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Agilent Technologies, Inc. Annual Report Agilent Technologies 2016 AGILENT TECHNOLOGIES, INC. ANNUAL REPORT AGILENT TECHNOLOGIES DELIVERING TRUSTED ANSWERS TO CUSTOMERS’ CRITICAL QUESTIONS AND CHALLENGES Agilent provides laboratories worldwide with complete workflow solutions—custom packages of instruments, software, services, informatics, consumables and, most of all, knowledgeable people who partner with customers to gain the insights they seek. OVERVIEW AGILENT TECHNOLOGIES, INC. 2016 ANNUAL REPORT MARKETS FOOD—Agilent solutions help ensure that our food is safe ENERGY AND CHEMICAL—Agilent solutions ensure (free of chemical, viral, bacterial or microbiological contam- the quality of energy sources and verify that they meet inants) and authentic (not blended, diluted or containing safety, regulatory and environmental standards. Agilent lower-quality substitutions). also helps energy researchers investigate biofuels, renewable fuels and other forms of alternative energy. PHARMA—Agilent solutions help customers speed drug Agilent solutions are used in the develop ment and testing discovery, development and manufacturing, as well as of today’s cutting-edge polymers, composite materials and ensure the purity of their therapeutics, and conform to the alloys. strictest compliance regulations. DIAGNOSTICS—Agilent solutions help pathology labs ENVIRONMENT—Agilent solutions provide fast, accurate meet regulatory demands and deliver fast, accurate and sensitive methods for monitoring contaminants in air, information to the medical professionals they serve, enabling water and soil. more accurate diagnoses and more effective therapies for patients. ACADEMIA AND GOVERNMENT—Agilent solutions accelerate breakthrough discoveries in academic and government research. This is our most diverse market, with nearly every Agilent product in demand. 2016 ANNUAL REPORT OVERVIEW CONTINUED Transformation OVERVIEW AGILENT TECHNOLOGIES, INC. 2016 ANNUAL REPORT FISCAL 2016 We made major strides in transforming the company and focusing on what we do best: helping our customers achieve more with trusted answers and new insights. OUTGROWING THE MARKET SIMPLIFYING THE COMPANY Two consecutive years of outgrowing the market with Simplifying the organ ization is making us faster and easier $4.2 billion in revenues. New products that are transforming to do business with, while lowering costs. the industry. ONE AGILENT EXPANDING MARGINS CUSTOMER-CENTRIC CULTURE Seven consecutive quarters of year-over-year profitability Providing customers more complete products and solutions growth. by collaborating across organizational and geographic boundaries. BALANCED CAPITAL ALLOCATION Increased total cash return to shareholders with $150 million in cash dividends, $434 million in share repurchases and $480 million invested in the business. 2016 ANNUAL REPORT OVERVIEW Delivering ON OUR COMMITMENTS SHAREHOLDER LETTER AGILENT TECHNOLOGIES, INC. 2016 ANNUAL REPORT TO OUR SHAREHOLDERS Fiscal 2016 was a year of tremendous growth and TECHNOLOGY THAT REVOLUTIONIZES THE progress for all of us at Agilent. Throughout the year we INDUSTRY AND EMPOWERS CUSTOMERS solidified our transformation into a life sciences, diagnostics Our analytical lab business, which represents 83 percent and applied chemical company. We sustained above-market of the total company, is comprised of two externally growth, expanded our profits and invested for the future. reported business segments: the Life Sciences and Applied We made major strides in transforming the company and Markets Group and the Agilent CrossLab Group. Together, focusing on what we do best: helping our customers these businesses serve customers in pharmaceuticals and achieve more with trusted answers and new insights. life sciences research, as well as in applied chemical We deepened our cultural transformation as well, markets such as chemical and energy, food safety, learning to serve our customers better by working as One environmental and forensics. We offer our customers a Agilent across organizational and geographic boundaries. strong and comprehensive portfolio of instruments, software, The results included improved customer satisfaction, consum ables and services. winning against the competition and delivering strong operating results. INNOVATIVE SOLUTIONS IN LIFE SCIENCES We executed with financial discipline, achieving revenues AND APPLIED MARKETS of $4.2 billion. This marks the second consecutive year we have outgrown the marketplace. We expanded our The Life Sciences and Applied Markets Group brings operating margins, ending fiscal year 2016 with our seventh together Agilent’s analytical laboratory instrumentation and straight quarter of year-over-year profitability growth. informatics. Throughout the year, we continued to We significantly increased our