WAT - Waters Corporation (WAT) Presents at Cowen 43rd Annual Health Care Conference (Transcript)

2023-03-09 11:26:17 ET

Waters Corporation (WAT)

Cowen 43rd Annual Health Care Conference

March 06, 2023 9:50 AM ET

Company Participants

Udit Batra - President, CEO and Director

Conference Call Participants

Daniel Brennan - Cowen and Company

Presentation

Daniel Brennan

Excellent. Well, thank you, thanks for being here. I'm Dan Brennan from Cowen, Day 1 of the TD Cowen Healthcare Conference. Really pleased to be joined with me on stage here without Udit Batra, obviously, CEO of Waters Corporation. So Udit, first of all, welcome.

Udit Batra

Thank you, Dan.

Daniel Brennan

And we have Caspar in the front row as well.

Question-and-Answer Session

A - Daniel Brennan

Maybe, Udit, you've been in the CEO role coming up on 2 years, right? Performance has been stellar, stocks responded accordingly, though year-to-date, yourselves and others a little bit more mix. But certainly, '22 was a great year. Kind of what stood out most in your mind from the results that you posted last year? And can you repeat the outstanding performance this year?

Udit Batra

Firstly, thank you, Dan for having us. And I'd just simply start by saying, it is -- I get the chance to do all the blah, blah, and it's my colleagues, who do the hard work and their resilience and their competence has been outstanding. But I would say 3 things stand out. First, consistent and outstanding commercial execution. And you see this in the results. I mean 12% growth, almost 9% -- 8.5%, 9% on a 3-year stack basis on a constant currency basis. The margins are flat, given such a strong FX headwind as well. And despite the investments we made in our adjacencies. So the commercial execution stands out, and it's an outstanding and consistent execution.

Second, my heart and water's heart still beats faster when we see new technology. I mean this is who we are. And it's been an outstanding couple of years for new products across the board, across LC, across mass spec, in consumables, in software, also new service offerings, it's tremendous, right? It's been really, really fantastic, and that's contributed to our top line. It will contribute even more going forward.

And third, I mean, we do what we say. We said we'll first get the house in order from a commercial standpoint, we'll recharge innovation, get a fantastic team in place. And then we will start to allocate capital towards targeted M&A that accelerates our strategic ambition, and that's what we've just done with the announced acquisition of Wyatt Technology. So super excited. But I think commercial execution, innovation and now consistently going towards our strategic direction is what stands out.

Daniel Brennan

And obviously, repeating that, I'd say any performance in '23, that's...?

Udit Batra

You're only as good as your last quarter as somebody told me when I took this rollover. Look, it's been a tremendous couple of years of performance. It comes off a high base, as you know. But that said, we're not expecting anything to crash. So let me just sort of break it down, right? From an end market perspective, we're serving pretty resilient end markets, but the unmet needs are very significant, right? Not just in pharma. I mean, pharma, small molecule is still the largest volume in the pharma industry, but biologics, which are now 40-ish percent of the pipeline, there, we're solving very significant unmet needs. It's a very resilient segment and that's growing high single digits to low double digits.

Then you go into the industrial segment, the constitution of which has completely changed over the last 10 years for us and for many others, but definitely for us, right? In the Industrial segment, PFAS testing, a $200 million to $250 million market, growing 20%, where we have an exquisitely sensitive instrument that we just launched last year, right?

And then finally, in our TA business, where roughly 40% of the business is now again serving more resilient segments like battery testing and electronics testing. So the end markets are resilient. Second, in those resilient end markets, it's the same formula. I mean the commercial execution is tremendous, and we think that's not going to change. And we have -- the 5 initiatives that we announced there, they're going super well. The instrument replacement cycle is still going to go on, the service attachment rate, which has increased over 350 basis points in the last 2 years. We expect it to increase another 100 basis points. E-commerce is going to increase penetration. So commercially, we think it's going to be pretty robust.

And innovation is contributing and across the different segments. If you just look at biologics, in particular, that's close to 30% of our pharma revenues. There, we've introduced for columns, MaxPeak Premier technology, coating technology that is being applied to columns and now to instruments. The BioAccord is gaining traction across the biologics development stream. And the last piece is our move towards bringing in new technology into our armamentarium that can serve our customers better, this is why it. So really feel good about the end markets, feel good about the execution and now also with the M&A.

Daniel Brennan

Great. So we're hosting a panel later today with 3 different KOLs on the LC-MS part of the market, academic scientists, a pharma customer and industry kind of commercial sales executive. What would you say would be 2 or 3 of the key questions that we should probe them on that, I guess, insight on your competitive profile and/or the state of the outlook to the market?

