ABT
#Okay.
Okay, there's a lot there.
Yes.
China I think is about 3% of overall sales.
Now, that said, yes, it's a small part of the Company as a whole.
Nevertheless, it's an important business; it's a big business; it's a business we pay a lot of attention to.
Frankly, China is an important country for us for a lot of our businesses.
But it is true that in the grand scheme of Abbott, as China pediatric goes, the Company isn't necessarily going to be driven by just that.
So, we think all of our businesses ---+ particularly large ones, and that's a large one ---+ are important.
But the diversity of the Company and the size of the Company obviously absorb shock when it happens in other parts of the Company.
So, to your question about, are we hands-on mitigating and dealing with what we think we can do with the challenges.
Yes, we are.
The EVP of that business is spending a lot of time in China.
We have made some management and leadership changes in China in a proactive way to enhance our management, our experience, our knowledge, our skill, et cetera there.
I think hope always springs eternal when you make changes in your leadership team, et cetera.
But it's getting a lot of focused attention by the senior leadership team, on down.
And in the right ways; the CFO, the Controller, everybody who's got any kind of way to have a stake in this has weighed in.
We do, as a team, look at our spending allocations, our capital allocations, how we're spending, where we're spending, where the bang for the buck is, et cetera.
So I think we've looked at just about everything we can, not only to specifically focus on improving the situation and the performance in China, but also how to mitigate it if it doesn't improve enough or fast enough.
And so, yes, it's getting a fair amount of attention that way across the Company.
With regard to Latin America and Southeast Asia, I'm pleased with the progress in both places.
Pleased with the performance of the business; frankly, pleased with the performance of the business in Europe and other places, too.
But I'm going to be careful not to project what I think can happen in any given country, because the year always starts with a certain set of expectations and then has some surprise you didn't anticipate.
Which is one of the reasons I always tout the diverse model, because somewhere something is going to go awry or different from your expectations, no matter how tightly you manage everything.
In our case, I'm pleased with our management teams in the various geographies you mentioned.
I think they are all doing well.
We've got a lot of talent in the organization.
We've made some changes where we needed to.
In this particular case, our challenge in China wasn't challenged-based as much as a market-driven, and a lot of dynamics that changed rapidly there that we've had to react to, and deal with.
So, I think there are a number of other countries picking up slack here, the US, surprisingly, one of them in the nutrition business.
I think you can see that in the numbers in the earnings report.
Vietnam doing well, strong for us.
A lot of other, smaller countries doing well.
Vietnam, as you know, is a big business for us in the nutrition business.
And we've got a terrific manager there and have had for a long time, and that's doing well.
So there are some places that are picking up some of the slack there.
And frankly, so are other businesses of Abbott, like the pharmaceutical business and so forth; having a great year in China and other countries, and good, sustained, high-growth performance.
So, again, yes.
It's proactive.
We are mitigating.
It's why we're not giving any guidance or anything at this point.
As I answered to <UNK> <UNK> earlier, the underlying fundamentals of the overall growth rates in our market are good.
But one place that sticks out right now as a challenge is the pediatric business in China, which is about 3% of the Company's sales.
Well, first of all, Alere is not a sensitive subject.
And at this point, I'm just not going to make a lot of comments about it.
I'd say we are pursuing all the necessary regulatory approvals for the deal.
And at this point, that is the path.
That is the things that have to happen between now and whether a deal finishes here, is regulatory approval.
So, all necessary approvals are being pursued.
We're doing everything we're supposed to do on the contract.
And beyond that I'm not going to forecast it or try to.
But that's it.
I can't say a lot more about Alere, or express opinions or whatever.
I think I've said about what I can say, to <UNK> <UNK>'s question and to yours.
And other than that, we'll work through the regulatory approvals and see what happens.
With regard to AMO, we've said the perceived dilution of that business will be offset in some fashion, so you don't need to adjust your model, et cetera.
I assume that's the basis of the question.
Because, net of all considerations here, in the mix of our financing of these deals, there is enough moving parts that we won't need to absorb dilution there.
