美國雅培 (ABT) 2009 Q1 法說會逐字稿

Good morning and thank you for standing by.

Welcome to Abbott's first quarter 2009 earnings conference call.

All participants will be able to listen only until the question and answer portion of this call.

(Operator Instructions).

Should you become disconnected throughout this conference call, please dial 1-312-470-7334 and reference the Abbott call.

This call is being recorded by Abbott.

With the exception of any participants' questions asked during the question-and-answer session, the entire call.

including the question-and-answer session is material copyrighted by Abbott.

It cannot be recorded or rebroadcast without Abbott's express written permission.

I would now like to introduce Mr.

John Thomas, Vice President.

Investor Relations.

Good morning and thanks for joining us.

Also on today's call will be Miles White, Chairman of the Board and Chief Executive Officer, and Tom Freyman, Executive Vice President Finance and Chief Financial Officer.

Miles will provide his opening remarks and Tom will review the details of our financial results for the quarter and the outlook for the year.

I'll then discuss the highlights of our major businesses.

Following our comments, we'll take any questions you have.

Some statements made today may be forward-looking.

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.

Factors that may affect Abbott's operations are discussed in item 1A, risk factors to our annual report on Securities and Exchange Commission Form 10-K for the year ended December 31st, 2008, and are incorporated by reference.

We undertake no obligation to release publicly any revision toss forward-looking statements as a result of subsequent events or developments.

In 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 will be available on our website at Abbott.com.

In addition, we'll include operational sales results information today, which are given on a constant currency basis, that is, excluding foreign exchange.

With that, I will now turn the call over to Miles.

Miles?

Okay.

Thanks, John and good morning everyone.

As you can see from our earnings news release this morning, Abbott's first quarter results demonstrate that there is tremendous value in a well-balanced, highly diverse portfolio of businesses that's capable of top tier earnings performance in even the most difficult market conditions.

Despite a clearly weak US economy, Abbott's fundamentals are strong and so is our commitment to delivering double-digit earnings per share growth while returning cash to shareholders through steady dividend increases and ongoing share repurchase.

This quarter, our collective businesses delivered mid-teens earnings per share growth.

We also saw strong double-digit operational sales growth in global nutritionals, international pharmaceuticals and global vascular, which continues to benefit from the steady performance of Xience V, our best-in-class and market-leading drug-eluting stent.

In the first quarter we also delivered significant operating margin expansion in our vascular and diagnostics segments.

As a result, we exceeded the mid point of our EPS guidance range this quarter by $0.03.

We also confirmed our 2009 EPS guidance range of $3.65 to $3.70, reflecting double-digit earnings per share growth this year.

There were three particular things in the quarter, one of which was one-time in nature, that impacted our top line results this quarter, but did not impact our ability to deliver EPS in excess of our forecast.

I'll briefly touch on these before Tom and John provide their normal reviews.

The first was the impact of foreign exchange rates on our reported sales growth this quarter.

We had originally expected that first quarter currency rates would have a negative impact on reported sales, and so our first quarter would be the most difficult quarter of the year in terms of year-over-year comparisons.

As it turned out, currency trends were somewhat more unfavorable than our estimates, particularly the non Euro currencies in regions such as Latin America, Eastern Europe and Asia.

However, we're significantly insulated on our bottom line from currency fluctuations, due to our substantial international operations as well as our overall mix of product sales which act as a natural hedge.

So we didn't see any significant impact to earnings in the quarter, just the top line.

The second item impacting sales this quarter was the overall weak US economy, and the impact that's had on managed care practices and patient behavior.

For example, recent market data indicates that a higher percentage of patients in the US are not refilling their prescriptions.

What's more, at the beginning of each year we particularly see adjustment toss insurance plans in terms of changes or increases to copays, deductibles and out of pocket costs, as well as prior authorization requirements.

We expect some of that each year, and we plan for it.

This year, the magnitude of these managed care changes was greater than in previous years.

Together with the weak US economy and changing consumer behavior, this impacted the growth trajectories in certain business segments, more than we would have otherwise anticipated.

