Q2 2021 Abbott Laboratories Earnings Call
[music].
Yeah.
Good morning, and thank you for standing by welcome to Abbott second quarter 2021 earnings conference call.
All participants will be able to listen only until the question and answer portion of this call John.
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I would now like to introduce Mr. Scott Leinweber, Vice President Investor Relations licensing and acquisitions.
Good morning, and thank you for joining US with me today are Robert Ford, President and Chief Executive Officer.
And Bob Funck, Executive Vice President Finance, and Chief Financial Officer.
Robert and Bob will provide opening remarks following their comments, we'll take your questions.
Before we get started some statements made today maybe forward looking for purposes of the private Securities Litigation Reform Act of $19.95.
Including the expected financial results for 2021.
Abbott cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements.
Economic competitive governmental technological and other factors that may affect abbott's operations are discussed in item 1 a risk factors to our annual report on form 10-K for the year ended December 31.2020.
Abbott undertakes no obligation to release publicly any revisions to forward looking statements as a result of subsequent events or developments, except as required by law.
On today's conference call as in the past non-GAAP financial measures will be used to help investors understand abbott's ongoing business performance.
These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available at our website at Abbott Dot com.
Unless otherwise noted our commentary for sales growth refers to organic sales growth, which excludes the impact of foreign exchange.
With that I will now turn the call over to Robert.
Thanks, Scott Good morning, everyone and thank you for joining us.
Today, we reported results of a very strong quarter.
Ongoing earnings per share were $1.17, reflecting more than 100% growth compared to the prior year.
Sales increased 35% on an organic basis in the quarter compared to last year.
Given the significant significant negative impact COVID-19 had on demand for elective medical procedures and routine diagnostic testing last year.
Comparing sales versus pre pandemic levels in 2019 provides 1 of the more relevant measures of performance.
On this comparison, excluding sales from our Covid testing business organic sales grew nearly 11, 5% in the second quarter drew.
Driven by strong sales growth across all 4 of our major businesses, including double digit growth in established pharmaceuticals nutrition and medical devices.
I'll now summarize our second quarter results before turning over the call to Bob.
And I'll start with nutrition, where sales increased 9.5% compared to last year.
Strong growth in the quarter was led by mid teens growth in adult nutrition.
Including more than 20% growth internationally.
Since the beginning of the pandemic, we have seen 2 factors positively impact adult nutrition demand.
New users are entering the category and.
And existing customers have increased their usage.
And as the global market leader. These dynamics are driving strong growth for our ensure and <unk> brands.
In pediatric nutrition sales grew nearly 4.5% in the quarter led by growth of nearly 9% in the U S, where we continue to capture share with our leading portfolio of infant formula and toddler brands.
Sales are pedialyte, our global Rehydration brand grew strong double digits, driven by recently launched new products and increased investments, we're making in direct to consumer promotion.
Turning to diagnostics.
Sales increased more than 55%, which includes $1.3 billion of Covid testing related sales.
Excluding COVID-19 testing related sales underlying diagnostics sales increased 37% compared to last year.
Strong sales growth in our underlying diagnostic business is being driven by improving routine diagnostic testing as health care systems continue to recover from the pandemic.
Well as the continued rollout of our linear platforms.
Excluding COVID-19 testing related sales second quarter sales in core laboratories, and molecular diagnostics grew mid single digits compared to pre pandemic levels in the second quarter of 2019.
Moving to established Pharmaceuticals, where sales grew nearly 15% in the quarter.
Strong sales performance in the quarter was broad base across several countries, including double digit growth in India, China, Russia, and Brazil, which led to overall sales growth of nearly 18, 5% in our key emerging markets.
While we continue to see Covid cases surge in several emerging markets, including the recent surge in India. Our team is executing at a high level to meet market demand for our medicines.
And lastly, I'll cover medical devices, where sales grew 45% in the quarter compared to last year and more than 15, 5% compared to the second quarter of 2019.
Strong growth in the quarter was led by structural heart Electrophysiology heart failure, and diabetes care, all of which grew double digits compared to the second quarter of 2019.
