Good morning, everyone, and welcome to the Waters 2019 Investor Day. For those of you that I have not had the pleasure to meet, my name is Bryan Brokmeier, and I'm head of Investor Relations at Waters. I really appreciate your interest in the company, and I would like to thank everyone that is able to join us here in New York, as well as those of you logged on to the webcast. Before we begin, I want to call your attention to the cautionary language. During the course of the presentation today, we will be making various forward-looking statements. During the course of today, we will be making various forward-looking statements regarding future events or future financial performance. We caution you that all such statements are only predictions, and that actual events or results may differ materially.
Please refer to the cautionary language contained in today's presentation, in addition to our recent SEC filings, in particular our 10-K that was filed on February 26, 2019, for more detailed explanation of the risks associated with the Waters business. The slides from today's presentation will be available for download in PDF form later today on the investor relations section of waters.com. So now let me give you a brief overview of today's agenda. I think we have a great day for you today. Our first speaker is Chris O'Connell, Waters Chairman and Chief Executive Officer. He'll provide you with a high-level look at the company and the strategy. We also have presentations from six additional senior leaders of Waters, two of whom you have never heard from before.
At about the halfway point, around 10:20 A.M., we will have a 15-minute break, and then we'll resume with the presentation after 15 minutes. At about noon, we will bring all the presenters back onto the stage for a panel Q&A discussion, which I think you'll find very valuable. And we expect to wrap up somewhere around 12:45 P.M. With that, I would like to invite Chris O'Connell, Waters Chairman and CEO, up to the stage to get us started. Chris?
Yeah, I'll stay there.
Thank you. Good morning, everyone, and thank you very much for being here today in New York and for your investment of time here at the Waters Investor Day. I can't believe it's been two years since we were last in this forum. It's gone very fast, but we certainly have a lot to update you on. As you saw from Bryan, we've got a terrific agenda planned for today and really are excited to get into great depth around all the different things that distinguish Waters as a company and our roadmap for the future, and perhaps most importantly, the people that are going to be taking us there.
Just by way of a personal reflection, I've now been in the CEO position for a little more than three years, and I just want to say that I've never been more excited about the company, about what we're working on, about what the future holds in terms of opportunity, but also our opportunity to truly make a difference, a positive difference in the world at Waters, and really, just what a privilege it is for me to be able to lead this team that you're going to hear from today, as well as the rest of their colleagues. Waters is a company that truly has what I believe to be the very best people in the industry, and this team is very focused, very experienced, and very motivated to deliver on a lot heading forward, so our objectives for today are threefold.
First of all, I want to provide everybody in the investment community a fresh look at Waters in terms of our unique positioning as a company and also our growth strategies going forward. Secondly, two years ago, we established our five-point value creation model, and we want to give you a scorecard, really an update on all the great progress we're making against our five-point value creation model. And then third, and most importantly, is to generate as many new insights for you as possible into the business from our talented and experienced management team. Every conversation at Waters, to me, begins with a quick reflection on our values as a company, our values given to us by our founder, Jim Waters.
Everything in terms of the ethos of the company and what we strive for can be boiled down to the simple concept of delivering benefit to all of our stakeholders. It's truly a multi-stakeholder perspective in terms of serving the needs of our customers, our employees, our shareholders, and society more broadly. And today, of course, we're going to see a particular focus on how Waters delivers benefit to our shareholder. Our management team is here today, our entire Executive Committee that hopefully you'll have a chance to interact with over the course of the day. But I'm extremely proud of this team, and it's been a real pleasure to build this very experienced and talented team at the top.
This group of nine people of the executive committee represent over 300 years of experience in business, over 200 years of experience in this specific industry, and over 130 years of experience in Waters alone. Five of the nine members of this team have been with the company for well over 20 years, so we have great depth of experience in the company and the industry. Four of the new members, including myself, three and a half years ago, are new within that time period, and we've really blended the very best of the depth and the expertise inside the company with complementary new perspectives and viewpoints coming in from the outside.
Taking a very broad look at the strategic development of the company, it was wonderful last September to celebrate our 60th anniversary as a company when looking back on that period of time since 1958 when Jim Waters started the company and pioneered the field of liquid chromatography, and really since then, Waters, in my view, has done a remarkable job over multiple generations to, at the same time, stay true to the core values and focus and specialty orientation of the company while also continually reinventing the company for greater growth and greater impact in the world.
And I think what you're going to hear today, particularly around our innovation story and product development, is we feel we are really moving into the next generation relative to the next reinvention of the company through how we contribute to what is unmistakably a rising pace of innovation throughout the life sciences, materials, and food sciences. And as we continue to grow and develop the company, we will continue to emphasize innovation, growth, and value creation in a sustainable manner. More recently, since we talked last a few years ago, the management team has been hard at work to continue to build the company for sustainable growth and to strike the balance between those factors that are truly enduring and those factors that need to evolve.
The list of characteristics of the company that are truly enduring to me include a focus on the core attractiveness of our markets, the highly differentiated specialty positioning of the company, the culture, which is truly innovative and truly driven, while at the same time we're pressing very hard to drive changes in the right parts of the business to accelerate our innovation pipeline, to really accelerate the development of the incredible talent and leadership potential within the company, to move to a more assertive capital deployment framework, and of course, to continue to advance our ESG initiatives. And we're going to certainly comment on all these factors today as we get through the presentations, both mine as well as the management team. So today, Waters is a strong, vibrant, innovative, and very global company.
We have nearly three-quarters of our revenue coming from outside the United States, and certainly our global footprint in terms of our R&D centers, our 15 manufacturing plants, our customer centers, and demonstration laboratories reflect that incredible global mindset and global footprint. Of course, everything at Waters starts with our people and our talent. We now have over 7,000 employees, more than 1,000 of whom are scientists or engineers, and certainly that scientific base in the company is an incredible source of differentiation and strength, but interestingly enough, more than half of our employees are directly in the field serving the needs of our customers, and that's why you do continue to hear from all of us that it's customer-first, and that's what's leading us into the future.
Very interestingly as well, 60% of our employees reside outside the United States, even though we have a lot of our headquarters operations in the United States. Financially, we're on very strong footing. Last year, our turnover was nearly $2.5 billion, and we have industry-leading cash flow generation and returns on invested capital. Those are very important metrics to me personally. And at the same time, we've continued to step up our investment in R&D, now spending 9% of our worldwide products revenue on research and development. In terms of a snapshot of the mix of the business, that really is a reflection of our specialty model. Our end markets that we serve, of course, are highlighted by our core business in the pharma and biopharma space. It's now 56% of our business, with biopharma being 13%.
Something that often surprises people about Waters is the fact that our number two business is actually the material sciences business, and we're going to talk more in depth about that today as well. Of course, we have great businesses in food and environmental, clinical, and biomedical research that represent great growth opportunity as well. From a product mix, approximately half of our revenue is recurring in nature between service and our precision chemistries, as well as the recurring aspect of our informatics business, with the other half represented in an increasingly systematized offering between our instruments and our informatics. Globally, as I mentioned, 72% of our revenue comes from outside the United States, with Asia in recent years having taken on the number one position in terms of our major geographies.
And certainly, the growth and the balance of our China operation over that time has led the way, now 18% of our worldwide revenue. But we do have great breadth in terms of the countries we serve, in terms of our presence in these markets. And while they're all somewhat different from each other, and you'll hear more about that from Mike later, we see growth opportunities really across the world in all of these ways. Really building on our financial footprint and connecting it to our value creation model, Sherry will get into more depth today. But our value creation model is really built on pulling three levers.
One is our growth story and our organically driven objectives to deliver industry and continue to make sure we're making the right investments across our portfolio to deliver that growth while at the same time we maintain Waters' traditional exacting operating discipline in terms of how we build the business, how we balance growth, investment, and profitability to deliver an overall return on invested capital that is enviable by everybody in the industry. And certainly, there's been a lot of new news more recently in the capital deployment front, and Waters has always prided itself on being a great capital allocator, and we're very committed to that. And certainly, we have a lot more opportunity looking forward in that regard, which then all three of these factors combine to give us a very sustainable value creation model.
Speaking of value creation, two years ago, I introduced our five-point value creation framework. These points, for those of you who follow the company closely, should feel very familiar, though we continue to evolve and deepen these commitments that we have. Number one is keeping maniacally focused on highly structurally attractive markets with a true specialty model. I think we find that our customers are more interested and more in need of a specialty model in terms of their most exacting analytical needs than ever before. Our second value creation framework is to really focus our growth strategy on organic innovation. You're going to hear a lot more about that today. Like I said earlier, we've never been more excited about what's coming in our product pipeline.
Third, we do believe while we do carry industry-leading margins and profitability, that Waters has the opportunity for continuous improvement, and not just in operations as we scale the company, but really throughout our innovation as well as our commercial processes. Number four, I mentioned the discipline capital allocation point, but certainly U.S. tax reform was a game changer for Waters, and it really represents a paradigm shift that we'll get into in more depth today. Finally, the most important point to me, and I'll end with some comments just on what we're doing to invest in our most important asset, which is our people. Waters is rich with an incredible employee base all around the world, and we really, truly do believe that our people and our culture and our governance is a source of competitive advantage.
And so that'll be a continued point of emphasis for me personally as well as the whole organization. So let's get into it. Our vision at Waters is to perform and be recognized as the world's leading specialty measurement company. We're very intentional about the word specialty measurement. You'll hear echoes of our specialty focus all day long. And we really define specialty focus and specialty measurement as delivering what our customers need in terms of their most vital insights that support their innovation processes as well as their operational processes. And that really is a combination of having an incredibly focused technology portfolio of high-value analytical technologies while at the same time being equally as exacting in terms of our selection of markets that we can contribute to well. We're not trying to be all things to all people.
We're trying to be the very best in a very carefully selected set of market categories with a very carefully selected and high-growth and profit-oriented set of technologies. And that combined together really gives us the specialty focus that we think is very differentiated in the market. Our corporate strategy is really the bar that we hold ourselves to across all of our different businesses, technologies, and markets is to focus on three core pillars of strength. One is to exploit that specialty focus. Number two is to deliver innovation leadership consistently. And number three is to advance the unique application expertise we bring to bear. As it relates to specialty focus, we've developed a very rigorous relative attractiveness framework that guides all of our decision-making and all of our investment priorities.
Relative attractiveness is the combination of making sure we pick markets that have inherent robustness relative to growth and profitability while at the same time making sure we direct our investments to those categories where we have the strongest competitive advantage or, as you would say, right to win. In terms of innovation leadership, we've been working very hard over the past two or three years to accelerate a whole new wave of innovation to market, and Ian's going to talk more about our core mandate to accelerate the cadence of our new product introduction while at the same time changing the game in innovation towards a more systems-oriented, purpose-driven set of innovations that support our customers' changing needs. We call that Transformational Engineering, and certainly, we've also looked outside the company as well.
We have a lot of humility to recognize that not everything that we ultimately want is inside the company. And so we've built a corporate development capability to be very purposeful, to look outside and to find those technologies that we can tuck in and can add to the attractiveness of our overall technology set and serve important adjacent customer needs. Very strategically driven. There's no particular targets relative to deployment of capital, but to be opportunistic and to do things that matter to our customers. Certainly, our acquisition in the last year of the Prosolia technology for direct ionization techniques is a small example of that.
And then third, in terms of application expertise, at Waters, one thing that's impressed me as I've gotten into the business and gotten to know more and more people over the last three years is just incredible depth of science and technology orientation around the applications that matter most to our customers. That gives us a knowledge of our customer workflows that's truly remarkable. I continue to get feedback on this from my customer visits into the field. And really, that translates into what I believe is an unparalleled capability of service and support, which is why that you see so much of our business and so much value created through that service and support process with our customers. In terms of our technology portfolio, especially for those of you who are newer to the story, we focus at Waters on a more limited set of the highest value technologies.
Of course, it all started with liquid chromatography, which remains a foundational technology in our portfolio. But of course, the increasing blurring of the lines with mass detection and mass spectrometry of all types, and of course, all of the associated chemistries and informatics that create the systems that make us so unique. And then adding to it, all of the incredible depth of technology throughout our TA Instruments franchise in thermal analysis, rheology, and microcalorimetry. We love this product lineup. We have very strong technology positions and market share positions in each of them. And we're pushing aggressively on all elements of our technology portfolio to make sure they continue to serve the representative applications that you can see listed here.
I won't go into a lot of detail, but you'll hear more about it throughout the presentations today, both as general-purpose instruments that serve a wide range of needs in a very scalable manner, but also increasingly as a more system orientation around purpose-built solutions for the most challenging customer needs. Really, on the twin side of our select technology portfolio is a very focused business portfolio. We categorize our different market categories into five major areas: pharma, material science, food and environmental, clinical, and biomedical research. Together, these represent, at our latest calculation, about $65 billion of market size in total. But we then take a very strict approach to defining where we play. We participate in about $15 billion of that overall portfolio in terms of our chosen market segments. That represents a little over 20% of the overall life science technologies game.
I mentioned earlier our relative attractiveness framework that is used to guide our selection, and I'll give a few examples of this in a minute, but the market segments we choose are characterized in general by higher rates of growth and more profitability than the market in total, and we've identified through all of our strategic processes what we call high-focus categories. A couple of examples, including the development of the manufacturing side of both small molecule and large molecule drugs, chemicals and polymers within material sciences, food safety within the broader food world, general use IVD, and then the metabolomics and proteomics area within biomedical research. I won't go through the details of the drivers, but you're going to hear a number of examples today about why these carefully selected market categories appear to us to give us sustainable opportunity for investment for growth and for value creation.
Let me give you three specific examples of what I mean by market subcategories. The first one I'd like to talk about is biopharmaceutical development. So this is outside of discovery and before manufacturing. But clearly, the incredible rush of innovation that you see when you look at the biopharmaceutical space is resulting in an unprecedented level of biotech drugs moving into development, into method development, into process development. And as you look at that phase of development, the analytical needs are rising. You're going to hear more today later about multi-attribute monitoring and the increasing requirements. And it may surprise you that more than 1,000 tests based on LC and LC-MS are done to an individual molecule as it works its way through product development. By the way, that's more than 10 times the amount of testing that happens for a small molecule on LC and LC-MS assays.
And that's important because those insights are then defining the downstream methods that are used throughout QA/QC and present a whole new field of opportunity. This is really a once-in-a-generation opportunity to shape this space. And certainly, what we've done with BioAccord is going to speak to that. And that's why I listed BioAccord on that long timeline earlier in the presentation because we really think that's a symbol of this entire new era of analytical measurement activity of the highest level in the regulated laboratory where Waters has such a strong foundational position to our business in HPLC and small molecule workflows. Another example within the material science area is the area of polymers. You're going to hear a lot from Terry Kelly today about polymers and chemicals and inorganics and different attributes of material innovation that are measured with the most exacting analytical technologies.
One of the great surprises to me coming into Waters has been the incredible depth and breadth of the innovation that's happening across material sciences of all types, everything from industrial companies to consumer companies to technology companies. And in fact, Waters and TA together serve over 30,000 individual accounts in this space. And what's happening with a highly innovative material today, tomorrow will become a broad-based technology, as you can see from the quote. Waters has a very unique opportunity to provide the insights on both the chemical structure and the physical property of materials and the relationship between the two through both our TA-branded products and our Waters-branded products. And that gives us great focus and great expertise and great advantage in this space. You see pictured here an example of a new technology called the DMA 850.
When material scientists are trying to understand the strength and the mechanical properties of a polymer, this technology, which was just launched last year, has already become one of our fastest-growing elements in the material science laboratory. So there is a lot of change going on here, and we're stepping right up to that and trying to lead it as best we can. The third example of a market subsegment that I'd like to just touch on briefly is the general use IVD category within clinical diagnostics. The Mass Spec enabled general use IVD sector is a little over $1 billion and growing meaningfully faster than the overall clinical diagnostic space. It's being driven by a number of factors, including the rise of access of people around the world to healthcare and greater need to pair specific patient diagnoses with the right therapy.
We see continued growth in this space. It may surprise you for me to say that Waters was actually the first mover in this space more than 15 years ago, where Waters actually achieved the first FDA-cleared medical device for a general use IVD instrument. As a result of that, we've established a strong installed base around the world and have developed deep expertise as it relates to the application science that's necessary to continue to evolve LC-MS technology in the clinical field. This is another example of a subsetting of a category where we can see both a structurally attractive market and also a very strong right to win.
Really, as I wrap up my comments on the market perspective of Waters and the specialty focus, one of the things that stands out to me as I go around to see customers and I set out when I join the company to make sure I'm interacting with customers at least a couple of days per month, and I've continued to do that, is seeing what I intuitively feel is a rising pace of innovation across the life materials and food sciences. You see this with a much broader base of innovators that seem to be coming into the field. Our customers are looking to engage a wider range of users in the most sophisticated analytical measurement techniques. The challenges that they're taking on are greater than ever before.
And that, to me, reinforces the positioning of the company and the focus of Waters to make sure that we're doing everything possible to enable that innovation that's happening across all of our key customer bases. Speaking of innovation, I want to just make a few comments to introduce what we're doing from an R&D standpoint. Probably the biggest set of changes going on in the company over the last three years has been the increasing priority and emphasis in change that we're driving to everything about how we're doing innovation that is yielding what I believe to be the most exciting product pipeline that we've had in a long time. Ian's going to talk later about the fact that we've actually increased R&D spending more than 40% over the past five years.
We've also integrated our previously distinct technology centers to make sure we can more rapidly get after the systems opportunity, which is an increasing need of our customers, and we've rationalized our portfolio as well. Over the past two or three years, we've cut about 40% of our R&D programs, really to make room for bigger investments, bigger initiatives around the technology platforms that are going to move the needle going forward, and we couldn't be more excited about that, but we're also not just doing all that within R&D. We've also been transforming our marketing organization because, as all of you know, innovation for the sake of innovation is great, but it needs to be more and more customer-directed over time.
And so we're doing a lot throughout marketing to really retool our entire capability to make sure that we can enhance the speed of insight from our customer base and drive that all the way through our portfolio selection and our feature determination throughout the product development process. And that's yielding some very interesting dynamics in terms of a new platform strategy. It's yielding some interesting dynamics in terms of how we think about roadmaps between Waters Technology and TA Technology in terms of that structure and properties relationship that you're going to hear more about. And there's a lot there. So you've heard a lot about BioAccord. You're going to hear a lot about BioAccord today. But rest assured, it goes far beyond BioAccord in terms of what's in our portfolio and what we're working on and what is going to benefit the company in the years to come.
Speaking just for a minute about our third element of our value creation framework in terms of productivity and continuous improvement opportunity, as I alluded to before, Sherry Buck and I have been focusing on building a continuous improvement kind of framework within the company to make sure that as we scale the company, we're finding the way to best direct profitability and the growth towards the initiatives that can enhance everything we're trying to achieve from a growth and innovation standpoint, and while the earlier phases of that continuous improvement initiative, we're focusing on cost efficiency, what we've learned in the process is that everything we can look at from a process redesign standpoint and a systems modernization standpoint actually is benefiting our innovation process as well as our go-to-market and our channel.
