis From sample preparation to separation to the qualitative assessment of over 7,000 contaminants that he knows to look for to the detection and quantitation of 9 new contaminants that was previously undetected. This work is typically tedious and very slow, But through our joint collaboration, we've been able to accelerate the pace of Doctor. Ferguson's work and hence increase our total comprehension of the impact of these toxins in our water supply. Our third area Innovation leadership is applying our applications expertise both to new customer requirements, New societal challenges as well as the unique requirements in developing markets. And I'll now refer to 3 Examples, 2 of which are tied to the U.
S. Energy market and the 3rd coming from emerging markets. So first, hydraulic fracturing otherwise known as fracking, well known new field with great benefits for energy independence in the United States. But the environmental concerns of fracking are also very well understood and of concern. A typical fracking well will use over 1,000,000 gallons of water.
And that water has to be treated, assessed and then released back into the environment, really requiring a full breadth of analytical Ability is to understand the salts, the metals and the isotopes that come back up from the shale layer. We're really uniquely positioned to provide a breadth of analytical capabilities for this new field from chromatography to mass spec to our electrochemistry business to our radiation detection business and we're helping both end users optimize the fracking process itself, but just as importantly providing State and federal regulatory authorities with the framework by which they can measure the impact of fracking on our environment. Now as exciting as fracking is, we know that coal is around to stay as an important source of energy for many years to come in the United States and around the world. And improving miner's health has been a source of debate and concern for a long time in our regulatory community. Now the slow pace of regulatory deliberations have finally come to conclusion with a new law that requires both a lower limit of exposure for our miners to particulates as you see here on the page as well as real time monitoring of the conditions that they're working in.
And that's in stark contrast to what we have today. Today, in a mine, the particulate matter is measured by fixed installation equipment. The samples are taken out of the mine. They go to an outside lab and then literally days to weeks later, the results come back. By taking our proven technology, miniaturizing it and making it more portable, we've allowed the regulatory authorities to move forward and require and enact real time monitoring, so that a miner knows the conditions of the particulate exposure they're getting in a real time basis, both representing a great improvement in miner safety and also a new growth area for us as an extension of our existing environmental business.
So my last example will go across the ocean to China, but we'll stay on the issue of pollution and health. Just as particulates are a big threat to minors, it's also a threat to a resident walking the streets of Beijing. And the scale of the problem Apis. Last fall, the Beijing government closed factories, closed schools and had personal car drivers only drive every other day of the week because the particulate matter had risen to over 300 milligrams per cubic meter, which is 10 times the WHO safety limit. Now we have been a leader in air quality monitoring in China for literally decades.
We've moved much of our production, engineering and business management to the country. And we've provided for the Chinese for many years the 2.5 micron particulate monitors that they've used on a daily basis. So with the extent of the problem in China, they now need additional capability. And so what we've developed for them is the first real time monitoring in the field Analysis of both particulate count and also composition of the particles, so you can understand what is the source of the particles and ultimately get This new technology takes advantage of our sample preparation our sample collection expertise as well as our leading position So to close my section on analytic instruments, innovation leadership is essential to our growth and our success. We have a very strong pipeline of R and D projects and a track record of innovation.
And we're very excited about the prospects of our innovation helping our customers make the world healthier, cleaner and safer in the years to come. So now I'd like to introduce my colleague, Andy Thompson, who will discuss the importance of innovation in Specialty Diagnostics.
Okay. Good morning. As Tom highlighted, I'm going to speak today about how our specialty diagnostic portfolio is ideally suited to serve a changing and dynamic healthcare environment. And as a reminder, our $3,200,000,000 in Annual revenue is divided into 6 very specific niche businesses within the diagnostic industry. Now rather than go into detail into each of these, I thought I would speak collectively about what we like and why we're so excited about these businesses.
So I often get the question, why do you invest in the areas you invest in? Why these niche businesses? What do they have in Well, I have the following in common. 1, they all have outstanding growth prospects and 2, taken collectively, they have industry leading margins. So So what do we look at when we invest in our current businesses and what do we look at when we are thoughtful about strategic acquisitions?
Well, it's the following. They're protected through intellectual property. They've got protected and sustainable scientific know how and they've got innovation at their core and their culture. So each of these businesses has 1 or ideally all three of those characteristics in them. Couple of examples.
For intellectual property, our PCT, the gold standard test for sepsis resides within our Clinical Diagnostics business. In scientific know how, great examples include our Transplant Diagnostics business, but also our allergy and autoimmune business that reside within our immunodiagnostics business. And lastly, innovation, while it's core to all of our businesses, When I think about the future and how we're going to sustain and expand our margins and our growth, I think about how we're going to lead and the inevitable migration of life science tools into clinical diagnostics and I get particularly excited. It will be meaningful and impactful for all our business, but it will be profound impact in our microbiology business. So something else all these businesses have in common is a shared customer group and that's that large segment of traditional clinical customers, either hospitals and reference labs.
And while things continue to go extremely well in that segment, I thought I would spend A little bit of our time this morning talking about some new and exciting adjacent markets where we're seeing particularly good results. The first one is the dark blue segment. Here are in vitro diagnostic partners, you know on their household names, all look to us for one of 2 they look to us for 1 of 2 areas. Novel content that they can apply onto their platforms enhancing their menus Or 2, manufacturing expertise where we can use our scale and quality and expertise to do it at a more affordable cost to them. So we solve 2 problems for them.
We enhance the relevance of their platforms or we manage their costs. Either way, We gain access to a massive installed base and ensure that we are present in virtually every hospital around the world. The next category there in the lighter blue are markets that we serve either in pharma, In criminal justice, in biotech or our food safety. In each of these markets, The challenges there are demanding rapid adoption of diagnostic solutions. If it's whether it's in food safety to release in a timely and safe manner food onto the marketplace and criminal justice where the accused are living up to their commitments of their sentencing or their parole.
And then lastly, in our pharma and biotech, we're ensuring A safe and quality manufacturing environment, but also we're monitoring the drugs get released into the market and we're helping to tailor those Pharmaceuticals to the customer population or to the patient population. So when you think about Alternate care markets that I've just talked about, community based healthcare, it really does demand a different channel approach. And here we are uniquely Advantage because of our go to market approach. We've got 3 principal areas we can go to market. We can go direct as we do with our specialty diagnostics Portfolio where our leadership demands a presence and here we serve a variety of end markets.
We serve anatomical pathology markets. We serve with microbiology, but also criminal justice, allergists and pediatricians. In the U. S. And China, but also through 3rd party distributors to make sure we most cost effectively reach all of those customers.