The third but related item impacting sales this quarter was the effect of US wholesalers reducing purchases, as they too adjusted to the weakening economy and slower than expected market demand in some segments.

We had not anticipated the full magnitude of this effect in our original planning for the quarter, including Humira which I'll discuss in a moment.

Given these unique dynamics, our US pharmaceuticals team has adjusted its commercial approach on a number of levels, refining our marketing mix to more directly address this changing patient behavior.

We're now focusing additional attention on programs that we know will directly benefit eligible patients, those who need assistance in this economy, affording their copays and out-of-pocket costs.

We've done that by expanding our existing patient assistance programs.

At the same time, we're seeing a continued shift toward the use of specialty pharmacies for products such as Humira.

Specialty pharmacies are patient-focused services within large pharmacy benefit managers.

These services actively engage patients on many levels and help to increase patient adherence to therapies, so that's a good thing for patients and it's a good thing for our business, longer term.

Specialty pharmacies also tightly manage their inventories and tend to operate using more of a just in time model.

As a result of these changing dynamics, our US pharmaceuticals business was below our expectations for the quarter, including Humira, as Tom will discuss in a moment.

However, we think customers across our pharmaceutical distribution channel are now better aligned with current demand trajectories, making this more of a one time transitional quarter.

As we look ahead, underlying patient demand in the US for our key growth drivers remains strong, including trends for Humira which continues to grow significantly faster than the anti-TNF market.

In fact, this morning we noted that the latest March monthly prescription data indicates that Humira total prescription growth has accelerated to 24%, from February's 19%, with an improvement in new prescriptions as well.

Outside the US, Humira's operational sales grew nearly 50% this quarter, reflecting continued strong double-digit demand internationally.

Globally, Humira ranks as the fastest growing pharmaceutical product among the industry's top 15 global products, just ahead of Avastin.

It's growing twice the rate of competitors across the world and is the leading anti-TNF product in Europe, recently surpassing Enbrel in patient share.

A large part of our success is due to Humira's robust clinical profile, which we're adding to this year with additional data.

Humira remains a significant component of our growth story, that hasn't changed.

We continue to expect Humira to grow strong double digits over the next several years.

For this year, we've updated our expectations to reflect these trends.

We expect global Humira operational sales growth of 25 to 30%, Excluding the negative impact of exchange.

And reported sales growth of 15 to 20%, which includes the impact of exchange.

This updated forecast for Humira is captured in our guidance for double-digit EPS growth for 2009, which is the same as our original guidance.

Back in January, when we issued our 2009 EPS guidance, we did so with a high degree of confidence in our overall planning assumptions.

It was difficult to predict the degree of impact the weak US economy would have on our US business.

However, we planned conservatively so that we could absorb any impact.

As we move through the course of the year, we'll make adjustments to spending.

However, our spending levels will remain strong and at a level that will support the continued long-term growth off our businesses.

Tom will walk you through the details of that in a moment.

Humira is one leg of growth in our overall portfolio of growth businesses and it's certainly an important one.

But it's also important not to let it overshadow the balance of our other businesses.

Last year, our collective mix of diverse growth businesses delivered outstanding results.

We reported total sales of nearly $30 billion.

EPS growth in the mid-teens, record operating cash flow, and we returned more than $2 billion in cash to shareholders in the form of double-digit dividend increases and share repurchases.

We're on track for a similar level of performance in 2009.

Abbott is broadly diverse in many ways, operationally, financially, geographically, and as you listen to our remarks today and look through our earnings news release you'll see that come through.

Over the years, we have refined and reshaped our business portfolio through strategic acquisitions, divestitures, restructuring, spinoffs and alliances.

Today, we have one of the best mixes of healthcare businesses in the industry.

Abbott's current portfolio of businesses is strong, it's highly diverse, and its growth prospects are outstanding.

I continue to be very optimistic about our future as we continue to target sustainable double-digit EPS growth.

With that, I'll turn it over to Tom and I'll be here for Q&A.

Thanks, Miles.

I'll now take a few minutes to walk through our results for the first quarter and our outlook for 2009.

