Good morning. Thank you, everyone, for joining us today for Waters Corporation presentation. Very happy to have Waters here for the first time. Logistics, we are going to be in, as I'm looking it up, Lisle A afterwards for the breakout session. In terms of the disclosures, you can find any relevant disclosures from our side on our website at williamblair.com. In terms of the management team, we have CEO Chris O'Connell, CFO Sherry Buck, and Bryan Brokmeier, Head of Investor Relations, who I've had the pleasure of working with on the sell side for many years as well. Obviously, Waters is a really great company. I've covered it for a number of years. Very high quality, high ROIC, focused on organic growth. I'm sure we'll get into some of the higher level story here, and so very happy to have Waters here presenting today.
So with that, I'll turn it over to Chris. Thank you.
Thank you very much, Amanda. It is really great to be in Chicago, my original hometown, for the William Blair Conference, and certainly looking forward to covering the company story at a high level, and if we have time for a question or two here, that's great. Otherwise, we have a breakout session following, and look forward to the dialogue there. First, just a quick note on our cautionary statements that can be found in our filings, which you all know. Let me just start out real quick by commenting on a little bit of the background of the company. Just by background, I've been at Waters for about two and a half years as CEO. I came to the company from 21 years in the medical device industry, all with Medtronic.
Certainly coming to Waters has opened my eyes to a fascinating space, a tremendous amount of growth, but also a significant contribution to the world. One of the most remarkable parts of Waters is the deep orientation to a core set of values given to us by our founder, Jim Waters. This year, we're actually going to celebrate 60 years as a corporation. Jim started the company in 1958 and really set the company on a path towards a multi-stakeholder value creation model that very much informs the culture within the company that's very results-driven, very scientific and R&D-oriented, and very responsible in terms of paying attention to the needs of all of our key stakeholders, from our customers to our employees to our shareholders and more broadly society. Certainly, our employee base is very motivated by the contributions that we make to the world.
At our core, our purpose is very much driven to advance human health and well-being by focusing on what we do well, which is the most advanced analytical measurement technologies that really form the heart of some of the most important questions that are asked on the part of the life sciences industries in terms of pharmaceuticals, biomedical research, and clinical diagnostics, as well as increasing appetite for knowledge of matter at the molecular level in areas like food safety and materials sciences. And I'll get into all that in a little bit, really as it relates to the growth opportunities for the company. Today, Waters is about a $2.3 billion company. I'll talk a little bit more about the markets we serve.
But as Amanda alluded to, Waters has been a very disciplined operator for many years, delivering very high cash flow conversion, very strong operating margins, slightly over 30%. And probably the most important statistic to me and to the company is Return on Invested Capital, which is a reflection both of our top-line growth performance and potential, but also our P&L management and our disciplined capital allocation, which I'll talk a little more about. We have about 7,000 employees around the world now, more than half of whom are dedicated directly to serving our customers throughout the life, material, and food sciences. And that level of expertise that's on the playing field in front of our customers is a major competitive advantage. Waters is a very global company operating in well over 100 countries.
And also, more than 70% of our revenue is generated from outside the United States, which gives us a lot of balance, but also a lot of exposure to some of the higher growth economies of the world. And as I alluded to earlier in my comments on values and purpose, there's a very strong employee ethic around careers and low turnover. And in fact, nearly 40% of our population of employees, even with all the growth in Asia and some of the higher growth areas, nearly 40% have over 10 years of experience. And it's certainly not unusual to meet people in the company with 30 or even 40 years of experience. Just tremendous dedication to what we do. Just a quick note on Q1 that's behind us, but I'll just make a comment.
We got off to a little bit of a slow start from a top-line standpoint, certainly over-delivered on the earnings line. But we had some transient weakness in India, as well as in our mass spec product line that we described fully in our results. But as we said at the time, Q1 is our smallest quarter. It's 20% of our year. And we still very much feel that we have all of our goals ahead of us over the rest of the fiscal year. Let me frame the bulk of my comments in the context of our five-point value creation model. And those of you who I've met before have heard me talk about these five points. But really, what we're trying to accomplish from a value creation, long-term value creation standpoint, boils down to five factors. Number one is a very clear strategic positioning in structurally attractive markets.