In structural heart, we achieved the highest number of mitraclip procedures ever in the second quarter, including a record number of procedures in the month of June.
Now I'll wrap up with diabetes care, where strong growth was led by freestyle libre sales of more than $900 million.
The global user base for Libre grew to approximately $3.5 million users, including approximately 1 million users in the U S driven by market expansion and awareness efforts as well as ongoing new product launch activity in every major market around the world.
So in summary.
We're achieving strong growth across all 4 of our major businesses.
Particularly pleased with the strong momentum and growth contributions were seeing from several recently launched products and investments, we're making in our key growth platforms.
And our new product pipeline continues to be incredibly productive delivering a steady cadence of new products with more to come over the next several months.
I'll now turn over the call to Bob to discuss our results and outlook for the full year in more detail Bob.
Thanks, Robert as Scott mentioned earlier. Please note that all references to sales growth rates unless otherwise noted are on an organic basis, which is consistent with our previous guidance.
Turning to our results sale.
Sales for the second quarter increased 35% on an organic basis, which was led by strong performance across all of our businesses.
Excluding COVID-19 testing related sales organic sales growth was 29% versus last year.
Nearly 11, 5% compared to the second quarter of 2019.
Foreign exchange.
Change had a favorable year over year impact of 4.5% on second quarter sales, resulting in total reported sales growth of 39, 5% in the quarter.
Regarding other aspects of the P&L for the quarter.
<unk> gross margin ratio was 56, 9% of sales.
Adjusted R&D investment was 6.2% of sales.
And adjusted SG&A expense was 25.8 percentage of sales.
Our second quarter adjusted tax rate was 14, 4%.
Which reflects an adjustment from <unk>.
Our year to date tax rate with our revised full year effective tax rate forecast of 14, 7%.
The revised full year forecast is modestly lower than the estimate we provided in January due to a shift in the mix of our business and geographic income.
Turning to our outlook for the full year 2021.
Our full year adjusted earnings per share guidance of $4.30.
To $4.50.
It remains unchanged and reflects strong double digit growth compared to last year.
And approximately 35% growth at the midpoint.
Compared to a pre pandemic adjusted earnings per share in 2019.
We continue to forecast 4 to $4.5 billion.
And Covid testing related sales for the full year 2021.
And based on current rates, we would expect exchange to have a favorable impact of around 2% on a full year of 2021 sales.
Turning to the outlook for the third quarter.
We forecast adjusted earnings per share of at least 90.
Which reflects continued strong growth and momentum in our core underlying business and a sequential step down and COVID-19 testing related sales compared to the second quarter.
And based on current rates, we would expect exchange to have a favorable impact.
Around 1% on our third quarter reported sales.
With that we'll now open the call for questions.
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Our first question comes from Bob Hopkins from Bank of America. Your line is open.
Okay, great. Thank you and good morning.
I'll keep my questions, a quick and high level.
First for Robert I'm, just curious in your view.
On the pace of the recovery in physical procedures generally is it kind of continued throughout the quarter and into July or are you starting to see signs that the spread of variance could cause a little lumpiness from the patient recovery just wanted to get your views on how things are going.
Sure.
Listen, we obviously had a very strong quarter in terms of recovery I mean, we had plan to see that recovery.
In the U S and in Europe in certain Asian markets Asian markets and that recovery has largely played out the way we had we had anticipated.
I'd say, probably a little bit better even than what we thought.
I don't think what we're seeing here with related to like increase in Covid cases, I don't think that Youll see the same but at least we're not seeing the same kind of impact in terms of.
Hospitals, shutting procedures down stopping testing et cetera, I think it's a very different situation, where we are this year versus where we are last year, even though if you look at the case global case counts, they're pretty much in line to where we were October last year. We've got we've got therapeutics, we got vaccines, we've got testing so we're not seeing.
On the device side and our business has done very well overall.
As I said in my comments, where we're up double digits mid teens versus the second quarter of 2019.
Largely driven by AEP heart failure structural heart diabetes as I said.
And our and actually if you look at the cardiovascular specific recovery, we exited the first quarter at about a 2% growth.
Versus March of 2019.
