All right, good afternoon. We're going to get started with Waters Corporation. Presenting on behalf of the company will be Sherry Buck, Waters Corporation's Chief Financial Officer, also from the company. I don't think they'll be presenting, though. [audio distortion].
Oh, we have other folks too. Yeah, we got a full team from Waters, but we're going to be in more than capable hands with Sherry right now, and then after we finish up here, we can talk to the full crew next door and then talk it at the breakout. So thanks, Sherry, for joining us.
Oh, great. Thanks, Doug. We're happy to be at your conference today. So Doug mentioned we have a few colleagues in the audience, but just to highlight who they are, I first want to introduce Ian King, who's the Head of Global Products , and he's been providing lots of good insights around our products and technologies today in our breakout sessions. Bryan Brokmeier is our new Head of Investor Relations, and John Lynch, our Corporate Treasurer. So next, just quickly, I'd like to point out to everyone the standard cautionary language about our forward-looking statements, risk factors, our non-GAAP measures, and those are all further detailed in our filings. So for those of you who may be newer to the Waters story, I'd like to share a broad overview of the company.
Slide number three, which is based on our 2017 financial results, really provides a great perspective about the company. Waters is a very strong global company. We're global in terms of where our sales are, where our employees are, and where our R&D and our manufacturing facilities are located. We compete in markets of well over $10 billion, and I'll break that down for you a little bit further in the presentation. Waters has annual sales of about $2 billion and very strong financial characteristics in terms of free cash flow, industry-leading margins, and top quartile return on invested capital. We have about 7,000 employees worldwide and about 15 operating facilities around the world. We're in over 100 countries, and more than half of our employee base is directly in the field serving our customers.
We feel that's a real differentiator for our organization to have so many customer-facing employees. We're also a company that attracts people for the long term. Nearly 40% of our employees have over 10 years of experience in the company, and this is factoring in the fact that we have fairly new markets in some of our emerging areas, such as China. It's not uncommon to meet people within the organization who have 20 years, 30 years, or even 40 years with the organization. I think that really underscores the passion and commitment that our employees have to be able to deliver benefit to all of our stakeholders. Waters is a purpose-driven company, and it's oriented towards advancing human health and well-being.
If you were to speak to our customers within the life sciences, food sciences, or material sciences, we're proud to be deeply embedded in some of the key workflows and some of the challenging questions that our customers are facing in order to advance health, quality, and safety in just about every aspect of life. While it's really impossible to show on a single piece of paper everything that we do as far as our technologies, on page four really highlights the diversity of some of the problems that we help our customers solve. It's across a very broad spectrum of businesses as well. I think it's safe to say that with a high level of confidence that probably everybody in this room has been impacted in some way or another by a result of the technologies and the products that we take to market.
I'd like to frame my comments for the remainder of the day against our five-point long-term value creation strategy model that we shared during our Investor Day that we held in New York about a year ago. Number one is the unique strategic position that the company holds in structurally attractive markets. Number two is a clear growth strategy largely driven by organic innovation. Third is we have the opportunity to continuously improve our operations. Fourth, we also believe that being a judicious allocator of capital is an important philosophy in the company, and we've had a strong track record as it relates to capital deployment. And finally, Waters operates with a performance-oriented culture and management team. There's a real passion for our purpose and vision with an employee base that is very focused on the customer and delivering results.
I'll start with the first pillar of our value creation model, which is our strong strategic position. The life science tools industry is about $57 billion of market overall. Waters very selectively participates in about 20% of that market, or about $13 billion, and on average, the markets that we choose to participate in are growing about 1% faster than the tools market overall, so the selectivity about where we participate and the focus that our company has is really the starting point in terms of our strategy. From a technology standpoint, we focus on high-value technologies that offer the most sophisticated, high-precision, specialty measurement techniques and methods for the life, material, and food sciences. Our portfolio is highlighted by offerings in liquid chromatography, mass spectrometry, the software operating systems that drive these technologies and support regulatory compliance, precision chemistries, and the professional services that go along with these technologies.
On the material science side, our portfolio includes thermal analysis, rheology, and microcalorimetry. All of these technology categories are marked by very strong economics in terms of growth and profit margin profile. Moving on to the business mix, which is on slide eight, we look at this across several dimensions, including end market, type of revenue, and by geography. I'm going to make a few comments across each of these dimensions. On the end market side, from a trade class perspective, pharma represents almost 60%. We like the breadth and the dynamics of the pharma industry and believe it's an attractive market where we can serve these customers with our rich portfolio of technologies. We also have a very strong position in the industrial categories at about 30% of our mix. Government and academic comprises a smaller part of our overall mix at about 13%.