Abbott delivered ongoing earnings per share of $0.73 for the first quarter, up almost 16% and $0.03 above the midpoint of our previous guidance range.

We achieved this strong growth despite the dynamics Miles mentioned and the impact of generic Depakote entrants, and we are confirming our 2009 EPS guidance.

Regarding sales, operational growth in the quarter, that is before exchange, was 5.4%, reflecting particularly strong growth in our global nutritionals, global vascular and international pharmaceuticals businesses.

Exchange was unfavorable 6.1%, somewhat more unfavorable than our previous forecast, so on a reported basis, sales declined slightly.

Excluding the negative effect of the decline in Depakote sales from the generic competition of 3.5 percentage points, operational sales growth in the quarter was 8.9%.

Generic competition began for the ER version of Depakote this quarter, and the immediate release version in the third quarter of 2008.

Depakote negatively impacted global pharmaceutical sales growth by 6 percentage points, and US pharmaceutical sales growth by more than 13 percentage points.

US pharmaceutical sales were approximately $150 million below our expectations for the quarter, due to somewhat slower than expected market growth in certain segments including injectable anti-TNFs, and a related reduction in customer purchases.

Humira accounted for somewhat more than half of the $150 million.

The adjusted gross margin ratio in the quarter was in line with our expectations at 58.1%.

This reflects an improvement of 130 basis points from the prior year.

This was driven primarily by improved performance of the vascular and diagnostics businesses.

Regarding spending levels in the quarter, both SG&A and R&D expense as a percentage of sales were in line with our forecast.

R&D expense was 9.5% of sales, reflecting continued investment in our pipeline, including programs in vascular, and biologics as well as neuroscience, oncology and HCV.

On an ongoing basis, excluding the impact of exchange, R&D increased nearly 5%.

SG&A expense was under 29% of sales, a decline from the prior year, reflecting our 2009 expectation of SG&A leverage.

On an ongoing basis, again excluding the the impact of exchange, SG&A increased nearly 2%.

Regarding the other income line of the P&L in the first quarter, our reported results included the derecognition of contingent liabilities associated with the conclusion of the TAP joint venture last year.

The $800 million favorable pre-tax P&L impact of this was excluded from ongoing results.

So on an ongoing basis, that is, excluding this gain, other income was $155 million, which was in line with our previous forecast.

The tax rate for ongoing operations in the quarter was 17.8%, in line with our previous guidance.

As Miles mentioned, today we confirmed our 2009 earnings per share guidance of $3.65 to $3.70, reflecting double-digit growth over 2008.

Our sales forecast includes an estimated negative impact from foreign exchange of around 6.5% for the full year, based on year-to-date and current exchange rates.

This is unfavorable by more than a full percentage point compared to our original outlook for the year.

We expect operational sales growth excluding this exchange in the high single digits, and low single digit growth on a reported basis for the full year, including the incremental sales from AMO.

We continue to forecast a modest improvement in the full year gross margin ratio over 2008, with a ratio somewhat above 58.5% for 2009.

As I mentioned, we expect to deliver significant SG&A leverage in 2009, with SG&A as a percentage of sales of roughly 26% for the full year, which would be a reduction of more than 100 basis points this year.

The SG&A ratio in the first half of the year is forecast to be higher than the full year average, and in the second half we expect greater SG&A leverage with are ratio below the full year average.

We're forecasting R&D as a percentage of sales for the full year of approximately 9%.

Regarding other aspects of our 2009 outlook, we continue to expect other income of approximately $300 million related to the conclusion of the TAP joint venture and we're forecasting net interest expense of 350 to $400 million including financing costs associated with the AMO transaction.

We continue to project a 2009 tax rate of 17.5 to 18%.

As a result, when you look at the overall P&L for 2009, we expect further improvement in our operating margin ratio, as well as our net margin ratio.

Again, our vascular business will be a significant contributor.

Now let's turn to our quarterly outlook for the remainder of 2009.

For the first time, we're providing second quarter ongoing earnings per share guidance of $0.87 to $0.89.

This second quarter guidance reflects EPS growth in line with the forecast we provided on the fourth quarter call in January.