And then lastly and again uniquely, we go through our OEM partners to make sure that our proprietary content and our manufacturing capabilities are leveraged on their diagnostic platforms that can be found around the world and you see some of our partners listed there. So we think we've got an unmatched, highly efficient and productive way to optimize our customer reach. So if I take some concrete examples in just one area and that's our Drugs of Use Panel, how does that work? Well, as an industry leader, it demands investments in a direct channel and you'll see that here where we need to service pain management centers. These are often found in strip malls.
It demands that we service drug courts. You'll see in a graphic below The size and the growth, the scale of this exploding marketplace, it demands that we call on other areas, more traditional markets of the clinical hospital and reference labs. In the emerging markets where a rising middle class increasingly takes on 1st world problems of drug abuse, We need to more we need to very effectively reach those customers as efficiently as possible and here we use a network of 3rd party distributors. And then lastly, On our OEM partners here, these large IVD take advantage of our capability and expertise and take our menu and adopted on their platform. And again, we have a global presence and access across the world.
So if we shift to what's on the minds of our customers, there's not a day that goes by that we don't hear or read in the press about the challenges of the implementation of the Affordable Care Act, the rise of the accountable care organizations, All of these are having a profound impact on our customers. And increasingly, they're asking us, their partners, their suppliers to address their acute pricing issues. And we can address that either through improved outcomes, we can address it through Decreasing the length of stay or increasingly by helping them keep patients out of the hospital and serving their patient base in the community. So we think with our investments in our niche portfolio that we've got the depth of capabilities here to deliver highly relevant clinical utility supported by health economic data that will enable a fair reimbursement for our customers Fair reimbursement for our customers and fewer ER and hospital visits. So if you take a couple of concrete examples of where we're delivering on this promise, you heard me talk in the past about PCT And the graphic there shows that this has been a home run success story since our acquisition of the bronze business in 2,009.
And yet we really have an untapped market in the U. S. Where sepsis continues to be a chronic problem. It is one of the leading causes of death in ICUs and it's a massive drain on hospitals' budgets. So with PCT being the gold standard to address sepsis and with the rise of hospital acquired infections and superbugs, with MRSA and C.
Diff alike. PCT is a solution for 2 of the most pressing of healthcares of hospital problems today and the there has never been a better landscape for the uptake of PCT in the United States. Our customers are also telling us though that increasingly they want to serve the community. They want to stop The patients from coming into the hospital and get out into the community and serve them there. And here you've heard me talk in the past About our allergy portfolio, in the past I've talked about the advantages of a simple blood test as opposed to a time consuming, painful and often misleading Skin Prick test.
Here, I want to talk about how we're serving the community and helping GPs, helping pediatricians manage their asthma patients. Asthma is a huge problem. The scale and scope of it is enormous and the cost you see outlined on the slide. What we can do with a simple blood test is we can identify those 90% of asthma sufferers who also suffer from allergies and further we can identify the specific allergens that they're suffering from. So we empower The prescribing physicians with the tools to greatly relieve symptoms, taking a kitty litter box outside of a bedroom, taking up carpet in the den, removing mold from a basement.
All of these will have dramatic impact on the asthma symptoms and enable the community base to avoid countless ER visits and frankly greatly reduce patient suffering. So this is just one example of what's driving demand in allergy and as the market leader, we'll enjoy a disproportionate Amount of this volume as care moves into the community. So I've spoken and focused a lot on some very specific niche markets within diagnostics. And I think it's time to turn to The combined capabilities and the strength of Thermo Fisher Scientific's broad offering. If you look at our analytical technologies capabilities, We will leverage our leadership position in mass spectrometry as we lead in the implementation of solutions into clinical diagnostics.
In our laboratory products group, our Kingfisher products are helping to solve some tricky workflow solutions in the pre analytic management of RNA and DNA samples. In Life Science Solutions, we've gained access to market leading real time PCR platforms, which is a great destination for our diagnostic content. And finally, our breakthrough next generation sequencing Holds tremendous potential for our diagnostic applications across virtually our entire all of our Specialty Diagnostics business. So I hope you'll agree that we really do have an unmatched capability across the company. When we think about our companion diagnostics portfolio and offering, increasingly when we engage our customers, they tell us They're not just interested in development capabilities or assay marker development capabilities across multiple disease specialties.
What they really want is a company that can take them from assay development all the way through to market launch and beyond. And here we've got access to all the life science tools, whether it be market leading mass spectrometry, real time PCR or breakthrough next generation sequencing. We've got unmatched clinical trial services and Assay Development Capabilities. We also have global regulatory capabilities, Supply chain and commercial expertise that further set us apart from the competition. So frankly, last year I spoke to you all about how Optimistic we were about our companion diagnostic offering.
And as I've come to know the Life Technologies portfolio, I'm even more exciting That there isn't a company out there that can touch us and what we can offer to our farmer partners. So it's been 20 months since the acquisition of One Lambda. And so I think it's time for an update. And I'm very pleased to report that the One Lambda business has exceeded all of our expectations. We continue to grow above market And as a market leader, we do this by expanding the market and by taking share.
We're particularly excited about the opportunities that present themselves in post transplant testing and we've had a number of new product introductions that are leading the way there. In Life Technologies, while still early, there's been some very exciting work to understand how we can port Our novel diagnostic content under the leading platforms principally under the real time PCR, but also the next gen sequencing, Some very empowering technologies and you'll hear a lot more about that in the future. I talked to you about the Life Technology impact in our companion diagnostics. So between the 2 of those, they'll have a very real and material impact on Specialty Diagnostics moving forward. So to conclude, I hope I left you with a sense of the very strong and healthy growth prospects We have for the business and the very bright outlook we have for the future.
We'll continue to lead by optimizing our customer reach With our channel presence, we'll continue to improve outcomes for our patients by lowering their costs And we'll complement our company wide capabilities and drive and lead in the convergence of Life Science Tools into Clinical Diagnostics, and we'll continue to invest thoughtfully in strategic acquisitions moving forward. So thank you for your time this morning. And with that, I'll yield the podium to Alan Mallis, Executive Vice President for Lab Product Services. Thank you very much.
Well, good morning. In the earlier session today, Mark Casper outlined 3 drivers of organic growth. And if you remember, the first one was about Technology Innovation the second was our unique value proposition and the third was our presence in emerging markets. In the 3 previous presentations, we took you through and you got a sense for how we're strengthening The depth of our innovation that we offer. I plan to discuss our unique customer value proposition and how we're leveraging our total company capabilities to help customers accelerate discovery and really Help them to more efficiently do their work.