Udit Batra

Tell me if you discover something different, I'd be keen. But look, from an academic standpoint, if you're a professor, again, it's a question of needs. What exactly are the different unmet needs you have in your lab that we can satisfy. And it's largely focused in my view, in this case, on the different types of modalities. How are you answering questions for RNA therapeutics, how are you answering questions for cell and gene therapy, how are you asking answering questions for different types of new interesting biologic therapeutics.

If you think about the pharma customer and if there are late-stage development in QA/QC, I mean you would really -- I would be curious on what is there out of the set of toys that they have for testing biologics, be it monoclonal antibodies, be it AAV, what's working? And what do you expect to use for high-volume applications? And what do you expect it to be a hobby that you're never going to buy the second instrument? And if you go to these labs, you find that they have enough money to buy everything, and they do. But it's the second instrument that matters. It's the third instrument that matters. It's a third consumable that matters.

And then finally, for service, I mean we are a very focused service company, right? So we believe our service engineers help customers run experiments, not service any random instruments, right? So we're very focused on the water side. And I think this is something we'll talk about a bit more in the next couple of months, even at Pittcon, 40% of the errors that occur in QA/QC are human errors. You can attribute that to somebody putting the wrong vial in a tray or putting the wrong column. And each time you have a deviation, you have to record it in QA/QC, right?

So my question to the service person would be, how are you helping customers resolve that? Servicing instruments doesn't help you. If the error is purely human and the customers need it. How are you automating? How are you thinking about solutions that reduce the 40% errors to 0. So you don't have to go to your boss and say, boss the filing is going to be delayed, because I put the wrong vial instead of the one that needed to be tested. So those will be the questions.

Daniel Brennan

Okay. So maybe a question or 2 on guidance and then we'll dig into the businesses. But in terms of high level, so you're guiding for this year calls for 5% to 6.5% growth. I think some are even hoping for even something greater, but I'm sure you'll always find people who want more. But you have tough comps. You grew 12% last year, 16% the year before. So the 3-year stack, I think as you noted, we calculate, call it, 8.5%. And even the 2-year stack for '23 implies around 9%. So with COVID creating these extreme kind of recovery comps, what's the right way to think about the recent results? And how should we interpret your '23 guide reasonable or conservative?

Udit Batra

It's the right starting point. I will not let you come up with any sort of adjective that you can label it with, but it's the right starting point. And the way -- the reason I say that is anytime you start the year, you have a set of upsides and downsides. We always look at uncertainties and say, okay, what uncertainties can help us overachieve right? And where is sort of the floor? And I wouldn't say this is the floor, but this is a reasonable starting point, right? And when you look -- and then why is that the case, right, the 5% to 6.5%, and you've talked about the comps already, just take instrument growth, right, just as an example.

Classically, instruments grow 3-ish percent, and there's 50 basis points of pricing in there. Let's assume we add 100 basis points on top of pricing -- on instrument pricing, so it's 150 basis points. And then there's 100 basis points of Waters out executing the market, there you have 5%. That's the lower end. And the 6.5%, about 55% of our business is consumables, the 6.5% is a similar math you could do for our consumables business, right?

So I think that is a reasonable starting point based on historic averages despite the fact that we come off such really, really euphoric growth. The uncertainties that can make you outperform, and this is largely your question, the uncertainties are China, right? I mean I think you would have to be super brave to say we assume China is going to come back in Q1 or Q2. I mean we're watching and as these uncertainties involved, there is room for upside. Second, we think our commercial execution can do more than 100 basis points if everything goes well. We think our innovation can do more than 100 basis points if everything goes well, right? So that is an uncertainty on top as well.

And third is traction that we get with the deal, right? We assume sometime in Q2, the close-in sometimes in Q2, if it happens a bit sooner, you get an upside. And if the uptake is faster, you get an upside. So I mean that's how we think about our guide. We set a baseline and we say, okay, what are the uncertainties that can take us up, and we are pretty diligent about going to find them and holding people accountable.

Daniel Brennan

Got it. Got it. So the adjacencies and the innovation in that base 5%, they're really not in there, that's really upside. Is that fair?

Udit Batra

I think in the commercial execution, you cannot -- the commercial execution and innovation are commingled, right? So when we do the replacement, when we look at the replacement cycle, the replacement cycle occurs, because we had our HPLC as an alternative to the old alliance. The replacement from our spec occurs, because you have the Xevo TQ Absolute and Xevo G3 QTof. So a bit commingled, but not all of innovation momentum is in there, right? And for many of these cases, it's the second year or even the third year of these products. So you have a higher base to go off.