You may recall that there was a high level of TAP-related income in the second quarter of 2008 that's impacting the growth comparison.

We're forecasting low single digit sales growth in the second quarter on a reported basis.

This includes an estimated negative impact from exchange approaching 9%.

So on an operational basis, that is, excluding exchange, sales growth would be in the low double digits.

We expect an ongoing gross margin ratio of around 58.5% in the second quarter.

Other income, again related to our previous TAP joint venture, is forecast at around $50 million in the second quarter, and the tax rate is expected to be in line with our full year guidance of 17.5 to 18%.

For the third and fourth quarters, we continue to forecast low double-digit EPS growth.

In the third quarter, we're forecasting low single digit sales growth on a reported basis, impacted by nearly 8% negative exchange.

For the fourth quarter, we expect reported sales growth in the mid single digits as the negative impact of exchange moderates.

So in both quarters, we're forecasting operational sales growth in the high single digits.

Overall, we remain well positioned with our diversified mix of global businesses, as we continue to forecast another year of double-digit EPS growth in 2009.

And with that, let me turn it over to John for the business operating highlights.

Thanks, Tom.

This morning I'll review the performance of our major business segments, medical products, pharmaceuticals and nutritionals.

I'll focus primarily on operational sales, which are given on constant currency basis as I mentioned before, that is, excluding the impact of foreign exchange.

Let me start with our medical products and our vascular business, where worldwide operational sales were $645 million in the first quarter, and that was up more than 45%.

Sales were driven by the continued success of our drug eluting stent, Xience V.

Global DES franchise sales, which includes Xience, as well as other third party DES product revenues, were more than $330 million in the quarter, more than triple the first quarter sales of last year.

In Europe, Xience market share is in the mid-to high 20s, and we've been gaining approximately two share points each quarter.

In the US, Xience market share remains steady in the high 20s.

Total Xience platform, which includes Promus, has captured about half of the market.

Market dynamics remain positive as US PCI volumes are growing in the single digits.

US DES penetration has steadily risen over the last five quarters and is approximately 75%, up more than 2 percentage points versus the fourth quarter 2008 and 10 percentage points year-over-year.

Xience has clearly established its reputation as the best drug eluting stent in the class, based on its superior clinical data, as well as best-in-class deliverability profile.

At the American College of Cardiology Medical Meeting in March, we presented three year data from our Xience clinical trial, SPIRIT two.

Results demonstrated that the clinical advantages of Xience continue to increase over Boston Scientific's Taxus Express and Taxus Liberte stents, between two and three years.

Xience maintained a low rate of cardiac death, a low single digit mace rate of 6.4%, and had no additional stent thrombosis.

The observed cardiac death rate for Taxus Express and Taxus Liberte was about three times higher, between two and three years and the mace rate increased by 40% to about 15%.

The additional SPIRIT data presentations we have planned for this year will continue to support the reputation of Xience as a market leading, best-in-class drug eluting stent.

We also look forward to launching Xience in several additional countries over the next year, including China, Canada and Japan, where we continue to expect a fourth quarter 2009 approval and an early 2010 launch.

Behind Xience V, we have a robust vascular pipeline, which I will briefly review at the end of all of my remarks.

For the second quarter, our Abbott Vascular, we expect sales to grow strong double-digits, led by continued success of Xience V.

And more importantly, this growth is driving significant operating margin expansion in this business segment.

Now let me turn to our diagnostic business, where worldwide operational sales were up 6% in the quarter, with more than 5% growth in the US and 6% operational growth internationally.

In our core laboratory diagnostics segment, which includes immunochemistry and hematology, operational sales were up more than 4% this quarter.

Prism, as well as ARCHITECT sales were up strong double-digits worldwide, as menu expansion helped to drive growth in our large installed instrument base.

In the US, we launched CELL-DYN Emerald in the quarter, our new hematology instrument for small to mid-sized labs.

We also continue our efforts to improve profitability in the core diagnostic business, reducing overall costs, improving efficiencies, and expanding operating margins.