In addition, I'm going to give you an insight into the deep customer reach and engagement we have and how that uniquely positions us to really better understand customer needs and differentiates Thermo Fisher in the markets that we serve. So first, before I get to that, let me just quickly cover the Laboratory Products and Services segment, which I lead. This is a part of our company in which we're deeply immersed in our customers' operations on a day to day basis. And through all these interactions, we have a tremendous understanding of our customers' needs in a very diverse set of end markets. Now when you look at this segment, it's our largest.
It's roughly $6,500,000,000 and consists of 3 distinct businesses. And each of these businesses have strong market leadership positions. Our Biopharma Services business is a best in class global supply chain partner that provides logistics, Packaging Biorepository Storage for Clinical Trials. Our Laboratory Products business is the largest manufacturer of consumables and equipment to support sample prep, management and storage. And then finally, our research and safety channel market is the premier productivity partner for our customers in providing them equipment, consumables, chemicals So I wanted to just give you that brief overview of the segment and really spend the rest of our time discussing Our industry leading value proposition, and really what we've done in the last year to significantly strengthen it and strengthen our offering that we're bringing to our customers.
Our focus remains very consistent. This is actually the same slide that we presented to you last year, and it shows why we're the ultimate partner for our customers. Our goal is to Our value proposition is to help our customers with their innovation and productivity. We provide the leading technology and tools and expertise and services to help them run their labs and their operations more efficiently, so they can spend more time doing what's most important in advancing their goals. Now no other competitor in the marketplace can match this value proposition.
And now with the acquisition of Life Technologies, we've made it even stronger. So here you can see I've highlighted some of the complementary capabilities that the Life Technologies businesses enhance our offering with. It enhances our life science tools with industry leading molecular and cell biology products that complement our leadership in proteomics. It also expands our technology innovation, our applications expertise and our R and D collaboration that we're bringing to scientists and key opinion leaders in the marketplace. Now in addition, we significantly strengthened our e business capabilities with the lifetechnologies.com platform.
This is the premier life sciences website, provides leading scientific content, configuration tools and capabilities. Now let me show you how we take this value proposition to our customers. So first, we're really the trusted partner and resource for our customers because we have an unmatched scale and depth the capabilities to support them in the work that they're doing. So let me give you some examples. So you can see here, we have over 16,600 employees who interact daily with our customers in the market.
Over 2,000 of them are actually situated in our customer sites, work side by side with our customers to help them execute their work. In addition, we have over 4,000 supply centers located within our customer sites so that they have easy access to our products. And then we're also bringing Technology and knowledge and leadership to them with 4,600 scientists and engineers who are working with our customers to solve their problems and create solutions for them. In addition, through our broad collaboration, we've been able to build an e commerce business of over $3,000,000,000 And this platform logs over 400,000,000 page views, over 75,000,000 visits, and we have over 1,000,000 social media followers. So in this, I threw a lot of statistics out in this discussion here.
And the reason I did is it's tremendously important Because the combination of all these capabilities drives a very strong collaboration with our customers And really sets Thermo Fisher as their ultimate partner to work with. Now what makes our strategy so successful as well is how deeply rooted we are in our customer operations and the access that we have to all the key decision makers in their organization. And we do this in a broad set of end markets, and this is really the strength of our company. For example, we work with the executives running the businesses. We have relationships and engage with the CEOs running the business.
We also interact with the executives leading R and D, procurement and other key functions within their organization. In the lab, we're collaborating with the scientists at the bench. We're also working with the lab managers that are responsible for procuring supplies and ensuring that their labs run smoothly. We work directly with clinical trials managers to support their critical logistics of getting clinical trial drugs to patients. And then in manufacturing, we have direct access to procurement and operations leaders who are responsible for driving Quality and efficiency in their manufacturing operations.
Through all of these interactions and engagements, You can see we have really an end to end access into our customer base. So as they're working at the front end within research and discovery, through product validation, through ultimately manufacturing products and the quality control process. No other company in our space can come close to claiming this level of access to our customers. Now one other area that I wanted to discuss and take a deeper dive into in which is a big differentiator for us is E Business. We've come a long way in this area.
When I think back, I've been with our company for a little over 15 years. And when I first started, I remember launching fisherside dotcom into the marketplace. And the value that it brought to customers at that time and the ease in which that they could order products then, Well, a lot has transpired since then. So when you think about what's evolved in terms of e business capabilities, in terms of engagement with customers In the e world, it's significant. Today, we aggregate the broadest portfolio of products in the market and provide real time search, online ordering as well as supply products to customers.
When you think about what I just said though, That's really just basically the table stakes of doing e business in the market. What sets Thermo Fisher apart Our scientific engagement that we have with the key scientists and thought leaders as they're designing their workflows. So what do I mean by scientific engagement? Well, it starts with really providing relevant expertise. It's engaging with the key thought leaders through social media and webinars, in attracting those key scientists and opinion leaders.
And the reason that, that engagement exists is that we have the most robust Scientific content. We provide specific applications, techniques, workflows. We have significant document libraries for them to use. And all of this information is becoming more and more important as their budgets are becoming tighter and their needs and time lines are becoming more aggressive. We also play a critical role in helping them to accelerate validation of their results by providing them highly efficient protocol search tools, specific configuration tools that help them design and execute their workflows.
So then after that products are purchased and then we continue to support these customers through the online support content and self-service tools that we provide them. So when you think about this And you think about the scientific community, this is really an iterative process as they do their work. So we're attracting them, we're engaging with them, We transact, we support them as they're designing and working through their experiments. Through the e business capability we have, We're really seen as a constant partner to the customers. And it's really we've generated a relationship And a capability that goes far beyond just the purchasing of products.
Now what I'd like to do is show you some examples of really how this plays in practice. So earlier today, Mark had shared with you that we've gained significant share in the biopharma market, and we expect that momentum to continue. The market dynamics in the biopharma marketplace have changed in the last several years, which has really forced the customers to much more aggressively look at driving greater productivity and really focusing to enhance the quality and the productivity of their pipelines. The good news, this has created a huge opportunity for Thermo Fisher. So when we look at These customers, the biopharma customers on a closer basis in terms of what they're really specifically looking for, They're focused on accelerating discovery and development of their products.
They're looking at streamlining their operations, lowering their cost structure within their labs, looking at accelerating trials and approvals to ensure that they can get their products as quick to the market as possible and then ultimately manufacturing those products efficiently and getting very high yield in the production processes. All of these are targeted so that they can increase their sales and increase their profitability. Now when you look at our capabilities, we're uniquely positioned to support these customers this customer base. First, from a technology perspective, both Tom and Mark Stephenson shared with you all Cutting edge analytical capabilities that we have to support the research scientists in this community. From the lab efficiency perspective, We are the ultimate partner with our channel under the Fisher Scientific brand.