Our revenues are split fairly evenly between recurring revenues and our instruments with informatics. If you were to pull the informatics part out of our instruments, the pure instrument mix of our business would be about 40%. We continue to mix towards recurring revenues, which have favorable financial characteristics in terms of growth and margin. From a geographic standpoint, we're fairly balanced but see strong growth in our emerging markets. In fact, at the end of 2017, Asia now represents a slightly higher percent of mix than our Americas business, and we anticipate that Asia will continue to be an important factor to our global growth. As you can see, 10 years ago, Asia represented 26% of our geographic mix, and it has now grown to 37% at the end of 2017.
I'll also note that our European region has been a really good source of growth for the company as well, just under 30% of our mix. Moving on to our second pillar of organic innovation on page nine, I'd like to highlight some key trends in the market that shape our strategy and shape our innovation focus. These market trends clearly support our value creation model. We see the expansion of patient access to medicines, particularly in the emerging markets. There's increasing complexity of molecular structure of new and innovative drugs and rising standards of performance and quality in materials and food science. All of these trends point to changing customer needs, and we believe that Waters is well- positioned to support these trends through our focus on innovation. All of these items lead to our vision and our overall corporate strategy.
Our vision is to be the world's leading specialty measurement company in life, material, and food sciences, which is very much driven by innovation. Our strategy is to first enhance our core pharma business, which we believe has continued opportunity for growth, particularly given key global trends that support further innovation in pharma. We also believe there is untapped opportunity in our other vertical markets of material science, food and environmental, clinical, diagnostics, and medical research. As we scale these businesses over time and drive our technology set to be a standard of measurement in these other areas, we believe it can contribute to our overall growth goals. We'll continue to compete on the basis of focused innovation and the quality of our total customer experience. Organic innovation has been at the core of Waters historically, and we have increased that focus in the past few years.
We've been able to increase our R&D spending faster than our rate of sales over the past couple of years, all the while getting leverage in other parts of our P&L and delivering good operating leverage. We do have some structure around our innovation process, and we look at it in three parts that help us balance our resources, our risk, and our reward. Innovation to drive the core is aimed at the near-term product portfolio. It's very focused and very disciplined, with a reasonable amount of certainty around it. This is innovation that keeps us competitive. The next block is transformational engineering. This is where we redefine the way we look at innovation to develop the next-generation systems that meet customer needs. It is strongly informed by our strategic planning process, and this is the innovation that will help change the basis of competition.
And finally, breakthrough innovation is where we have to think differently as we harness almost the limitless possibilities of mass spectrometry. We believe that mass spectrometry is almost unlimited in what it can do to advance measurement science, and we place a few bets in this space, and we believe that innovation here will one day change the world. Our innovation efforts are ultimately for the benefit of our customers. On page 12 is a summary of our overall business strategy. While we focus on the technology, all of our business strategies are driven by the specific needs of our individual customers. I've already spoken a bit about the importance of our pharma business. It's our largest business and our core business today. We have a leading position, and our strategy is to fortify our core and win in the fast-changing game of biopharma.
Material science is our second biggest business. We have a very interesting portfolio of technologies between Waters and TA Technologies, and we're focused on leveraging both of these strong brands more than ever before in the marketplace. There's a lot of innovation that's happening in the materials space, with all types of innovation around metals and polymers, multilayer composites. All of these require a higher degree of analytical techniques, and we're very excited about this growth opportunity and the technologies that our company can offer. Food and environmental is a market development opportunity for us, and we're focused on developing more food-focused consumables and workflows for this space. In clinical diagnostics, we have a basic offering in general use IVD. We plan to nurture the intended use IVD innovations, but it's not a driving strategy for the company in the short term.
This space will take longer for it to play out, and we see it more as an opportunistic strategy for the future. And finally, in biomedical research, it's a smaller business, primarily driven by academic and government purchasing cycles. We believe that we have a competitive advantage, particularly in the area of metabolomics. Shifting over to the third pillar of our value creation model, which is on page 13, the ability to generate ongoing operational improvement. One of the myths about Waters is that our company is optimized in terms of its margin structure. We believe that's a myth because our margins and profitability are really more of a function of the choices that we've made about where we want to invest in and our overall business model that we've made over time. This is really where the unique mix of our product mix comes in.