And so we are looking holistically at all of our business processes from how we innovate to how we go-to-market. And we're investing capital in new technologies that help make us more efficient. So that's not just going to create those cost efficiencies for us as we scale, but it's also going to create enhanced revenue opportunities and benefit the overall business so that we can optimize that fine formula between growth, investment, and profitability. Just a couple of words on capital deployment, and Sherry will go into this in much greater depth. But clearly, U.S. tax reform was a game changer for Waters. After U.S. tax reform, we did a ton of work internally as management as well as with our board of directors. In fact, we formed a Finance Committee of the board to really take a step back and look at what had changed.
I think the best way to characterize what happened with the capital deployment opportunity is that before tax reform, you could probably characterize Waters as a capital accumulator. We were obviously with our global cash flows. We had a lot of cash outside the United States. We were more and more restricted. And after tax reform, we've had an opportunity to pivot to what I call a capital deployer. And this small example of the capital we deployed in 2016 and 2017 of $1 billion quadrupling in terms of the capital we can deploy in 2018 and 2019, and this is based on 2018 actuals plus 2019, what we've guided to, really underscores the size of the opportunity relative to capital deployment. We've been extremely rigorous as it relates to our priorities. Priority number one is investing to grow the business.
And in part, that relates to the increased investment in R&D. It relates to the increased capital investments. And you've heard about a number of those. In fact,Eri n, today we'll talk more about our capital investment in Taunton Chemistry Operations. But we're also investing in systems and a number of other elements of fixtures and capital that can help drive and grow our business. Of course, our second priority as it relates to the capital deployment is making sure we optimize our overall financial flexibility. And we clearly have a lot more financial flexibility than ever before. And of course, finally returning capital to shareholders, which we see as our job to return excess capital to shareholders. And we do that through our enhanced share buyback program, which is rewarding for shareholders, but also gives us the flexibility to be opportunistic with our capital as opportunities arise.
Certainly, optimizing our balance sheet has led to enhanced returns on invested capital. I told you two years ago when we first met in this type of setting that return on invested capital is my ultimate metric. Certainly, over the last five years with this new capital position, capital structure that we're operating in, we've been able to enhance our overall returns on invested capital as a corporation. Let me just finish with some comments on our number one most important asset at Waters, and that's our people. This starts with a very personal philosophy of mine as a leader that values and culture with a particular emphasis on people are critical performance drivers and need to be focused on and invested in in the same way that you'd invest in innovation or any other important part of your business.
I am continually impressed every day that I walk through Waters all over the world with the people that we have in this company. It's an incredibly expert, deep, driven, motivated, passionate group of people. And I think we're leveraging our talent better than ever before. And we're certainly investing in our people more than ever before. One small microcosm of that is what we call the Global Leadership Forum. This is a group of our 60 most senior leaders in the company. I gather this group twice a year to talk through the big picture of the company and to personally invest in every single individual at that level and beyond. This group has come a long way. I see leaders stepping up in all parts of the business.
Obviously, our top leadership group at the Global Leadership Forum level is very diversified across technical, business, commercial, and other capabilities, very strong backgrounds, an incredible mix of tenure with a third of the people in the room well over 20 years of experience, but also about a quarter of the people new in the last three years bringing in incremental new perspectives, complementary skill sets, etc. Like I said, it's a very global group. More than a third of our Global Leadership Forum is actually born outside the United States, and many of those are now in the U.S., but many of those, of course, are operating in the different markets around the world, and clearly, in my experience, diversity wins. Diversity of viewpoint, diversity of background, diversity of gender makes us stronger.
Actually, even beyond the GLF, you look at our top leadership group of our vice presidents and our senior vice presidents. We have tripled the number of women at the VP and the senior VP level in the last three years. I think it's making us a much stronger and much broader-minded business as we look at the opportunities ahead of ourselves. This investment in our people really knows no bounds. I personally engage in that. For example, I teach. I designed and teach a three-day leadership development course each year for a new cohort of 15 people to help really bring along this entire group and the next generation of leaders within the company. I couldn't be more excited about what people are doing to step up and take on greater responsibility and contribute more to the overall company.
Really, along the lines of culture, I just wanted to also make a note on ESG. Waters has long been a company committed to sustainable business practices. In fact, we just recently published our latest sustainability report where you can read about the areas of focus within the company in terms of the reduction of energy usage by employee, which is strong, what we're doing in our field with our customers in terms of lowering per sample solvent usage by significant amounts. But you'll also see that we have created a culture and a set of values within the company encouraging our employees to be deeply engaged in the communities in which they live and work.
We're heavily involved in investing in STEM education at a primary school level all the way through people that would be joining our company and continue to be ambassadors and advocates for community engagement in many different ways. From a governance standpoint, I've had the opportunity to bring on three new independent directors in the past two years, and it would be four, I guess, if you include me, three and a half years ago. We've added two new committees, a Finance Committee as well as a Science and Technology Committee, and so we now run five active committees, and we continue to evolve and strengthen and add rigor to our overall governance practices. At this point, we're looking to establish a new set of 2025 sustainability goals.
And as the foundation for that, we're currently engaging in a broad-based materiality assessment that will inform what those goals end up being. So I think we feel terrific that as we step back and look at ourselves in the mirror, that we're delivering benefit not only to our customers and our employees and our shareholders, but we're delivering benefit to society in a shared value kind of a mindset where our business success and our societal contributions reinforce each other strongly over time. So as I wrap up and set the stage for everything that's to come today, I just want to reflect back on our five-point value creation model. I hope you can see from some of my introductory comments, and I know you will certainly see from everybody else today that we're making very strong progress on each of these five elements.
I'm very proud of the team for leaning in so well to the opportunities and the incredible focus in this company and these levers that will create sustainable value for all of our shareholders over time, and with that, I do want to give a little bit of a preview of what's next. Two years ago, you had a chance to hear from Ian King on the R&D side and Mike Harrington, who spoke about pharmaceuticals two years ago. This time, he's going to give a broader view of our global markets that he oversees. You're going to hear again from Terry Kelly on materials science and TA. You're going to hear, of course, from Sherry Buck, our CFO.
You're also going to meet two new members that you have not yet met: Jeff Mazzeo, our Vice President of Global Marketing, and Erin Chambers, our Vice President of our Chemistry Operations and Technology Centers. And Jeff and Erin are good examples of this deeper and broader talent pool that is alive and well and being invested in so heavily. And I think you're going to gain some really great incremental insights, not just from the folks that you may have had a chance to interact with already, but also from increasingly new voices throughout the corporation as well. So we have a great day ahead of us, and I can't wait to dive in. So first up is our top priority of innovation, and that's going to be addressed by Ian King. So come on up, Ian.
Well, thank you, Chris.
Let me add my welcome to that of my colleagues. I must admit, it's an unusual situation for us to let a product guy loose on an audience like this. Let's hope we both enjoy it. First, a few words of introduction. My name is Ian King, and I joined Waters in the U.K. in 1982. Prior to that, I was a research scientist in clinical pharmacology and a Waters customer. I guess I've been around Waters products for the best part of 40 years. In 1992, I moved to our headquarters in Massachusetts. Since then, I've had several positions, including Vice President and General Manager of our consumables business, Vice President of our chromatography business. Currently, my responsibility is for the research and development of all Waters branded products.
I hope the presentation today, including the one I'm going to go through with you now, will give you a glimpse of why so many of us stay so long and why being a part of this company is so rewarding. I really believe the work we do delivers real benefit to our customers and in turn enables them to change the world. That's enough to get me out of bed every day. So there are four key topics I want to discuss with you today after I give you some context around our R&D organization. And I think I can show you that we are prioritizing our investment towards research and development as we continue to reassert our innovation leadership. The purpose of that investment is to put us at the start of multiple new product cycles.
I hope I can show you that as we take a more detailed look than normal at what is now a robust and an exciting product portfolio. The program I introduced many of this audience to two years ago called transformational engineering is now well embedded in our product development process and is beginning to fulfill the promise of accelerated product cadence. Finally, looking to the future, discuss how we believe we are optimally positioned in three attractive technology markets that are all at different stages of their evolution and give us real options on how we deploy our innovation resources to support the future growth of the company. Our customers look to us to lead innovation in our industry. We have a very credible record here, demonstrated by setting the standard of measurement on numerous occasions during our 16-year history.
Our specialty focus means we are not diluted by a broad portfolio. And that gives us the opportunity to lead in each of the technology centers we participate in. As we look to continuously reassert our position of innovation leadership, we focus on three principles. First, we prioritize organic innovation to deliver industry-leading product cadence. Make no mistake, we are investing to win here. That's not to say we need to do or even can do everything ourselves. We have many very talented people at Waters, but there are many more of them outside the company. Expanding our innovation footprint by aligning with key thought leaders and institutions is a vital part of the innovation journey. Secondly, it's clear customers are asking our industry for true system-level solutions.
A theme that you will see recurring through many of the presentations today will allow them to focus more on the results than on how they get the results. By embedding transformational engineering throughout our innovation process to integrate our deep expertise in liquid chromatography, mass spectrometry, informatics, and chemistry, we become uniquely positioned to deliver on that need, and thirdly, as we recognize the accelerating pace of innovation from our customers, as we plot our technology course for the future, the realization that we will have technology gaps that may need to be filled with planned, purposeful M&A activity, which becomes more important than perhaps it was for us in the past. Two years ago, I stood in front of this group and told you that to stay ahead, we would need to reinvent the way we innovated. That's exactly what we have been doing.
Innovation is a multifaceted process. It is no longer the sole domain of the technical experts. It requires vision, planning, execution, and oversight. The vision of where we compete and clearly defining our right to win led us to the first of some major changes in our R&D thinking. It was clear to meet the changing needs of our customers. We needed to elevate our product development to the systems level. Our structure of four independent R&D organizations didn't lend itself well to that strategy. So 18 months ago, we combined these four groups into a single systems-focused R&D organization with a much stronger marketing interface to help us move to a more market-led portfolio. The second big change came about as we developed a strong plan to align resources around prioritized initiatives.
We could see that while we were doing many technically interesting programs, too many of them were not aligned to the strategic plan. Not enough resources were allocated to the development of the new platforms that we needed to get to our new product cycle. It led us to reduce by 40% the number of programs we were doing and reallocate those resources to our prioritized product and platform development. That's a painful process, but a necessary one as we build our future. And of course, establishing better practices around execution and oversight has led us to more predictable outcomes in our development and commercialization initiatives. More importantly, the reinvention of innovation is starting to pay off, and I hope I can show you in the next few minutes. But first, I just wanted to talk to you a little bit about our R&D organization.
We are over 1,000 people worldwide, made up of chemists, physicists, mechanical engineers, software engineers, and many more scientific disciplines. We're located in five major centers around the globe. In Massachusetts, we have our center of excellence for liquid chromatography, both instruments and chemistry, as well as the attendant software. In Delaware, we have our center of excellence for thermal analysis and rheology for TA Instruments. In the U.K. and Singapore, we focus on our mass spectrometry technologies, and in Romania, we have our center of excellence for our informatics product development, and while these locations contain deep subject matter expertise, our new structure allows for a more seamless integration and focus on systems development. All the way through, we make sure our most important inventions, developments, and manufacturing processes are protected with over 4,500 patents issued or pending, along with hundreds of trade secrets.
As Chris mentioned earlier, we've continued to invest in R&D as a priority. Today, we invest 42% more in R&D than we did five years ago. That reflects a compounded annual growth rate of over 7%, and our 2018 investment represented 9% of our product sales for $143 million. Now, I'm sure you have seen bigger amounts spent in our industry, but as Chris pointed out earlier, we are a specialty measurement company, not diluted by a broad portfolio, and you can see here a view of the spending in each of the technology centers of the company. With this high concentration of focus and our proven track record, it may not be the highest spend, but we believe it is the most impactful in the industry.
We'll take some time going through how we spend that money and talking about some of the outcomes we are seeing from the investment. So for the next few minutes, I want to talk to you about how these changes and investments in R&D are starting to make a significant impact on our portfolio. In 2016, we embarked on a strategic planning initiative to take a fresh look at our business. One of the outcomes of that was we needed to look at innovation in three ways. First, we needed to give a clear priority to our core business. So it's this type of innovation we drive into our product technology every day. And the rewards are a strong, sustainable product pipeline that gives us an excellent return on R&D investment. We call that innovation to drive the core.
This is innovation that gives us our competitive edge with the products that we have today. We also came to understand how much our customer base was evolving. Their pace of innovation was accelerating. And to satisfy that, they needed more powerful tools that were simpler to operate and robust enough to be confidently deployed around the world. It was clear that we needed to get after new state-of-the-art platforms to meet that demand and to get us to the start of new product cycles. We termed our approach to solving this challenge transformational engineering, the output of which we believe will change the basis of competition. And it was clear also that there were still many problems our customers had that were yet to be solved, problems we felt we could solve if we could begin to harness the almost limitless potential of mass spectrometry.
In our research labs, we continue to push the boundaries of technology. We call that breakthrough innovation to deliver capabilities that will make a profound impact on our customers and allow them to one day change the world. While we made good progress in all of these dimensions of innovation, most of it was behind the scenes. In 2017, our product release cadence was below our expectations. It accelerated in 2018, and we released a good crop of products later in the year, which will show more impact as 2019 progresses. This year, 2019, is a watershed year for us. I'm happy to say that we now have all three categories of innovation delivering products in 2019, combining to produce the richest product release cycle we've seen in many years.
First, our efforts in innovation to drive the core will result in the release of seven new systems at a controlled cadence through 2019. These systems will be performance extensions of our current platforms in LC, LC-MS, and informatics. In addition to that, in 2019, our transformational engineering focus will introduce the beginning of two new product cycles. It's these platforms, along with others in development, that we believe will change the basis of competition. The first one is the BioAccord system we released six weeks ago. I won't dwell on the significance of this release, as you will hear much more about it from my colleagues later in the morning. The second one is the introduction of Waters Connect, a unique new informatics platform based on modern cloud-ready architecture, a web-based application environment, and with data compliance engineered into its core.
I'll talk a bit more about this very exciting development a bit later. And right now, we would anticipate the first elements of this to roll out in about 12 months from today. Also, for the second half of 2019, we will release a new multidimensional high-resolution mass spectrometer, which incorporates really exciting innovation in the field of ion mobility. This Cyclic IMS technology, coupled with a new high-mass resolution and mass accuracy time-of-flight mass spectrometer, will be a very powerful tool for the leading researchers at the forefront of intact protein research, metabolite and lipid research, and biopharmaceutical discovery. We've been working very closely with leading authorities in the field to understand the technology gaps that they have in trying to solve their very complex programs as we develop the new cyclic IMS system.
Rather than me tell you about that, I want you to hear directly from these leading researchers who have had early access to the system over the last few months. Given all that, I'm very excited about the portfolio. I think it's rich, and it sets up 2019 for a very impactful product release schedule. I think it's balanced from our core competitiveness with existing platforms through the start of our next generation of platforms that set us up for the future, the cutting-edge, innovative mass spectrometry technology that will allow researchers to solve the problems in front of them. I want to bring the discussion back, excuse me, to the heart of our innovation focus, transformational engineering, which is what sets us down the path of new platform development and what will go a long way to define our product portfolios for the future.
Our focus for innovation over many years has been on performance, bringing enabling technology to the global scientific community. While that remains a prerequisite, today, our customers need fit-for-purpose tools that can be broadly deployed with little technical overhead for use by non-experts. For us, transformational engineering is a multidisciplinary approach to innovation with a focus on workflow, simplicity, and robustness. Fundamentally, it is the innovation based on the customer experience. We've realized for some time the power of mass spectrometry is an information-rich measurement tool that enables unique insights into complex systems. Until today, it's been the domain of the MS experts. The tools were extraordinarily powerful but complex to use. Biologics presented a unique challenge. The molecules are very complex and notoriously hard to characterize. Mass spectrometry is uniquely suited to that challenge. But to be effective, MS needs to be broadly deployable across the pharmaceutical value chain.
There were significant technology barriers that needed to be dismantled before that could happen. That's where BioAccord comes in. It was designed and built to be simple, robust, easy to deploy, and support with fit-for-purpose performance, enough power to address the characterization challenges in biologics, while simple and robust enough for broad deployment. It also had to sit on an informatics platform that could raise the standards of data integrity for mass spectrometry to the requirements of the highly regulated areas like pharma QA. We believe this first example of transformational engineering, more to follow, is what will change the basis of competition now and into the future, so we've talked a lot this morning on how transformational engineering is helping us redefine innovation, and using this example of the multiple new types of patent filings on BioAccord shows that we are innovating beyond instrument performance.
That performance innovation is certainly there in the new BioAccord system. But many of the patent filings are around the user experience, the way the system is integrated together, the self-diagnostics right through to the ease of maintenance. And just as importantly, putting all of this upfront engineering into carefully selected platforms means that we can increase and control the cadence of new product releases. BioAccord is not a singular product but is, in fact, a start of several families of product. Underpinning everything we do going forward is a groundbreaking new set of platforms and an architecture that won't change for many years. That architecture today exists in BioAccord, but it will evolve and develop continuously for many years, like the iOS architecture and platform that underpins your iPhone and your iPad and your MacBook that you have in your hands right now.
On top of these long-lasting platforms, we'll continue to build technology building blocks like the RDa detector that's contained in the BioAccord system. BioAccord is our first example of a core system that can then be configured for market-specific jobs with the addition of market-specific chemistries and informatics. And this is one example of the platform leverage transformational engineering brings. Next time we talk, you'll see the impact of others like liquid chromatography and tandem quadrupole mass spectrometry currently under development. This is the game changer for the markets we serve today. This combination of technical building blocks on our robust, reliable architecture, market-specific chemistries, scientific content, and specific software application gives us a pipeline to develop multiple products per year for multiple core systems. So I'd like to paint a bit of a vision of the future for you.
And this has me more excited than any point in my career today. But transformational engineering isn't just about LC and MS. It's also about chemistry, which Eri n is going to talk to you about a bit later, and informatics. Our Empower product has been the gold standard for laboratory informatics for over 20 years. Every year, we extend the product such that it is now used in 50 of the top 50 pharma companies in the world. We have even moved Empower to work in the cloud as customers have pushed for more and more capabilities. Even our great engineers can only take a 20-year-old architecture so far. For several years now, we have been planning for a future that will allow our customers to continue to leverage the strength of Empower while reaping the benefits of our transformational engineering initiatives. That future is called Waters Connect.
Today, I'd like to introduce you to the way we are thinking about the future of informatics. Let's start, as we always do, with our customers. This is what they have told us that they expect. The software user experience they expect from their LC-MS analytical software should be similar to what they experience on the web and on their application devices today. They expect Waters to provide a platform and set of apps that set the industry bar for compliance and data integrity. They expect Waters to help them manage disparate sets of laboratory data, allowing them to focus on scientific discovery. Our customers want our instruments to connect like IoT devices with data ported into data lakes where analytical tools, including AI and machine learning, harvest new insights every day.