That's a very focused position relative to our competition. Number two, a growth strategy that, as Amanda alluded to, is very oriented toward organic innovation. Number three is what we believe a significant opportunity as we scale the company for continuous operating improvement. Number four is a long-standing commitment to being a disciplined capital allocator. And then finally, and most important to me in terms of the enduring ability to deliver against these, is a performance-oriented culture and management team. And that's really the great strength of the company. And I'll say a little bit more about that. So on the first point on our strategic position, the overall life science tool sector is roughly a $57 million marketplace. We very purposely choose to participate in about 20% of that, $13 billion, that form really the foundation of our specialty measurement corporate strategy.
These segments do grow faster than the overall market. The overall tools market, we believe, grows at about 4%. The markets that we participate in, which tend to be more pharma-heavy than some of our competitors, tend to grow a little faster, maybe 4.5% or 5%. And our long-term growth rates have typically averaged a little bit better than that in terms of an ongoing strong delivery of organic growth. Our technology portfolio is very oriented to very sophisticated categories of high-precision specialty measurement, including liquid chromatography, mass spectrometry, and all the related informatics and consumables that come with those workflows, as well as our platform in the materials sciences headline by thermal analysis and rheology through our TA Instruments-branded product lines.
It's been a very purposeful choice of the company to remain more focused in the high-value specialty measurement tools because, number one, that's what we think we can do well. And that's where we can also generate outsized returns over time for our shareholders. The mix of the business has evolved steadily over time in terms of the markets we serve, the nature of the revenues, as well as the geographic split. As I mentioned earlier, pharmaceuticals is our lead category from an end market standpoint, with industrial second and government and academic third. And over time, we've actually shifted gradually towards more exposure to pharma. We believe that exposure is a real positive thing because of the ongoing innovation in all elements of the pharma sector. And it certainly is a portion of the reason why we tend to be a bit more profitable than the industry.
Also contributing to that is the recurring revenues. We're about 50/50 between instruments and informatics, and then recurring revenues of service and consumable chemistry products. And within that mix, informatics, which does have a recurring component, is about 10%. So really, instruments, the capital instruments that we produce are only about 40% of our overall mix. I mentioned earlier our 71% mix outside the United States, and that's continued to trend towards Asia. Last year, the Asian economies took over the Americas in terms of our largest geographic sector. Within that, China is already at 17% and rising. Only 10 years ago, China was 6% of our revenue. And last year, it was 17%. So you can see the rising importance of China in our business.
And having just returned from another trip to China, yet another trip to China last week, I can tell you that that economy continues to show its promise and its balance and its strength. And we're pleased with our position there, as well as in India, Japan, and the rest of Southeast Asia. But we do tend to tilt a little more towards Asia every year as we push forward in our business. So talking now beyond our position and the context for our strategies, since I've come in, we've done a lot of work on a real bottoms-up basis to understand the different markets we serve and where we're best positioned to make choices to compete. And really, the broad background is defined by what I believe to be a very positive environment in the life sciences, materials, and food sciences of investment in analytical measurement technologies.
Clearly, there's almost an insatiable appetite for participants of all types to understand matter at the molecular level throughout pharmaceuticals, materials sciences, and food. And certainly, the trends of the world towards more investment in healthcare, a rising middle class, and increasing population all provide fuel to these trends. More specifically, the trends within our core businesses include the rise of the generic drug and coming biosimilar revolution. And that's all about more and more people in the global population having access to life-changing medical therapies and all the analytical testing that's required to bring that to life. The generics industry is really booming in all parts of the world, including developed markets. It's not just an emerging markets phenomenon. On the other end are the innovators in pharma that are increasingly tilting their portfolios towards large molecule therapies.
And the increasing complexity of those therapies is demanding ever more analytical measurement content. And we're very well positioned to capitalize on that trend. Those rising standards, regulatory standards, as well as consumer performance standards, are also reflected in materials science as well as food safety. Certainly, the supply and demand in the food is creating more and more discontinuities and more questions about contamination and safety and authenticity and even health-giving properties of food that demand more measurement. And certainly, in some of the smaller parts of what we do, rising investment in biomedical research and really unmet needs in the clinical diagnostics space are all trends that are pushing our customer needs towards more interest in data, security, integrity, more accessible, usable technologies for wider populations, more complete system orientation towards what we do in our products.