Daniel Brennan

Right. Okay. So maybe in terms of backlog, can you give us a little flavor of what it looks like? I think on the 4Q call, you said orders were strong as ever. So any color about like the backlog and/or how orders finished the year and what that means for the '23 outlook?

Udit Batra

Yes. Yes. Look, I think, Dan, your underlying question is instrument growth dramatically going to slow down. So I think you asked it now 3 different ways. So let me just address it directly. The answer is no. We're not seeing any signal of the instrument growth crashing to a complete negative number. I think that's the fear that people had. You know what, growing 16%, 20%, now it's going to go down minus 15%, not at all, right? I mean we are not seeing any changes in the demand profile.

So let me take this in turn and then I'll explicitly answer your question on backlog at the very end. It's important to understand the end markets are resilient. The demand we can all read about, we can all understand. the demand for biologics, the demand for better cell therapies and gene therapies, the demand for PFAS, the demand for battery testing, that's 80% of our business. We are coming up with better value propositions that there exists in the market across the portfolio and the commercial execution has been great. So there is no reason to believe that this -- in this resilient end market, you will see a dramatic change in demand, a dramatic change in execution. None of that is going to happen, especially on the instrument side.

Now to your question on backlog, we do down the backlog slightly in Q4, but for the full year, it was a bit higher than previous years. Now we don't want to increase backlog much further, because it's actually at an all-time high, and this is what I commented on in the call, largely because our backlog was at a very low level 2, 2.5 years ago. And because the demand has been so high, it's -- we've been able to build it to healthy levels, and it's healthy enough now. right? It will go plus/minus delta X. I wouldn't look too deeply into if it's gone up or gone down 1 quarter. If it's gone down by $100 million, then we'll have a chat, right? But other -- short of that, I wouldn't look at small deviations in change in backlog, right?

I think that is an important thing to keep in mind. Now it's at a steady state, and then there will be a variation around it, sometimes up, sometimes down. gone are the days when you were just building, building, building, and now you're at a point where you're sort of at a steady state. And we like it because any more our customers are coming back and saying, "Hey, why are you not shipping the product right? So I think that's a better way of thinking about it. So demand is superb, the backlog will move around a certain standard deviation, nothing to be thinking more about.

Daniel Brennan

And would you think orders could continue to grow year-on-year, given how rapid? I mean on the bioproduction space, investors got very nervous, because growth got so strong and then the order rates were off the charts, and that orders are negative, and we're doing 2-year stack comps, 3-year stock comps, instruments, obviously a super robust growth. What's the outlook for -- because investors are really focused on this order outlook, what's the outlook for orders, call it...

Udit Batra

Look at fundamentals. We had we had no COVID tailwind to speak of, right? We had nothing that was sort of a onetime impact. We basically had a drop in access due to COVID, that access came back and we are doing well. And the rest of it is basically outstanding execution, right? So if the market is -- and I think we drew this waterfall in one of our discussions, if you look at our overall growth rate on a 3-year basis, it's 8.5%, 9%. The market used to be 4%, 5%, 6%, assume it's growing a little bit faster due to 100 basis points on a 3-year basis of pricing, right? So let's say, it's in sort of 6%, it's 7% at the high end. Water still has 200 basis points ahead of the market. And that is directly attributable to commercial execution and innovation and now traction in adjacencies.

So we don't expect the algorithm to change at all, right? Now the 4% to 6% as a baseline growth will definitely slow down, because you have a high base that you're coming off, but it's not going to go to a negative, right? So that's why the 5% to 6.5% that we guide is based on sort of a long-term average and saying the long-term average is not dropping. And in that, there's an assumption of better pricing than the past.

Daniel Brennan

So you have a nice waterfall chart on your adjacencies. I think it's a $12 billion TAM, growing double digits. Just what's the expectation of the contribution over the next, say, 5 years for those adjacencies to your organic growth? And can you help us think through -- you have nice slides and you show TAMs and growth rates, but between bioseparation, biocharacterization, LC-MS diagnostics batteries and sustainable polymers, which of those 1 or 2 do you think will be the most meaningful?

Udit Batra

First just give you the answer. Instead of being mid-single digit, now you're mid- to high single digits once these start to gain traction, right? And the case in point, and then you rightly said, it's another $7 billion in our TAM, and it's growing high single digit to low double digits already as a weighted average, right? So you add it and you get to mid- to high single-digit growth that we would expect in the midterm. We've said this in the past, and we start to see traction.