Finally, our customers want Waters to join up everything above into an ecosystem that allows them to optimize and tune their business. Even today, Waters has many of these capabilities embedded in Empower, NuGenesis, UNIFI, and MassLynx. But the architecture to bring them all together didn't exist until now. With the new architecture of Waters Connect, we can move the capabilities from five separate software platforms into a single platform, allowing for shared data and integrated services, all while making upgrades and installations significantly. Waters Connect is built on a modern, cloud-ready architecture with, very importantly, compliance designed into its core. Not only does this enable the adoption of LC-MS further into regulated spaces, it also gives us the opportunity to look at industry-leading ways of delivering software as a service and advanced data integration and analytics.
This will give us the opportunity to win anywhere in the laboratory ecosystem we serve and prepares us for growth in the future in any market we choose to serve. We believe that Waters Connect is the platform that will underpin our growth for the next two. This confidence is built on real competitive advantage. First of all, we have the greatest asset any software company would love to have. We have the biggest user base in our industry. But most importantly of all, 500,000 Empower users will be seamlessly integrated with Waters Connect as soon as the first generation of the web-based CDS apps are available. Data will flow from Empower into the new system without our customers even noticing, like your old photos magically show up on your new iPhone.
As I mentioned, Waters Connect is built on modern, cloud-ready architecture with compliance designed into the core, differentiated from anything else out there today. The platform will have an ecosystem of Waters-created web-based apps, the first of which will appear early next year. We also have developed Waters Connect with a rich development environment and a developer toolset to allow the incorporation of third-party developed applications, rapidly expanding the breadth of applicability. Think iPad, and as we develop new instrument platforms, the products they produce will be fully integrated into Waters Connect. Already, BioAccord, Vion UPLC systems are Waters Connect-enabled. We still have a lot of questions to ask, and next for us is understanding our customers' needs around software as a service and cloud deployment.
We feel that we can deliver increasingly more value to our customers with greater insights, faster deployment, and business flexibility that the architecture of Waters Connect will enable. The groundbreaking Waters Connect architecture opens up all of these options to us and our customers. So this as a whole is Waters Connect: harmonized integration, ease of customization, and a central hub of web-based applications. Now, add this to everything else we've talked about so far today. I hope you can start to see our confidence in our innovation leadership for the industry. So to finish up today, I'd like to talk a little bit about the technology markets that we serve and take a little look into the future. We're optimally positioned in three technology categories today. LC with optical detectors is, of course, where it all started.
It's a well-entrenched technology, which remains vital to a very wide range of measurements. It is deeply embedded in regulated spaces and will remain so well into the future. It continues to grow as the volume of analytical testing continues to rise rather than the new spaces that it can be applied to. Productivity, dependability, and performance will be the drivers of competitive advantage. And that fits very well with our transformational engineering initiative. It's certainly the biggest of the technology areas we serve today and is clearly the gold standard of measurement in this space. It remains central to our innovation, as we showed with ACQUITY, and we will show again with platforms currently under development. LC-MS is at a different stage of evolution, with many application spaces still underdeveloped. Areas like clinical diagnostics are still very young.
As we mentioned earlier, we are reducing the barriers that today prevent wider deployment of LC-MS into regulated spaces. Because of this, growth rates will be higher as new spaces open up. Although smaller than LC optical, it is still in an expansive stage of its development. Direct ionization mass spectrometry is an area we've been focused on now for a few years. This is where the mass spectrometer, using unique ionization techniques, can be uncoupled from any front-end sample preparation, including the chromatography. This could open up significant growth areas in the future as the performance of the technique continues to grow. It is a small space today, but growing quickly and could become disruptive to other established technologies. I want to talk a little about one element of direct ionization, and that is mass spectrometry imaging.
So traditionally, LC-MS is used for four major types of analysis: screening, which checks to see if certain compounds are contained in a sample; quantification, which measures how much of a compound is in a sample; elucidation, to check if there are any other unexpected compounds in a sample; and comparison, where you can quickly find out if there are any differences between a wide range of samples. MS imaging is a technique used to visualize the spatial distribution of compounds in a sample and is beginning to be used in a variety of ways. Pharmaceutical companies see great potential in drug discovery. Cancer drugs are very toxic. So the more the scientists know about how and where the drugs are deposited in body tissue, the better they can target the tumors and not the healthy organ. Similarly, scientists can actually see the distribution of metabolites in body tissue.
In clinical pathology, which is the example I'm going to show you in a moment, the techniques could become disruptive to older, established workflows. Basic tissue classification by traditional pathology requires the tissue to be stained and an assessment of the morphology of the tissue done by a trained pathologist. Any more in-depth classification of tissue specimens, such as receptor status, requires the staining of specific proteins, in this case, to make a more informed decision on the status of a tumor. Both these techniques are hands-on and require the stained tissue to then be scanned or viewed by microscope and reviewed by an experienced histopathologist. They are slow, so therefore difficult to be used as real-time information during any surgical procedure. Recently, we've been building a suite of some of the most promising technologies in imaging.
The most recent being the acquisition of Desorption Electrospray Ionization technology or DESI as it's fondly known, which we purchased from Prosolia last year. Since that time, our developers have been working to optimize DESI performance to improve today's products. Our researchers have been working with thought leaders in the clinical space to build prototypes of DESI mass spectrometry on a machine learning platform to allow rapid tissue classification based on single samples. Contrasted with the traditional workflow above, this DESI MS imaging allows tissues to be classified with multiple levels of information based on their chemical composition with no sample preparation. It does it quickly and provides real-time information, potentially leading to better surgical outcomes. It's very much in research at this point, but I hope it gives you an example of the types of new diversified spaces direct ionization mass spectrometry can.
I hope you found some of that interesting. But if you only take four things away from my section today, I hope they will be that we are investing in innovation for the future growth of this company. That investment has put us at the start of two new product cycles already, with more to follow. Our product cadence is accelerating due to our transformational engineering initiative. And our technology markets are very balanced, from established gold standard technologies to potentially disruptive ones. We're extremely excited about the state of innovation at Waters. I hope some of that excitement got through to you today, and I'd like to thank you all for your attention. With that, I'd like to invite our Vice President of Marketing, Jeff Mazzeo, to the podium.
T hank you, Ian, and good morning, everyone.
As Ian said, my name is Jeff Mazzeo, and I'm the Vice President of Global Marketing at Waters. I've been with the company for 22 years, and it's been an extremely pleasurable experience. Today, I'm here to talk to you about a very exciting new opportunity for LC-MS technology in the biopharmaceutical segment of the pharmaceutical market. Biopharmaceuticals have been referred to as biologics or large molecule drugs by my colleagues today. And just to give you a few examples, they include things like antibodies, vaccines, oligonucleotides, and gene therapies. So I'm going to cover four key areas this morning. The first that I'll cover is to demonstrate to you that the pace of innovation is increasing in the pharmaceutical industry. And that increased pace of innovation increases the need for specialty measurement.
I'll talk to you about the fact that Waters, over the last 10 years, has established a very strong position in the biopharmaceutical development space, and as we've talked to our customers in this space, what they've told us is they would very much like to more broadly deploy LC-MS technology. However, they've been very clear that current market offerings do not meet their needs in that regard. So what we've done is developed the BioAccord system that you heard a little bit about already this morning to deliver on those needs and to give our customers LC-MS technology in a format that allows them to easily adopt it and deploy it to take advantage of the power of this technology, so first, let's take a look at the biopharmaceutical pipeline.
What we're looking at here is the total number of drugs that are in development, so this is before approval, from 2001 to 2017. And you can see that in 2001, there are just about 6,000 drugs in development. By 2017, that number was about 15,000. And in fact, if you look at the last several years, you can see that the number of drugs in development is actually rising. We're seeing an acceleration of innovation. The other interesting point here is to take a look at the percentage of those drugs in development which are biopharmaceuticals. And you can see in 2001, it was 22%, whereas in 2017, it was up to 38%. And that number is expected to continue to rise over the next five to 10 years.
And again, this pace of innovation and this tilt towards more biopharmaceuticals is driving the need for more specialty measurement. And as these drugs get to the approval stage and are manufactured, it needs to be done in a compliant environment. That early pipeline that I talked about for biopharmaceuticals has played out to tremendous commercial success for this category of pharmaceuticals. You can see that in 2005, if you looked at the top 10 selling drugs around the globe, they were all small molecules. However, by 2017, seven of the top 10 were biopharmaceuticals. And indeed, as these drugs are targeted at diseases like cancer and they command a high premium, the commercial success of biopharmaceuticals will accelerate. Waters recognized this trend in the pharmaceutical industry towards more focus on biopharmaceuticals over a decade ago. And we've had a very strong focus on this segment.
We've introduced many new products, which I'll take you through. And we also introduced sales specialists into our field regions so that we could capitalize on this opportunity. Prior to 2007, you all know that we launched ACQUITY UPLC in 2004. And to be fair, when we launched that product, it was really targeted at small molecule reverse phase separations. But as we saw this biopharmaceutical trend, we realized that we could take advantage of the power of UPLC and apply it to separations that are relevant to biopharmaceuticals, starting with amino acids. Amino acids are the fundamental building blocks of proteins. Waters has had a long history of success in AAA, starting with Pico-Tag and then AccQ-Tag. So we developed a UPLC-based method with the AccQ-Tag chemistry for much faster amino acid analysis. We also introduced UPLC columns for the separation of peptides.
Peptides are generated from the enzymatic digest of a protein, and they require high-resolution separations, which is a perfect fit with UPLC. In 2007, we started to accelerate our new products in this space. We introduced many new chemistries based on UPLC to go now to intact protein separations, both by size exclusion and reverse phase, as well as chemistries for the separation of oligonucleotide therapies, as well as introducing an actual LC system specifically designed for biopharmaceutical separations, the ACQUITY H-Class Bio. In addition, as I'll talk about, mass spectrometry is a fundamentally important technology for the characterization of these complex molecules. So early in 2008, we introduced BiopharmaLynx, which is an application manager in our MassLynx LC-MS software, which is specifically used for the characterization workflows of biopharmaceuticals.
More recently, we've continued to innovate in chemistry with things like the GlycoWorks N-Glycan kit, which I'll talk more about, which is a complete workflow kit, everything from the enzymatic release of the glycans to a novel tagging technology followed by UPLC MS analysis. One thing to point out is that as we had a lot of success with BiopharmaLynx in the 2007 to 2012 timeframe, it became clear to us that our customers wanted to do LC-MS in a more regulated, compliant environment. So in 2013 is when we first launched our UniFi LC-MS informatics platform. And that really set up a very strong position for us in this regulated LC-MS analysis. And as I'll talk about BioAccord, it is based on that UniFi informatics. So we've had tremendous success with UniFi already using our QTof instrumentation. We've continued to introduce new column brands.
Erin will tell you more about BioResolve, additional LCs dedicated to this space. Of course, what I'm here to talk to you about today is the recently launched BioAccord. All of these activities over the last decade plus have led to us increasing our market share from approximately 10% in the early 2000s to 20% today. Now, biopharmaceuticals, as I already mentioned, they are very much more complex than small molecule drugs. They're larger, significantly larger. So an antibody is 150,000 Daltons versus four or 500 for something like ibuprofen. In addition, it's very important to realize that biopharmaceuticals are not single chemical entities. They are heterogeneous mixtures of closely related but different structures, varying based on glycosylation, modification to the peptide backbone, etc. Because of this, we like to say that measurement for small molecules is kind of incidental.
You know what you made, you expect it to be a single entity, and you're just confirming it. Contrasted with biopharmaceuticals, where measurement is fundamental, it helps to define exactly what they are and to characterize their quality attributes. That leads to significantly more testing for biopharmaceuticals versus small molecule drugs. And you can see some of the stats here. Chris talked about that as part of development. It's about an order of magnitude more testing for a biopharmaceutical versus a small molecule drug. The stat I have of 4x LC testing in this case talks about for batch release. So now we're talking QA/QC. Regardless, measurement is fundamentally important for biopharmaceuticals because of their complexity and the heterogeneity. And I haven't even mentioned the fact that the process by which they're made is also much more complex.
As I mentioned, mass spectrometry is a fundamentally important technique for the characterization of these molecules. This is looking at the data from FDA submissions of BLAs over the period of 2000 to 2015. You can see that there were 80 total submissions to the FDA of biopharmaceuticals. 79 of those submissions had some form of mass spectrometry data. What's more interesting, though, is if you look at the trend of the number of attributes that are measured by mass spectrometry over time, it's increasing. What this means is that LC-MS has been evolving from something that's used in discovery and maybe early-stage development, becoming something that's much more important in later-stage development for the characterization of these molecules. In fact, we're aware of a handful of our customers that are using LC-MS today to actually do batch release of biopharmaceuticals.
All of them are based on our UNIFI informatics platform, again, for the reason that it provides LC-MS in a high data integrity compliant environment. Something else that you may have heard about that's driving a shift towards more LC-MS in the biopharmaceutical space is what's called Multi-Attribute Monitoring, or MAM. MAM is a technology that's based on LC-MS, where with one single test, we can measure multiple quality attributes of a protein biopharmaceutical with much higher sensitivity and much higher selectivity. This allows our customers to streamline QC release because in a single test, they can do what takes today five or six tests. So they can release things much faster and at lower cost. In addition, as the industry is moving towards things like continuous manufacturing, it needs to be enabled by process analytical technology.
LC-MS is ideally suited to measure the quality of biopharmaceuticals in this environment. So because of this, when we look at the LC optical and the LC-MS market, specifically in the biopharmaceutical segment, we expect much higher growth for LC-MS over the next 10 years. Today, this represents just under a $1 billion market for these two technologies. Over the next 10 years, it'll become significantly larger with a 10% CAGR. However, LC-MS will grow with a 15% CAGR versus 6% for LC optical, such that by 2027, we forecast that LC-MS in this segment will actually be bigger than LC optical. But as I mentioned before, as our customers have told us that they really want to deploy LC-MS much more broadly in the biopharmaceutical workflow, they've been very clear that current market offerings do not meet their needs.
They've really pointed out five things that they say are lacking in current offerings. This is data that we've compiled from hundreds of interviews with scientists in this field. Number one, they said the systems need to be much more robust than current research-grade offerings. Number two, they need to have a much higher level of reproducibility, not only on a given system, but even between two different systems. Again, if they're going to deploy this in a regulated workflow, it needs to be much easier to learn and operate so it doesn't require an LC-MS expert. It needs to be much smaller than current offerings if they want to deploy it into their existing laboratory spaces. Finally, in addition to the informatics being compliant, it needs to readily allow them to take the raw data and convert it to actionable information with no user intervention.
All five of these needs need to be delivered without sacrificing any fidelity of the LC-MS data that the system produces. So we listen to our customers, and we've worked on and launched earlier this year the BioAccord system. And I invite you to come during the break to take a look at it. We have one of the systems out there with additional example data. BioAccord delivers on the needs of our customers, and it integrates the full Waters portfolio of technologies. It uses our I-Class UPLC instrument for the demanding high-resolution separations that are needed for things like peptide mapping. It leverages all the chemistries that I've talked about and that Erin will go into much more detail about to do the separation, but also do the workflows required to prepare samples for analysis. The heart of the system is the new ACQUITY RDa mass spectrometer.
This is a time-of-flight-based mass spectrometer that provides accurate mass information, which is crucially important to allow characterization of these complex molecules. In addition, the informatics is based on our UNIFI platform. Again, we've established a strong position with UNIFI already in regulated LC-MS and biopharmaceuticals, and this will continue to allow us to leverage it going forward. All of this is backed up by our world-class service and support, as well as our outstanding scientific capabilities. So BioAccord delivers against those customer needs that I touched on before. It's a purpose-driven solution. It supports three applications: peptide mapping, intact and subunit mass analysis, and released N-Glycan analysis. It's been specifically designed to provide the required performance for those three applications. In addition, it is compliant-ready because our customers want to deploy this into late-stage developments and eventually into QA2C.
Finally, the three things in the middle are all enabled by a new technology that we're calling Smart MS, whereby the system automatically sets itself up so non-expert users can take advantage of it and quickly get quality data out of the system, streamline workflows to go from data to information, and it's self-diagnosing so that if there are any problems, they're identified and resolved quickly. Speaking of problems, there we go. There's something else we've done with this system, which is a novel concept and a new paradigm shift in our industry. That's called Systems Integration Testing. What we mean by that is part of our manufacturing, we actually take all the components of the system in our operations, we assemble it as a system, and we test it as such under conditions which mimic how it's going to be used by our customers.
Again, part of the manufacturing process. Once it passes those tests, we ship it as a complete system in a single container, and it gets installed in our customer's laboratory. This is in stark contrast to the way our industry operates today, where the first time the components of a system come together and are tested as a system is in the customer's laboratory. This is going to provide an incredible new customer experience for the customers that are targeted in the biopharmaceutical space: much faster and easier installation, increased robustness, and finally, for Waters, this is going to deliver increased field productivity because they won't be troubleshooting problems in the field. Everything will be tested as part of the manufacturing.
So I mentioned that there are three key applications that this system supports: peptide mapping, which is fundamental for MAM, as I talked about before, intact and subunit mass analysis, and released N-Glycans. But those three applications are critically important across the entire development and manufacturing QA2C continuum in the biopharmaceutical space. So let me now take you through some example data. And again, I invite you to come see the system at the break where we have even more data. First, I want to stress that the three applications I'm going to show you are all done on a compact, easy-to-use system that's also compliant. The first application is peptide mapping. So peptide mapping is done by taking a protein, treating it with a proteolytic enzyme to form peptides, typically hundreds of peptides. These peptides need to be separated with high resolution and then take an accurate mass measurement.
By doing so, we can really get into the fine detail of the protein structure. We can pick up very small differences in masses by cutting it into peptides, and we can pick up those differences at very low levels. This, again, is the fundamental application of multi-attribute monitoring that I touched on before. You can see the beautiful UPLC separation of this complex digest. The next application is intact mass analysis. This is of an intact antibody. It's 150,000 Daltons, as I mentioned to you before. I want to point out that that top raw spectra, which is the multiply charged ion envelope, the quality of that data is equivalent to what we can get on our research-grade instruments.
Again, no sacrifice in performance, outstanding spectral resolution, such that we then take that multiply charged ion envelope and we deconvolute it using algorithms to get the intact mass. And you can see that at this level, we can see the major glycoforms of the protein. So all of those different masses that you see in the deconvoluted spectra correspond to some of the major glycoforms. Peptide mapping, we can go real deep at real low levels. Intact mass is fast, but we can only see the high-level structural difference. Do I need help again, I think? Thank you. And then the third application is released N-glycans. And this is enabled by our GlycoWorks kit. This is a complete kit for releasing the glycans, tagging them, and doing the separation.
You can see the beautiful separation of these closely related glycans, as well as the outstanding mass spectra there in the inset. Now, when we look at a protein at this level, we've released the glycans, so we don't know where they're attached anymore, but we get an overall profile of the different sugars that are attached. And this is very important for measuring the safety and efficacy of these drugs. So we believe that BioAccord really defines a new market category. And I'd like to compare and contrast it to current market offerings. So current market offerings, as they've tried to address this opportunity for broader deployment of LC-MS in the biopharmaceutical space, it's really repositioning of research-grade mass spectrometry systems. The BioAccord is high-performance, easy-to-use and deploy LC-MS system. Current offerings are complex and require an expert to use.