And then if you look at the second quarter, our June growth rate was round about 7%.
Vs versus June of 2019, so we're seeing this kind of sequential recovery in the procedures as evidenced by our growth rates in our procedures and we're looking at data yesterday. The first couple weeks of July are showing that same trajectory, whether it's in the U S and or whether it's outside the U S General.
Obviously, there are some markets that have different kind of trends in pesos, but I'd say overall, we're <unk>.
Seeing that recovery and that's how we're looking at the rest of the rest of the year Bob has that continued.
Trajectory in terms of recovery.
In procedures and diagnostic testing.
Okay. That's really helpful. Thank you and then.
My second question for Bob I'd Love Your day comment on 2 things. Okay..1 just you had a nice EPS beat relative to consensus and really relative to the way you guys group driving the quarter.
But you are leaving guidance Athene, just wanted to understand that that dynamic why not boost the EPS a little bit and then secondly, if you.
Just curious if you think consensus estimates as we look forward, a little bit or kind of reflecting the way you guys are viewing the world right now and obviously I'm specifically talking about about next year is there any preliminary thoughts on whether consensus is sort of capturing the world as you see it.
And wondering just about the EPS guidance for this year. Thank you.
Yeah, Bob I'll take the first question on the guidance for this year clearly.
About a third of that beat was due to the low higher COVID-19 sales than we had projected obviously you know forecasting COVID-19 is quite challenging and.
And so thats about a third of it would be about 2 thirds really was better performance of the base business versus how the street had modeled debt.
And so the way we look at it we gave a pretty wide range on earnings guidance back at the beginning of June and that really kind of accounts for any kind of fluctuations or changes in the in the COVID-19.
Testing in the back half of this year as well as kind of underlying base business performance. So we feel really comfortable about the about the range. We have in fuels that kind of captures different scenarios around COVID-19 testing.
Rob on the question of consensus for the rest of the year, but I think this is how we're thinking about the second half of the year, obviously from a topline perspective.
We're going to have to lap some of our Covid sales that we had in Q3 and Q4, obviously if you looked at last year that was really the height of our ramp up in COVID-19 sales, but the underlying business, excluding COVID-19 sales will be.
Getting sequentially better every quarter. So we're looking at our base underlying business growing low double digits for the rest of the year from a gross margin perspective.
We'll see expansion in gross margin versus where we were in Q2, there's obviously, maybe some friction on on some input cost commodities freight et cetera. The team works hard to kind of offset those so we will see improvement also as the base business recovers in the margin profiles from net recovery expand and will continue to make the ramp.
Up of investments that we talked about from an R&D and SG&A perspective.
Some of those investments have a faster and more I'd say kind of more immediate return. So for example, direct consumer advertising and.
In nutrition or Libre for example, and some of those investments are a little bit more medium term.
Whether it's R&D programs or whether it's kind of getting ready for upcoming launches.
So the real.
Say kind of factor here becomes COVID-19 testing.
And we gave we gave guidance about a month ago about 4 to $4.5 billion.
After the 2 after the 2 quarters, we're at about 335 billion. So we've got between.
Half a billion dollars and $1 billion to go in the next 6 months and I think that's really the question here is how well testing.
Play itself out in the next kind of second half year, whether its variants, whether its vaccination rates et cetera. So that's just something that we're paying attention and as Bob said, that's why that's why our guidance range.
Pretty wide, which was really to account for that.
Great. Thank you.
Okay.
Thank you. Our next question comes from Robbie Marcus from Jpmorgan. Your line is open.
Oh, great. Thanks for taking the questions and congrats on a good quarter.
Maybe to follow up.
On the last question.
There is a lot of moving pieces down the P&L right now you had a really good operating margin in the quarter.
Just wondering if you could update us on the latest on how youre thinking of reinvestment.
Covid testing resin use how thats flowing through the P&L and if you have any preliminary thoughts on on the impact or benefit it might add to next year as people think about their models now.
In terms of investment Ravi if you look at our SG&A and R&D combined were up around $700 million.
Versus the prior year, and we expect to kind of sustained.
Pretty strong investment in the base business. So we haven't reinvested some of those COVID-19 testing sale profit.