We're working on-site with these customers to drive efficiencies from the procurement of their products as well as the operating practices that they have in their labs. With our clinical trials logistics business, We have the industry's leading capabilities to manage trials and accelerate commercialization. And then finally, on the manufacturing front, Mark Stevenson shared with you our enhanced offering in bioproduction. And this provides our biopharma customers with flexible solutions so that they can So you can see our relationship is deep And significant across all the significant stages within the biopharma customers. So now what I'd like to do is for you to hear more on this from one of our customers.
This is David Feynman. He's the Chairman and CEO of Kinimed. It's a biotech company that's based out in California. And I want you to hear about what David has to say about the important work that they're doing and really how we're engaging with them as with Thermo Fisher and partnering with them in virtually every step of their process that they're going through. So let's start the video.
Not only does Thermo Fisher provide us with laboratory support and general Apishka. Services that enable us to function better as a business. But most importantly, we have access to the best technical minds and corporate leadership at Thermo Fisher so that we can do a better job in enabling the future of personalized medicine through advances in mass spectrometry. What we do is take a deep Athaisz. Dive into complex biology and come up with yesno answers to complicated questions like, is this the right Aphashech.
Is this drug working or not? Is the patient getting better? Yes or no? We're Actually tagging or labeling what's happening in biology, we're able to actually track the natural history going from DNA Through transcription and all the complexities of getting to proteins and then what those proteins are doing. What's critical in what we do is to be able to not only identify disease, but also predict where it's going and monitor its course.
And we do this really in just a few sips of water typically. So for example, in the liver, we can measure fibrosis in the liver rather than with a biopsy, but pick that up in a few drops Apish. And we've done this in a host of different diseases ranging from cardiometabolic disease, Apishe. Fibrotic disease, cancers, diseases of neurodegeneration, the diseases of our age like Parkinson's disease. Thermo Fisher is our partner of choice in this because of the technical expertise.
We get tremendous purchasing power, not only in terms of Capital equipment for day to day operations through acquiring our lab supplies, the facilities of support In terms of sample storage, when we get into diagnostic kits, all the things that we do in our business, So we can focus on what we do best, which is posing and resolving the daunting problems facing diagnosis and better medicine.
So you can see from the video, I mean, as David says it on here, I mean, it's a pretty compelling story of how we're supporting their needs and the diversity I'm Ken Apiszewski, and I'm going to go to many other markets as well. Here I've just selected 3 additional markets to have some discussion about. And I'm not going to cover everything on the slide, but what I did want to do was just highlight a few areas where we're contributing some significant value that's important to these So first, starting with food and agriculture. So priority for many of these customers is really all about The safe food supply, all the way from the farm to getting food to your dinner table. So our analytical technologies really play a Critical role in helping quickly and accurately identify a very broad set of potential hazards including Pesticides, heavy metals, microbial contamination, just to name a few of many.
In addition, If and when contamination events occur, it's critical for the customers to Enable them to trace through their supply chain to determine where is that source of contamination. Well, we have the data compliant management systems to help them do that, which is critical to them keeping their processes going in their efficiencies and running their business. So now turning to the petrochemical and energy business. There are many different critical ways that we're supporting these customers. Just one of them is a determination of specific drilling locations.
This is a critical decision for these customers that has tremendous cost implications to their operations. Our analytical instruments are used to accurately measure and analyze core geological samples. They're used to really determine optimal drilling locations for these companies. And then finally, looking at Contract testing labs. Now these are for profit laboratories.
And what they need to do is quickly, I'm Ken Apischa. I'm Ken Apischa. Our cutting edge technologies are used to analyze the samples from a wide range of applications. That's including environmental, diagnostic, food testing. In addition, our Fisher Scientific channel supports these customers by giving them easy access to products and services to ensure that they can run their laboratories efficiently as well.
So you can see through these examples, there are many other industries and market segments that we're supporting with our unique Customer value proposition. And with all of these, we're using this breadth of capability to enhance our share of wallet So we are truly unmatched in the position that we have to service the markets in which we serve. I hope you have a better sense of how the combination Our unique customer value proposition and our tremendous reach and access to the market provides us and puts us in a unique position So now what I'd like to do is turn it over to my colleague, Syed Jaffray. He's the Senior Vice President of Asia Pacific and Emerging Markets, and he's going to share with you some of the exciting opportunities that we have in these high growth regions of the world. Thank you.
Good morning, everyone. So this morning, all of our presenters highlighted the importance of emerging markets As a key element of our company's growth strategy. And I will now spend some time to share with you as to how we are leveraging our scale to drive new growth opportunities in these markets. In the interest of time, I will talk about the progress we have made in China, India and Korea And also the strategy that we have to continue with our growth momentum in these countries. And lastly, I will touch on some of the new emerging opportunities that we are pursuing in a number of these markets.
So on the left side, you can see in the pie chart as to how we define emerging markets in our company. These markets are now generating about $3,100,000,000 of revenues for our business and we have over 9,200 employees who are located within these regions. Our goal in these markets is to increase our presence And to continue to ensure that we are investing to grow our business over the next 5 years at a rate within the range of about 8% to 10%. Our strategy remains unchanged Just like we shared with you last year and the previous years, and that is that we continue to build our scale and depth of capabilities in these markets. The addition of Life Technologies has further increased and strengthened our presence in these markets and we are leveraging this additional scale to accelerate growth in a number of these regions for us.
As a key element of our strategy in this region, we continue To invest in improving customer satisfaction and we're doing that by resourcing and optimizing our Supply chain capabilities and our service capabilities in the region. And also from a product development perspective, As we understand our customers' local product needs better, we have been making select investments in localizing Specific R and D capabilities in the region as well. And operationally, we have the largest footprint in our industry in emerging markets and in the future, We will continue to expand our operations in low cost regions as a part of our overall localization efforts. So let me talk a little bit about why we have been successful in these markets and highlight A few of our achievements from the last year. As you heard from Mark and Pete, that last year We delivered strong results and now 18% of our company's revenues are coming from these markets.
We gained share in China where we grew the business by 20% last year and we've broadened our capabilities. For example, we expanded our innovation at the center in Shanghai. So we can better serve some of the local markets and develop products that help us in getting to the mid level markets so that we are in a better position to compete with the local Chinese suppliers. As we continue To expand our commercial presence in these markets, we made sure that we are increasing the number Our customer facing employees all across these emerging markets. And then To capture new growth opportunities, we have started to focus on a number of new emerging markets that I'll talk about a little more in the later part of my presentation.
