Waters (WAT) Jefferies Global Healthcare Conference summary

Market trends and replacement cycles

• Instrument growth has averaged 5% over 15 years, but short-term results are volatile, with recent years showing significant swings.

• Long-term LC growth is about 4% with 50 bps of pricing, but current performance is below trend, especially in China.

• Service and spare parts revenue, especially in China, are strong indicators of instrument usage and aging fleets.

• Chemistry revenue is growing at high single digits, reflecting continued instrument utilization.

• High single-digit consumables growth is expected to continue, supported by innovation and e-commerce expansion.

Regional and segment performance

• China outperformed expectations in Q1, driving a more optimistic full-year outlook.

• Branded generics in China are seeing delayed LC replacement due to anti-corruption campaigns, with 50% of fleets overdue.

• Recovery in consumables is evident in biotech and CDMO segments, but capital replacement is still lagging.

• Stimulus in China is not yet factored into guidance, but planning and optimism are increasing.

• Localization of product portfolios and partnerships in China position the company well for future growth.

Innovation and product development

• Significant R&D investment is focused on large molecules and novel modalities, with 70%-80% of R&D directed there.

• Recent launches include the Alliance iS for QA/QC, Xevo MRT benchtop mass spec, and BioAccord for upstream testing.

• Informatics platform Empower is being expanded to integrate more instruments, supporting regulatory submissions.

• PFAS market is a new growth vector, with regulatory changes driving demand for sensitive instruments.

• Specialty clinical segments are growing double digits, with over 600 analytes supported.