Back into the base business to drive growth going forward as.
As you say, we had really healthy.
Operating margin profile in the second quarter, we're going to see some impact on net operating margin profile. The rest of the year with the step down in those COVID-19 testing.
In the back half of this year.
That's going to obviously have some impact on our operating margin profile, while we sustained a lot of that investment in particular in the R&D and SG&A spaces.
To drive growth the rest of the year and into next year.
Great and maybe just a quick follow up we have some coming.
Coming back to.
New product launches and clinical datasets, we have 2 interesting ones coming at ESC later in August with cardio Mems and with Ambulate.
I was just hoping if we could get the latest thoughts on.
Approval timing product launch potential in.
How we should think about.
<unk>.
Near term expectations for product launches given the COVID-19 environment is still impacting hospitals to a degree.
Sure.
John.
John on amulet, we've talked we've talked about this right Robbie we've we filed with the FDA late last year, we right now we plan to present the data.
At ESC, so thats kind of in the late August timeframe.
We think it's again an attractive market great.
Great.
Maturity for growth for us the product is available.
In Europe and in those markets, albeit a smaller market than the U S.
We have a 50% market share.
So we feel very good about our ability here to compete with a product we have.
Regarding timing, it's 1 of those I can't I can't give you I can't give you an exact timing.
It's definitely we think are kind of in the second half and then it's just going to depend in terms of.
Impact this year versus.
Versus next year, obviously, the impact next year as larger and this is going to depend on when the approval hits. This year, obviously, if its more towards the back end of the year. Then we will see a less of an impact if it's if it's sooner.
Would be an opportunity for us here to execute on that.
On Cardiome Ms I guess similar.
We think this is another great opportunity I mean, both these products were products. When we began the St. Jude integration. Both these products were trials that we really wanted to.
Best in and drive on the clinical evidence and driving the clinical evidence of these 2 products. So it's great to see we are in a position now to be able to kind of disclose.
And share the data from these trials that we put together we filed our label expansion.
With the FDA on cardio Mems.
Quarter more towards the end of the second quarter.
And again with this you think it's a great opportunity also in probably in terms of an approval there.
Not really banking on that approval from a sales perspective this year.
Great. Thanks, a lot.
Yes.
Thank you. Our next question comes from Vijay Kumar from Evercore ISI. Your line is open.
Okay.
Please check that youre not on mute.
Hey, guys apologies.
Strong print this morning.
Robert maybe 1 high level question on the base business here I think there was some confusion this morning.
On the base ex ex Covid.
Versus pre pandemic 2019 levels I think you did 11% in Tokyo.
That was.
Maybe perhaps low double digits in Q1. So the question I think people are asking is if.
If we had sequential improvements.
Is that 11 versus 10 that seems a little late.
But I think that kind of ignore the business mix, maybe perhaps can you talk about what's happening to device business what was the sequential acceleration.
And what is baked in for the back half should we continue to see some benefit from backlog and further acceleration.
Sure I mean, I think the med device.
<unk> kind of grew.
Again Q2 versus 2021.
That that growth rate has been increasing and it has been sequentially improving as I said and the first question, obviously the recoveries not not.
Not uniform across all businesses. So if you look at our device portfolio.
1 of the parts of the portfolio that we have seen a little bit of a lagging recovery here has been in neuromodulation.
Where.
Characterize that as a little bit even more elective than some of the other procedures and we've seen.
Say look a little bit of a slower recovery.
Trend in that business versus say for example, a structural heart.
In EP.
Or or.
Or diabetes.
<unk>.
Similar to similar to diagnostics.
Our immunoassay and clinical chemistry business.
That's growing high single digits in the second quarter versus.
Versus the second quarter of 2019, and Thats, an improvement versus where we were in Q1.
1 of the issues that we see in our diagnostics businesses, we're seeing slower.
A slower recovery in kind of blood donations and that obviously impacts our transfusion business. So kind of similar to new role on the diagnostics side seen a bit of a slower recovery, but I would say that those businesses that were more impacted by COVID-19.
In Q2 of last year, I'd say that largely kind of recovered very well very nicely.