So let me talk a little bit about how we have taken a prioritized approach to pursue opportunities in these markets. So on the top left, you can see that China and India are the countries where we have had a long history. We have well established management teams, well established infrastructure in place and our strategy here is to rely on the deep experience and knowledge of our teams to drive growth in these countries. Then on the top right, Tier 2 countries of South Korea, Brazil and Russia, this is where we have strong commercial presence and this is where we are replicating and translating the best practices and management processes that made us successful in areas like China And India. These are priority markets for us and we will aggressively invest in these markets in the future as well.
The lower half represents regions which fall into what I will call the new emerging markets. This is where we are investing and we are expanding our direct commercial presence in specific countries where we anticipate high growth potential in the future and we will continue to monitor this carefully to determine which parts We invest in more in the future. With the addition of Life Technologies, it certainly has created many more Apish. And on the next slide, I'll give you a sense of how we are going to benefit from that. So how are we benefiting from the power of the combined scale we have as one company now?
We are leveraging Our expanded direct sales organization because now we have access to a much larger number of end use customers. We have many more partners now and we are in the process of optimizing our network of distributors and dealers and strengthening our partnerships with certain partners in the regions. We have many more products, many more complementary products, and we are leveraging our combined portfolio of products and services to gain more share of wallet at our Focus accounts. And this is also helping us increase The addressable opportunities in many of the vertical markets such as food safety, forensics and environmental to name a few. And organizationally, we are being more productive because we are realizing the efficiencies gained through the integration of some of the support functions such as supply chain and service.
So from here on in the rest of the presentation, I'll focus on sharing with you how we are using our combined scale to drive growth in areas like China, India, Korea, and I'll talk a little bit about the Middle East as well. So Let's start with China. China continues to be our most important emerging market. It's about a $7,500,000,000 addressable market, which is expected to grow over the next 5 years at a rate of about 10%. Vertical markets such as healthcare, pharma, environmental and food safety are the most important markets for us.
And in a few minutes, I'll share with you why we are bullish about the growth prospects in these areas. In China, our presence today is stronger than ever before. We have a world class organization there with over 2,000 customer facing employees serving our customers from a vast network of commercial offices and application labs all across the country. We have an extensive network of manufacturing operations, which is serving both the domestic and global customers' needs. And the key point here is that we will leverage Athaishi.
The significant investments that we have made in China to gain share and to build on our leadership position in the future as well. Our strategy in China is focused on Opportunities that are aligned with the national priorities of China. So vertical markets such as healthcare, environment, food safety, These are the ones where we see the national government in China making significant investments. And on the next slide, I'll talk to you a little bit about the growth drivers and our value proposition for these markets. As the Chinese population is urbanizing, Our customer base is growing and we are expanding our commercial organization as our customers are expanding into The Tier 2, Tier 3 and even Tier 4 cities in China.
Per my earlier comments, expanding manufacturing And product development capabilities, optimizing our service and supply chain capabilities are the other key elements of our strategy in China. Now we have been successful in China because we have an experienced talented team on the ground in China And to continue with our success record in China, we understand that we have to continue to invest in Building career development and training opportunities so we can have a sustainable high performance organization for many, many years to come. So let me just share a few comments on the key vertical markets in China, Starting with the biopharma, most of the large pharmaceutical companies are increasing their investments in China because We are encouraged by the domestic market potential and also the operational capabilities that are available in China. We are leveraging our relationships with these global pharmaceutical companies to support their expansion efforts in China. And also we are working closely with many Chinese pharmaceutical companies.
Environment, you heard a lot about it from Tom, for example. Environment is a huge issue in China And the pollution in air, water and soil is at all time high. And responding to The social and the global pressures in China, the Chinese government is enforcing stricter environmental regulations, which means more investments are being made in monitoring technologies. And that is a trend also for the water and soil. And we as a company have the Technologies and solutions that can address many of these environmental challenges.
Looking at healthcare, with the increasing aging population, The Chinese government is in the process of reforming the healthcare sector. They're building more hospitals. They are refurbishing the existing infrastructure of hospitals and clinics. And that is what is making China the 2nd largest healthcare market in the world. By 2020, 75% of the Chinese population is expected to be middle class and that is another driver for the expansion of the healthcare market Apish in the future.
And we as a company have over the last few years formed an organization, commercial team that is totally focused on providing solutions and ensuring that we are taking care of our healthcare customers' needs like no one else in the industry. And lastly on food safety, another huge growing market in China. Last year, the Chinese government elevated the status of the Food and Drug Administration in China to a ministry level. And that means now That ministry is reporting into the State Council versus last year when they reported to the Ministry of Health. And that raise in status is a clear sign that food safety is becoming more and more important and that means more regulations and we have had in leadership position in food safety in China for many years and we plan to continue to build on that and expand our share in that part of the market.
Let me talk a little bit very briefly about another emerging market, which is India. Those of you who follow politics, last week there was a massive government leadership change in India. And with the new leadership, it is expected that it will spur the economic growth in India and it will attract more foreign investments into India. Based on that, we believe that it's about a $2,100,000,000 addressable market, which is expected to grow between 6% to 8% for the next 5 years. The key markets for us in India are pharmaceuticals, Healthcare, environmental, food safety, for example, and given our experience in these markets in so many other parts of the world, We feel very good about the growth prospects in India.
We have extensive presence in India with over 1200 employees located in the country. Over the last few years, we have invested in demo labs and application labs. In Ahmedabad where the new prime minister is from actually, We have a state of the art operation to support the clinical trials of our pharmaceutical customers and we plan to use that more in the future as well. The key point here in India is that we have a long term commitment to India and we believe that we have created an efficient and scalable country model where our team is prepared to win in many, many markets in India as they start to accelerate in the future. A few brief comments on Korea, Again, a country that we haven't talked about as much in the past, but it is becoming a very interesting market for us.
Korea is About $1,600,000,000 addressable market, which is expected to grow within a range of about 5% to 7% over the next few years. The key markets for us are healthcare, bioprocessing, life sciences and pharmaceuticals. And Very important point to note in Korea is that the Korean government has a keen interest in supporting and funding innovation and research. So because of all that, we believe that Korea could become a very interesting market in the future as well. Now for us, a number of things changed in Korea.
We had a medium sized organization, but with the acquisition of Life Technologies, we now have critical mass. We have over 300 people Based in Korea, we have invested in demo and application lab capabilities and we have translated our vertical markets and our Focus accounts programs from areas like China into Korea and we are expecting that this combined scale is going to play a very big role in us being a leader in our industry in Korea in the future. And let me just switch gears and talk a little bit about the last slide I have here. We are looking at an emerging market which is on the I would call the other end of the emerging market spectrum, All right. And that is the Middle East.