We've seen customer demand transition to our newer ARCHITECT platforms, and we expect this, along with other initiatives to roughly double profit and cash flow over the next several years in this division.

In our point of care business, operational sales this quarter grew double digits.

In molecular diagnostics, operational sales also increased double digits and in February, we presented data confirming our real time PCR HIV viral load test is state of the art for measuring variant strains of the virus.

So for our worldwide diagnostic businesses in the second quarter, we anticipate reported sales to decline in the high single digits, which includes the negative impact of foreign exchange.

This includes a double-digit decline in core laboratory diagnostics, which is in line with our expectations, given that the vast majority of this business is international.

And we focus this business for, as I said, more profitable growth.

In addition, we expect double-digit growth in molecular diagnostics in the second quarter and mid single digit growth in point of care.

In our other medical products businesses, worldwide operational sales in our diabetes business were down mid single digits this quarter.

In the US, we've successfully grown prescription share, offset by a double-digit decline in the US market due to economic pressures.

We have targeted our efforts to continue to educate patients on the importance of regular glucose testing.

Outside of the US, we continue to grow share faster than the market.

In the second quarter, in our global diabetes business, we expect low to mid single digit decline in reported sales, which includes the negative impact of foreign exchange.

Let me move on quickly to our new vision care business.

We completed the acquisition of Advanced Medical Optics on February 25th, as you know.

And AMO has been renamed Abbott Medical Optics and has transitioned very smoothly into the Abbott organization.

This new business enhances and strengthens Abbott's diverse mix of medical device businesses, and gives us a leadership position in the large and growing vision care market.

This includes the number two market position in cataract surgery, where AMO recently launched it's new TECNIS multifocal interocular lens in the US.

It's performed well in international markets and we would expect similar performance here in the US.

AMO holds the number one market position in refractive surgery or LASIK, subsequent to closing the acquisition, AMO achieved a major contract win with LCA Vision, expanding AMO's installed base and reflecting the continuity of the business within Abbott.

Given that we closed AMO at the end of February, we reported one month of US sales in the quarter only, and no international sales in accordance with our accounting principles.

I'll now move on the to pharmaceuticals, where worldwide operational sales were up slightly in the quarter, impacted by the expected decline in Depakote sales as Tom mentioned, as a result of generic competition.

Excluding the impact of Depakote, worldwide operational pharmaceutical sales increased 7%.

In our immunology business, global Humira operational sales were up nearly 28%, including strong international operational sales growth of nearly 50%.

Outside of the US, as Miles mentioned, Humira continues to perform exceptionally well.

It shares the number one position in RA in Western Europe and Canada, with close to 40% of the market.

There continues to be significant room for continued biologic penetration in international markets, where penetration rates are in the single to low double-digits in certain countries.

While currency has had a more unfavorable impact on reported growth than we had originally anticipated, operational sales growth for Humira in international markets is tracking in line with our outlook for the year.

In the US, Humira prescription growth has continued at a strong rate, outpacing the market.

Total Humira prescription growth in the first quarter was roughly 18% and the latest March data as Miles indicated, shows 24% in terms of TRX growth.

We're also gaining share across indications.

In Crohn's, Humira US prescription share is approaching 45%.

And we've been pleased with our launch into the psoriasis market, where Humira total US prescription share now exceeds 30%.

We also have a number of efforts under way to address market growth and increase adherence with our current patients.

In addition to the patients assistance programs mentioned earlier, we're targeting our direct consumer efforts in both RA and psoriasis.

Our psoriasis campaign recently began, and has already started to increase patient awareness of Humira and drive incremental share performance.

Last month, we received FDA approval for our psoriasis starter pack, which will help ensure patients initiating Humira therapy are started on the right dose and will help with patient adherence.

We found that patients who begin therapy with the appropriate starting dose have better efficacy levels and stay on therapy longer.

We continue to be well positioned in this market.

Our success is driven by Humira's best-in-class profile, and differentiating clinical data.

Humira's the only biologic with radiographic inhibition data out to five years in patients with both early and established RA.