And we expect that trend to continue in the second half.
That's helpful and then maybe 1 on the product side on the accordion Mems.
Some work.
Like it's an interesting trial, it's a pretty large trial I think net.
<unk> 3600 <unk> pay.
Patients enrolled.
It's fairly large.
Sure.
I guess Tom.
Assuming some of these results if they were to amendment.
Kimpton.
I deal with from a trial in terms of.
Reduction in heart failure hospitalizations mortality as an endpoint here.
Should cardiome Mems.
The billing.
A billion dollar product for Abbott and debt.
And the reason I'm asking is.
Historical adoption trends have been quite slow.
Investments in such a large trials suggest some optimism. So I'm curious how you guys are thinking about the longer term opportunity.
Sure I mean, I think a lot of these device segments that we see kind of large opportunities I think the key thing here is to make sure that you put the clinical evidence to be able to kind of create a strong kind of market development approach here and when we looked at Cardiome Ms. At.
At the time.
Back in 2017, where there was some issues with reimbursement CMS certainly the Max kind of worth reimbursing et cetera.
And you had positive champions data I'm aware of some of the.
Perceived shortcomings of that trial, but there was also plenty of real world evidence showing similar benefits and similar results that you had observed in champion. So we looked at this and we believe that this was a significant opportunity in the cardiovascular space.
We believe that.
Monitoring pulmonary arterial pressure is a great indicator for prevention of <unk>.
Heart failure.
<unk> and <unk>.
<unk> decided to make the investment in <unk>.
And a larger trial to either address.
The perceived shortcomings of champion or and or augment augment that dataset. So.
I'm hesitant to put a number around here Vijay.
But I think the viewpoint here is that this is this is an opportunity as we're building our heart failure portfolio.
With our <unk> portfolio.
And even with Mitraclip quite frankly to really have a comprehensive suite of solutions for it and I think this is going to be.
An opportunity that we will.
B intentional about investing whether its trial, whether its clinical and field base teams to drive it.
We think the opportunity to expand the label to a class II in the class 4.
<unk> presents a significant opportunity for us to expand the market.
And also the indication here to include cardio Mems with.
Elevated levels of BMP so.
I think that this is a great opportunity I guess your comment on mortality I think thats important but I also know in talking to health systems that hospitalization.
And reduction in hospitalization is still is still very important.
Some could argue that maybe youre just kicking the can down the road, but.
I think that if you look at and have conversations with health care systems. They will see this as an important.
Reduction any redemption hospitalization for this patient population.
Significantly important for them. So bottom line I think this is a great opportunity for us and we're being intentional about our investment.
And making the right clinical evidence to support the adoption. So that we can get to numbers that you're referencing or even bigger.
That's helpful. Thanks, guys.
Thank you. Our next question comes from Larry Dave Wilson from Wells Fargo. Your line is open.
Good morning, Thanks for taking the question just day.
2 from me I'll start with Libre.
Robert just maybe at a high level your thoughts on kind of the roadmap for libre from here.
Given that you are closing in on $1 billion a quarter in sales.
More specifically any update on the launch of Libre 3.
In Europe and in <unk>.
Now delays at FDA might impact the timing of Libre III in the U S and I had 1 follow up.
Sure.
So listen we had a real strong quarter as you saw and as you mentioned approaching that $1 billion Mark on a quarterly run rate on a quarterly perspective.
Sales above 40%.
I think really important year, Larry as the user base.
And this is this is this is a different kind of device business.
<unk> talked about it from a mass market opportunity versus other parts of our device portfolio that might be a little more let's say call. It net cheap versus the size of libre.
But the user base is super important because when you've got this kind of retention level debt.
We're seeing on the product so.
Between.
$80.90 plus percent globally.
It really it really it looks more like a subscription like model.
And when you are in that subscription like model and you've got this recurring revenue the user bases.
<unk> is hugely important and I think thats a lot of our focus right here as we've talked about this mass market is building the user base and I think we've done a really good job internationally and in the U S. But as we've talked about okay. We've got $3.5 million users.
I've talked about numbers, all the way up to 80 million users potential for this product once you aggregate insulin users in type twos et cetera. So.