BioAccord is simple, intuitive, and it's meant for non-experts. Current offerings are factory tested at the component level. With BioAccord, we've introduced systems integration testing, a new paradigm in our industry. Current offerings are a large footprint, and they require significant facilities, whereas BioAccord is small and easily deployable, and finally, current market offerings have maximized performance at the expense of robustness and reproducibility, whereas with BioAccord, we've delivered the required performance for the applications with excellent robustness and reproducibility. Customer response to the BioAccord system has been outstanding. We've had an opportunity to bring many customers into our laboratories in Wilmslow in the U.K., as well as more recently here in the U.S. in Milford. You can see some of the companies that are represented here. I'd just like to share with you a few of the quotes that have come from these customers.
Impressed with the data and the fact that the system is easy to use. Fit for purpose as an accurate mass detector, similar to our QDa mass detector we launched several years ago, but much more powerful because it's accurate mass. Game-changing system, easily train someone who's not an expert on how to use it. Rather than outsource my analyses, I can now actually do it in-house, saving me time and money. And finally, don't underestimate the importance of unifying this. Client LC-MS analysis is absolutely critical, and customers recognize that we have an advantage in this regard. But don't take my word for it. Let's hear directly from these customers. Next slide, please. So to summarize, I've demonstrated to you today that the pace of innovation in the pharmaceutical industry is increasing, and this increases the need for specialty measurement.
Waters, in the last 10 years, has established a strong franchise in biopharmaceutical development. The customers in that space have told us that they really want to deploy LC-MS technology much more broadly, but that current offerings haven't met their needs. We developed and launched the BioAccord to deliver against these needs. BioAccord represents an exciting opportunity for our customers, but it represents an exciting new direction for Waters, where we'll develop fit-for-purpose, workflow-based solutions that are easily adoptable by our customers so that more of them can take advantage of the power of LC-MS technology. I'd now like to turn it over to Erin Chambers, Vice President of our Chemistry Technology Group.
Good morning, everyone, and welcome. It's a real pleasure for me to be here today.
As an analytical chemist, I've spent about 30 years talking to scientists, and I can tell you we're quite a group. So it's a real privilege to speak to you today, and before I do, I wanted to tell you a little bit about myself. So I was lucky enough to be able to have spent time as a customer working on both drug development at Pfizer and in biotech. I've also worked as a competitor in mass spec instrument design and in service. At Waters, my work has focused on the development of instrumentation and consumables and, more recently, applied science. In my scientific career, the part that has meant the most to me and may mean something to some of you has been foundational research I did in diabetes and in Alzheimer's disease.
It was really when I was doing this work that it all came together for me in terms of the importance of every single piece of the analysis and how deeply interconnected they are. The other thing I realized then was just how lucky I was to be working for a company on the cutting edge of technology. I had grown to get used to the best tools, leading edge. In fact, I came to expect that. I bring this same high level of expectation to the position I hold now in chemistry, as well as to the work I do as part of the broader global products organization. As we talk about chemistry today, Chris mentioned three pillars of strategy: specialty focus, innovation leadership, and application expertise. I look at chemistry as an embodiment of all of those pieces.
As we talk about chemistry today, I want you to keep a couple of things in mind. As one of the key recurring revenue streams for the company, chemistry is resilient, it's stable, it's predictable, not to mention profitable. We are investing heavily, obviously, for growth and innovation, but also to advance and grow the core of our specialty advantage and our competitive advantage. The agility of the chemistry organization allows us to address many application markets and many end markets. It also allows us to go very deeply and intensely focused in specific areas. I will talk to you in a little bit more detail today about the pharmaceutical industry and the biopharmaceutical industry in particular. This same agility and deep expertise is also what makes an enabler of that broader specialty advantage. Next slide.
I wanted to orient you to what we're talking about here today when we talk about chemistry. We're talking about a portfolio of industry-leading consumables. These are things like sample prep products that range from $2-$4 per sample, to kits that are multi-sample, single-use that may be in the thousands of dollars, and then to high-fidelity chromatographic columns that could be several hundreds of dollars to several thousands of dollars. Multiple use, but limited lifetime. They may last a couple of weeks to a couple of months. The important thing here is that all of what you see are the upfront pieces that are critical to all LC and LC-MS separations.
It is this deep level of expertise and our broad market focus that allows us to take common hardware platforms or platforms that serve common purposes like screening for pesticides, quantification of drugs, or identification of unknowns, and diversify and differentiate those platforms into application solutions for our customers. We can also, as I mentioned earlier, laser-focus in on each one of these specific areas to answer sometimes very complex, very specific customer questions. As our market and customer needs are changing, you've heard from Ian how they're asking for more and more of the workflow. So that company that can deliver end-to-end ease of use and comprehensive answers becomes even more valuable. And this plays directly to our strengths. What you have just seen here in the previous slides in terms of products and markets results in global chemistry business with strong organic growth.
It is stable, it's predictable, and it's resilient. We grew in the recession of 2008. We grew during the financial crisis. We deliver that consistency to the organization. In a few minutes, I'm going to go deep into how we do that and why. From a geographic perspective, our revenue is tied closely to the size of the install base. You can see a reflection of that dynamic in the strong business in the Americas and in Europe, where we have a significant install base. As we look at China specifically, this is a much smaller but fast-growing install base. For chemistry, it represents currently 15% of the top-line revenue versus about 18% for the overall corporation. Now, you'll hear a lot more about the China dynamics from a broader corporate perspective from Mike later on.
But I'd like to talk to you a little bit more about the chemistry aspects. So we do enjoy currently a five-year compounded annual growth rate of 16%. And while this is growing aggressively, there are significant opportunities for strong continued growth. I mentioned it's a young market with a small but fast-growing install base. One of our biggest opportunities is in accelerating the growth of that install base and the accompanying recurring revenue. Another opportunity are the growing food safety concerns, in particular in China and in Asia, and all of the testing that's associated with that. And lastly, the nascent biopharmaceutical market in China. All of these represent areas of focus for us to drive future growth. From a product and market perspective, and now we're looking globally, the majority of the revenue comes from a product perspective from columns.
If you're interested, I can show you what they look like at the break. You'd be amazed. It's about the size of a pen, and it can effectively differentiate between different insulin analogs or different Alzheimer biomarkers. It's really quite remarkable when you see what it can do. From a market perspective, the majority of our sales are in the pharmaceutical market with expansion opportunities in food and life science. The pharmaceutical market for us is very important. You can see here that about 82% of our pharmaceutical revenue is in the later stages of the process in QA, QC, and development. This is due to a combination of different factors. One of them is the very large installed base. You might be surprised to know we have 35,000 Alliance systems in pharma and over 20,000 ACQUITY systems.
This is shored up and reinforced by a market-leading position within our informatics. The other factor here is the reliability and the reproducibility of the chromatographic columns. So I'd like to spend a little bit more time on this as it is at the fundamental core of chemistry. The lead here requires an unparalleled level of reliability and reproducibility. And this is exactly what our integrated chemistry value chain delivers. At the heart of it is our manufacturing facility in Taunton, Massachusetts. You're no doubt aware. Chris mentioned it earlier on, and I'd like to take the opportunity to expand on it, that we recently made the single greatest capital investment we've ever made to build a new center of excellence and innovation for chemistry in Taunton. There is no greater validation of the importance of this, not only to chemistry but to the corporation.
We are investing to protect and grow this advantage. So many of our competitors start at that particle formation stage. We start at raw materials. You ask yourself, "Well, why is that important?" It is the ability to control hundreds of parameters that go into the synthetic process and translate those into performance that sets us apart. We spent 60 years developing this capability, filing IP, and more importantly, trade secrets. This is not something that can be reproduced easily. We understand the subtleties of every stage: particle formation, surface modification, packing, and we take this knowledge, and we use it to dial in efficiency, resolution, reproducibility. The result of that are products that perform the same today as they did 40 years ago, and because of that, they are built into legacy methods that endure decades.
As a scientist, I have to admit I had a little bit of envy over Jeff's data. Mine is not quite as exciting, but it is no less remarkable. You won't see a control chart like this from anyone else. This is 17 years of production of our Symmetry particle. What makes it truly incredible is the degree of mastery you have to have over a heterogeneous particle surface. We are talking about monitoring and controlling over 300 different parameters during the synthetic process. You can see why I stand here completely confident in the quality and the reproducibility at the core of our competitive advantage. Most importantly, what you saw previously leads to decades-long annuity cycles. It may be surprising to you to see a technical product life cycle that spans decades. The important thing to understand is it's directly tied to the life of the drug.
Think about something like Tylenol. It came out in 1955. Still making it. We're still testing every batch. Azithromycin, governed in the 1970s, patented 1981. Still make it. We still test everything. Once our products get embedded into these legacy methods, the importance and the reliability of that technical result is such that the pain of change is great to the tune of upwards of $1 million, and once those consumables get embedded into the methods, selling costs go down, margins go up, operating profits go up, so each specific growth curve you see here is actually a culmination of multiple adoption curves within pharma. We purposefully start at discovery. We want to capture that annuity early and then be starting to think about our next product cycle. Many of our newer products are, in fact, still in the growth phase.
So I want to draw your attention to one in particular, and that's ACQUITY. This is what happens when you design a system with a consumable. You get very high attach rates, and you get a growth curve like you see here with double-digit CAGRs 14 years later. Now, this is important not just because it's ACQUITY; it's important for us as a product line. But this was early systems development. What you saw from Ian on transformational engineering, that is the next step change in designing systems and consumables from the ground up that work best together. What you get is an integrated consumable that drives real added value. So I want to shift gears here for a minute from focusing primarily on our small molecule pharma to talking more broadly about chemistry and its influence on other parts of the business and other markets.
At the core is innovation. Innovation drives our core growth. It drives accelerated growth in various geographies and markets. And it's a combination of that innovation and that technical leadership and expertise that allows us to deploy technologies across various markets. The example I want to take you through here is Bridged Ethyl Hybrid, much easier to say BEH. It's a foundation for brands like ACQUITY and XBridge. It had its origins in small molecules, but we were able to modify this to increase its versatility such that it became the enabler of UPLC. Controlling the formation of this particle has allowed us to take a single unique phase stationary phase, grow, and evolve it in novel ways into a multitude of different, very specific market areas. Things like size exclusion chromatography for biopharmaceuticals and materials, diethylamine for food safety, and you'll hear about a specific example there from Mike.
And while we've obviously continued to focus on small molecules, the large molecule arena is growing at twice the rate. We're able to take the performance of hybrid particles in sub-2 microns and bring that to bioseparation. We made a conscious decision 10 years ago to invest and get ahead of the curve. The result is the expanse of different technologies that you see here. Chemistry takes a holistic approach to looking at columns, standards, mobile phases for every single one of these application areas, from amino acids to oligonucleotides, peptides, and proteins. Jeff highlighted the transition of the market to a greater proportion of biopharmaceuticals and the order of magnitude of incremental testing that comes with it. It's obviously an opportunity for us, but also for our customers. The pace of that innovation is changing, and the tools need to keep up.
The agility of chemistry also allows us to take any one of those compounds and dive deep as the market shifts demand. Monoclonal antibodies are a great example of that. Jeff showed you seven of the top 10 best-selling drugs are biopharmaceuticals. Five or half of those are monoclonal antibodies. It should be no surprise that we have chosen to focus here even more deeply. The amount of analytical testing here is astonishing. The breadth of different techniques required to prove safety and efficacy is wide. We have chosen to bring all of these tools to our customers. This is an area where that pace of innovation is truly accelerating. We have matched that pace with our own. We can check every single box with class and industry-leading technologies. We developed a strategic plan based on market attractiveness and right to win, and we implemented it.
And the portfolio you see here, which grows at double digits, is one of the results. Until recently, we were missing one thing, and that was ion exchange. This is where BioResolve comes in. We launched an entire new brand of consumables aimed at solving simply the most sophisticated and complex of customer questions. Each release targets a very specific question with everything needed to provide the answer: column, mobile phase, standards, pre-column. Last year, the first was for intact protein. Last month, the second was for charge heterogeneity, the cation exchange column. You'll want to keep your eye out here because we will continue to solve the unsolvable. In 2019 and beyond, you can expect us to bring fundamental step changes to complex biopharmaceutical workflows and to grow this portfolio of BioResolve chemistries aimed at very specific targets.
So each of these chemistries is unique and critical in its own right, but it also forms the foundation for systems such as the charge heterogeneity ion exchange system you see here. You've got chemistries on the front end. You've got compliant, scalable informatics on the back end, and you have high-performing hardware in the middle. We've been putting systems together for a while, and we do it well. But we're in a new era where customer demands are changing. You heard from my colleagues on innovation and transformational engineering. You heard about data compliance, and you heard about the importance of application-driven workflows. For the first time, we have developed a single comprehensive solution built from the ground up to be exactly what it needs to be. And that's BioAccord. So this is where everything you heard comes together.
Our specialty focus in biopharmaceuticals, our innovation leadership with transformational engineering, and our application expertise to translate and navigate the complex. As a key part, chemistry drives the overall workflow simplification, whether it is in terms of reimagining complex pre-analytics, decreasing sample prep time from days to hours, or providing standards and reagents that bring the reproducibility and standardization of LC-MS to new levels. I hope by now it's obvious why it's so important to bring every piece together: chemistry, informatics, hardware, and the integrated systems that our customers need, and why Waters is uniquely positioned to deliver this. We're focused. We're different, and we have created a new space in biopharmaceuticals and in the process, we made it very difficult for anyone to follow. Closing, I would like to close at some point here. I'd like to leave you with a few thoughts. Chemistry is resilient, predictable, profitable.
We are investing to solidify our competitive advantage, and we are driving deep into carefully chosen markets. We're matching the pace of customers' innovation. And all of this to drive LC-MS and Waters as the standard of measurement. And with that, I'd like to thank you for your attention. And I believe we are on a 15-minute break. See what we have here. About 10:30 A.M., we can come back at 10:45 A.M.
Okay. All right.
All right, everyone. If you can take your seats. We have new batteries, so we'll see if the remote will work or if it was user error. We're ready to resume the presentation. In a minute, we're going to hear from Mike Harrington, Terry Kelly, and lastly, Sherry Buck. Also, I want to remind everyone that at the conclusion of our presenters today, we have a panel discussion, and that should start at about 12:00 P.M.
Now, I'd like to welcome Dr. Mike Harrington. Mike?
Okay. Good morning, everyone, and welcome back from the break. Or I should say thanks for coming back from the break. My name is Mike Harrington, and in addition to being a member of the Waters Executive Committee, I also lead the commercial function for Waters Products and Services. Like Ian, I joined the company back in the '80s, a little bit later than Ian, in 1987. And before that, I had actually also been a Waters customer back in Ireland. And what I experienced then with my service, my sales, and my application support person who really showed me that they were truly vested in making a young, inexperienced postgraduate student adept in the art and science of chromatography, it really reflected to me a strong culture in the organization.
And I guess I liked it so much I joined the company. I didn't know then that one day I would actually have the privilege of leaving that function and, in fact, having the honor to stand in front of all of you and talk about the organization today, which I believe is a faithful reproduction of that culture throughout more than 30 years that ultimately is the foundation for our specialty model today. And that, I guess, is what gets me up in the morning, Ian. Or maybe not. Maybe it's my dog, Sam, who licks my face at 5:00 A.M. because he wants me to take him for a walk before I go to work. So you've already heard from some specifics from Chris, from Ian, Jeff, and Aaron about our products and markets.
So over the next 30 minutes or so, what I'd like to do is to give you some insights into our geographies, our products, and the key elements of the execution of our specialty measurement strategy. I hope to show you that Waters is well-positioned across our markets and geographies, that we continue to deliver benefit throughout the lifecycle of our technology solutions in the hands of our customers, and that the hallmark of our specialty measurement approach is to respond rapidly to our customers' changing needs with a deep scientific knowledge and expertise to tackle problems across their businesses and across their enterprise. Chris talked a lot about our corporate strategy earlier on, and we in the commercial organization play a key role in delivering across all three of those pillars. It's our job to select and serve the specialty markets that we've chosen.
We are the purveyors of the innovation into the hands of our customers, not just at the point where they're acquiring it, but throughout the lifetime of those innovative technologies. It's our job to ensure that we take our application's expertise and put it in the hands of our customers and help them get the maximum benefit from the solutions that they've purchased. As part of our specialty measurement focus, we've chosen structurally attractive markets to participate in, driven by robust trends. Although we have more than 50% of our business in the pharmaceutical industry, we are also looking to scale our businesses in other important areas such as materials, food, clinical diagnostics, etc.
In pharmaceutical, we see two major trends: really the rise of healthcare, the access to healthcare that's really driven by both government policies as well as rising wealth in the middle classes and in emerging geographies, and the second, which you've already heard about a lot today, is the rise of the biologic. I challenge any of you to watch TV and not see at least five commercials for the latest biologic drug during the course of your evening's viewing. Chris also highlighted the materials science in his opening, and my good friend and colleague Terry Kelly is going to talk to you much more eloquently about that in a few minutes. I get to talk about the mundane stuff like food and drugs. Terry gets to talk about mobile phones and golf balls.
By the way, when he tells you in a self-deprecating fashion about his golf game, be careful. He's actually a lot better than he pretends, and it's really a ruse to try to lighten your wallet during the course of the round. Chris also talked about clinical diagnostics, and I'll talk a little bit more about the area of food safety and testing later in my presentation, which is a really significant opportunity for us. So collectively, these trends that I've highlighted on the slide point to continued growth in our end markets and especially to areas where our unique expertise is even more needed than ever before. Waters is truly a global business with our revenues balanced across the Americas, Europe, and Asia-Pacific. In fact, more than 70% of our business is now outside of North America, with almost 40% in emerging geographies.
We've also invested significantly, for example, in Asia-Pacific, where 42% of our worldwide sales, service, and support resources are now deployed, so we've really positioned ourselves to continue strong growth, especially in that region, so looking at our developed and emerging geographies in a little bit more detail, it really shows that not only are our emerging geographies growing at almost three times the rate of our developed geographies, but they also show differing profiles across our product portfolio. So if you look at the two small pie charts, what you'll see is that in developed geographies, 60% of our business comes from the service and chemistry recurring businesses, and I'll show you in a few slides why that's actually a good thing for us and also adds value for our customers. On the other hand, in emerging geographies, 60% of our revenues come from instruments and software.
But as you heard from Aaron, that's a really solid foundation for future growth of those recurring revenues, so in the next four slides, I'm going to drill down in more detail into specific regions, two from the developed markets and two emerging countries. Looking first at the U.S., 2018 was a mixed year for us with a sluggish performance early on, but a good rebound in Q4, and overall, we've grown. The compound annual growth rate over a five-year period has been in the mid-single-digit range. Our U.S. business continues to have a very strong pharmaceutical foundation, especially in biopharmaceuticals, as you heard from Jeff and Aaron, but we're also seeing a more recent trend of generic pharmaceutical companies, including Indian companies, establishing manufacturing sites here in the U.S.
We've also seen growth in clinical diagnostics, where LC-MS continues to emerge as a preferred technique, particularly in the area of laboratory-developed tests or LDTs. Our strategic focus in the U.S. has really been to continue to work with regulators across areas such as data integrity and, more recently, on analytical procedure lifecycle management, which helps companies to modernize their older chromatographic methods. Our regulatory expertise, especially in pharmaceuticals, continues to be an important element of what sets us aside as a specialty measurement provider. Turning to Western Europe, we've seen a five-year CAGR of 3% at actual currencies. At constant currency over the same five-year period, our growth was actually 6%, which I believe is more of an apples-to-apples comparison and more of an indicator of the growth in demand and the growth in our business.
