Dear Shareholders,
2022 was another terrific year for Danaher. We leveraged the power of the Danaher Business System (DBS) to deliver outstanding core revenue and earnings growth and strong free cash flow generation—all while reliably supporting our customers in a challenging operating environment. Our team of 81,000 associates worked every day to advance our mission of improving human health. They went above and beyond to help our customers provide faster, more accurate disease diagnoses, bring life-saving therapies to market faster and protect the global food and water supply.
RAINER M. BLAIR
President and Chief Executive Officer
2022 HIGHLIGHTS
Our strong financial performance fueled impactful growth investments throughout the year. We accelerated new product innovation, added significant production capacity and invested in highly skilled scientific talent. These proactive investments are strengthening our position as a science and technology leader and, we believe, are contributing to meaningful market share gains.
We also made notable progress across our sustainability program, which we view as a fundamental responsibility, a strategic priority and a means of competitive differentiation that touches every aspect of our business.
In September, we announced our intention to establish our Environmental & Applied Solutions segment as a new publicly traded company, which will be named Veralto. We believe both Danaher and Veralto will be best positioned to realize their full potential as more focused stand-alone businesses, each fully pursuing their respective strategies.
Powered by DBS and united by our Shared Purpose, Helping Realize Life's Potential, we see tremendous opportunities ahead for both Danaher and Veralto to continue delivering long-term shareholder value and positively impacting the world around us.
INVESTING FOR LONG-TERM GROWTH
Danaher is a science and technology innovator committed to helping customers solve some of the most complex challenges in improving human health. In 2022, we accelerated growth investments to advance health care with innovative diagnostics and drug discovery, development and delivery solutions. And, we launched several leading-edge technologies that are helping protect the world's food and water supply.
Our investments in innovation enabled several breakthrough product introductions. Leica Microsystems' MICA makes microscopy more accessible by leveraging machine learning and automation to simplify the imaging workflow of live cells, helping researchers reduce the time from sample to discovery. Hach's Ultra-Low Range Chlorine Analyzers set a new industry standard for chemical detection levels in water, helping customers improve the quality of the water supply and reduce maintenance costs in their water treatment systems.
And Leica Biosystems' Bond PRIME is a fully automated advanced staining platform that delivers high-resolution stains for the definitive diagnoses of life-threatening cancers, with an industry leading average turnaround time.
Given the rapid pace of innovation and change in our end markets, top-caliber scientific expertise is another important component of our competitive advantage. Over the past year, we recruited several globally recognized physician scientists to serve as science and technology leaders across Danaher. We also established new strategic partnerships to help accelerate breakthrough customer solutions. One such example is at Cytiva, where we are partnering with Bayer to develop the first modular end-to-end manufacturing platform for allogeneic cell therapies. This platform will help meet the industry's growing global demand for the cost-effective cell therapy manufacturing solutions needed to improve treatment accessibility for patients.
With many of our customers' promising biologic therapies progressing through the regulatory approval process, we expect our Biotechnology and Life Sciences businesses to grow meaningfully in the coming years. In 2022, we continued to make substantial investments to expand production capacity in these areas and have committed over $1.5 billion from 2021 through 2025 to double production capacity in our Biotechnology businesses. This capacity is essential to support both current demand and long-term growth opportunities while also increasing surety of supply for our customers around the world.
MAKING A POSITIVE IMPACT ON THE WORLD
Sustainability is a fundamental responsibility and a strategic priority that touches every aspect of our business. With DBS as our driving force, we made considerable progress across our three pillars of sustainability in 2022—innovating products that improve lives and our planet, building the best team and protecting our environment.
One of our Core Values is Innovation Defines our Future. In 2022, we invested more than $1.7 billion toward research & development—up nearly 30% since 2020. These investments strengthen our long-term competitive advantage and help improve human health around the world. This innovation doesn't happen by accident. It is the product of the DBS Innovation Engine, part of a holistic management program encompassing tools that facilitate customer focused innovation, strategy, process, organization, talent and culture.
Another one of our Core Values is The Best Team Wins, and we believe the best teams are more diverse and as a result, more engaged. In 2022, we adopted the Danaher DEI policy which codifies our commitment to diversity, equity and inclusion at all levels of the organization. We strive not only to build a diverse team, but also to create an environment where associates have a strong sense of belonging and can achieve professional and personal fulfillment. In our latest sustainability report, we highlighted how DBS tools like Policy Deployment are driving significant progress towards our diversity and associate engagement objectives.
As responsible global citizens, we recognize the pressing need to address climate change and take swift action. In September, we set a 2032 goal to reduce our Scope 1 and 2 greenhouse gas (GHG) emissions by 50.4% compared to 2021 levels, which aligns to the prevailing climate science goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels. We expect our powerful suite of DBS tools and processes, like the DBS Energy Management Toolkit, will be instrumental to achieve this ambitious new goal.
We are pleased with the progress made across our sustainability pillars and, as always, our deeply ingrained commitment to continuous improvement compels us to do more. We believe this spirit combined with our innovative portfolio and dedicated team creates limitless potential for long-term positive impact.
Dear Shareholders, AN EXCITING FUTURE AHEAD
With the anticipated launch of Veralto in late-2023, Danaher will become a more focused science and technology innovator committed to making a profound impact on human health. Our leading franchises are positioned in highly attractive life sciences and diagnostics end markets and are united by a common set of durable, high-recurring revenue business models. As we look to the future, our focus is on enhancing our portfolio and competitive advantage in these areas. We see tremendous opportunities ahead for Danaher and Veralto to create long-term value for our customers, our associates and our shareholders.
We know you have options when you choose where to invest. By choosing Danaher, you are investing in an outstanding group of high growth franchises underpinned by DBS, with a future full of potential. Thank you for being part of our team. We look forward to rewarding your continued support for many years to come.
RAINER M. BLAIR
President and Chief Executive Officer
Read the original letter here.