I think there is.
A real strong growth opportunity for us and we're still in the still in the early innings is as I've said from a from a roadmap perspective.
Not deviating from kind of how we've thought about this right, which is we will continue to provide.
Superior technology superior experience to the user whether it's with the product whether it's how they can get the product.
And still a value proposition that makes sense.
For a mass adoption.
That's all gone very well and that will continue to go very well Libre 3.
We launched it.
And I'd say in Germany at the beginning of the year here a lot of our focus in that launch Larry was just more to understand kind of our marketing messaging, our positioning with our existing portfolio reactions from physicians and even look at how other users from other CGM kind of reacted to it.
And.
It's basically surpassed my expectations as we went into that into that pilot launch and so we will be now transitioning to full launch mode of Libre, 3 where we've got approval.
Specifically in the U S. Obviously.
It's understood that the backlog that exists at the FDA regarding regarding diabetes products.
And.
I'm not going to comment on kind of timing here or expectations, but just that were.
We're very excited.
To be able to bring Lee breakthrough to the U S also and augment our portfolio with the product.
That's helpful. Robert.
Lastly from me I know I've asked about this on a few earnings calls, but just curious how your thoughts on capital allocation are evolving.
Given your strong balance sheet, we know valuations are relatively high or are there areas, where you think valuations look more attractive than historically in the sweet spot for Abbott's Ben.
Acquisitions in the $5 billion to $10 billion range.
Is that still the case I mean, obviously St. Jude was an exception to that but just curious to see how your thoughts are evolving on M&A. Thank you.
Well specifically M&A.
No change in thoughts there I mean, I think rather than have a number are tied to it. It's more about does it does it strategically fit do we think that we can execute and drive more value out of it out of it.
And.
<unk>.
That mindset hasn't Hasnt hasnt changed independently of kind of dollar amount there.
We're obviously actively looking.
We constantly surveil and survey and pay attention and track what I can say is that we've been probably actively monitoring much more than where we were back in 2017.
But there are some some some pretty elevated valuations right now and im not going to not going to do anything here, that's kind of either delude, our profiles are growth rates et cetera, and.
Key driver here is it being strategic.
I actually think a lot of opportunity we have from that from a capital allocation back to kind of how you started that started the question was we've got a lot of opportunity internally.
A lot of great returns that we can have with our capital as we deploy them to support these opportunities that we have in our pipeline.
Specifically regarding kind of manufacturing kind of ramp up in capacity, whether it's libre with its mitraclip sealant.
Seeing an opportunity here with adult nutrition as we've seen kind of.
Several years here, a strong kind of double digit growth in nutrition. So I think we've got great opportunity.
To be able to provide a great return to our shareholders by looking at our internal.
Opportunities also.
Thanks Robert.
Thank you.
Our next question comes from Matt Taylor from UBS. Your line is open.
Hi, guys. Thanks for taking the question.
So I just wanted to ask 1 about the Covid testing.
And we know your guidance for the year implies lower sales in the last 2 quarters. I was wondering if you could just give us any insight into the trends that youre seeing in testing, especially outside of the U S where we have less visibility. So we can think about some of the different scenarios that you are baking into the guidance for the rest of the year.
Sure.
Well about a month ago, we've talked a lot about COVID-19 testing here and I don't think over the last 30 days, we've seen anything materially different.
I would say we continue to see some of that kind of lowered kind of testing volumes in the U S.
Whether it's PCR, but probably a little bit more on the on the rapid side.
We did a little bit better than what we had forecasted.
For the second quarter and that was largely driven by international markets still about 80% of our of our sales are on the rapid side, but.
But we did see.
Higher international sales.
And I would say is probably driven by by Delta variant a lot of those international sales are more let's say kind of tender driven and we've got great visibility too.
Where cases are rising.
Our positions in those markets.
As a company our relationships our understanding of how health authorities in those in those countries are thinking about their testing.
And I, what I can say is we become we definitely become a preferred supplier here.
Because of our scale our capacity the quality of our products and our pricing so.
The question here is going to be even even with surges.
Are you going to see testing increase.