total cash return to introduce new and innovative offerings with a significantly shareholders, distributing $150 million in dividends and differentiated customer experience. repurchasing $434 million of our shares. We also invested In liquid chromatography, we launched the InfinityLab $480 million directly into the business with key acquisitions, portfolio, including a new line of liquid chromatography strategic transactions and capital expenditures. instruments, columns, supplies and services. We added the 2016 ANNUAL REPORT SHAREHOLDER LETTER TO OUR SHAREHOLDERS Agilent 1260 Infinity II LC system to complement our NEXT-GENERATION DIAGNOSTICS flagship 1290 Infinity II LC. This instrument provides best- AND GENOMICS in-class lab efficiency and improved performance with full In addition to our continued growth through leadership backward compatibility. in analytical laboratories, we are leveraging Agilent’s In gas chromatography, we introduced the trans- analytical strength to further penetrate the connected formational Intuvo 9000 GC system. Building on our clinical research and diagnostics laboratories. This is being recognized leadership in GC, the Intuvo system revolutionizes done through our third externally reported business the way users perform gas chromatography. It features segment, the Diagnostics and Genomics Group. breakthrough innovations in its technology, footprint, The Diagnostics and Genomics Group is comprised energy efficiency and environmental friendliness. The of five business divisions. Three divisions originate from our development of this product harnesses the complete 2012 acquisition of Dako and focus on pathology, Agilent portfolio of technological capability. Intuvo companion diagnostics and reagent partnerships. The comprises a complete ecosystem of instrumentation, Genomics Division includes our microarrays, next- consumables, supplies, services and software. generation sequencing target enrichment and Agilent’s Agilent’s latest GC Triple-Quad sets a new benchmark in other genomics solutions. The Nucleic Acid Solutions GC/MS, while our new 8900 Triple-Quad ICP-MS provides Division manufactures synthetic RNA for potential use as customers in several key markets with better answers than active pharmaceutical ingredients. ever before. On the software side, our newest OpenLAB In fiscal 2015, our complementary diagnostic for Bristol- software platform continues to expand its multi-technique Myers Squibb Co.’s OPDIVO was approved by the U.S. and multi-vendor capabilities. OpenLAB has full scalability Food and Drug Administration for non-squamous, non- from single workstations to networked enterprise solutions. small cell lung cancer (NSCLC). In fiscal 2016, the FDA approved expanding the use of this PD-L1 diagnostic to INTEGRATED SERVICES AND CONSUMABLES include patients with melanoma, and commercial The Agilent CrossLab Group combines our analytical availability for both NSCLC and melanoma has expanded laboratory services and consumables businesses under a to include the European Union. Agilent is the first company new Agilent brand. The Agilent CrossLab brand is focused to provide FDA-approved tests for lung cancer and melanoma on delivering a new and integrated approach that offers for PD-L1 markers. actionable insights to help customers achieve successful In addition, Merck & Co.’s KEYTRUDA was approved by outcomes. the FDA for first-line treatment for metastatic NSCLC for We continued to bring novel new chemistries to market patients with high rates of PD-L1 expression. In conjunction, under the Agilent CrossLab brand. One example is our Agilent’s pharmDx companion diagnostics PD-L1 test was Advance Bio SEC family of products. These products rely also approved for expanded use. This is the first time an on a new and innovative chromatographic particle tech- Agilent PD-L1 companion diagnostic has been approved nology that simultaneously delivers superior performance, for first-line testing. lifetime and reproducibility. They provide a level of We launched a comprehensive offering of pooled economic value to our customers that is unsurpassed in CRISPR libraries for functional genomics to help accelerate biopharma workflow applications. Our new bio columns research into complex diseases and drug discovery. We are the first in a family of products utilizing this technology, also announced a $120 million investment over the next with the next wave of products currently in development. three years to expand production capacity for our Nucleic SHAREHOLDER LETTER AGILENT TECHNOLOGIES, INC. 2016 ANNUAL REPORT Acid Solutions Business, including a new factory in WHAT MAKES AGILENT GREAT Colorado that can double our manufacturing capacity. I tell our teams every day that what makes this company great is quite simple. Our employees, working
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