A
#Thanks for the opportunity to provide more insights here.
So I think there is a macro statement above all three of those market segments, which are specific government policies are driving sustained growth in China.
So the CFDA is focusing on really changing the fundamentals of the Chinese pharma industry, and the Chinese pharma companies are investing aggressively to adhere to the new rules.
Lots going on in terms of the environmental cleanup efforts, consistent with the China five-year plan.
There's been a lot of more publicized work around land and water, for example.
So I'd say the focus in China, both environmental both in terms of water, soil and air analysis, is really, really going well.
I think I may have mentioned this in the prior call, but the real step up has been in the area of soil analysis for remediation of construction areas, and then finally, the growth in food safety continues.
So I really think it's the government policies across those three segments, are really driving very strong growth for us in China.
I think you should just think about this as the nature of the beast.
This space, particularly in the United States, tends to be very lumpy with lots of big deals.
So it just so happened we had some big deals last year, we didn't have them this year.
We are not seeing anything fundamentally different in terms of the funding levels in the United States, beyond, there does seem to be some level of wait-and-see, people trying to figure out where all the new government policies might land here in 2017.
But I wouldn't read too much into the first-quarter number.
Our view was just a byproduct of the timing of deal activity.
Okay, <UNK>.
We've been waiting for that one.
Sure, <UNK>.
I'm going to pass it over to <UNK>.
He's done some high-level analysis on how we think about it.
Firstly, in terms of the cash repatriation, you're absolutely right, it would be a positive.
Not just when it's effective, but also on an ongoing basis, as we continue to generate the lion's share of our cash offshore.
So on an ongoing basis, we would have access to that cash, which is great.
Then regarding the border tax adjustment, yes, we looked at our imports and exports, like everybody else, and we are fairly balanced.
We are very balanced.
So level of imports and level of exports are about similar.
And we export about 70% of the production in the US and we import into the US about 70% of manufactured outside.
So net-net, it will be very neutral.
So there are aspects of the tax reform that we are eager to understand, to know more about, and read all the details, but at this point in time, it's speculation.
Yes, you have a great recollection of the progression of the agencies in China, because as you know, a couple years ago we were pointing to a slow down in this area because of the reorganization.
So I would say we are probably still in the early innings of this.
If you follow the typical five-year plan, this is an area of focus, so I think we are probably still in the early innings of the growth in the food area.
I think it's primarily food safety, but I would tell you what is growing very quickly is the food authenticity.
We're looking for various forms of counterfeiting of products that may be trying to find their way into the market.
So it's still being driven by food safety, but the authenticity side of things is really growing quite strongly.
Both from a government customs perspective, but also our private sector clients also want to ensure some testing is done.
We are overall, I mean certainly ACG was not impacted per se on the new product, things like that, but you are absolutely correct that whenever we introduce new products, it's an opportunity to increase our gross margin, for two reasons.
Number one is, we now design our products using the latest and greatest value engineering techniques.
And then second, because we introduce products that are truly differentiated, we are able to price them, Intuvo is a great example.
So we do, in time, you will see the gross margins going up all the time.
And throughout the year.
I cannot quantify precisely the impact of pricing, new product introduction, and a few other things.
Again, Q1 was a little bit special, especially for ACG, because of the factors that I noted.
Excuse me, <UNK>, I had a little bit difficulty hearing the question.
It's an important part of <UNK>'s genomics business, but we don't provide that level of detail outside the Company, sorry.
But it's a nice business for us.
And I'll just leave it at that.
Yes.
I think you are referring to Gen9 investments.
Gen9 has been purchased by Ginkgo, and Agilent was a shareholder in Gen9.
Overall, we think there is aspects of the synthetic biology market that are going to be quite strong, in terms of growth.
A lot of tools out there with some of our customers in the Bay Area, for example, as well as Ginkgo, so they are using our tools.
Not clear to me though whether our companies will be able to build a sustainable business around R&D services in syn bio, and that's why we went in a different direction in terms of our view of Gen9.
<UNK>, anything else you would add to that.
I would just add that we continue to be a new vendor to the new Ginkgo.
That's right.
Thanks for that.
Thank you, <UNK>.
So on behalf of the management team, I wanted to thank everybody for joining us on the call.
And if you have any questions, please give us a call in IR, and we'd like to wish you a good rest of the day.
Thank you.
Goodbye.