In the Middle East, we are seeing investments being made in healthcare, in environmental, in education, in research. And that is interesting for us in the sense that last year We saw double digit growth in our business in the Middle East. Looking at countries like Israel, Saudi Arabia, Qatar, UAE, We see that these countries are going to invest more in the future. So take Israel as an example. Israel has the highest Investment per capita in R and D in the world.
Saudi Arabia has deep interest in using our genetic analysis testing
For multiple
reasons, with their population in the country, we are the largest supplier of lab products in Qatar, for example. So Our strategy in this region is to carefully invest in specific countries where we expect to see higher growth opportunities in the future and be selective in terms of how we invest in the growth opportunities in the future. So to summarize, I want to leave you with 3 key points here. The first one is that We are leveraging our scale and we are building on our strong momentum now that we also have the added capabilities that came through the acquisition of Life Technologies. China will remain a top priority for our growth markets and we will Maintain a strong commercial presence and we'll expand our manufacturing and technology development efforts to cement our leadership in the country.
And we will prioritize our investments for emerging markets in the future and emerging markets will continue to be a very important source of growth for our company. So with that, let me thank you and invite Mark Casper back to the stage for his closing remarks for the Q and A. Thank you.
So we'll have about 30 minutes for Q and A. And as We're getting oriented for that. Let me introduce the other 2 operational leaders of the company that didn't present today, but are here with us. Fred Lowery, who's our President of our Lab Products Business and Greg Harrima, who's the President of our Customer Channels businesses here as well. So I I think you got a sense this morning that we're very excited about the future and our growth prospects and we're very much looking forward to your questions at this point in the agenda.
Thanks. Hey, Mark. Appreciate all the color. Just wondering if you could talk a little bit about the pricing expectations you have over the next few years under Life. If we look at the 2013 results, You were able to do reasonably better than you initially expected in your guidance, at least due to pricing and volume and such.
So as we look forward, the assets that you got from Life are, I would argue a little bit higher value add on the food chain. They're very proprietary products. Can you talk a little bit about the importance of pricing as it relates to that 3% to 5% growth rate you're targeting?
Yes. So Isaac, in terms of our assumptions, there are a lot of upsides to the long term outlook and we'll highlight some of them, I'm sure, in the Q and one of which is pricing. So we have effectively assumed 0 net price over the 5 year period. We've averaged over the last few years about a half point. So So that's clearly an upside both in the top line as well as there'd be an upside in the margin expansion expectations over time.
So we see good opportunity there over time.
And just to follow-up that 0 assumption is that just to be conservative? Or is it because you think there might actually be a palpable change in the pricing environment in the industry?
I would say that I think that that's one of the areas of conservatism that we've put in the assumptions.
Hi, Mark. So it seems like there's a little bit of confusion on sort of the implied EPS growth CAGR from to 2018. I guess as you think about the key deltas, I mean you talk about price being 1, but it seems like the assumptions for balance sheet utilization, capital Employment M and A is probably the big difference between some buy side or sell side models and kind of what was shown on the screen. And so I guess as you think about the business, I mean the cash flow Generation, it seems like it's going to be quite robust. And this business seems like it could support a fair amount of leverage.
I mean your intent In terms of M and A hasn't changed, right, despite sort of now being a fairly large entity. It seems like you cited $5,000,000,000 but probably could be a I mean, how are you thinking about future acquisitions, size and really sort of utilizing that balance sheet in kind of a low interest rate environment?
Great. So Ross, a few things to cover, right. So if I think about first the M and A portion, right. So if you go back to all of our analyst days over the many years, the one thing that we don't assume is M and A in the numbers because It's unpredictable when it's going to happen. It does happen, all right.
I mean, when we started as a management team, we were a couple of 1,000,000,000 in revenue, so we've consolidated the industry and we'll continue to do so. So what we've assumed is a 2x leverage ratio in those Base numbers, right? And there's another $5,000,000,000 of capital that could be deployed on M and A. So there's plenty of opportunity there. And in fact, Over that 5 year period, it'll probably be more than $5,000,000,000 ultimately get deployed in M and A realistically.
So that's not in the numbers, right. But when you think about the outlook for the business, here's the baseline assumptions. We have opportunities on the organic growth for Life Science Solutions, right? We talked about 3% and our goal is to drive that higher. When you look at the out years of margin expansion, you have a huge uptake in the beginning through the acquisition and the synergies and more modest in the 2nd part of the 5 year period.
You have pricing as well as substantial opportunity to leverage the scale of the company and our infrastructure to drive additional cost reduction. So those are 2 drivers, top line faster, middle of the P and L from the margin expansion and then another $5,000,000,000 of capital deployment. When you look at it holistically, you have a Period from the end of 2013 where we earned $5.42 to somewhere around $10 you got something like a 13% CAGR. Apescher. The one thing I love about this group is that you've known us for so long.
The numbers this year are already baked in as done and locked and in a way we feel that way also. So you say, all right, we aren't saying roughly $6.90 this year. You have roughly a 10% CAGR over the period after that. And those are a bunch of upsides beyond that. So we'll keep pushing to make sure that we deliver outstanding financial performance in each of the periods, including executing the acquisition that we have right now.
And just as a follow-up, it seemed like on the organic growth side, one of the key variables is going to be So reaccelerating the Life business back to more of a historical growth rate or at least more back to a market growth rate for the rest of your business. As you think about and maybe Mark can comment on this as well. If you think about some of the key revenue drivers in terms of synergies that you cited today, How would you rate sort of most achievable versus what will take more effort just in terms of whether it's the NGS stuff into the clinic or Some of the C complementarities, just trying to get a sense for how you would sort of priority weight those.
Yes. What I would say is There are a number of growth drivers beyond the base case assumptions and we'll get Smarter over time on where the best leverage is. The one that is most obvious that we feel really good about and have incredibly high confidence is that in the area of biosciences and doing some tactical innovation to drive incremental growth on the reagents and leverage the incredible commercial reach we have as a company. That one is very clear, right? So if I'd say that's your highest probability.
I think you got a sense, Mark, on the enthusiasm we have around next gen sequencing. I share that enthusiasm and that obviously is a meaningful upside. But what we want to do is make sure we execute the roadmap. And as we do it, here. We'll continue to communicate that as an upside as well.
Hey, Mark. This is John Gerber with Macquarie. So two questions, one for you and one for Mark Stephenson. First for you on your Slide where you kind of talk about who you see as your peers that you highlight here. I guess if I were to look at that the one Kind of difference maybe between you and some of them is your dividend yield.