We see a solid foundation and mid-single-digit growth in pharmaceuticals, as well as growth in clinical diagnostics. Also in Europe, we see huge opportunities in food safety and authenticity. And we're extremely well-positioned in this market through our network of thought leaders, as well as a dedicated team focused on food applications, which allows us to have that rapid response that I referred to earlier, and we can respond comprehensively when issues arise. You'll notice as well there's a little hashtag in there called Analytical Foodies, which is a social media group that connects our experts with food scientists in the field. And this has spread across social media with more than 15,000 mentions in the last month alone. And it's a great way of connecting the community of people who are interested in food science and food safety across the globe, and issues do arise.
If you look at the bottom of the slide, you'll see three chemical compounds: glyphosate, fipronil, and acrylamide. And I'll talk a little bit more about glyphosate later on. But fipronil, if you have a pet—I mentioned my dog earlier on—if you have a pet, you're probably quite familiar with this. It's used to kill ticks and fleas, so Frontline is fipronil, which is great for your pet. What's not so great is when it turns up in your breakfast. And as you may be aware, fipronil turned up in eggs in the Netherlands in 2017 and again in 2018. So again, these types of scares require a rapid response from companies to help to be able to measure, control, and prevent these types of things happening in the future. And there's new regulations on acrylamide levels in food.
I remember acrylamide when I was a scientist in the lab. I used to make polyacrylamide gels to separate proteins. And all over the bottle, it said, "Do not ingest. Cancer-causing." And now I find it's turning up in my potato chips, my bakery products, my breakfast cereals, coffee, baby food. So these are all really important measurements that need to be made to help to protect society. Turning to China, China has been a strong and consistent growth engine for Waters. Many of the government initiatives that you see mentioned on the bottom left-hand part of the slide really play to Waters' strengths and our specialty measurement approach. We've benefited from what we call cycles of growth in China, such as the generic consistency project or the food safety initiative or the modernization of the Chinese Pharmacopeia.
We really see this continuing as, despite some of the fears that might be out there about trade wars or tariffs, the Chinese government really continues to commit and to invest in areas that support our business. It doesn't seem like five years ago when myself and Zhang Wei, who is the Secretary General of the Chinese Pharmacopoeia, signed an agreement to open a joint collaborative lab between Waters and the ChP called the Gold Pharma Lab. That has really delivered benefit across the industry, including multiple commercial projects, new Pharmacopoeia methods, and extensive training of the scientific community in China. We will continue to invest in our infrastructure and in those types of collaborations to drive future growth and really to set us aside as a specialty provider as opposed to just being a purveyor of all things analytical.
Turning to India, although India was challenging last year, we've still seen a solid CAGR between 2013 and 2018 of 9%, again, at actual currency. At constant currency, that growth has been 13%, which I think is more indicative of the growth in demand over that period. Pharma environment in India appears to be improving, with customers operating at increasing instrument utilization, and we see consistent use of our chemistries and services, which bodes well for future instrument purchases. And additionally, we're seeing encouraging development of other Indian growth opportunities, particularly in food safety testing. In fact, recently, the FSSAI, easy for me to say, the government agency in India responsible for implementing an effective nationwide food testing laboratory network, announced a partnership with the GFSP, which is the Global Food Safety Partnership, for training its personnel.
They further highlighted that the World Bank, the U.S. FDA, and Waters Corporation, as members of the GFSP, were in attendance at that meeting in New Delhi. This puts Waters right at the center and at the decision table as this key government agency establishes the testing protocols for food safety throughout India. Looking now, and I had a question at the break where somebody asked about, "What about services?" So it's something that we perhaps don't talk about as much as we should because we're very proud of the service that we provide to our customers as part of our specialty model. So we have a balanced product mix, and as you'll see, we do have a good balance between service, instruments, chemistry, and informatics. And we see our business continuing to trend towards our higher margin recurring businesses of chemistry and services.
As you'll see in the next few slides, we believe that's a really good thing for us and also for our customers. I'm not going to speak in detail about our instrument portfolio, but I really wanted to show this slide. That's really. It was in Ian's presentation. That's really because I want you all to understand the huge confidence that I have and the enthusiasm of my team about the instrument portfolio that Ian described that started to emerge in 2018 and is now continuing through 2019 and beyond. Looking at our service business, it's really a key differentiator for Waters. It's about a third of our overall revenues. In both independent and Waters' internal surveys, we consistently hear from our customers that this is one of the main reasons for them selecting Waters as a vendor.
The consistent contact between our experienced field service engineers and our customers is a strong and vital contributor to the overall relationship. And this has really been heightened by the emergence in recent years of areas such as professional services, which has grown faster than the rest of our service business. So I wanted to give you some insight into the lifetime service coverage of a liquid chromatography system in our customer's hands. So we performed an analysis where we took all of the LC systems that were manufactured in 2010, and we followed them through the lifetime of those assets in our customer's hands. And the chart on the right basically shows you what happened in the context of service to those systems over the course of the ensuing nine years. A couple of terms that I'm sure you're all familiar with, but warranty is warranty.
That's comprehensive coverage during the first 12 months of life of that instrument in our customer's hands. A service plan is a full, what we call Total Assurance Plan, which provides full bumper-to-bumper service in addition to Performance Maintenance visits. Demand service is where our customers choose to access our service labor and parts on a non-demand basis. So they call us when they need us kind of thing. And then retired is our estimation of systems that have either been taken out of use or have been self-serviced by our customer or have moved to a third-party service provider. A couple of points. First of all, even after nine years, almost 70% of the instruments are, A, still in active use, and B, being fully serviced by Waters.
If you take the full sort of panorama of that chart, you'll see that our customers are utilizing Waters service over 85% of the lifetime of the asset. So this is a huge asset to us, but it's also an asset to our customers. And I think what it represents is that our customers are voting with their wallets in a way to say, "The people that we think are best suited to install, to service, to maintain, and to support me in my liquid chromatography journey, that's Waters." And I guess I kind of look at it, we all love car analogies or Apple analogies, I guess I kind of look at it and say, "Why would I take my Land Rover to Joe's Auto Shop for repair and maintenance?
What would happen if when I was driving from my home in Westborough, Massachusetts, to take the Amtrak train to come and see you all, what would have happened if my car had broken down? Is it worth the risk? So I think a lot of our customers, especially those who are in regulated environments, they say, "It's just not worth it." And with the talent and skill that is resident within the Waters service and support organization, "Why would I take that chance?" That's basically how they put their confidence in us. And in return, we believe that we deliver strong, viable asset lifetime for them, maximum uptime, maximum delivery of the type of performance and the type of results that they need to see from those systems.
We've learned that Waters' LC systems are kept in service for many years, and that leads to a very interesting phenomenon that even some experienced Waters people didn't realize until we did the analysis. When you take into account the number of new systems that are being added, which is the green bars on the histogram below, and you balance that against what are the systems that are being taken out of service, which is the kind of burgundy-colored, what you actually see is that our installed base is growing faster than the rate of new system placement. Now, that can't go on forever, but right now, it's growing at a rate that is probably two to three points faster than the rate of growth of new installs.
When you take that and couple it with what I showed you on the earlier slide, that represents a tremendous asset for us as a company. Aaron talked to you about the fact that we have a fully integrated LC column manufacturing process delivering unparalleled quality and reproducibility in LC columns. This has given Waters more than 20% market share in the overall LC columns market. But we also know from our data that we have a higher market share amongst our own users. So in fact, Waters' LC system users are between twice in the case of Alliance or four times in the case of ACQUITY more likely to purchase Waters' LC columns. So our market share amongst our own Alliance users, for example, is 35%, whereas our market share overall is just over 20%.
So again, that's an important feature when you think about what is the lifetime value of that business to us that results from placing instruments. Also on the right, you'll see the use of ACQUITY columns with ACQUITY instruments is very high, with most of the UPLC columns that we sell being used on our own instruments. And I think this also highlights that the UPLC advantage that Aaron referred to, that message has really resonated among our customers. Putting all that together, you've seen that the integrated product portfolio creates a strong relationship with our customers, delivering value to them over the lifetime of the systems. For us, by combining the information about service and LC columns, we can make a solid estimate of the lifetime revenue associated with each instrument that our customers invest in.
This is also why we prioritize investments in service and support in my organization in the field. It also means that we can predict with a very high level of reliability the future annuity of both service and consumables that will accrue from our current installed base, as well as that which we will get from future instrument purchases. And in fact, what it shows you is that for every $1 of equipment that we sell, we're going to get $2 more at higher operating margin from the service and from the consumables through the lifetime of that instrument. So now I want to change stance a little bit and talk to you about how we respond to evolving customer needs. In our most recent strategic plan, we took a deep look at the changing needs of our customers.
We conducted many, many interviews and talked to them about how things are changing in their environment and how that should reflect on how we need to change to address their needs. No surprise, the technology needs at the bottom still are a super high priority for them. And as my colleague Terry Kelly would say, "We still have to win the measurements. That's fundamental." But we're also seeing a greater emphasis on things like application needs. So they want our help in applying the science and executing the workflow, as well as operational needs where they want to see a return on investment by increasing lab efficiency. So I'm going to talk about those two areas. Ian spoke about our Empower franchise where we have over 60% market share in pharmaceuticals and 500,000 licensed users out there.
This is a key asset that our customers rely on every day to manage their data and to manage their compliance. A CDS system is only part of what our customers need to do to manage that total environment. Empower provides them with built-in technical controls, but they also need to perform instrument and software qualification, and they actually need to do computer system validation. Both of these tasks, they look to Waters to help them through our professional services network. Then finally, once the system is operational, they also need to perform periodic reviews, checking and validating that the system is performing as expected. They don't only have to do that for internal reasons. They also have to do that because they have to prove that to the regulators.
So the EDS 365 analytics platform produces things like a mission-critical data integrity and compliance report, which is so necessary in today's regulatory environment. It also has 14 separate dashboards that deliver real insights to our customers around their projects, their systems, their laboratories, and their staff. They can understand instrument utilization, review difficult methods or projects, and even assess things like staff training needs by utilizing these dashboards. And you can see a small sample of the customers down below. It was interesting. We had a conversation at breakfast this morning, and we were talking about a customer who uses this platform across three different manufacturing and development sites, one in the U.K., one in France, and one in the U.S.
It was interesting because the customer, when I was talking to them, he said, "It was very interesting to look at the use of Empower and the use of instruments because it kind of helped us to resolve some conversations we were having about national stereotypes." Because they can analyze exactly how the systems are being used in each of those environments. So yes, Americans do get up earlier in the morning. They get to work at 7:30 A.M., but they're all gone by 4:00 P.M. Yes, it's true that the French don't get to work till 9:30 A.M. They have a tasse de café, and then they start working at 10:30 A.M., but they don't go home till 7:00 P.M. And yes, it's true, as Noel Coward said, that in the U.K., just around half past 3:00, everything stops for tea. Tea breaks, coffee breaks.
But the interesting thing that they found was that when you took the total area under the curve or the total utilization, there was less than a 1% difference between all of those three sites in terms of the work that was being done. It was just being done really differently. So I know that's a little bit of an unusual insight, but think about the power of the analytics platform to help people to really understand what's happening in their working environment on a day-to-day basis. This is another example where working with Amazon Web Services, we took their Empower system and put it into the cloud. So what it did basically was didn't change their utilization of Empower. They still have the same number of users, same number of licenses.
By lifting and shifting their Empower instances into the cloud, they reduced the number of systems, Empower systems they needed. They drastically reduced the number of servers. They reduced the number of support models they needed, and they reduced their IT infrastructure cost of ownership by almost two-thirds. So again, delivering benefit, delivering value through our specialty model. And then finally, I'd want to talk a little bit about this area of applying the science, executing the workflow. I mentioned glyphosate earlier. We have multiple examples of this, but I chose this one because it's in the news quite frequently at the moment, as some of you may know. Glyphosate or Roundup is the most widely used herbicide in the world. Since 1974, almost enough of this enzyme-blocking herbicide has been sprayed to cover every acre of arable land on the planet.
Its residues have been found in biscuits, crackers, potato chips, breakfast cereals, and 60% of bread in the U.K. It pains me deeply to think that the warm baguette that I ate in France last week was laced with weed killer. Most alarmingly, I just heard on CBS News earlier this week that levels have been found in beer and wine, and the levels that they found were 500 times the allowable limits in drinking water in the European Union, so enjoy your glass of wine later on tonight, so several years ago, a study was conducted on members of the European Parliament to measure the levels of glyphosate in their urine, and the study revealed that they had levels that were 17 times higher in their urine than was allowable in drinking water.
A further study of German adults showed that 75% had levels that were five times higher than the allowable drinking water limits, and a third of them had between 10 times and 42 times the allowable limits. Very, very concerning. By the way, this is a very difficult method, a very difficult analysis. As a side note, I would probably not shake the hand of the lady on the left or the gentleman on the right, as you will note that they're holding their urine samples upside down. Historically, glyphosate was analyzed as a single residue method, but these methods were difficult to use, costly, and inefficient.
Using our expertise, our unique expertise across sample preparation, liquid chromatography, mass spectrometry, and analytics, we produced and created a customized protocol on our ACQUITY I-Class and Xevo TQ-XS, which is our premier tandem quad platform that delivers a robust, reproducible method that's now being used not just in Europe, but also around the world for this important and complex analysis. And it's interesting because the column technology that you see there, Torus technology, was originally designed for supercritical fluid chromatography. But our scientists, with their expertise, really understanding the complexity of the analysis, really understood how to make this the most accurate, the most sensitive, and the most reproducible method. This is really what sets us apart from our competitors in delivering that specialty model.
So in closing, I hope that I've given you some insights into our geographies, our products, and the key elements of the execution of our specialty measurement strategy. I think we're well positioned across our markets and geographies. We continue to deliver benefit throughout the lifecycle of our technology solutions, including consumables and service. And really, the hallmark of our specialty measurement approach is to respond rapidly to our customers' changing needs with a deep scientific knowledge and expertise to help tackle problems across their business. So this poor Irish graduate student who was helped and assisted by some great people back at Waters hopes to continue to carry that message through my career and to our customers today in the same faithful way that it was done all those years ago. So with that, I'll thank you all for your attention.
I'm going to hand over to my friend and colleague Terry Kelly, who's the president of TA Instruments. Terry.
Can you hear me okay? Thank you, Mike, for helping me build trust with our audience with your comments earlier. And I realized that the highlight of today's presentation or presentations are really the bookends between Chris and Chris and Sherry. So think of me as the final price you have to pay before you get to hear from Sherry Buck in about 20 minutes. But I'm Terry Kelly. I've been with – I'm the Senior Vice President of Waters Corporation and president of TA Instruments. I've been with the company, with Waters since 1996 when TA was acquired and in the analytical instruments business for more than 30 years, dating back to the late 1980s with DuPont.
I'm the guy who's going to declare an end to all talk about pharma and biopharma and try and transition over to materials. You'll spend maybe a couple of minutes every day taking your prescription or your vitamins, whatever it might be. I'm the guy who believes that for the other 23 hours and 58 minutes, your lives are being enhanced by materials, and your lives are probably more likely to be saved by innovative new materials in the future. It's a really exciting market segment, as Chris said, the second largest market segment in the business. The reason it's exciting is because the need for high-performance measurements and high-performance materials is increasing. We've confirmed that with our customers that they need to do more and more testing. It's pervasive. It cuts across many different end markets.
And we know what tools are in materials labs, and we have some of the leading technologies, and we have a lot of new and well-differentiated products and really a robust pipeline behind them. So needs are increasing. We've got the right products. And thirdly, we are really in a unique position as a corporation to be able to deliver valuable insights across structure and property measurements, which is what our customers need to do. We've got two great brands, two great sets of technologies, a large and relatively satisfied customer base. And so we're in a unique position to win in this market. I forgot to change the headline of this slide because it's not that scientists seek to understand, or I hope to understand, structure and properties of materials.
They need to understand the structure and property and the relationship between structure and property of a wide range of materials. We like to say we can characterize materials from water to steel and everything in between, right, so polymers and composites and paints, inks and coatings, lubricants and adhesives, elastomers, steel and ceramics. And these materials really find their way into a lot of different end markets from automotive to electronics, energy to med devices, cosmetics and personal care products and consumer products and aerospace, and we get to serve a lot of really innovative companies. This is kind of an evolving list of some of our top customers, and they are the most innovative companies and academic institutions and government labs, and this list is changing and evolving every year.
And people used to think our technology is really just for heavy chemical and polymer manufacturers like DuPont and Dow and BASF and Exxon. And though they remain really strong customers, it's a much more diverse set of customers than that. Maybe the left-hand column is a good example. There you see DuPont, great customer. But you also see Apple and Nike and Unilever. And Apple is a great example of kind of a surge and a real growth in tech orders that we've seen. It's more than doubled over just the last three years from 2015 to 2018. So you see customers up there like Samsung and LG and Intel. Amazon's a good customer. Google's a good customer. Facebook, believe it or not, is a great customer. We're starting to see some real prominent customers in med devices like Medtronic and Boston Scientific.
I have to pause for a second because some of the companies you see up there, 3M in particular, Medtronic, Boston Scientific, they were landed by the guy who was the top worldwide sales rep at TA last year, and he's based in Minnesota. In fact, he was the college roommate, I think, of one of the analysts here in the room. Am I right, Steve? Yep. And you taught him algebra, I guess, for four years. Is that what you tutor? Yeah, he tutored him algebra. Steve, if you have any more buddies or roommates that are, A, still alive, B, not in jail, we'd love to talk to them. Those guys really know how to produce. Again, back to the list. There are exciting companies on there.
We like to joke that every billionaire is kind of bored on Earth, and they want to go to space, right? Elon Musk and Bezos and what's his name? Richard Branson from Virgin Galactic. I think they just had a tough slate. All of those guys are great customers for our corporation. So it's a healthy mix. It's a broad mix. It's pretty exciting. It spans a lot of different market segments. And they spend a lot of money. So if we look at the R&D spending forecast for 2019, it's more than $2.3 trillion spread over 115 countries. And 17% of that is going to be on CapEx, and it grows about 4% per year. And while life science R&D spending is impressive at $190 billion, it's dwarfed by segments that are more materials-focused. So if you look at tech, automotive, aerospace, energy, advanced materials, more than double.
It's about $430 billion of R&D spending projected for 2019, and every one of the leading companies in these segments, whether it's Boeing or Airbus or Lockheed Martin or Northrop Grumman or energy, it spans from PetroChina to Exxon to Total in France to Royal Dutch Shell. Advanced materials are the common names of BASF and 3M, and automotive is common names like Ford and GM, but also Tesla. Every one of those are our customers, our corporation's customers, buying materials-based systems for their laboratories, and the one that really has a soft spot in my heart is academia. Academia is really the birthplace of future customers, and it's where a lot of new applications are developed for our technologies, and academia will spend $72 billion on research and development.