Now rather than talking about abstractly about the numbers, let's just talk about the specifics. Let's talk about bioanalytical characterization and bioseparations. We said bioanalytical characterization is roughly a $1.8 billion market, growing 10% to 12%, if memory serves me right. In that market, roughly $600 million, $700 million is LC, UV and LC-mass spec and similar size is light scattering, right. And I guess what we just did, we entered light scattering, right? And there's a small portion that's left over of other techniques as well.

So we think this is an area which is very tangible. In biologics, in particular, you see a significant need for characterization. And maybe just sort of digging in a bit deeper, there is need for raw material characterization. And if you think of monoclonal antibody production, you're using cells to produce monoclonal antibodies, cells are -- cells work better in certain environments. This is called media. In fact, it's called a fed batch. You feed certain nutrients to grow the cells and then the cells produce more protein, Guess what, in that mix, there are 200 different components, a small change in any one or in a dramatic change in productivity of your cell line. And guess what technique helps you analyze it, LC-MS?

And so we're getting LC-MS into raw material characterization. You go further downstream process development, process characterization, in-process testing, there's LC-UV, LC-mass spec and now another technique has entered the fray, light scattering. What UV and mass spec tell you about chemistry, light scattering tells you about physics. UV and mass spec tell you about the structure of the molecule, what amino acids are there in a protein and light scattering tells you how big it is. Is it aggregated or not, right? And then finally, in QA/QC, UV is already present. We've made significant headway with mass spec and now light scattering is, in fact, further ahead of mass spec.

So in all, just I felt it's easier to sort of double click on an area rather than give you an abstract answer, the math you can do yourself why mid-single digits becomes mid-single digits to higher digit, it's just simple arithmetic. But double-clicking tells you why we are so confident. And don't ask me if it's 3 years or 5 years or 10 years, I mean, it's going to take some time for different types of applications, but the opportunity is already here.

Daniel Brennan

Okay. Maybe just kind of digging a little bit on the Waters division specifically. So we've already hit upon instruments a few times. But when you separate mass spec and LC, I think mass spec is a third roughly I'll see 2/3, you ended on a really strong note in '22 with mass spec, I think you said it grew well into the 20s over the course of the whole year. So maybe give us a sense like where was your mass spec franchise prior to you joining? What was the strategy to regain share and kind of help us frame the opportunity going forward in mass spec?

Udit Batra

I think it's summarized by just one advice I got from an analyst and then later from some investors as well that you should exit mass spec, especially high-res mass spec, because you guys have been losing share, and several of you in the room, I don't know if one of you also was saying it as well. But when you have such significant share, you don't exit and you don't think about exiting lightly. Thank goodness, we didn't, right? We had a whole set of new products coming in, meeting very significant unmet needs across the board.

In high-resolution mass spec, we introduced the Cyclic. It is the only instrument in high-res mass spec that allows you to look at the shape of molecule in addition to its size. And that allowed us to gain traction. And it's now in the third year since its launch, and now we're gaining a lot of traction, right? And the early application work was great, but now we're getting a lot of traction. So in high res we started gaining traction.

For high-volume application in -- with tandem quads. We talked about Xevo TQ Absolute for the PFAS testing area, but also our Xevo G3 QTof and these acronyms, you don't need to remember. But all you need to know is that this particular instrument is used for high-volume applications, and it is one of the best in the industry. The need that it needs here is that it's on the same software that is going to be used in QA/QC. So this particular mass spec is on waters_connect. Waters_connect is the exact software that is on BioAccord. So when you do an experiment with our Xevo G3 QTof, it can be seamlessly transferred to the BioAccord, which is the leading instrument in QA/QC. So mass spec survival is on the back of incredible innovation, right? And we've just started to get traction with some of the newer platforms. So we're super excited about it.

Daniel Brennan

So basically, you inherited this R&D engine maybe that was -- hadn't really manifested in the commercial sense. You've got the commercial initiatives, the adjacencies. But specifically, are there any kind of when you think strategically your mass spec franchise looking forward for the next 3 years, like what's going on maybe things we haven't heard of today in R&D? Or what's the strategy from here?