I think we I think we will I think we will see some of that.
The question will be geographically, where are we going to see it more and I think geographically, we will see more internationally than at least what I think right now than what we will see.
In the United States from.
From a back half perspective.
Thank you and maybe I could just ask 1 follow up on recovery.
Recovery in diagnostics versus net tech. So I know you called out interest issue with blood donations.
I guess, excluding would you think about the recovery in the core diagnostics business ex.
Ex COVID-19.
Similar to 2 minutes actually to go in lockstep or is there going to be a difference there.
Some reason could you flesh out the debt.
Blood donation headwind how much of that like at a high level I would say, yes, we are seeing kind of that same kind of recovery trend.
Again within its own within its own kind of segment.
Our immunoassay and clinical chemistry business, which represents about 80% of our core lab business that actually was up.
Single digits in Q2 versus Q2 of 2019, so we are seeing.
That that recovery on the on the core lab on the prolapse. There are some assays that havent recovered as much what we've seen here in the U S is that we're seeing post surgery policies here from certain hospitals.
Do less overnight space. So when you when you're doing that you're getting a little bit less of that but I'd say, that's that's offset with higher share gain and growth in in.
In new accounts with the rollout of <unk>. So we're seeing that kind of high single digit and as you mentioned the issue is really kind of low low.
Low donation blood donations that are impacting our transfusion business of which we've got 65.60 plus percent market share. So we're hoping to see.
We've been working with different different agencies here to kind of bring awareness to this to this fact here because obviously there is inventory of blood but.
If this rate of donations continues then it will be it'll be a challenge for for the U S. So hopefully we'll start to see that recover here.
As we get towards the end of the year.
Okay, great. Thank you.
Thank you. Our next question comes from Joanne Wuensch from Citibank. Your line is open.
Good morning, and thank you for taking my question.
It's really 2 questions. The first 1 is a follow up on that Bob was asking earlier on.
Is there anything that you can give us.
2022, I'm getting a lot of questions as it relates to margin COVID-19 double digit EPS. So anything on a framework basis that would be helpful. I'd appreciate it.
Sure.
Listen we've talked about this a couple of times on a couple of calls already and I just think it's a little bit too early to kind of provide that forecast.
Given there's so many different kind of moving parts, we are starting our process.
Right now, but I don't think the framework changes versus what we've talked about which is our underlying business. So excluding COVID-19 testing it will clearly be very well positioned.
From very strong growth top line and bottom line.
Just based on the trends that we're seeing based on the pipeline the new products that we have in the pipeline that that we have in place. So our underlying base business will clearly be set up for very strong top and bottom line growth. We've obviously got to look at Covid testing and that's a factor here.
We've talked about it last last last call it'll be it'll be.
Probably not very prudent here to assume.
A significant amount of Covid testing.
If there is going to be demand of Covid testing, we've got plenty of capacity to meet it.
And that's that's ultimately going to be kind of a factor here as I said, we're going to start to kind of lap a little bit of this of this of this testing.
In Q3, and Q4 of this year, we've obviously had a real strong Q1 also.
So that's that obviously has an impact and then having to look at our spend and modulate our spend here, but in a way that doesn't detract from our kind of long term sustainable growth. Even past 2022.2023. So we've got a lot of lot of good momentum a lot of Ani.
<unk>, an upcoming launch activity and I want to make sure that I capitalize on our positions in the opportunities that we have built upon.
And then I've heard from Barnes pipeline investment a couple of times there other than some of the names that are products that we've already.
Such as Andrew at Cardiome, then birth rate are there other product in the pipeline that you'd like to draw your attention.
Yes sure.
If you look at structural heart I think theres, 2 kind of really.
Good opportunities for us over here.
<unk>.
With bringing the product to the U S.
And the launch of our second generation product an avatar in Europe. I mean, these are 2 opportunities that we have.
We know our position.
We know the choices and the strategy that will take as we as we enter this market here in the U S. I think it's great. It will be a great opportunity for US and then the second product on on structural heart is our tricuspid.
Repair system.