If you take a look at the top 30 academic institutions all around the world, ranked by their R&D spending, every single one of them is a customer of our corporation. The government is spending money on this as well. A lot of you probably remember the Human Genome Project, which ran from 1990 to about 2003. We wanted to map the human genome, and the government threw a lot of money at it, and it really created an enormous benefit for actually created some companies in the life science tool space and for the pharma and life science industry. A similar initiative was started in 2011 by the Obama administration called the Materials Genome Initiative. They declared that the discovery and the deployment of advanced materials was critical to our global competitiveness in the 21st century.
They're pushing money through a lot of different agencies like NASA and NSF and NIST and the Department of Energy, Army, Navy, Air Force, the FDA. Their goal really is to develop materials twice as fast at a fraction of the cost. We're seeing the benefit of a lot of that spending is that every one of those labs and DOE that's getting funding for this type of thing, whether it's Sandia or Los Alamos or Oak Ridge National Labs or Lawrence Livermore, great customers. The NSF is funding these centers called the Materials Research Center that are at probably a dozen different universities across the U.S. Every single one of those are our corporation's customers. The world's most innovative companies, they're spending a lot of money on R&D.
The government recognizes it as important, and they're spending a lot of money and pushing money into academia and through other institutions. So it's an active market. And it's not just R&D. This kind of describes the life cycle of our systems. It really starts in academia, and then it moves to the R&D centers of these innovative companies, and then it moves into manufacturing and then out into their supply chain. That's the life cycle. And it drives geographic growth for our business. And the reason is customers really have to ensure that they have a consistent product, high performance. And we've seen it happen in tech companies that are based in Korea or Silicon Valley, right? The system goes into their R&D, and they push it out to their supply chain throughout Southeast Asia.
Or aerospace companies in, let's just say, the west of the U.S. and in Europe, right? They buy our systems. They spec them in, and we see their supply chain adopting our technologies. We can literally follow individual customers from one academic institution to their job in one of these innovative companies in their R&D center to them using our technology and product development and then pushing it into manufacturing and then from manufacturing move it into their supply chain. Actually, the farther it gets away from R&D and academia, the more important not only high performance, but automation and ease of use becomes to the customer. And that's been a real focus for a lot of our recent new product developments. So this is our share that's based today. About $4 billion is what we can address with our current technologies.
That's the share of the analytical instruments market that goes into materials that we can address with our current technologies. That's about $450 million for us. It's 11% market share. That market share really varies by product line. It can be high in thermal analysis. It can be lower, for example, in mechanical testing, an area that we've just gotten into. And it's really highly fragmented, right? So there's a lot of opportunities for M&A of adjacent and complementary technologies there. The market's growing at about 4.5%, but I think we've demonstrated over the years that we can grow faster than that as long as we stay in really a healthy rhythm of new product development, keep pushing out well-differentiated products.
I think the second opportunity for us to grow is for us to leverage more than 30,000 installations that we have between Waters systems and TA systems in materials accounts. So here's where you're going to start to see the value that we can deliver to customers that nobody else can deliver, right? Customers are validating the need for a better understanding of structure-property relationships, right? In fact, there's literally tens of thousands of publications on structure-property relationships that actually reference both TA technologies and Waters technologies in those same papers. So there's a huge opportunity. And as this guy says from this, the success of new materials really depends on their ability to measure both chemical and structural properties. And we're the guys that have vital technologies on both sides of that equation, right?
Whether it's chromatography and mass spec on the structure side or thermal analysis and rheology and mechanical testing and measuring physical properties on the property side. This is the lineup. So in structure, we've got the Waters products like the ACQUITY and the Alliance and the APC and the Xevo G2 and other mass spec systems. And they're really well accepted by customers to measure and understand the structure of materials. And in TA Instruments, we've got thermal analysis and rheology and mechanical testing products that can measure the properties that result from the structure that is created by the scientist. At TA, we've introduced nine new thermal analysis products over the last three years. And the one that you saw tucked away in the corner, I want to thank everybody for the prominent location of our new instrument.
I think it might have been behind the water cooler, but that's our 10th new Discovery series product that we're introducing next month at Pittcon in Philadelphia. It's called our Discovery TMA. It measures dimensional changes as a function of temperature. But the Discovery series has really driven a lot of growth for TA Instruments. It's high performance. It can win competitive battles. We have a large base of customers that we can roll over with that. And now we're going to take that platform. We're going to start accessorizing it so we can get into new applications and expand the performance range of this platform. One example is there on the left-hand side where we've taken our Discovery Hybrid Rheometer, and we've combined it with a Raman spectrometer. And it's one of the first instruments that we've ever developed that can simultaneously measure structure and properties.
Just introduced at the end of last year. So overall, across the top, measuring structure with Waters technologies, measuring properties with TA Instruments technologies, we think we have the strongest and the most robust portfolio for measuring structure and properties. And I'd like to give you a few examples. So this is some data that shows some chromatography data on the left-hand side and some rheology data on the right-hand side. And what we're finding, and before I launch into some of these examples, is that the ties between structure and properties are really the ties that create opportunities for our corporation's technologies. Okay? It's really only half the story to understand the difference in molecular weight distribution, which is what you see on the left-hand side. These two materials, composition is identical, but their molecular weight distribution is much different. One has a very broad molecular weight distribution.
One has a very narrow molecular weight distribution. All right, Kelly. So what? Right? You told me that they're a little bit different in terms of their molecular weight distribution. What does it mean for the performance of this product? What does it mean for how I can process this product? Right? And here's where we can start to deliver insights that no other companies can. You put those same materials on a Discovery Hybrid Rheometer, and you can see that the material with the broad molecular weight distribution has a very short, very narrow, what we call linear viscoelastic region, where viscosity the linear region is where viscosity does not change as a function of shear rate. And the very narrow molecular weight distribution material has a much longer linear viscoelastic region, right? So it's probably going to process better and faster than the other material, right?
No way of knowing that unless you really have answers on both sides, on the structure side and on the property side. Even if it was just a rheometer, you might say, "Well, this one processes great. This one processes terrible. But why?" Well, the why is because of what you built, and you can measure it with structure. And then when you measure structure, you can understand how it's going to perform. Here's another example. So copolymers are often used to try and deliver the performance attributes of two different polymers. So the composition might be identical, but the structure could be different, right? And an ion mobility mass spec can determine the difference between a block copolymer, which is what you see at the top, and a random copolymer, which is what you see at the bottom.
That can have a lot of impact on. I shouldn't say impact, like 10 times in this example. But there's a plastic at the bottom, an automotive bumper, that has really poor impact resistance, right? And how would you know that ahead of time? You can identify the composition of the material. You can identify the structure of the material. Well, you can take those, and you can run them on a dynamic mechanical analyzer and look at the mechanical properties as a function of temperature. When you look at the low temperature peak of the block copolymer in green there, you see it has a really high peak at low temperatures. What that means is that material can dissipate mechanical energy through molecular motion, therefore has better impact resistance. So you can see we're getting a much more comprehensive answer.
We're getting much more valuable answers by combining structure measurements with property measurements. Last I checked, I don't think there are any other vendors that offer an ion mobility mass spec and a real high sensitivity dynamic mechanical analyzer. So because the linear viscoelastic region and block and random copolymers is literally the edge of my technical knowledge, the far edge of my technical knowledge, I thought I'd bring it back to something that Mike alluded to. So I am a bad golfer, which means I am a big customer for golf ball manufacturers because they don't last very long. But I'm going to give you a couple of examples where the world's most advanced mobile phones and the highest performing golf balls, there are examples where literally TA and Waters Technologies are used to characterize the materials from the core to the cover.
All the way through these products, we're using both sets of our corporation's technologies. So mass spec is used routinely to measure impurities in displays, these high-performance displays that are on all the leading mobile phones. And our DSC and our Rheometer are used to characterize the UV coatings that are on the surface of that display, right, to give it scratch resistance and water resistance. Our Rheometers measure the viscosity of the adhesives that hold all the different layers together in a phone or in a golf ball. Our new Discovery TMA measures what's called the coefficient of thermal expansion, right? Materials expand and contract as a function of temperature, right?
Anytime you've got multi-layer materials, whether you go from a screen to the electronics to the cover on the back through the four or five layers of a golf ball, you need to understand how each layer expands and contracts as a function of temperature. Ideally, you want to match up their coefficient of thermal expansion. A TMA can be used literally throughout each of these products. A DMA can be used to characterize energy storage and dissipation. That means, again, I'm the guy who goes through a lot of golf balls, so I buy those rock-hard cheap golf balls, right? They can build the formula for that, and they can measure the mechanical properties of that using our systems. Other people might want softer golf balls for touch and feel and spin around the green.
Again, you can formulate for that, and you can test for that with our systems. A couple of good examples. As you go from the surface of a golf ball all the way through to the middle and the other side, if you start at the cover of a mobile phone and go all the way to the back case, our technology touches every piece of those, cover to core. We've done some competitive analysis that really reveals relative to our peers, we have a much more balanced portfolio to serve the materials customer. Good balance between structure measurements and property measurements. There are some competitors that you'll see up on the left-hand side that are much larger, right? They have a much larger share, in particular on the structure side of the equation, but they can only give half the answer.
Hopefully, as I demonstrated before, having half the answer looking just at molecular weight distribution doesn't tell you anything about how the material performs. Having half the answer from, say, mass spec about whether it's a block copolymer or random copolymer doesn't tell you anything about the impact resistance and what the resulting properties of that are going to be. So there are bigger companies. They have bigger share positions, in particular on the structure side, but they're not in a position to give the whole answer to our customers. There are some companies you can see that have maybe a share position that's relatively similar to Waters'. But what we find is that those are companies that have a broad range of products. They have a lot of products, none of which are actually leading in any particular category or leading in performance, right?
And we know that our customers, customers that buy from us routinely, they prefer depth over breadth, right? They want to deal with the experts, the customers, the companies that have the high-performing systems with strong application support, strong service support. They don't have as much appreciation for competitors that have a broad range but don't lead in any particular category. You'll also see some smaller competitors down there at the bottom. And those, again, represent, I think, opportunities for M&A where we can pick up more complementary technologies to better serve materials customers. So we're really in a unique position with our balanced portfolio. We have the formula to win in materials is the bottom line, right? We've got two great brands. We've got a balanced portfolio of really well-differentiated products. Our scientists are material scientists.
Our application scientists aren't—they didn't go get their PhD in thermal analysis or in chromatography. I don't even think you can get a PhD in. I wouldn't know. I never pursued anything like that. But they're material scientists, and they speak the language of our customers. Our customers' language is structure properties, and that's what our applications—that's the language of our applications scientists. So two great brands, well-differentiated products. We speak their language, and we believe we can deliver more and better answers to customers that really need to understand structure property relationships. And we can leverage an install base of more than 30,000 customers. So that's kind of our formula. And I think on this next slide, I'm going to share some comments with a guy by the name of Gareth McKinley, who's a professor at MIT.
So Gareth, he really represents the voice of many customers around the world. And I'm very excited about the materials segment. I believe it's a segment that can grow as fast or faster than any life science-oriented market segment. It's a segment that can be as profitable or more profitable than any other pharma or life science segment in the business. And we're going to win, right? We're going to win in this particular market because innovation is accelerating. Needs for tests are increasing. We ask customers specifically all around the world, technique by technique, the needs are increasing. And every single one of them tells us, "I need to do more tests." So innovation is moving fast. They need to do more tests. We've got the right products that are well-differentiated, and they can be applied to almost every market, certainly across a lot of different market segments.
We've got a robust new product portfolio. What you've seen from us over the last three years is just the start of things. We have more new platforms coming in 2020 and 2021. And we're in a unique position to serve our customers by giving them both structure and property answers. And we've got two great brands, really two large sets of customers that we can leverage, and we've got the global footprint to effectively serve them. So thank you for your kind attention, and I'm going to turn it over to Sherry Buck, our CFO. Get them?
Good morning, everyone. Just a quick introduction for those of you who I haven't had an opportunity to meet: Sherry Buck, and I'm the CFO. I've been with Waters now about two years. And if I reflect on those two years, they've really flown by quickly. And in fact, about two years ago, when we had our first Investor Day, I had just been with Waters for a couple of months. And during that Investor Day, I shared with you a couple of things that attracted me to coming to Waters. And one of those was the great people and culture, and the second was our focus around organic innovation.
And I'd have to say, over the last couple of years, as I've gotten to know the business better, that those two factors are still very much at the core of what makes us so successful and what makes us really a specialty company. So I'm the last batter up, so to speak, and usually that's a little bit of a challenge, but it's even more of a challenge in following Mike and Terry because I don't have really cool, funny stories to tell about the numbers. So what I am going to do is share with you some of the key elements of our financial model and performance and give you a roadmap for what I'm going to cover. So first, I'm going to give a brief recap of our historical financial performance just to put that in context for everyone.
I'm going to talk about our Waters financial model. Chris had that in his opening, and give you some further insights about our margin profile. From there, I'm going to talk a little bit more about capital allocation priorities and our evolving capital structure. I'm going to wrap up with our three-year outlook. Waters has consistently delivered revenue, operating income, and earnings per share growth, really demonstrating the strength of our business model over time. Our revenues grew from $1.9 billion in 2013 to $2.4 billion in 2018, representing a 6% constant currency CAGR. This translates to a 5% CAGR on a reported basis. Over the last five years, while our growth fluctuated each year due to a variety of factors such as different business dynamics and effects, we remained focused on our innovation efforts.
Operating income has grown from $535 million to $750 million, representing a 7% CAGR. And our EPS has grown 10% on that time period. We have a very high-quality free cash flow, which is largely a result of our specialty focus, balance sheet management, and the capital deployment choices we've made. We achieved a 7% CAGR in free cash flow over the last five years from $229 million to $555 million, which translates to $0.25 of free cash flow from every $1 worth of sales. The strategies that you've heard this morning from the team will continue to support our strong free cash flow into the future. While Waters has historically delivered strong top quartile return on invested capital, this was further enhanced in 2018 as a result of U.S.
tax reform, which enabled us to pay down debt and utilize our cash to repurchase shares, resulting in a 24% ROIC at the end of 2018. Now I'd like just to spend a few minutes to recap our 2018 performance. Our 2018 global revenues of $2.4 billion increased 4% in constant currency or 5% as reported. And despite some variable macro conditions in certain parts of the world and a slower start to the year, we did end of the year on a high note and saw growth in our three major geographies and in markets for the full year. We maintained strong operational discipline throughout the year while increasing our investments in R&D, growing it at 8% in constant currency, which was nearly double our sales growth rate. And additionally, we capitalized on the positive effects of U.S.
tax reform to strengthen our balance sheet and return more capital to shareholders. Combining all these factors, our non-GAAP adjusted diluted earnings per share grew 11% from the prior year. Next, I'll take a brief moment to summarize our guidance approach and recap our 2018 performance and our 2019 guide, so as we develop our guidance at the beginning of each year, we look and take into consideration our most recent business results, our strategies, and combine those with looking externally at the environment, the markets, the geographic performance, and dynamics, and based upon those, we try to set our guidance such that we can achieve goals that even when our assumptions of the environment change, that we can still make our plans, so during 2018, we did experience some prolonged in-market dynamics than expected, but we were able to deliver sales at the low end of our revenue guide.
And additionally, through managing various levers across the business, we met our margin goals and exceeded on earnings per share. Moving forward to looking into this year, 2019, we developed our guide based upon four key factors: generally positive in-market dynamics, momentum from our robust Q4, benefits of a new product introduction lifecycle, which Ian has highlighted today, and implementation of our enhanced capital deployment plan. And as shared during our Q4 2018 earnings call in January, our constant currency revenue guide is 4%-6%. And based on exchange rates at the time of the call, we expect FX to be a headwind on the top line for the full year in the range of 1%-2%. And our EPS guide is $9.20-$9.45, with currency having an unfavorable impact of about 1%.
Now moving forward into kind of the heart of the presentation and our Waters' financial model, there are four key points I'd like to share this morning. First is we participate in attractive end-markets that we believe are well-positioned for growth. And you've heard quite a few of that from Mike and Terry this morning. Second, our focus on sustaining our industry-leading margins while investing for growth. And additionally, the strong free cash flow and flexible balance sheet that we have. And lastly, disciplined capital deployment. Chris spoke earlier about our five-point value creation model. And what I'd like to do now is link that with our overall financial model of sales growth, operating performance, and capital deployment. So it all starts on the top line with our revenue growth.
As you've heard from my colleagues this morning, a differentiator for Waters is our specialty focus and the end-markets in which we participate in, coupled with innovation and the exciting new product pipeline and our new product cycles. Also, in terms of growing the business, there's opportunity for M&A. We've been building a corporate development capability and have a forward-leaning posture to take advantage of opportunities to augment our core business. We enjoy industry-leading margins, primarily driven by the markets we participate in. But as Chris described earlier, we do see opportunities across the span of our business beyond operational improvements, but productivity and leverage opportunities in R&D and our channels. We will carefully evaluate and make choices about reinvestment in the business and our profitability as we continue to grow and scale our business. The third element of our financial model is capital deployment.
We've demonstrated a consistent return to capital to shareholders through our long-standing share repurchase program, and with the passage of U.S. tax reform, we have greater flexibility and have accelerated our share repurchases in the near term, all with a view towards return on invested capital. Now I'm going to dive into each one of these levers in our financial model in a little bit more detail. Participating in structurally attractive markets provides us with multiple engines for growth. Pharma, which represented about 50% of our business 10 years ago, now represents 56% of our business and is a central part of our growth strategy, as you've heard this morning from my various colleagues. Over the last five years, Pharma delivered an 8% CAGR, and we continue to see opportunities for growth.
As Jeff shared earlier, the pace of innovation, particularly the accelerating biopharmaceutical pipeline, drives the need for specialty measurement. This, coupled with continued growth in prescription medicines and rising standards, supports continued growth opportunities within pharma. Our product mix is split evenly, with 50% generated from recurring revenues, 50% from instruments and informatics. As a point of reference, our recurring revenues represented about 43% of our business 10 years ago. The recurring revenues, which represent the combination of consumables and services to support our instruments, grew 8% over the last five years. As you heard from Aaron and Mike, these are both resilient, high-performing businesses with characteristics unique to Waters' specialty measurements.
While our overall geographic mix is fairly balanced between Asia, the Americas, and Europe, we've experienced tremendous growth in Asia, which has grown 28% of our total business in 2008 to 38% in 2018, and now represents our largest geographic region. China has contributed double-digit revenue growth, and as Mike shared, plays a critical role in the continued growth of our business. Moving on to our margin profile, Waters has maintained a consistent gross margin of about 59% over the last five years. During that time frame, we were able to offset about 3 percentage points of FX headwinds through positive impacts of sales mix and fixed cost absorption from volume leverage in order to maintain the 50% gross margin.
Providing further visibility into mix drivers within gross margin, on the right-hand side of the slide, we summarize the in-market, product, and geographical impacts as to how each of these contribute to our gross margin relative to the overall company average. For example, pharma and industrial markets have a positive impact on gross margin relative to the company's 59%, while academic and governmental is slightly lower than the company average. As we see differing growth rates when each of these areas of business is during any given period, we hope this can provide you some insights as to how the mix dynamics affect our overall gross margins. We've been able to achieve industry-leading operating margins largely as a result of the choices we've made about the businesses in which we participate in.