And it seems like when you first did the Life deal, maybe there's a little bit more anticipation around what that Could be sounds like now you are focused on maybe a little bit more on The buyback and I'm assuming that's allowing some opportunity to do M and A as you alluded to. So can you maybe just talk about as you've now merged the companies and you look at the outlook of Your industry and where you are in that industry, kind of how you came to the conclusion that maybe you wanted to focus a little bit more on the buyback and the M and A?
Yes. So one is our strategy is working and we basically add value and create shareholder value through M and A. So When we think about where our long term prospects are at a $17,000,000,000 scale and a $95,000,000,000 industry, incredibly fragmented because we're still much larger than anybody else. So there's plenty of opportunities to grow that way. And from the mix between dividends and Schulte.
Buyback of shares, at these valuations, we're buyers of our shares at an aggressive rate. Obviously, we're not doing it right now because of our debt. But looking at the valuation and our prospects, we want to put that incremental capital to buy back shares, right? So that's the view. We'll grow our dividend.
And then maybe in the following 5 year period after we've executed, we'll talk more about what the right view is. But Even a $20,000,000,000 number that Pete talked about in terms of revenue, we still got plenty of opportunity to grow. Okay.
And then for Mark Stephenson, if I can. I think you mentioned a number of headwinds that Life had last year and I think you're able to grow about 3% organically, you noted. So can you maybe talk about why what other headwinds you see, I guess, going forward as to why 3% plus isn't something that Should be just kind of expected as opposed to aspirational. And maybe tying into that, can you maybe talk about your view of you talked a lot about panels, but can Whole genome sequencing and the importance that that's going to have and kind of where you see life playing there? Thanks.
Just in terms of the business, all the businesses have a portfolio of technologies. And within that, we manage those portfolios, which are which are more mature or growth and I think that's some of the shift. We have some very fast growing business areas in biosciences and some more mature technologies. So Just getting that balance right that helps us to accelerate the growth as we go forward. In terms of the genetic sequencing area, While there's a tremendous interest in doing whole genome sequencing, we actually think what's actionable at the moment for the oncology area for diagnostics is sequencing sets of targeted genes.
And so as we look at the technology and where we're focused, we're going to focus on there and that area, oncology and the examples I shared and there are other areas in microbiology where we think is the right fit.
Hey, Mark. So I guess this is a question for you as well as for Mark Stephenson, Actually a couple. So the robust deal synergies and the improved product breadth Appischer. Associated with the Life transaction at this point probably speak for themselves, really robust, really attractive. And these are I think a big part of why the stock has done as well as it has over the last year.
So while you've talked a few times including in the Q and A about your ability to reaccelerate growth within the Life franchise. I do think it's important to note some of the differences that have historically existed between Thermo and Life when it comes to commitments made to investors and customers and the ultimate follow through. And I think it's important to come back to this Not to be heavy handed, but because many of us think about some of the legacy issues at Life has that existed at Life is really representing a great for Thermo and Shareholders. So with all that really the two questions are first, where are you in the process of incorporating legacy Thermo's really organizational motivational structure and legacy Thermo's more realistic way of making go and no go on new projects into a life infrastructure that has come up short of commitments and claims made in certain instances over the past few years. And then the second question is keeping in mind some of the unfulfilled promises made by the former Lifetech to customers, Especially in areas such as old genetic analysis including Ion, what are you doing now to rebuild confidence in some parts of the legacy Life customer base that simply put feels quite unfulfilled by the promises made That simply put feels quite unfulfilled by the promises made by Old Life.
Yes. So Doug, great question. So in terms of The culture, the coming together, living to commitments, I can only comment really on Thermo Fisher Scientific, right? And we do what we say we're going to do. And that philosophy is with our employees, with our customers, with our suppliers and with our shareholders.
And what we try to do is actually beat expectations in all of those fronts. And that has served us well, right. So what we do here is we're a strong industry leader and our job is to gain market share, Deliver solid financial performance, create shareholder value. So that's our philosophy. When we have interacted and I have interacted with 1,000 and 1,000 of our new colleagues through town halls, through site tours, lunches, I think I'm going to call pounce here.
And just working the process as the whole management team has In terms of just creating a culture of melding the businesses together, it is incredibly well received with our colleagues. Why? Because we're focused on our customers. We're focused on customer success. We're focused on having innovation make a difference.
And those things are getting our new colleagues incredibly excited. One of the things that we have really explained internally is our ambitions are incredibly high in terms of what we want our technologies to do for our customers, But we're not going to make promises until we know that we can achieve them. And when we can achieve them, we'll go externally and talk about it. So we deemphasize some Product type commitments externally until we actually develop the products such there. The customer base actually has been very well, accepts it.
They know us. In fact, I've seen so many customers have said, we're thrilled that Thermo Fisher owns Life Technologies. We love the capabilities that Life brings, but we trust that you'll do what you say you're going to do. And the combination is incredibly compelling. So my view is, You know who we are, you know that we're going to deliver on what we say we're going to do.
And that's a great opportunity for all parts of the portfolio, whether it's Sequencing, whether it's QPCR, whether it's bioscience reagents or analytical instruments, we think we have a great opportunities ahead to grow our business.
Yes, Mark over here. Just maybe just following up on some of that. If we think about some of the drivers you called out for the upside scenario for 3% organic growth, one of them is around Sanger. So do you actually expect revitalization in that business maybe for comp inventory sequencing? And then on the clinical side, can you communicate anything under regulatory strategy around instruments through the FDA for Ion Torrent.
So Mark, do you want to
talk a little bit about Sanger and a little bit about the regulatory viewpoints on our sequencing business?
Yes. Is the microphone on still? Yes. In terms of Sanger sequencing, we still believe that Sanger gets replaced over time by next generation sequencing. I think what we've done a good job is revitalizing that and keeping it as the gold And we still see good opportunities to do that and that's continued to happen.
So over the last couple of years and as we look forward, There's still a desire by the clinical validated customers and by forensics to validate that. And that view is allowed us To keep stable that Sanger sequencing business and in fact we're looking at new opportunities for it. So that's how we view the Sanger sequencing business. In terms of the regulatory framework, I would say the U. S.
Here and somewhat internationally although there's variance what's going on in China. But here in the U. S. The regulators have been very open in their view to how to regulate next generation We've been in a lot of discussion with them as we bring forward the PGM Ion Torrent next generation sequencing. We're just into the clinical trial and expect to get registration in that product in this calendar
And then just one follow-up for you Mark. In your comments going back to the M and A, I mean you did use the word bolt on time and time again. Why not really pursue larger deals? I mean, you're coming off a transforming deal with life. You've had a lot of success here.
