MDT
#Well, a number of points.
First of all, our confidence and our belief and really, surety if you like, in the long-term opportunity in emerging markets is completely unchanged, and we are not at all wavering on that.
That's just a matter of fact.
The way in which we approach that market, to tap into that opportunity, particularly in the short term, actually has been more complex and more difficult than we first envisaged.
And so the growth rate has been slower than what certainly we had originally thought.
I think having said that, there's certain fairly respectable double-digit growth that we can expect reliably, but we want that to be higher.
And we're looking at methods to which we can ---+ we are continually actually looking at methods to which we can do that sooner rather than later.
And as we're learning, channel optimization is a key factor, partnerships with governments is a key factor, and finally, referral chain development is something that we need to approach with far greater scale than we've had before.
These are all important factors.
As far as Covidien goes, there are a number of things that make us optimistic that this combination will help us.
One, there is a complementary strength in certain markets.
In the Middle East and Latin America, where between Covidien and Medtronic, we have complementary strengths.
As a result, we now have our emerging market profile diversified between China, Middle East and Africa and Latin America as the big three centers within emerging markets, while previously on the standalone Medtronic basis it was primarily China.
So that gives us a little bit of diversity in these markets that we didn't have.
And finally as we've talked about before, simply the scale that we now have will allow us to penetrate more geographies much more efficiently than we could before, and just adding more sales teams around the world, either in underpenetrated regions within countries, or in brand-new countries, will have to contribute.
So we haven't pieced all that stuff together yet, and we are in the process of prioritizing some of those investments.
And again, we're trying to accelerate the growth profile in emerging markets with actually a pretty great sense of urgency.
I think a number of things.
First of all, as we go forward, this is going to reflect in our overall productivity.
I think that's the best way to do it.
Although we will keep track of our value capture efforts, we're very detailed and granular programs, I think at some point, new efforts that are a result of the combination, versus efforts that were already in place that get accelerated, gets very mixed up.
And instead of trying to divide those things up, we're going to commit to certain levels of productivity that we get out of different line items in our P&L.
And that's the way to do it.
We feel good about a long-term productivity that we can get out of this.
That value capture, the synergy effort is going to eventually morph into a long-term productivity benefit, extending way beyond the three years that we've projected.
I think that's the correct way to look at it.
That this becomes a productivity engine of significant magnitude that we didn't have before.
And to some extent, we're pretty excited about it.
Thanks, <UNK>.
Sorry, we've gone past the top of the hour, but we'll take two last questions.
On the tax rate it's assumed in the guidance, <UNK>, but what we're saying it will probably be toward the higher end of the range until the credit is approved, but assuming it gets approved, then that would be in that range.
It's basically assumed in there.
Well, I can't go through all the numbers you just laid out, <UNK>, because I don't have those in my mind.
Let me look at it from the way ---+ you're right, our revenue growth overall, as we indicated is the mid-single digit growth plus 1% to 1.5% related to the extra week.
So just taking the midpoint of the range of 5%, you're saying somewhere around 6%, 6.5% revenue growth.
What, as we indicated on the comments overall from the operating margin perspective as we looked at it, we know from the standpoint of what we're driving there, as far as the 100 basis points of improvement on the operating margin as we go forward, we're driving about 400 basis points of leverage, and the operating income line on an operational basis before foreign exchange.
And so the point is yes, we are getting that 400 basis points of leverage that we've talked about in the calculation.
To offset, that's negatively impacted by foreign exchange, and so it's all going to get back, and foreign exchange is offsetting the majority of the overall operating leverage that we've talked about, that we're trying to drive towards.
So the rest of the numbers get a little more difficult as think about the number of shares that have been issued and the various tax rates that are going on between the various years, as we go forward.
But no, the guidance is kind of in line with what we were expecting from the overall standpoint of earnings per share growing.
Again, as we've talked about, that 200 to 400 basis points faster than the revenue.
But unfortunately with $0.40 to $0.50 of FX hit, you take the $4.30 to $4.40, and add $0.40 to $0.50 to that, I think you're going to get to the point that it is on a constant currency basis, is significant leverage over and above the revenue growth.
So on LINQ overall, we have to think about it in terms of its three indications for use.
So syncope, cryptogenic stroke and atrial fibrillation.
On the syncope side, we're probably in the low to mid-20s penetrated, 20% and again I'm just talking about the US and Europe, because that really is the only place currently where it's generating the very significant revenues, and we're still building up reimbursement in other places around the world.
In cryptogenic stroke, it's more like 5% penetrated, and then when you look at atrial fibrillation, it's more like 1% to 2% penetrated so there's still plenty of growth opportunity left, obviously in the product.
Now, we don't expect competitors looking, who have basic capabilities in electronics, are going to look at this and ignore it, so we expect at some point were going to see competitors, but frankly, we haven't seen anything yet.
I think we're now at a point as we look at our five-year plan where we think this will be a $1 billion contributor to the overall Company in terms of its overall diagnostic sales.
And as <UNK> pointed out, when you look at syncope patients you put one of these devices in, roughly 8% to 9% of those patients will wind up with a pacemaker within a year, and by the time you get out to year three, it's more like 20%, so it really is the source of the low-power growth that we have seen in the United States, in terms of growth in units.
So we think it's an important product line, in terms of what it does for us on product sales, but it also provides us now with service revenue opportunity, longer-term to monitor patients.
And so we'll be updating that as our plans develop.
Thanks, <UNK>.
Time for one last question.
Just to be clear, the 30% number is the heart valve therapies number, so it's a combination of our transcatheter valves and surgical valves.
So actually, the TAVI growth in the United States is faster than the international growth.
So our growth in overall was about 50% and in the US, we almost doubled our revenues in TAVI during the quarter on a year-over-year basis.
So the US is considerably faster, in terms of its overall growth.
So important, I just did want to finish up that we don't do any meaningful stocking of transcatheter valves in the US, just finish your first question.
On the transcutaneous pacing product line, obviously we're talking about OUS now, or Europe, with the CE mark that we now have.
And there is no separate reimbursement in the sense of this product line obtaining different reimbursement in Europe.
So it basically is being targeted at a specific set of patients who might be at risk for infection, and single chamber patient population, although we do see an opportunity to see a mix shift toward more single chamber pacing because of the benefits this product line offers in terms of lower expected complication rate.
So we think it's an important breakthrough, but you will see us be very deliberate in the rollout of this product.
It requires very different implant technique than what the standard pacemaker has, and so you will see us doing very significant training and education as we roll this out, and that will gate some of the speed with which it grows.
Thanks, everyone.
And thanks to all of you for those great questions.
And with that, on behalf of our entire management team, thank you again for your continued support and interest in Medtronic.
We look forward to updating you on our progress on our Q1 call, which we anticipate holding on September 3.
Thank you, and have a great day.