And then finally, something that plays well into our core expertise in science and applications is more of an applications-driven approach rather than a pure instrument approach. So therefore, our vision as a corporation is to be recognized as the world's leading specialty measurement company, maniacally focused on innovation in people that are focused in the life material and food sciences. We are not trying to be a one-stop shop in a laboratory. We want to compete on the basis of our focus, our innovation, and the quality of the total customer experience. And that's how we measure quality is in terms of the total customer experiences. And we believe if we can continue to focus on serving the most demanding market segments with solutions that meet the rising regulatory and performance and quality needs of our customers, that we can continue to prosper.
Just a little bit more about innovation. Probably the area of the company that we're driving the most change in right now at Waters is in the R&D sector in the innovation area. In the last five years, we've increased our spending in R&D as a percentage of revenue from 7.5% to 8.5% of product revenue, most of that coming in the last few years. And we're really trying to do three things in our innovation portfolio. First is around core iterative innovation that's very focused, very disciplined, and keeps us competitive in our key technologies.
But we introduced the term at our really first-ever investor conference early last year called transformational engineering, where we're bringing together previously distinct individual product centers like chromatography and mass spec and informatics and chemistry into a more systems-oriented engineering capability to try to meet the needs that I articulated earlier of more of an application-focused, system-oriented, bespoke, fit-for-purpose set of offerings. And some of our most important product development initiatives are really benefiting from this more systems orientation. We think that's going to be the basis upon which competition evolves. But finally, and maybe a little bit of a pleasant surprise for me coming into the company is just how much effort is spent on breakthrough innovation. Fully, a quarter of our R&D spending is dedicated to pure research. In fact, next week, we're doing a second annual gathering of all of our researchers from around the world.
It just continues to amaze me, the technologies that are coming forward, the application science that's coming to the fore, and really the spirit in the company, particularly oriented around mass spectrometry, where we think that a lot of what we have in our technology pipe can lead to totally new analytical measurement workflows and impact many more markets than we currently participate in. From a business strategy standpoint, aside from the corporate strategy, we define our business in five key market sectors. Pharma is our core business. We're equally emphasizing our core strength in small molecule pharma, as well as trying to win the race really towards new standards of measurement in biopharma. Biopharma is about one-third to the two-thirds of core pharma, but growing twice as fast.
Our strategy in pharma is to continue to enable the global pharmaceutical marketplace with the correct analytical techniques throughout product development and QAQC, which is really where the bulk of our business is, as well as discovery phase. Materials science is probably the least known part of Waters and actually is the second biggest business at Waters. In materials science, we have a combination of our Waters-branded and our TA-branded technology platforms. When you look across the range of these technologies and what's happening in both consumer products and industrial products and polymers and chemicals in particular, we probably have about the most interesting portfolio. We think that can be a very large business in the future, leveraging that broader product line. Food and environmental is more of a market development game for us.
LC-MS technology is used in some very demanding food safety applications today but can actually find a much broader place, particularly as some of those food value chains that I alluded to earlier become more robust. I mean, one interesting example is in Japan, about 10% of all food coming into the country is tested in some way. In the United States, that number is 0.1%. But we all know that consumers are demanding more information. Regulators are raising their standards. And the tools used in food safety and food quality value chains will continue to increase in sophistication. Clinical diagnostics and biomedical research are smaller businesses for us. We're primarily oriented in clinical in the general use IVD space with a large focus in clinical toxicology and newborn screening.
But we do see significant opportunity for mass spec to become more of a standard of analysis over time as it becomes more simple to use in some of the intended use IVD innovations in those areas and others. And then finally, biomedical research is primarily the domain of the academics and the government and, to a certain extent, the pharma companies. But the research surge in metabolomics, proteomics, and what we call panomics or multiomics will continue to demand the highest technology that we can produce. From an operating standpoint, a lot of people ask me, "Chris, your margins are best in class in the industry. Can you sustain that?" And one of the points that I think is important to have as context is that our margin structure is really a reflection of our very unique product mix. I talked about the product mix in pharma.
This shows our product mix by our mix by product, but also by geography, that we do have a unique mix that has, over time, trended to more profitable recurring revenue lines. And we really believe we have an opportunity within that, just like every other company in the industry, to continue to enhance our operating efficiency. Our goal in that regard is to strike a balance between growth, investment, and profitability. And so we don't have any significant goals for operating margin enhancement other than modest incremental improvements over time, the aggregation of marginal gains, if you will, while we continue to try to optimize the amount of investment we put in the business for long-term growth. And our track record demonstrates that we've been able to do that.