Why not should we really be thinking about 2 to 3 bolt ons per year once you delevered? Or Is it really about larger deals every couple of years?
Yes. I think that larger deals happen less frequently, but it's not that they May never happen and the industry still has a number of larger players over time that may get consolidated. But given the fragmentation, it's very safe to assume there's quite a bit of bolt on activity that can happen. So if I think back since I've been at the company, we probably have done almost 100 transactions, right? 2 of them are incredibly large scale, Fischer Life Technologies and the other 98 are in a variety of bolt ons from very small Apicerno to Fadia being on the larger end of that.
So that's why we characterize it. But if you take a long enough perspective, there'll probably be other larger M and A, I would say, Tycho.
Great. Hi, Mark.
It's Derek De Bruin from Bank of America. So one boring question for Pete. What's the implied tax rate when we sort of think about your 2018 numbers? How do we think about that?
So we're starting this year with a tax rate of around 15%. I've talked in the past, I mean obviously we don't try to predict what happens with tax legislation. There's a lot of things going on. We think we have a structure that will enable us to from a legislative standpoint. And as you look through the 2018 time period, the tax rate actually goes up a little bit because we assume that we have fixed tax structures that lower our rate and the incremental income comes in at a little bit higher rate.
So it ends up somewhere around 17% to 18% in that 2018 timeframe.
Great. And then Mark, so you've gone from $170,000,000 to $1,200,000,000 in China, which is an impressive number. I guess, could you just give a little bit of color on that number? It's like how much of that is from multinationals versus the domestic Chinese accounts. And I guess given that that market is still so fragmented from a distribution standpoint, it's like is the Fisher model that worked in North America and Europe.
I mean, is that really how transferable is that to particularly to China in terms of sort of building that market out.
Yes. So we have leveraged our scale to grow substantially in China. A number of you have been to our facilities in China. You get a sense of How strong we are in terms of the systems infrastructure, the talent, the supply chain, those things have allowed us to gain a lot of share. When you look at the way we do that, we primarily focus on our self manufactured products, and we do supplement it with a few key strategic partners.
So as opposed to a widely distributed set of product offerings, Apicerno. We find it better to actually focus on mostly our own with a few supplemental ones and that's been that's worked quite well for the company.
Peter Lawson, Mizuho Securities. Just around the Fisher distribution business. I know we've seen your deals with VWR. You mentioned synergies coming through from the Fisher business. I think Mark mentioned the use of Fisher distribution for Life Products.
How should we think about that business? Is it kind of moving upstream? And then when you talked about those synergies, Is that coming through on the distribution side, product side or service side?
Yes. So Peter, in terms of our channel business, It gives us an incredible footprint with our customer base. And we will continue to add selective self I'm Ken Apis. I'm Ken Apis. I'm Ken Apis.
I'm Ken Apis. I'm Ken Apis. I'm Ken Apis. I'm Ken Apis. So that customers that are very much in the repeat mindset In a way replenishing what they do in their labs, that capability is very powerful.
And when a customer is really shopping by experiment, then what you'll see us typically use Apisci, the Life Technologies or Life Science Solutions commercial infrastructure. So we are in a way moving upstream a little bit. We have some instruments that we offer through our channel, leveraging some of our presence in chromatography as an example, and you'll see us add some more life sciences categories as well.
And then just on the biopharma business, you talked about that as kind of 1% growth business. If we assume that It's a 1% growth business. Can you still get the kind of 7% CAGR from Thermo in the biopharma business?
Yes. So when you look at the guidance that we gave for this year, we assume mid single digit growth for the year and we feel like that level is sustainable for many years into the future. In fact, some of the industry consolidation that's going on right now or the corporate repositioning that's going in the pharmaceutical industry. That's a significant net positive for Thermo Fisher, right. So in a way, it probably depresses shows the growth rate of R and D spend in aggregate, but it's a huge share gain opportunity.
We're so well positioned with the executive suites of these companies that When they're in those deals, they rely on us to help them drive synergies, which is a share of wallet opportunity for Thermo Fisher.
Great. Mark, Dan Leonard from Leerink. A couple of questions. One, you shined a light on how much R and D you're spending on the Life Science Solutions business, but that's the business that's decremental to your long term growth rate. So first question, at what point in the long term do you reevaluate that spend?
And my second question on Ion Torrent, what was left unsaid on the R and D pipeline there? Was any improvements in throughput? And I can't tell if that represents a pivot in your R and D strategy or if it represents a pivot in your communication strategies, if you could address that. Thank you.
Yes. On the latter, it's about the communication strategy, right, which is we have American Society of Clinical Oncology happening in a week and a half. So we're willing to foreshadow something that's kind of a week and a half away, but we don't like to foreshadow from longer term product developments. We have a lot of incredibly exciting things going on within our next gen sequencing portfolio, but you know very much our Thermo Fisher philosophy and innovation. It has to be like within a matter of weeks of launch for us to be able to talk about it externally.
We don't foreshadow what we're working on. So that's the point there. In terms of the R and D portfolio, we've had the opportunity to meet with The scientific community around the world, an incredibly talented group of people, and we're excited about what we're working on. And One of the things that we said at the time of the announcement of the transaction and we reaffirmed during the course of our original guidance when we closed the transaction is We're keeping our R and D budget within that business stable exactly where it was to give our R and D teams the time to develop the products in pipeline and we'll reassess that over time. If we launch what we think we're going to launch, then it'll be a great return on investment.
And if we're not comfortable with what the productivity is over time, We'll make some reallocation decisions, but that's not our first priority right now. Our first priority is really bringing the companies together, taking out infrastructure inefficiencies, overlapping corporate costs, sourcing synergies, those things. And then we'll address R and D either by driving a lot more growth or we'll get the priorities right there.
Mark, we're actually out of time. Okay. We need to wrap.
Yes. So with that, let me Thank you for your participation today. It's an exciting time for the company. We continue to build out our leadership and today We've put ourselves in really an unrivaled position as the industry leader. When you look at our primary metric of success, It is about driving adjusted earnings per share growth.
When I think about how that happens, in 2013, we had very strong financial performance, but effectively we had no capital deployment. We put a lot of capital to work this year. It drives a real acceleration in our growth. We'll digest that in 2015 and we'll be back in the market again as we get later into next year to once again deploy the strong cash flow generation and the strong balance sheet that we'll have to drive a very bright future. Thanks for the interest.
We'll continue to update you on our progress in our upcoming calls. Thanks, everyone.