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#I think what you are referring to is scenarios that we build on on the web which are within our original guidance ranges.
I think if you go back to the script last quarter is exactly what we said 48% to 49% and 15% to 16%.
Let me ask <UNK> to answer that question for you, <UNK>, as he just came back from Russia just last month.
I would remind all of us that this is a business that had declined from $34 million to $26 million last year and our plan for this business this year is $26 million so flat to last year but with more revenue in the back half versus the front half as we knew the distributor was going to be working down some inventory that had increased as a result of the slowing market.
So we think we have a pretty good idea of what is taking place there, we have a good team of people on the ground in Russia and we have had very, very good and open discussions with our primary distributors.
I would add as well on top of that, <UNK>, that this is a market, unlike whole blood, we had only entered the whole blood market in fiscal 2012.
We invented double red cell separation technology.
This is something we continue to invest in.
The automation part of our business is an area where we continue to invest.
You have seen now what we have done with plasma automation.
We have certainly indicated we are making some very significant investments in the remainder of our automation platform.
We will continue to do that going forward but this is a part of our business that we have greater confidence in as we come to the markets.
There is going to be an impact both in terms of pricing and in terms of share.
We recognize that so we will make those decisions.
But we remain confident.
The biggest player in that space is the American Red Cross.
We feel good about the discussions that we are having with them today.
Two things I would add to that, <UNK>, is it doesn't take a lot to move the needle in selling HaemoBank.
This is an expensive device with software that our customers have to buy but significantly reduces cost well beyond that expense and our pipeline in that respect is growing.
There is a significant amount of interest in this new product.
Yes, correct.
So the installed base is around 4800 for TEG and that is primarily obviously it is 5000
---+ and that is a worldwide number.
Worldwide number, yes.
About 2000 in the US.
I think you asked a US number.
But our strategy is not one of necessarily replacing 5000s in every case.
It is a strategy that is driven by the relatively low penetration of the product against its market opportunity and the opportunities for growth in places that haven't yet even tried TEG.
Where we expect to see that change out, <UNK>, of a TEG 5000 to a TEG Success is where the clinicians need flexibility in the location of the testing.
In other words, an operating theater, a clinical area where rapid results and turnarounds are critical.
The TEG Success allows that testing to move from the laboratory environment to that clinical environment.
But where that doesn't need to happen, we don't expect those customers to change those out, we expect them to continue to move forward as they are with the TEG 5000 at least for the time being.
Well, the majority of our businesses is in the US and China and if you recall last year, that business grew 27%.
For us to achieve the targets we have outlined this year we have to have a growth rate of approximately 30%, a little over 30%.
So not a huge jump that needs to take place.
In fact with this impending launch, we are encouraged with growth rates at 23% in the quarter.
So when you think about you've got two very, very well established markets growing rapidly, US and China, with a number of new geographies coming on that are beginning to accelerate interest in the technology, we are pretty excited about with this represents.
Jumping from 27 to 30 isn't a big jump so we feel very, very optimistic about the outlooks for this product.
Let me just jump in on that one and then ask <UNK> for any additional color he might add.
But you will recall at our May investor conference, I thought Jonathan did a really nice job and that material still lies on our website about the explaining where we would go next with the expansion of the clinical applications of the testing.
Trauma being the first one up that we would see clearance for next.
But let me ask <UNK> to provide any additional color there.
One more point that I would emphasize there, <UNK>, and important for everyone to understand and we talked about this.
While the question was asked about our expenses and our spending for expenses, very consistent throughout the year but we continue to reevaluate what we spend and where we spend it and we have been very clear about our expectation that as we make decisions about spending, we are going to continue to accelerate our investments in R&D in the coming years with a focus on TEG clinical spending as well as spending in our apheresis platform.
So that focus will continue.
<UNK>, it is a question that I think many people are seeking answers on.
What I would tell you, what do I first mean by moderating.
We are looking at two years of decline of double digits around 10% fiscal 2014, fiscal 2015.
Our customers guided us this year to a decline of about 5% to 8%.
We are seeing a decline, we are seeing growth in other markets, international markets which are moderating our US declines.
But we are seeing declines in the US that are moderating closer to the low end of the range than the upper end of the range.
It is one quarter.
This is a market that I think has a better understanding of what is taking place but still it is a pretty fragmented market and so fully understanding that market is somewhat of a backwards look than a forward look.
But I think we are starting to understand it a little better than maybe we have in the past but that is what I mean by moderating.
In terms of growth, I think this is a global market with about half of the world's population lying in geographies where demand for blood is still yet to be met.
When the world catches up to that is anyone's guess but you are starting to see economies emerge and trying to address these healthcare needs.
We typically see that in platelets first before whole blood.
And the good news is that our focus with our technology which is a cheaper technology and an easier to use technology we typically get a first glimpse of that.
I think it is something that will happen slowly and is probably not anything that is imminent in the near term.
What I think we saw in the whole blood scenario is that price was far more sensitive than anything else.
There is still the need for solutions but that is really being driven by hospital decision-making versus blood center decision-making.
Our blood center customer numbers remain very, very focused on price and technology.
We like where we are.
We like what we are doing to invest in the future, both near-term and longer-term and we are encouraged by what we are seeing.
But it is going to be a market that will see price declines and share shifts like we saw in whole blood.
The plant is complete, it is up and running and we are assembling product in that location as we speak.
We continue to shift production.
The plan is to shift production from our Bothwell, Scotland facility to the Penang facility is what is up next.
The currency headwinds are a little stronger in the back half of the year and we will continue to see strength from plasma which is obviously a very large number and it has relatively lower gross margins.
Especially, <UNK>, when you consider the Solutions contract in the back half that will really start to accelerate.
As we have talked about, that is a lower margin product.
Yes, we have a view of it in fiscal 2017, yes.
Yes, I think we did at the Investor Day.
It is ---+ if you think about the headwind to growth rates in operating income that we disclosed at our Investor Day range, it will be up out the same nominal amount in fiscal 2017 and obviously a lower percentage because we will be coming off of a higher base.
Thanks.
We see continued progress with our identified growth drivers.
At the same time, most of the headwinds that caused declines in our US whole blood business will be behind us by midyear.
And early signs are indicating that the US whole blood market declines are moderating and Russia orders are beginning to rebound.
Our US plasma franchise continues to enjoy above market growth leveraging software advances and sodium citrate and saline solutions capabilities.
And our CBMS offering is demonstrating real value to our customers based on the foundation of new software products and connected devices.
Our VCC initiatives are providing expected savings and our investment in VCC is approaching completion.
Our business fundamentals remain strong with an expanding global footprint, a very strong customer base, a steady flow of differentiating new software and devices, a solid R&D pipeline, an improving cost structure and the broadest array of products and services in the blood industry.
We believe we have an increasing demand for our comprehensive blood management solutions offering throughout fiscal 2016 and CBMS will become much more meaningful in fiscal 2017 and beyond.
Thank you for your attention this morning.