Only 40% of our mix is from instruments. So when you peel out the instruments, you have left about 60%, which is comprised of service, chemistry, informatics, which all have very strong profit profiles. And beyond the product, our margin structure also reflects the attractive mix that we have in our geographies and our end markets. Our track record for continuing to get leverage in the business is very strong. This is a 10-year look where we've pretty consistently delivered over time mid-single-digit revenue growth with about 200 basis points of leverage on the operating income. The 10-year cumulative average growth rate on slide 14 represents 5% revenue growth, 7% operating income growth, and 11% earnings per share growth. We measure this both year to year and over longer periods of time, and we focus on trying to strike a balance between growth, investment, and our overall operating leverage.
Just to add a little bit more color on our operating margins, the chart on page 15 shows our 2017 operating margins at 30.5%, which represents the cumulative average growth rate over the last 10 years of about 7%. It's important to note that also during this time period, we absorbed about 200 basis points of FX headwinds on the operating margin, and to be able to realize the improvements with this kind of headwinds really demonstrates our ability to execute and focus on driving operating leverage for the organization. We have a fairly broad set of drivers and programs around optimizing the business mix, a continued focus on programmatic efficiencies and disciplined expense management, and all of these give us confidence in our ability to generate incremental improvements in operating margin over time.
Moving on to capital allocation on page 16, which is the fourth point of our value creation model. Waters has historically been a very judicious allocator of capital, and we look at the capital allocation in three buckets. Number one is to invest in the business. Number two is to enhance our balance sheet strength and flexibility, and third is return to our shareholders. With the passage of U.S. tax reform at the end of last year, we now have tax-efficient access to our overseas cash and global free cash flow, which provides us with really greater flexibility. We see opportunities in all three areas. In terms of investing in the business, there is now opportunity to invest in the U.S. at a lower cost of capital, where we can deploy cash efficiency alongside our innovation process and supply chain operations.
While we already have a strong balance sheet, access to our global cash flow gives us the opportunity to optimize our capital structure for maximum flexibility and opportunistic investments, and in terms of returning capital to shareholders through our share repurchase program, tax reform provides us the confidence in the sustainability of the program and provides us additional flexibility to enhance return of capital to shareholders. Looking forward, we will proceed thoughtfully in evaluating our opportunities for enhanced capital deployment. Our fifth value creation point is focused on our performance-oriented culture and management team. There's a very strong set of values at Waters, which was instilled by our founder, Jim Waters. He not only built the company, but he created a culture which was oriented around delivering benefit. It's about delivering benefit to our customers, to our employees, to our shareholders, and to society overall.
This set of values has created a culture within the company with a focus on results, with focusing on the success of our customers, science and innovation, and a real sense of optimism. These values, when combined with our vision to be the world's leading specialty measurement company, results in our purpose of improving human health, well-being, and makes Waters a really special place that I'm proud to be a part of. Over the last few years, we've built more rigor around some of our core management processes, including strategy development and linking our strategy and strategic objectives to our operating plans and building deeper and more robust talent processes that help us to enable successful execution of our strategies. Taking a quick moment on slide 19 to highlight our 2017 results.
We achieved 6% revenue growth on a constant currency basis and 13% earnings per share growth on an adjusted basis. The revenue growth was led by double-digit growth in China and a market that for us continues to be very important to our overall strategy. Most importantly, as you look across the business at the different slices that we look at, it was very balanced with 6% growth from Waters and an 8% growth coming from our TA business. If you look at our trade class growth, it was also balanced across pharma, industrial, and government and academic with 7%, 5%, and 6% growth respectively. We executed well throughout 2017 with a consistent sales performance and double-digit earnings per share growth each quarter.
In summary, I hope this has given you a broad perspective about Waters against our five-point long-term value creation model, where we have a highly differentiated strategic position, a clear strategy driven by organic innovation, opportunity for continued judicious allocation of capital, and continuous operational improvement. Thank you for coming today, and we look forward to talking to you and your interest in Waters.
Do Q&A in the breakout?
Yes.
Okay. So we'll move next door around the corner and get started in about 10 minutes in the Nantucket Room. Thanks, Sherry.