And our specialty measurement model provides us with many levers for organic growth and M&A opportunities as we scale the business. We've improved our operating margin 3 percentage points from 28%-31% over the last five years. We've been able to expand our margins while investing in R&D and offsetting FX headwinds through management of our SG&A as we generally plan for expense growth to be less than sales growth. And similar to the gross margin slide, we summarized again the M&A drivers and operating margins. Just one I would like to highlight is our service business, which you've heard my colleagues talk about this morning. And what I like about our service business, it's attractive and it's profitable for us. And it's very accretive on the operating margin line since it doesn't absorb R&D costs.
So we believe there are opportunities for further improvements in operating margins, such as R&D productivity, channel leverage, and operational improvements. And we'll balance reinvestments in the business with growth. And as we look forward, we'd expect to see modest expansions in our operating margins. So reflecting back on our investor day two years ago, there was still a lot of debate about whether U.S. tax reform was going to happen or it wasn't, and what scenarios would be included within the legislation. And we'd begun to strategize within the company about what our plans would be both in the event of tax reform and without tax reform. So fast forward now to December of 2017 with the passage of tax reform and the game-changing impact that it has had for Waters, particularly the tax-efficient access we now have to our foreign cash, which has opened up capital deployment opportunities.
And I'll go into some more detail in a few slides about our capital allocation plans. Moving on in the tax area from a rate perspective, our historical tax rate prior to U.S. tax reform was in the low to mid-teens %, largely driven by our footprint, where we have operations in lower tax jurisdictions, including Ireland, the U.K., and Singapore. And with the U.S. tax reform, our overall tax rate increased about 1.5%. And this was largely due to a provision within the tax laws where we were taxed on our foreign profits. And since we have over 70% of our sales outside the U.S., we were impacted by this part of the U.S. tax reform, although the overall U.S. tax rate went down. And based upon our current guidelines, we believe a mid-teens % rate is sustainable in the near term.
Moving on to our capital allocation priorities, we look at this in three broad buckets: investing for growth, financial strength, and returning capital to shareholders. I'll provide a little bit of color on each one of these. So first, we invest in the business through both the P&L and capital investments to support growth and innovation. Most notably are the investments that we've made in R&D. The five-year CAGR for R&D spend is 7%. And as Ian shared, we have a really exciting pipeline and opportunity of products coming to market. From a CapEx perspective, Aaron shared further insights about our chemistry business and the important role it plays in our footprint and our overall business model. Our investment in Taunton is critical to our continued growth and service to our customers. In terms of growing the business, there's the opportunity for M&A.
Our TA business has been active in tuck-in M&A to expand their product offering. Last year, we also acquired the DESI technology. While our core strategy is based on organic innovation, we do see opportunities to augment our capabilities and our portfolio through M&A and external investments. Second is maintaining a strong and flexible balance sheet and a more optimal capital structure. Given our ongoing access to our global cash, we plan to utilize our balance sheet and working towards a leverage ratio of about two and a half times net debt to EBITDA, which for our business and our strong cash flow engine is a modest leverage target, but still allows us for significant financial capacity for growth initiatives and external investments.
And third, we have a long-standing share repurchase program and expect to continue to deploy cash proceeds to our shareholders through share repurchases. And given U.S. tax reform, we're accelerating the pace in 2018 and 2019. We've delivered benefit to our shareholders through our established 16-year share repurchase program, which has been an integral part of our double-digit earnings per share growth. Since the inception of our share repurchase program, we've repurchased 87 million shares, which is approximately 50% of our outstanding shares totaling about $6 billion at an average share price of $70. As Chris mentioned earlier, given our full access to our global cash, we now have the opportunity to shift from a capital accumulator to a capital deployer.
To provide some further perspective, during the two-year period from 2016 to 2017, we had $1.7 billion of capital available, primarily from our operating cash flow, augmented by some debt proceeds, and only about $100 million of balance sheet cash readily accessible in our U.S. entities. Shifting to the right-hand side of the chart, when you look at how we deployed our cash, most of it, about 60%, is what I would call idle, and it remained on the balance sheet as it was in non-U.S. entities and not readily accessible. Let's turn the page to a post-tax reform environment, where we now have $4 billion of capital to deploy. We have full accessibility to our global cash balances as well as our ongoing operating cash flows. This provides us a unique opportunity at this point in time to evaluate our capital structure and how we deploy our capital.
Over the course of 2018, we performed an extensive review and worked closely with our finance committee and the board of directors to determine our strategy going forward. Given the strength of our operating cash flows, we determined that we could put our balance sheet to work and essentially shift from a net cash position to a net debt position and move towards a more optimal capital structure of two and a half times net debt to EBITDA. Again, we see this as a moderate leverage level and still having the financial flexibility to invest in the business through both organic and inorganic opportunities. Regarding return of capital to shareholders, we stepped up the share repurchases from our historic level of about $300 million a year. In 2018, we repurchased $1.3 billion worth of shares.
As communicated during our January earnings call, our current guide assumes about $2.5 billion of share repurchases in 2019. Pulling all these activities together, we're working towards a more optimal capital structure of the two and a half times net debt to EBITDA. Our path towards that is to first spend down our cash. We had about $1.7 billion at the end of 2018, and then we'll increase our debt. As a result, during 2019, we will shift to a net debt position. Based on the strategies and market trends that the teams have shared with you this morning, I'd like to translate those into our three-year outlook. We expect revenue growth to be in a range of 4%-6%, driven by continued strong growth in pharma and China, as well as from new products.
From a gross margin perspective, we expect it to remain stable in the 59% range. As I shared previously, there are a variety of pushes and pulls on gross margins, but we'll focus on the variables that we can control. We expect to see modest growth in our current operating margins, which are at 31%, and we'll balance profitability with reinvestments in the business each year. And based on our current footprint and U.S. tax regulations, a mid-teens tax rate appears sustainable over the next three years. And finally, we expect to sustain our track record of double-digit earnings per share growth, driven by the consistency in executing on our financial model.
I hope that I've been able to pull together the pillars of our strategy around specialty focus, innovation leadership, and application expertise, and that the colleagues that I shared this morning, how they translated into our financial model to drive longer-term value creation. We're going to focus on attractive in-market, sustaining our industry-leading margins while investing for growth, and delivering strong free cash flow and being disciplined with our capital deployment, so at this point in time, this concludes our prepared remarks, and up next, Chris is going to facilitate a Q&A session and just give us a couple of minutes while the presenters make their way to the stage, and we're going to bring some chairs up.
P erfect. Thank you, Sherry, very much, and I invite my colleagues who were speaking today to come on up. I hope that all of you enjoyed the presentations today.
We tried to, as I said at the beginning, provide a fresh look at everything going on at Waters, and particularly to go deep on innovation and a number of the key market spaces that are at the very top of our priority list. Now we really look forward to the interactive part of the day. So we'd like to ask if there are any questions, and I will field the questions and direct them to a member of the management team. Derik, why don't you go first?
Hi. Great. Thanks, Derik Brown from Bank of America. So I'm going to ask a geek question first. Like that. Can you, on the BioAccord, can you give us some specifics on like mass accuracy, dynamic range, resolution?
So we may be able to share a little bit more on that, but maybe, Jeff, I'll ask you to make any comments on what you're willing to share on the performance specs.
Yeah. Mass resolution of 10,000. Resolution spec is somewhere on the wall. Add to that. No, I just add to that. I mean, the specification of what it is we're trying to do with BioAccord are really that informatics drive and the chemistry drive combined with Empower to get it.
Great. Sherry, just sort of thinking about net interest. What's embedded in your guidance for net? And just sort of think about how that bridges.
Net interest expenses.
That's a big delta in the model.
Yeah. That's right, Derrick. I talked about it on our Q4 earnings call for 2019. Principal ramp-up is a ramp-up that, billing our estimate, is about $30-$35 million over the course of the year.
And then just one final question. So the Waters Connect, I think, is a software. How does sort of that how do you think about how other competitors' instruments think about you? You don't have a complete philosophy into other things? So I'm just sort of curious, how do you think about opening it up, allowing communication? How does sort of this do the customers don't like closed? Very curious on how you're thinking about.
Sure. I'll ask Ian to answer that question in a minute, and maybe Mike can add some perspective on the marketplace. But just as a quick reminder, one thing that was said earlier is that within the pharmaceutical space, for example, Empower has really a dominant market position for chromatography data of north of 6%. What that actually means is that more competitive LC systems run on Empower than even Waters' systems. So it very much is the default industry ability. And certainly, that place we occupy in the regulated laboratory, and now envision a world where mass spec is firmly entrenched in a regulated laboratory, you can understand the type of informatics position that we're trying to seek. And so we've been a little more of a closed system historically from the standpoint of third-party application developers.
As Ian alluded to, that's going to be opening up a little bit. Why don't you say a little more on that?
Yeah. So I think there's a couple of points maybe to look at that. The first is that I did mention in the chat that we spent a lot of time building a very broad developer interface to allow third parties to write to the system. I think that's really detailed scientific content that other companies, small innovative companies or academic companies could write applications that sort of much more that way. And of course, the other one coming back to your question is just how broad do you make it? Everybody's instrumentation right through to SDMS management. The architecture is broad enough for us to do that. I think what we would expect as we go forward is because things like BioAccord and things like ACQUITY and next generation of LCs will be very integrated to Waters Connect, that we're going to see some synergies and performance benefits.
But I think the openness of, especially in the regulated space where the installed base of other instruments are there, it's going to be open enough for them to do. So I think that's an important part. And of course, the other big question that customers are asking us to look at is conformity and consistency of what data looks like when they actually combine it. Because it's very difficult when you have disparate systems all set up in a different way, collecting and processing data differently for that to aggregate and be mined. And this is what customers are really asking us to do, is it's a combination of all of the data they collect. Could it be in a format that they can bring it all together and find those scientific insights?
We're working closely on committees on Allotrope where we have a very consistent design of how data is captured and what it looks like and allows people to mine it in a more effective way. More open than not soundly, but that's a journey in front of us that we still have questions to ask.
Yeah. I just maybe add to that that we have a customer advisory board who we involve very heavily into the development of new products. And it's interesting because you do get somewhat differing opinions occasionally. Some people will say, "Hey, we want a really open system. We want complete interoperability and communicability between all our software platforms, and we want to be able to bring in smaller software vendors." And then others who say, "No, no, no. We're in a regulated environment. We want to control that environment pretty rigorously." So we're trying to definitely understand that there's going to be in the future a lot more requirement for interoperability between both instruments and software as well as different software packages.
Great. Thank you. Next question. Yes.
Thank you. Dan Leonard from Deutsche Bank. First off, on BioAccord, I could use a bit more help on how you're framing that opportunity. How are you thinking about the opportunity for BioAccord version 1.0? What's a reasonable assumption of how you penetrate that over the first couple of years? And is that $1 billion LC-MS characterization opportunity? Is that $1 billion, I think I said. Is that all BioAccord and related instruments, or are there other types of measurement tools in that market?
Sure. I think it's a fair question, Dan, and we'll have Jeff maybe take the bulk of that question here, and as I said on the conference call just a few weeks ago in January, we're not going to give a lot of guidance early. We'll try to give updates as we march through the year. As you might imagine, this is a market development project because it's a new space. It's not a space that is occupied today by anybody. We sell as much high-resolution mass spectrometry into this space as anybody, but we're really talking about a new category. We're certainly seeing a lot of very early interest. We're very encouraged by the early days of the launch.
But certainly, we expect that platforms like BioAccord and the cadence that you saw on Ian's slide that's coming behind BioAccord one in terms of all those different applications that are going to be rolling out are really going to form the backbone of that opportunity. But Jeff, do you want to comment further on that?
Yeah. I think what we're seeing is the initial customers for BioAccord are still people that have levels of LC-MS expertise. What they want to do is they want to evaluate it in terms of fit for purpose. Does the instrument deliver the desired fit for purpose? And the good news is the feedback so far has been outstanding, as I shared with you earlier. So initially, it'll be scientists in development who are evaluating it, thinking about moving it deeper into late-stage development. And over time, it'll eventually make it into QA/QC for the reasons I discussed. In terms of how we'll expand on the applications, that's primarily going to be through software. So I talked about the three applications we support today are really aimed at protein therapeutics, peptide mapping, intact mass measurement, and glycans.
However, we know the instrument produces beautiful data for all of the nucleotides. We've actually got some initial feedback from our scientific operations team that it's great data for all of the nucleotides. So what we're working on is some software in a unified platform to do the characterization of those types of molecules because they're very different in terms of how they're made, and we can envision more and more applications being added over time.
Do a quick follow-up there?
Maybe just one follow-up. Chris, you're clearly articulating more of an appetite for M&A, larger M&A. We haven't seen Waters' do large M&A in a long time. Can you help us even in broad brush strokes describe what would be interesting to you?
Sure. Yeah. And I would maybe offer a friendly amendment to the characterization. I wouldn't say we're actively pursuing large M&A per se, but I would say a combination of having a crystal clear strategy about the segments that are most important to us, a recognition there's some good innovation both inside and outside of Waters, plus less restriction from a capital deployment standpoint, really compels us to take a strategic look outside. And so I had one other comment, which is while Waters hasn't done a lot of meaningful M&A in recent years, certainly the acquisitions of TA Instruments and Micromass spec 20 years ago were very meaningful in terms of contributing to who we are today. So just in terms of the way we're thinking about it, we obviously start with our core customers.
We start with our core market focuses to say, "What technologies are out there that make our core technologies more attractive in serving those customer needs, or what technologies sit adjacent to those core technologies?" And certainly, the DESI technology for mass spec imaging was a great example of something, albeit a little bit smaller, that fit very well strategically with what we're trying to do. And Ian talked more about that benefit down the road. So again, we don't have any type of an objective or strategy to deploy a certain amount of capital over a certain amount of time. We're going to be much more strategic about the way we look at that. We have built a really terrific corporate development organization that is more actively engaged in the outside world.
And so we're certainly seeing more opportunities, but we're going to be extremely judicious about that with strict financial guidelines and an absolute requirement of strategic fit to the extent we do something.
Kristen, maybe over here. Steve, I think he has a question.
Sure. Thank you. Steve Willoughby, Cleveland Research. Just a question regarding the cyclic ion mobility. I know in 2018, high-resolution mass spec was a bit weaker of an area for the company that you guys highlighted on some of your past calls. Can you give us a feel for does this new system help fix that, or is this one of potentially many new product launches in the high-res mass spec area?
Sure. That's great. Thanks, Steve. And I think I remember seeing you at ASMS last year, and there was even some initial data that was starting to emerge on cyclic IMS. And I'll have Ian say a little bit more about it. But really, to answer the broader question, you're exactly right. I think some of our core technology platforms in the super high end of mass spec in terms of performance, we are a bit later in the cycle, and that hurt us in some ways in recent years. And really, one of the observations I had when I came into the company and very quickly went over to Wilmslow into the research labs, I was astounded at some of the technology, the very proprietary technology that Waters had and was working on.
I've been very motivated personally to try to help do what I can do to support the R&D team in accelerating the development of that technology into commercial products. Cyclic IMS that Ian talked about earlier, and I'm sure he'll add some more comments, is one step in that direction. You could see some of the customer feedback because we've already had customers in utilizing prototypes there. There is a lot more in the pipeline. If you go back in history, looking at Micromass, Micromass has always and Waters' mass spec today has always prided itself on really leading in a number of different technology areas in high-resolution mass spec. We are very committed to sort of capturing that space and have a number of different plays that will roll out over the next several years. Ian, you want to say more?
Sure. Yeah. I think it's ion mobility. It's still very early in the technology stages of that. And I think what you see from cyclic IMS is an order of magnitude or more increase in the resolving power that we can get here for that extra dimension of separation. So it's going to do things at the high end of mass spectrometry differently maybe than other techniques that are used up there are today. So certainly, there's a space in there in protein characterization and biopharma discovery where that's going to fit very nicely.
The other thing I'd add to it is, and I didn't get a chance to talk about this during the presentation, but as part of us rethinking our innovation strategy and what we were doing, the technology cycles at the high end of mass spectrometry move very quickly, much more quickly than they do in a regulated environment where even we'll find our tandem quadrupoles and things in there. So we did actually structure around that with an organization, an advanced mass spectrometry technology group that are responsible for bringing cyclic to market. And they work at a much faster pace, much more entrepreneurial, knowing that the customer set for these products are different than the customer set for a regulated environment, and they work at a much faster pace, much more entrepreneurial, knowing that the customer set for these products are different than the customer set for a regulated environment.
Part of the reason for doing that was not only to get these innovative technologies to market faster, which we're starting to do now, but it's also really to understand that these innovations, as they get refined by the high-end users, find their way into our core instruments and really start to differentiate the benchtop size mass spectrometry that you would see in time-of-flight going forward and bring an ion mobility into that much more routine environment. We think we look at it in two different ways like that.
Just one follow-up there in terms of the timing on the actual launch of this instrument. Is this a 2019 introduction that could potentially start impacting actual results in 2019, or is this maybe more of a 2020 type concept?
Yeah. I think right now we have the instruments on the floor running. We've had customers using them. We still got a little bit of work to do. We fully anticipate that this will be at ASMS, and we'll talk a lot about that. And we would certainly expect revenues in the second half of 2019 for the product.
Then yep, Jack.
Thanks. So I appreciate all the color on some of the new products today, and I was hoping you could put that into the context of the three-year guidance that you laid out. So you'll do 4%-6% organic growth this year, and I would assume some of these things would be additive over the next three years. So maybe just help put that in context. And then maybe conversely, are there any drags on growth or risks that we should be keeping in mind?
Sure. Thanks, Jack. And I'll take a shot at that, and maybe Sherry can add to any additional comments on our guidance. I think, hopefully, you've seen us as very consistent in terms of our formula for guidance. And really what we look at is the overall portfolio of factors in terms of markets and products and different things that will drive the business. And we certainly never assume everything's going to go perfectly in our guidance. But what I would say is the new product flow just gives us that much more conviction and confidence in the guide that we do have.
Yeah. Thanks. The only other thing I'd add to it is there are a lot of new product cycles, and we're starting some new market categories. And that will be a contribution in the 4%-6%, but it's very hard to predict how quickly it's all going to ramp up and embed. As you've seen with other instrument launches that we've done, it does take a period of time. So we're trying to guide where we think that we can deliver. And if the new products will come, then hopefully that will just, as Chris said, provide more confidence to that.
That makes sense. And then just a two-parter on the financials related to the BioAccord. I like the stats on Alliance and ACQUITY related to the lifetime capital versus recurring revenue. What do you think that could look like for the BioAccord? And then as you maybe thinking about 2020, I think one of the things you mentioned, Sherry, was that the margins for LC-MS were actually diluted relative to the company overall. Could you just give us a sense for what that delta looks like? And could that? Don't want to think about 2020 already, but is that just something we should be keeping in mind?
Why don't Mike, you take a shot since you teed up this notion of lifetime value and maybe kind of look into your crystal ball in the future on something like a BioAccord and how that plays out relative to the mix of all that value that we generate. And also, don't forget that based on where Derek started with Waters Connect, we think we're building tremendous value and even more value into our informatics platform that we expect to generate through these types of initiatives. But Mike, go ahead, and then Sherry can.