We also have a number of upcoming data presentations that will add to our already robust body of data, including three year efficacy and safety data in Crohn's Disease, which will be presented at the upcoming Digestive Disease Week Meeting in May, and we'll be presenting additional long-term data regarding Humira's ability to stop disease progression at the ULAR meeting in June.

So as Miles discussed, we've captured current market conditions and recent exchange rate trends in our adjusted outlook for Humira.

In our lipid franchise, Niaspan and TriCor/TRILIPIX continue to grow with sales up modestly.

As you recall, we received approval for and began shipping TRILIPIX in the fourth quarter of last year, which also impacted first quarter sales.

Total prescriptions continue to grow faster than the cholesterol market, with Niaspan prescriptions up roughly 10%.

We've been pleased with the early results following the January launch of TRILIPIX, our next generation fibrate, and the first and only fibrate approved for combination use with statins.

Prescription trends indicate a rapid acceptance of TRILIPIX.

Growth of new patients has resulted in total market share gains for the overall TRILIPIX/TriCor franchise.

The indication for combination use with a statin has been an important factor in our early success with new combination use accounting for approximately 30% of TRILIPIX prescriptions.

At the recent ACC meeting data from our new study of TRILIPIX used in combination with the lowest available dose of Crestor showed that the combination led to greater improvements in all three lipids than the corresponding monotherapy.

TRILIPIX has now been studied for all of the most commonly prescribed doses of Crestor, 5, 10 and 20-milligrams in large, controlled clinical trials.

In all studies, TRILIPIX combination therapy improved HDL and triglycerides compared to Crestor alone, and improved LDL compared to TRILIPIX alone.

Abbott's product portfolio is uniquely positioned to address the growing need for adjunctive and combination therapies, treatments that help patients achieve recommended lipid goals, and the penetration of adjunctive therapies is still very low.

So for the second quarter in our lipid franchise, we expect double-digit growth.

Moving on to some of the other products within our pharmaceutical business, quickly, regarding Synthroid, US sales in the quarter were $86 million.

We expect more than $400 million in total US Synthroid sales this year.

In Lupron, global sales in the quarter were $192 million for the quarter, we expect approximately $800 million in total global Lupron sales in 2009.

So in summary in our worldwide pharmaceutical business, for the second quarter, we expect a low single digit sales decline, which includes the continued impact of generic competition on Depakote sales, as well as the negative impact of foreign exchange.

Next let me move on to our global nutritionals business, where operational sales were up 10.6%, driven by high teens operational growth in international markets, where demand continues to increase for our high quality nutritional products.

In pediatric nutritionals, performance was especially strong, where operational sales outside of the US were up 22%.

Abbott now holds the number one share position in several major markets across Asia and Latin America, and in China, we've continued to steadily increase our market share.

And as we announced earlier this year, we're now manufacturing out of our new nutritional facility in Singapore.

This 500,000 square foot facility addresses the growing global demand for our products, including the rapidly expanding Asian markets.

In the US, nutritional sales increased in the quarter more than 4%.

This was primarily driven by mid single digit growth in adult nutrition, with the strong performance of Glucerna and Ensure, as well as our therapeutic nutritional products, which make up a significant portion of our adult nutritional sales.

So as we look ahead to the fourth quarter or second quarter, excuse me in our nutritionals business in the US, we expect mid-to high single digit sales growth and flat sales approximately outside the US, which includes the impact of foreign exchange.

Finally, let me quickly cover our broad-based pipeline.

We launched, as you know, nine new products last year and this year we're submitting multiple New Drug Applications and advancing several new drugs and devices through development, including initiation of pivotal trials for one of our industry-leading oncology compounds.

So let me walk you through the major opportunities quickly.

We expect a fourth quarter approval and a 2010 launch as I mentioned, for Xience in Japan.

Japan is a more than $500 million DES market that's had consistently high DES penetration rates and a preference for olimus-based platforms.

We also expect to launch our next generation DES called Xience Prime by year end in Europe.

Xience Prime capitalizes on the proven attributes of Xience and at the same time improves deliverability, especially in longer lengths and complex anatomy.

We'll begin our US trials for Xience Prime middle of this year.