Udit Batra

I think we have very strong and astute competitors. I've already been blamed by my team for being super transparent about our pipeline, which I think I have to stop doing. But all I can say is we are targeting very clear unmet needs. In just the products that have been launched recently haven't even gained enough penetration. The Xevo G3 -- the Xevo TQ Absolute, we launched it in environmental testing for PFAS testing, right? No amount. However, minute is, minute enough, when you think of PFAS. These are called forever chemicals. They are in your system forever and ever and public health authorities and governments are saying, look, you've got to get them out of the system. .

And guess what, Xevo TQ Absolute can detect these at 1 per quadrillion. That is a teaspoon of sugar in an Olympic size pool, that's not the requirement today. It's part per billion. But even if they go to parts per quadrillion, this instrument is ready to do it. It has not even been launched in the food arena. It has not even made it into drug metabolism, right? So you can see there's a long runway ahead of us.

On the software side, we've just started to gain traction with waters_connect as a platform from our spec and with the BioAccord and now with the Xevo G3 QTof. And our ambition is that it becomes the new platform of choice for LC-MS. So you can see early stages of uptake. I mean, it's only the second year for several of these instruments, so you should see a nice runway ahead of us.

Daniel Brennan

And what's specifically baked in for '23 for mass spec and kind of given the differential price points?

Udit Batra

No, I've given you enough specifics on guidance. I think you should assume that the overall instrument growth rate is around 5-ish percent and a bit faster for mass spec, a bit slower for LC, but that's about it for now.

Daniel Brennan

Got it. Got it. Okay. So maybe -- I guess I'll stop and I'll see if -- I mean, we've got about 7 minutes left. I still have a bunch of questions up, but I look to the audience if anyone has any they want to pose.

All right. So we'll keep going. So kind of software. The company is always in an enviable spot with Empower, the gold sand in LC you've touched upon waters connect a few times. How does it -- how do investors really conceptualize software? And how does it really manifest in terms of whether it be stickiness behind the scenes and instrument? Does it manifest as a revenue line? Just how do we think about software as a value-creating asset, if you will, for investors?

Udit Batra

I mean, Often when you think of the instruments industry, you think of a razor, razor blade mark. And very often, people say, "Well, the razor is the instrument and the razor blade are the consumables, that is not entirely correct. The razor is the software in the compliant universe. The razor blade that is replaced every 7, 10 years, depending on the instrument, is instruments and the razor blade that is replaced even more often are service and consumables. But the razor itself is the software. And why do I say that? 80% of the drugs filed with the FDA just 2 years ago were on Empower. So Empower is by far the preferred compliance software in the industry.

Now the question is, how do you make sure that as you go forward, all biologics also go through Empower. And how do you enhance Empower in such a way that you create a bioanalytical ecosystem with the acquisition of Wyatt, we sort of put the first or the third pillar in the place. The first one was UV, the second is mass spec now the third one is light scattering, right? And there's probably 2 or 3 others that one puts in and you create an ecosystem eventually, where large molecules are like small molecules, where you lose 1 software, it doesn't matter what instrument you have surrounding it, but that software is used to file the data with the regulators.

For us as Waters, the first step was monetizing our position. right? So we did a lot of work on that front, and we've been pretty open about it. We sort of started charging people for plugging into Empower, because we spend a lot of money keeping it serviceable. And then now it's a question of creating the next generation of value proposition. So we're monetizing our incumbent position and then in parallel starting to create new features and bringing in new instruments, especially in the biologics service.

Daniel Brennan

So we could spend the entire time on Wyatt, but we're just going to probably have one question here, given the interest of time. So -- or maybe 1 or 2. But the business seems like a great fit. It's been growing 20%. I think your guide of low double digit seems implausibly low. But maybe is there something that was atypically elevated in the wide growth rate? Is there some risk of a shock or slowdown from the deal?

Udit Batra

Implausibly low, that's good. I was going to say it's conservative, and that's correct. Largely because the 20% had no additional and idiosyncratic drivers like COVID. The 20% is clean 20%, and let me sort of give you a bit of context on it. In the 20%, 80% of the growth -- 80% of the volume for Wyatt is in biologics. And the 30% out of the 80% is viral vectors for cell and gene therapy and a little bit of LNPs for RNA delivery. 50% polysaccharides and proteins. These 2 areas are growing rapidly. The application for AAV is the one that's expanding dramatically, right?

So Wyatt has gone from a polymer testing company, a colloids testing company, a material testing company dramatically in the last 3, 4 years to becoming a biologics testing company, right? So yes, there is a bit of conservatism built in the low double digit, largely because this is a big acquisition that Waters has made after several years, right? And I think that's the simplest answer to the question. But no COVID, no idiosyncratic changes.