Yes, diabetes is definitely strategic for Abbott.
There have been a number of occasions over the past ---+ gosh, I think five years ---+ when I've had inbound phone calls of people interested in acquiring the diabetes care business, and we have absolutely said no.
Because we had a program here that started with Navigator years ago, that became Libre, that fundamentally changes diabetic monitoring, glucose monitoring, et cetera, that we believe is game changing, market changing, healthcare changing, et cetera.
And we believe that the notion and the opportunity was such that we just plain had a different game plan than everybody else, and that it was worth us making that core and pursuing it; and we have.
And we're seeing the benefit of that now with the rollout of Libre in Europe and assumed rollout in the United States.
And there's a lot of opportunity for Libre beyond that, depending on how we develop it and how we take it.
So, it is strategically core to us.
If you think that's on my radar screen for some strategic move, take it off your screen.
That's core to Abbott and will remain core to Abbott.
And the opportunity there, we think, is nothing but great looking forward.
Operator, we'll take one more question.
Well, there's a ---+ you've got two franchises going here.
You've got the old, established, legacy franchise of blood glucose monitoring.
And then you've got what we call flash glucose monitoring, or Libre.
And that older blood glucose monitoring market is clearly under both volume and price pressure.
And Libre is growing rapidly in Europe, and we expect to grow rapidly in the United States.
So, at some point we would hope that Libre would grow so significantly that it would overtake the other.
So I don't expect, obviously, that kind of growth out of the base.
But I think we're going to keep experiencing pretty heavy double-digit growth out of Libre for the foreseeable future.
So, yes, I think it drives a lot of growth.
But where it crosses and, say, the overall business is somehow double-digit, I'm not sure I can project.
Well, I'll tell you, it's interesting.
We put out fair amount of focus on gross margin ---+ oh, gosh, more than 4 or 5 years ago ---+ in a couple of our businesses.
And you can see that.
You can see it in the performance.
You can see it in the bottom line of those businesses.
You can see it in the bottom line of the Company.
You can see it in the gross margin of the Company.
So we expanded those efforts across the Company in a number of places.
And I think what we've obviously learned from that is there's always opportunity to improve your business model, improve your cost structure, improve your gross margin, et cetera.
And it hasn't been done with price.
It's been done with the fundamental inputs in costs and the way we do business, the way we manage [actual], the way we do a lot of things.
So, I think there's always opportunity.
And we approach the business, and the businesses, every year with that in mind.
And it's fortunate that we have, because we've had some great success there in a couple businesses particularly, which has offset the effects of exchange over the last, say, three, four years which, as you know, has been pretty heavy.
And without that, the Company would have obviously been under a lot more profit growth pressure.
So, for us, it's become a routine.
We look for more gross margin improvement opportunity every year.
And if I look across the businesses, there are still many opportunities for us as we benchmark competitors or other models, business models we see out there, to improve the cost structure of our business in ways that are meaningful to the corporation.
Included in that is even the costs of new things launching.
The costs of our new diagnostic analyzers will be a tremendous improvement over the cost of our current diagnostic analyzers.
And one of the ways you can affect gross margin over the long-term is designed it into your products, and we are.
So, I think there's a lot of initiatives internally at the Company and across businesses now that make this part of routine daily life, to keep improving gross margin.
I can't forecast to you right now how that will impact us.
But I think in a world where you are denominated in dollars, and every year exchange tries to erode some of your top and bottom line, it becomes a routine part of your business to always be looking at ways to improve your margin.
And we do, and we are; and we're having a fair amount of success with that.
Thank you, Operator, and thank you for all of your questions.
And that concludes Abbott's conference call.
A replay of this call will be available after 11 AM Central Time today on Abbott's Investor Relations website at abbottinvestor.com; and after 11 AM Central Time via telephone at 404-537-3406, passcode 79624675.
The audio replay will be available until 4 PM Central Time on Wednesday, November 2.
Thank you for joining us today.