This is a 10-year look from 2007 to 2017, which shows good solid 5% organic top-line growth, generating some modest enhancement in operating income growth. And then, through our buyback program, some earnings per share accretion. And this formula of mid-single-digit revenue, upper single-digit operating income growth, and double-digit earnings per share growth is an objective for the company to continue to sustain over time and enhance where we can. In terms of driving that operating leverage and that operating efficiency, you can see here, this is our margin look over a 10-year period. And you can see kind of the gradual drift upward, which reflects some of the factors I talked about. And we look at the business mix, as I talked about. And obviously, the more growth in the top line we can get, the better we can perform on this metric.
We do have a variety and have launched in the past two years a variety of operating improvement initiatives and a balanced scorecard to get after these opportunities, and of course, good old-fashioned disciplined expense management. Shifting to capital allocation, our capital allocation framework is really three in three buckets: invest in the business, maintain and optimize the balance sheet, and then finally return capital to shareholders. Certainly, the U.S. tax reform earlier this year was a major game changer for Waters. We were one of those companies that was very trapped. We had $3.5 billion sitting outside the United States that we've been able to bring back. We did pay the toll tax, and we've now brought the majority of that cash back to the U.S. And we really see opportunities to enhance all three buckets.
Certainly, from the standpoint of investing in the business, I made the comment on R&D and what we're trying to do to continue to make that our first choice for investment. But we also announced earlier this year the largest capital investment, actually, in the history of the company to rebuild from the bottom up our highly differentiated chemistry synthesis plant in Taunton, Massachusetts. We were struggling with whether to make that investment in the U.S. Having our cash lowered our cost of capital in the U.S. and allowed us to get a much higher return on invested capital on the project. And so we did make the go-ahead along with some good state incentives to put that plant in Massachusetts. And now we're spending that $215 million over the next five years to bring that to life.
So, a good example of investing in the business by having more financial flexibility. We also paid down about $750 million of debt in the first quarter to give us more capacity, and at the same time, announced at the end of the first quarter a new share buyback authorization of an incremental $3 billion for over the next three years to build on our successful capital deployment program. We do not pay a dividend, and at this time, we're not contemplating it. Of course, we objectively revisit all capital allocation priorities on a periodic basis, but at this point, we're focused from a return to capital to shareholders on our buyback program.
Just pivoting to the final point on the culture and the management team, I talked earlier about our values and our vision and how our values and our vision combine to give us great purpose as a company, and that really creates a culture, a winning culture, but we've also supplemented that with a robust set of operating mechanisms around strategy, capital allocation internally, and a new talent management approach, and a rigorous set of five operating priorities that I base my personal objectives on, my management team cascades, and from there, everybody in the company develops their annual objectives, and we've tried to create more line of sight between our strategy, our investments, and how we measure our effectiveness on an operating standpoint to reinforce the discipline and focus of the management team.
So really, in conclusion, just again, the five points that I tried to cover: a focused, unique position in the most attractive markets, an innovation-oriented growth strategy, opportunity for ongoing improvement, disciplined capital allocation, and a high-performance management culture. These are the five keys that I keep coming back to that we continue to put more and more detail and rigor around. And at the end of the day, I'm extremely proud of the team. To have a CEO change a couple of years ago after my predecessor had been there for over 20 years in that position was not for the faint of heart, but just the way people welcomed me in the company, the enthusiasm with which everybody's gone about their work, the forward-looking perspective of the employees in really wanting to take Waters to the next level has been extremely rewarding and refreshing.
And I'm having a terrific time. So anyway, maybe I'll pause there. And it looks like we have about five minutes, Amanda. If I want to take any questions, certainly happy to get a cup of coffee and go to the breakout. But while we're here, anybody want to ask a question?
Yeah. So I think, having worked with the company for a while, I think that maybe we kind of the market share, I don't know, advantage or disadvantage that we've expected to enjoy. So you talked about that innovation. Maybe you could just talk a little bit more about how has it been for the company over the long term in doing that level of leadership in the space?