Daniel Brennan

Got it. Okay. Maybe on India and China. I mean India hasn't really come up much in the conversations on some of the recent calls, but I think it grew mid-teens in 2022. It's a significant part of your business. I mean where does it grow in '23? And kind of what are you most excited about?

Udit Batra

India is superb, right? I mean we -- I was at the APAC sales meeting, Asia Pacific sales meeting just 2 weeks ago, actually last week in Bangkok, and I met the India country head. I mean there is still a lot of excitement with the amount of volume that we're seeing on small molecules, right? There's been a lot of repatriation of generics manufacturing into India and Waters is by far the leader in that space, and we're seeing very significant growth on the LC franchise. What's happened then subsequently into the mass spec business, the penetration of biologics has started to increase in India, and we're seeing the same thing happen in India.

India never really fell off in terms of commercial execution. But they're benefiting a lot in terms of new products that are being introduced. And last about 6 months ago, we had 12 of our top customers from India visit the U.S. They went to our Immerse Cambridge lab to see all our new instruments and equipment, there's a lot of excitement. We see significant growth drivers in India going forward.

Daniel Brennan

And kind of how do you feel about China for '23? Obviously, there's a lot of excitement, but still uncertainty. I know you guide for high single digit. Just what are the error bars around that? And kind of what are you hearing?

Udit Batra

It's not any different than what we said before. I mean the first thing is, look, people are coming off of very harrowing time, right? And you want to make sure that your colleagues are safe, their families are safe, and people are taking an extra week or 2 weeks for Chinese New Year, by God, please do it, right? Just make sure that you're comfortable and confident that you're coming back into the workspace healthy and safe, right? And so that's the first priority by far.

Then in terms of China coming back, the drivers are very fundamental. I mean we're in the area of pharma, we're in the area of with biologics being a significant driver, contract manufacturing still being a significant driver local contract manufacturing being a significant driver, PFAS testing, battery and electronics testing, China is going to come back. Now is it going to come back super rapidly, which it does usually? Or is it going to come back a bit slower, and we'll see more momentum in the second half of the year? It's anyone's guess. So that's one of the uncertainties that we have in terms of the upside that we see for the balance of the year.

So I expect -- and early indicators because our people are coming back. There's a lot of enthusiasm to get back to get back with the customers, ensure that we're gaining traction again. But I would wait as more -- until more data comes out.

Daniel Brennan

Minute or 2 left. Really high-level pharma, just kind of pharma R&D, the tone of discussion points, Agilent mentioned like budget -- kind of decision-making is normalizing. Just what are you seeing from your big customers? And kind of how have you -- just from a high level, what have you contemplated in the guide?

Udit Batra

Still generally very positive, right? And I think it's a paradox right now, right? I mean you read a whole bunch of things in the newspapers and the economists are saying this. And there's a whole bunch of people write about how everything is slowing down and every decision making, all decision making is getting pushed into the future. I'm sure our customers are getting affected by that, and they are saying, you know what, I might not buy something in week 1, week 2 or in Q1 or buy in Q2, we're not seeing anything getting cancelled. Not a single order has been cancelled. Very few have been delayed, right?

So we're not seeing anything fundamental change in terms of behavior in pharma. The pipelines are the pipelines. I mean I spent most of my career in pharma. If you have a good product, you don't want to delay it, right? If you have something in late-stage development, you wanted to get commercialized ASAP. And if something is getting commercialized, every minute that passes by, you're getting closer to the genericization. So you don't want to lose any time.

I mean, it makes no sense for anyone in any leadership position for pharma to delay anything, right, given where we are. And I'm sure people are human beings, and they read this and that and, there is a bit of that affecting the paradoxical decision-making, but we're not seeing anything impact our business that makes us revolve. I mean there is a complete and dramatic change.

And you can expect us to be transparent, and I want to say this quite openly, both on the upside and the downside, right? We believe that we have a certain trajectory that we have said that we will follow. We have talked about predominantly in this discussion about uncertainties on the upside, but there can be uncertainties on the downside. And you will not see us surprising people. You will see us coming in and talking about that rather openly. I don't see anything today. But I just want to be totally open that there's always transparency on both sides, and we spend always more time on the upside, but you've got to make sure that you're transparent on both ends.

Daniel Brennan

Terrific. Well, thank you, Udit, for being here and thanks, everyone, for joining us, and have a good rest of the conference.

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Waters Corporation (WAT) Presents at Cowen 43rd Annual Health Care Conference (Transcript)