It's a great opportunity, it's got a potential kind of $1 billion market opportunity for it we've done very well with it actually right now our sales have kind of annualized right now on a $100 million basis, and and we launched this in the middle of a pandemic last year. So I think I think that's.
A great near term opportunity.
And then on CRM.
We've made the investment here to get our lead list Littlest program back on track here.
Regarding a single chamber and then making the investment on the dual chamber and I think thats, another kind of big opportunity that we'll have.
2.
To continue our growth recovery in our CRM.
So we're targeting to enter this market next year again with the single Chamber and then built off there. So I think we've got great opportunity.
In the device space and then in the diagnostics is the continuing of building the building the.
Menu.
<unk> the menu of assays.
We're obviously, making investments in our rapid business to capitalize on the the placements that we've made for <unk> now with COVID-19 to be able to have kind of not only drive flu but.
Other respiratory viruses that.
We will think will be opportunity for us also so but.
But I think those are probably more the near term I E. Next kind of 12.18 months.
And then.
Our larger pipeline after that.
Thank you very much.
Operator, we'll.
We'll take 1 more question.
Thank you and our last question comes from Josh Jennings from Cowen Your line is open.
Hi, good morning, Thanks, a lot for taking the question.
Brian I just wanted to ask.
Multipart question on just Duopolies in the U S market.
John.
Create 1 with the entrance of Andrew.
And then down the line.
And the different position as the first mover.
We will be created by a competitor coming into the <unk> mitral.
The mitral repair market.
Was hoping you could just give us your views on U S. Duopolies in terms of second player coming into the market capitalizing market growth ending up debt.
For competitive pricing to ensue in the potential for that second move it to 2.
To capture share and where those can play out thanks for taking the question.
Sure I mean generally speaking.
Competition will always kind of drive further innovation further investment.
So 1 can kind of make the.
The analysis here that.
When you're when you have a competitor coming into your segment.
Youll do more to invest in the business and that investment will then drive the category.
On 1 side I do I do believe in that and I think you can see.
You can see how that's kind of had an impact definitely when when we came into the U S with libre and kind of what happened to that market and what happened to the technology.
In terms of kind of may.
Making making all the technologies better and et cetera. So.
The flip side of that is competition.
<unk>.
You could potentially see.
I guess price as a lever.
To drive demand or to drive.
Share capture.
We've tried to focus every time, we're entering markets with our value proposition.
That sustains, our price and our pricing strategy and <unk>.
Focus on the benefits.
Our solution will bring.
<unk>.
So I think you've got these 2 parts of kind of competition in markets I would say that's probably true for.
4.
2 player market, where a 3 player market, so but listen we're excited to come into come into the la market here in the U S. We're obviously a player internationally and.
We're making the investments. So for example, we've already began our investment and market expansion.
With our catalyst trials just comparing.
Comparing our products too.
<unk>, which is which is the which is the standard of care.
And I know that competitors, making kind of similar Sony clinical vaccines I think that's good I think thats positive.
Thanks, a lot.
Okay. So.
So that being said.
I'd say here, if I, just kind of sum up our results clearly demonstrate here that we're showing a real strong growth across all of our businesses divvy.
Devices diagnostics are established pharmaceutical business, and our nutrition and and as I said in the beginning of the call as we look to the second half of the year, we expect that growth to continue in our in our in our underlying business Juans question, maybe to Bob's question also optically.
You're going to see a little bit of this I'd say artificial fog or lapping here or a comp versus for a few quarters as we kind of go through this the sales that we've had from this big.
Big role that we played in Covid testing during the pandemic, but I don't I don't let that cloud kind of how we think about the business and how we think about the business long term.
And I think our forecast here shows that we will have a pretty differentiated underlying base business performance here our pipeline is highly productive.
We've got a lot of ongoing launch activity and there is even more on the way here. So we're very excited about that and we're investing.
Across our key growth platforms. So we're feeling really good about our underlying base business and the momentum that we've got so so thanks for joining us today.
Thank you operator, and thank you for all of your questions that now concludes Abbott's conference call.
Webcast replay of this call will be available after 11 am central time today on Abbott's Investor Relations website at avid investor Dot com.
Thank you for joining us today.
Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.
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