Yeah. It's interesting. The history of the company is interesting, of course. Jim Waters, by the way, Jim is alive and well and vibrant at age 93. He gets in his car and drives over and has lunch with me once a month, and to have the founder around who first pioneered the field of gel permeation chromatography, which led to the world of liquid chromatography, and from the very beginning, he and the Waters Company was the innovator. In the late 1970s, became part of Millipore Corporation.
Those were really important years for the company to sort of grow up and professionalize as a company, but probably not the best years for the company because Waters, at its core, has a very independent spirit, spun out, of course, private, and then went public in 1995, shortly after which the acquisitions of Micromass to get into mass spectrometry and TA Instruments came to bear. But really, since those acquisitions more than 20 years ago now, it's been almost entirely organic. And I think that spirit of Jim Waters, the pioneering innovation around chromatography, first in HPLC and then in UPLC about 10 years ago, as well as all of the chemistries and informatics that go along with that. And that may be the least known part of the company or least appreciated. It's one thing to compare instrument platforms company to company.
But I alluded or mentioned the chemistry synthesis capability in the company. We really do have a very unique ability to develop a wide range of chemistries and consumable products and then the informatics platforms that form the application science. And really, that all is part of the innovation engine, I think, that's proven itself over time. I think the area where we have to improve is in the integration across some of these technologies. Mass spec, of course, the vast majority of mass spec utilizes chromatography, liquid chromatography as an inlet. And while we have a lot of interesting technologies in our quiver around direct ionization, mass spectrometry, and new ways of introducing samples into the mass spectrometer, doing a better job of more tightly coupling LC and mass spec in a system.
And that's why a program like the BioTOF, for those of you who have been following the company and are in some of our big R&D projects, probably our biggest bet is this BioTOF system, which is a very usable high-performance mass spectrometry system targeted directly at product development and QAQC in the biopharma world, but a system that is going to fundamentally rely on a level of robustness and simplicity to withstand the rigors of regulated workflow environments like product development and QAQC. So we spent a lot of time talking about this innovation. It's probably the area I've spent the most time since I've been there. And it's the area, as I mentioned earlier, where there's been the most change. And I think that commitment comes just from who we are from the beginning and also the strategy of the company. Yes?
Talk about your mass spec market share today versus a few years ago.
Yeah. So mass spec, it's a good question. Mass spec is a pretty heterogeneous field. I mean, there's the high-resolution mass spec. And that's an area where we're later in a product cycle. Our high-resolution mass spec technology in Q-TOF and Synapt time of flight is, I would characterize as later in its cycle. Certainly, we have some specialty applications like HDX and MS to the E that provide a lot of unique value in some of the direct, like mass spec imaging and direct ionization techniques. But in the core high-performance, there are other companies that have been more successful in recent years. We've probably lost a little bit of share there. Although the Q-TOF world is very different than the Orbitrap world in terms of the type of applications that are run.
So there is some market segmentation there. In that area, those cycles tend to run longer. And we have two of the most significant technologies in development right now. We've not spoken a lot about them. We probably will in a year in terms of taking high-resolution sensitivity and resolution to the next level. So we're very committed to that area. In fact, we recently carved out a new organization within Mass Spec to focus specifically on that area to go faster and be more impactful in the high-resolution space. But I'd say in the other spaces, we're holding or gaining share. Tandem quadrupole sector, we have as strong of a product lineup as we've ever had with the TQD and the Xevo TQ-S micro and the newly launched Xevo TQ-XS, which is a high-performance tandem quad mass spec tool for applied markets, but also bioanalysis.
We're competing very well in that sector and in many markets gaining share. And then in some of the more accessible segments, you've perhaps heard of the ACQUITY QDa, which is a single quad mass detector that is really built for chromatography workflows. We were a pioneer in that space. And by the way, the whole QDa experience taught us that the world is hungry for more usable, fit for purpose, simple to interface with mass spectrometry technologies, which is a philosophy we're now going to be carrying forward into the time of flight space, as I mentioned, with the BioTOF and ultimately into the tandem quad space as well.
The one over here, yes. Do you hedge currency exposure by?
We do not hedge currency. Nope. Nope. Over time, I've never done that. And we do try to manage that. Obviously, sometimes you get extremes that are tough to manage, but we've managed through it pretty well. And we don't have the economic burden of inefficiency that that introduces. So thank you very much. We'll go to breakout. Yeah. Yeah.