Yeah. I would say that broadly speaking, the same sort of metrics in terms of the service contribution and the LC columns contribution would be similar for the BioAccord to what you saw on the metrics for LC systems. The subtle difference here is that we do also have potentially an additional revenue stream associated with BioAccord, which is kits. So you look at things like GlycoWorks, or you look at other kits that we plan to bring to deliver the workflow instead of just the system solution. So I think there may even be another piece of ongoing lifetime revenue that we can capture. It's early days, and we're still rolling out some of those kits as we move forward. But I think that's where there's probably an even better revenue opportunity.
The other thing for us is that from a profitability point of view, we're doing SST testing. So there's potentially more efficient and effective deployment of our field resources to support the solution in the field. And a lot of the onboard diagnostics enable customers to very quickly assess and get the system back up into full operating mode where in the past they might have had to call in or delay. So I think all of those things are going to feed into a very healthy sort of operating profit model for us around the BioAccord.
Sherry, do you want to add anything to that?
Sure. So as you look at how it flows through the P&L and on the margins, so these are kind of relative to our average gross margin. I'd say our focus obviously is on growth in dollars, and I'd say as you kind of look at how all this plays out, it's all the attachments that go with it, and we're not just selling an instrument. You're selling a system, so as we look at this overall from an overall perspective, you're looking at all the pieces, the services, and chemistry that go with it.
Ian, you may want to add to that.
Yeah. I just had one more dimension to that. And this is kind of where the R&D guy gets dangerous because you'll look into the future a little bit. But as we went through what we're trying to do here with platform technology and deployment of those systems and what we're doing with Waters Connect, think about the business model in a slightly different way. Think of software as a service. Think of somebody with that platform already in the laboratory that can increase utility by cloud-based deployment of application sets. And you can see how those types of recurring revenues could tie in more directly to that type of system. We're a little bit of ways away from that yet. But again, the Waters Connect architecture gives us that opportunity to maximize the lifetime revenue generated from the platforms that we put in place.
Okay. Why don't we move to the next question? Thanks, everybody. Yep.
Hi. Ryan Blicker from Cowen. Can you talk a bit on the pricing strategy for BioAccord? I would guess that the competing solutions are going against their, or at least a couple hundred thousand based on the type of instruments. It would seem you have an opportunity to price at a discount and really lock in those recurring revenue streams. How do you think about that pricing strategy?
Yeah. So pricing strategy on BioAccord is a great question because there's going to be a sweet spot for us there that balances the value we're creating with accessibility. And maybe Jeff or Mike, you want to say a little more about that?
Yeah. If you look at the price of LC-MS systems on the high end, they're $500,000 or more. On the low end, you've got instruments that are around $100,000. We put the BioAccord somewhere in the middle there. And it's a combination really what value are we delivering to the customer as part of that overall solution. So that was a key weighing factor with regard to where we priced it.
Yeah. I think it's all down to what is the value of the data that it's generating? What are some of the operating efficiencies that they can generate by having that type of data more quickly? They don't have to go to a central lab. They can generate it right there close to where the action is, as it were. And that's including in the manufacturing process as well as in the final product testing. So we kind of put it into that range that Jeff talked about. And the mid-200s kind of range is where we expect it to be. But to Ian's point, the aftermarket revenue in terms of not just kits and columns and service that I described, but also the potential to deploy applications and specific application sets that are tailored to particular customers, I think would also be a good ongoing revenue stream for us.
Great. And if you don't mind, maybe a two-part TA follow-up based on two interesting slides up there. You talked about the customer diversification. I apologize if I missed this. But can you quantify what proportion of sales are now to kind of the core industrial cyclical customers? And then also one on M&A specific to TA. You also showed how fragmented that market is. Are there any applications that you feel you don't have in the portfolio? And if so, why not be a little more aggressive in consolidating that space and adding it to the TA portfolio?
Yeah. Terry can handle both those. And I'll just make a quick note on the front end of that in terms of the M&A. TA has been very consistent in small tuck-in M&A and very effective in doing that and adding some great technology platforms that are complementary, particularly on the physical property side of those measurements. And as one of our priority market categories, you can imagine that materials is an area that is at the top of our list from a prioritization standpoint. But Terry, you want to get into the question there on the core industrial mix as well?
Yeah. I mean, if you look at our mix overall, it's probably broadly 75% industrial customers, 20% academic, and maybe 5% business from government, and that 75 really spans all the segments that you saw up there. The difficulty, and maybe we don't want to get too specific, is as, say, for example, technology companies push product specs down into their supply chain, it could actually go from a technology company down to a company that's just producing polymers for them, right? So what is business for a high-tech company in Silicon Valley that we would classify as tech or electronics is a business in Southeast Asia that's a polymer manufacturer making a specialty material for them. So there's a lot of mix in between. So I hate to mislead you about what the exact mix is.
As far as M&A opportunities, I think with the addition of Rob Carson and a new CBO at Waters, we have the opportunity to be more aggressive and look for bigger plays in materials. We certainly do not have everything that's required for structure- property. We just happen to be in the best position to give good structure- property answers. There are other technologies out there that we have our eye on that could be bigger plays. In the past, we've had big innings at TA by hitting a lot of singles and looking for complementary pieces of technology that fall right in. Now we could add other legs to the stool to give even stronger structure- property answers. There's good candidates out there. As Sherry said, Waters Corporation has the firepower to go get them.
Great. What else do we have here? Yes, in the back.
This is Julia Qin at JPMorgan. Two questions. One is not just for TA, but across Waters, what are the sort of capabilities or product areas of interest in terms of M&A opportunities? And then second one is you talked about work underway for high-resolution mass spec and DESI imaging. So could you give us a sense of when roughly we can expect more information or updates on those fronts? Thank you.
Sure. I guess I probably wouldn't have a lot more to add on the M&A targets. And I don't want to get overly specific for obvious competitive reasons. But I think you can probably follow the trail in terms of the way we've done our overall business prioritization in the market segments that we talked about today and particularly the subcategories that we looked in. And with always the first look being, how does it relate directly to or adjacent to how our customers use our technologies today? And that's really what I mean when I talk about a strategic approach to M&A as opposed to a tactical approach. Some companies have it as a very core part of their business model to deploy a certain amount of capital, and it may take them in very different directions.
For Waters, we're going to start more from the standpoint of where are our customers today, what are their needs, and how do we actually make our technology and their workflows that sit in and around our core technologies more valuable to them? And that's going to obviously lead us to focus on areas like pharma and biopharma, material science, etc. As it relates to high-resolution mass spec and more, I think you're asking more about something like DESI and what's a timetable for a technology like that? Yeah. Ian, I don't know if you want to comment on what you see as a commercial outlook for something like the mass spec imaging.
Yeah. So I mean, today, we have DESI products on the market today in front of some of our mass spectrometers, and they're being used for very specific application sets. I think you can look at DESI maybe in two different paths of evolution. There's a non-regulated space for imaging today in pharmaceutical discovery, for instance, where imaging is going to be an increasingly important part of how drugs are developed, how those drugs are deposited in tissue and visualizing that. And we already have some customers looking at that with DESI. Now, the technology itself, the ionization source itself, needs more improvement. It's early stages. And our development engineers are working on that right now. So in the priority scale of things, we'll go through improving that technology to today's product.
And you'll start to see maybe next year some more integration of DESI into some of the mass spectrometry systems that we have today. And then I think the other path to look at is that more regulated space in clinical. And what I showed you today was a research program, but it certainly has that capability of really disrupting traditional workflows. Now, that's going to take a lot of work. And that's what we're aiming at through our research and development, both from what the DESI source itself can do, but also the power that you might need on the back end to improve imaging significantly. So it's right within our sights. It's too early to give a timetable to that, but it's certainly something we think could be disruptive into the space.
Great. Yep. Great. Thanks.
Rich Fitzgerald, Beck, Meg, and Oliver, thanks for taking the time today, guys. I had a quick housekeeping question and then a more substantive one. The first is I might be wrong, but one of the very early slides, you guys have the different end markets. You had the subcategories you participate in and then the subcategory growth. Most of the subcategory growth was MSD-plus, so mid-single-digit growth. I think materials had MSD-minus. Was that a typo, or is that not signifying that category is actually declining, is it?
No. I think what that really is, Terry showed a slide later that said Materials segment overall is growing about 4.5%, I think he said.
Right.
Yeah. So that would be mid-single digits, just below mid-single digits if you had.
Okay. Got it. Got it.
Just wanted to clarify that. And then the other one was from time to time, you guys talk about bringing mass spec into the clinic. And I was just wondering if you could elaborate a bit on that. And I'm wondering how much of that is in respect to lab-developed tests versus maybe other opportunities and maybe even talk about how some of the new mass spec innovation plays into that opportunity, which my understanding is it's still pretty early innings.
Yeah. No. Exactly. Just again, a quick comment. And when I talked about, and then have Jeff and Mike maybe say a little more about what's downstream here in clinical. The vast majority of our business in clinical today is LDT. And we were, as I pointed out earlier, a first mover in that space with the first cleared system in the industry. And you saw a picture on that slide as well, which was the RenataDX, which is a new platform, one of the big launches that Ian talked about last year. And so we think, especially with evolving IVDR-type regulation, that the IVD space for general-purpose instruments is going to be very robust. But clearly, we do see the opportunity to bring mass spec into even more demanding intended use and even direct clinical environments. And maybe Mike, you'd like to take that a little further.
Yeah. It's actually many, many years since we first started bringing mass spec into the clinical lab in sort of an LDT-type environment. And I think what we've found is that there's been a resurgence recently in the interest. If you look, there's a conference called M SACL, which is specifically about mass spectrometry going into the clinical lab. It's still targeted mainly at what I would call very specific application areas, hormones, sort of steroids, those sort of areas, as opposed to what you might call the more routine clinical environment. Clearly, newborn screening and therapeutic drug management are also applications. And I think the specificity and the sensitivity and the fact that you can do multiple panels of analytes in the same run, I think that's what's going to sort of tip the scales towards broader adoption of LC-MS in the clinical lab.
I think the challenge is the goalposts kind of keep moving a little bit in terms of what specific panels people would like to see, and I think that's why we haven't really seen an advance into the pure intended use segment yet, apart from a few specific areas. We have an active program in place. I have a GM for the clinical business who reports into me, and we're actively looking at that as a development area going forward.
Yeah, and I guess I would ju st reiterate what Ian said about the DESI imaging and the potential play there long-term in tissue pathology as well.
Great.
Thanks.
Okay. What do we have next? We have right here. And then Derek, come back to Derek after that.
Hi, Chris. Yeah. Keith Mills from Trillium Asset Management. I had two questions for you. Number one, can you talk about the change in the federal regulations on the Trump administration, the rollback of those regulations, how it's impacted your business both from a customer perspective and internally from a processes perspective, specifically, for example, are you doing more audits in your supply chain to ensure product quality on their part that maybe you didn't have to worry as much about in the past? And my second question is you mentioned your environmental, social, and governance review that's underway. And specifically, right now, it's been focused on energy use. And you talked about solvents in your customer base.
But can you just provide some more color in terms of what you think your priorities will be, your focus areas, materiality will be going forward, and when we can expect that new sustainability report from Waters?
Sure. No. Happy to address those. In terms of regulation and changing regulation, maybe I would think about the example you gave about supply chain quality, maybe aside from that a little bit. I really, and maybe Sherry can sort of correct me if I'm wrong, but there hasn't really been a major regulatory change in our space or in our markets that has changed our processes. A lot of what we're doing around supplier quality, around our quality management system overall, are really self-initiated. In fact, we're doing a lot. We've made a huge investment in quality. We fundamentally believe that quality is the flip side of innovation and the flip side of the same coin. We have always had quality leadership and intend to extend our quality leadership.
Whether it's process initiatives or what we're doing in, say, innovation and development, like you heard with BioAccord, we're raising the bar across the board. That extends all the way into our supply chain. Actually, Francis Kim, our Senior Vice President of Quality and Operations, is here if you'd like to learn a little bit more about our entire supply chain and how quality is being reflected all the way down and through. It's not really in response to any particular policy, directive, or change. I mean, the biggest policy change in recent years from the government that's affected us is the tax reform that we've spoken so much about. As it relates to ESG, I might defer most to that question because I think all of us are trying to very much take a first-principles look at the materiality assessment.
I've never actually been through a full-blown materiality assessment. I'm really excited about it. I'm checking in with the team on a regular basis. It's very high on my list, and that's why I mentioned it today, and so I fully expect we're going to move beyond some of the traditional metrics of energy consumption and solvent usage. Those will always be important, but I think as you maybe saw in the slide I presented on ESG, we take a broader view of that as well, and we're looking at all of our practices from the environmental practices where we want to be a real leader to the social engagement.
And we're actively in that way encouraging all of our employees to be active socially in their communities because it's our core philosophy that we need to be responsible businesses in all of the markets that we work in and live in. And that needs to come all the way through how we operate all the way up to our governance practices. And at the core of the idea for me, and I study the best companies in the world in this regard, is to have a very clearly defined shared value proposition. And the definition of shared value is where your business model and the positive contributions you make to society are reinforcing of each other in terms of delivering true sustainability and a positive social impact.
And so I expect that all of that will be in much sharper focus as we get through our materiality assessment and we set our 20 25 sustainability goals. Thank you.
Yeah. Derek, do you want to follow up?
Thanks. So two questions. One for Sherry. Sherry, when you look at that 4%-6% organic revenue growth number, how should we think about operating leverage on that number? I mean, at 4%, you can get what, and at 6%, you can get what? Just we're thinking about the incrementals and stuff like that.
Sure. Go ahead. Yeah. Please.
Okay. Great. Yeah, so I'd say typically in our financial model, whenever we're at the higher end of the growth range at 6%, you're able to have more volume, more leverage, and so it's higher. So in that range of the 4%-6%, we're talking about modest leverage, and I'd say it would be less than 50 basis points when you think about modest leverage.
Great. Thanks. And so, Chris, just want to ask more of a market question now. And this is sort of thinking about how the BioAccord's coming in. I mean, when you look at the obviously, there's some big news this week in some transactions that went on with Danaher going for GE Biopharma. Obviously, they have mass spec business. They've got Phenomenex. Now they're doing this end. You've got Thermo sort of with their bioprocess, their mass spec. You see Merck KGaA with their bioprocess business. And they've got a big column provider in that market. I guess it's sort of a question of, do these companies have potentially a different edge or a different angle because they sort of already are supplying in the market in terms of be ing with those customers and thinking about this?
Or is there a different customer at the end process of all this that they're not going to be addressing?
Basically, I agree with your commentary about having more integrated workflows. I'm just wondering, now some of these companies are going to have even more integrated workflows in multiple process. So does that give them any competitive?
Yeah. I mean, I'll.
It's a theoretical question.
Fair question. I don't want to comment too much on somebody else's deal other than when you see that kind of capital being deployed into this space, it's another signal that there's a lot of activity in the space. And maybe I'll let colleagues comment as well. But I would differentiate the bioprocessing space from the analytical and monitoring space. And certainly, our technologies are very, very core to the analytical and processes and the monitoring processes, both upstream and downstream, to monitor the process itself as sort of an audit to the process itself as well as the outcome and to assure the quality and the delivery of the outcome of that process. So we're really well established in those spaces. And we don't think that the type of combinations that are going on out there really alter the competitive dynamic in the areas where we compete.
But maybe I'll ask Jeff or any others to add to that.
Yeah. I would just say that as part of the voice of the customer for BioAccord, we talk to a lot of scientists who support bioprocess. And we see a tremendous opportunity for BioAccord to help, again, broader deployment of LC-MS to support all the things they do, both in upstream processing as well as downstream processing. There's a huge volume of testing that go es on there. And the whole value proposition of BioAccord, we think, is going to fit beautifully there.
Great. We probably have time for one or two more if there are any. Well, maybe we got one more here somewhere.
Okay. Maybe this will be the last one, and then I'll make some closing comments as well.
Maybe another TA one to get you more involved. You talked about the large install base there. I believe over 30,000 instruments and over 25,000 TA instruments, I think.
Yeah. Customers.
Customers. Okay.
So even more instruments.
Can you talk about maybe is there any way you could leverage that install base and attract more of a recurring revenue stream to those customers? I know a big portion of the TA business is instruments today. How do you think about that?
Yeah. I think it will grow over time. So we have pretty good market share in thermal analysis and rheology. But that doesn't mean that that is the biggest opportunity in materials accounts. There's a tremendous LC and LC mass spec opportunity in materials accounts. And as we leverage those 25,000 TA accounts to sell more LC and mass spec, we will get more recurring revenue on the materials side.
Yeah. And I would just remind for context, if you go back sort of three years ago, TA and Waters were managed businesses very, very separately. And I'll never forget one of the first conversations I had with Terry coming in. And Terry reminded me of this untapped opportunity that we have to think a little more broadly about the technology set with certain customers. And our market share in LC-MS happens to be lower in a lot of these accounts where we have super high share in TA. And so there's not just an innovation opportunity that we talked earlier about with structure and properties, but a clear set of commercial opportunities as well. So let me add just a couple of final comments. And then we'll wrap up the day. Before I do that, I want to thank. Putting a meeting like this together takes a lot.
I want to thank Bryan Brokmeier, the IR department, and all the team that helped. I want to thank Suzanne Carlson and all the support team who made today seamless here in New York because it really does take a village to do this, but we are committed at Waters to being a very open and transparent and collaborative dialogue with our investors, and we hope you appreciate meetings like this that we intend to do every other year. This is our second investor conference. We anticipate doing one two years from now to give you the similar update, and of course, we'll engage through a number of the sell-side conferences and other engagements directly with our key investors and, of course, through our earnings calls as well.
I hope that you could all see from this remarkable group of people that I have the privilege of calling colleagues that there's a ton of energy in Waters right now. I have an enormous amount of confidence in the six individuals that you heard from today as well as the rest of our organization as we really step into a very exciting future. If there are three messages that I would have you walk away from today with, number one, that the specialty positioning that Waters has is truly differentiated. As Aaron said earlier, we are focused and we are different. We've spent a lot of time really evaluating the broader corporate strategy.
We've gotten even more convicted around the role we can play to help our customers succeed more than ever before in this type of environment we face by really staying very, very focused as the world's leading specialty measurement company. The second main point I would walk away from is just the investment we've made in innovation, the tremendous progress we're making, really transforming a lot of the way we think about product development. And we're seeing the results on that. And so we really feel like we're squarely in front of a very exciting product cycle that will play out not just this year and next year but over a number of years. And then third, from a financial standpoint, we've said it a number of times, tax reform was clearly a game changer for us.
We're really going through a paradigm shift in capital deployment now in terms of transforming from a capital accumulator to a capital deployer. We think that's going to have very positive effects on our business in terms of our ability to invest, our ability to create great financial flexibility, and of course, return capital to shareholders. With that, I want to thank all of you for your sincere interest in Waters Corporation and look forward to continuing the dialogue. All of us will be around here for the lunch hour. Of course, see you on the road in your respective offices. Thanks very much.