Another addition to our DES portfolio is Xience Nano.

This is -- this small vessel stent is on the market in Europe, and it's in development here in the US.

We're also working on a number of coronary products including a next generation bare metal stent, front line and high pressure balloons and new guide wires, and we're launching multiple new products this year.

In pharmaceuticals, we now expect to submit our TRILIPIX Crestor fixed dose combination product in the third quarter of this year and that's ahead of our original time line.

We've now presented all of our data that supports our US regulatory filing.

In partnership with Sky Pharma, we submitted the regulatory application for the combination asthma product Flutiform, also in the first quarter.

And Humira continues in Phase III development for indications for ulcerative colitis and pediatric Crohn's disease.

Also in late stage development is ABT874 our anti-AL1223 biologic.

We're completing our Phase III pivotal trials and are planning for a global regulatory submission of this product next year.

In oncology, we have three compounds in Phase II development.

Our multi targeted kinase inhibitor, our PARP inhibitor and our BCL2 inhibitor.

We expect to advance our BCL2 inhibitor into pivotal trials this year.

And as you may recall, this compound has received accolades in the oncology clinical community for its ability to attack cancer in a fundamentally new way, triggering a switch in cancer cells, causing them to die.

We also have three hepatitis c compounds that are now in human clinical trials.

This includes both ACV polymerase and protease inhibitors.

Abbott is the only Company with these two classes of compounds in development.

With the potential to have the best HCV drug cocktail on the market in the coming years, if things go well.

We have numerous programs also in early clinical development, including compounds to address Alzheimer's disease, schizophrenia and pain, as well as small molecule compounds for the treatment of several autoimmune diseases.

And we have the most advanced bioabsorbable drug eluting stent in the industry, back in DES, with the opportunity to reach the market ahead of the competition.

Abbott is the only Company with long-term clinical data evaluating the safety and performance of this next generation technology.

So in summary, despite a weak US economy, Abbott delivered another strong quarter, with EPS growth of almost 16%, which was ahead of our original outlook.

We entered the year with a conservative plan, so we could absorb any factors that impact our business, and given the diversity of our businesses, we expect to deliver on our double-digit EPS target in 2009.

With that, we'll now open up the call, operator, for questions.

Thank you.

(Operator Instructions).

Our first question today is from Rick Wise from Leerink Swann.

Good morning, everybody.

Let me start off with a big picture question since we have the pleasure of Miles on the call again.

Miles, I'm real clear that you all are going to drive low double-digit EPS growth as you leverage expenses, improve mix and margins and so forth.

I'd be curious to hear your thoughts on the right aspirational sales growth and top line growth, ex currency that we should think about for the next few years.

What are you aiming for?

And do you feel like you have the fire power inside Abbott today to get there?

John highlighted the pipeline.

But said differently, it's a perennial question.

Do you need the M&A?

Do you need to acquire to hit your growth goals?

Thanks.

Thanks, Rick.

First, let me put it in kind of a target perspective.

I think that we have the fire power across the Company right now, based on what I see, to do high single digits plus on the top line.

It's hard to make a call about what this economy means because we're now seeing for the first time a real impact of the current economic downturn, which is severe, arguably, across all industries.

Impacting healthcare in ways we haven't seen in the past and I think that's new for everybody.

It's not as severe, obviously, in our industry as it is in others, so we can say well, we're not getting hammered, per se.

We're taking a dent here as an industry.

But the fact is, it's a different economic environment than many of us have seen in decades.

So with that, I'd say we have the fire power for the high single digits plus, which obviously would leverage to double digits on the bottom line and that's our target.

I just don't know how the overall economy will impact that.

I think we have that fire power anyway.

And we have it because of the products and the mix of businesses we have and how acutely patients need the products we have and so forth.

So I'm optimistic, and I don't see anything to change that yet.

I don't think this quarter, for example , is some kind of harbinger of gee, these are the growth rates we're going to see in the future.

You've got to remember that our entire growth rate this quarter in our whole business was in effect negated by Depakote going generic, and I would argue that there are very, very few companies I can count two or three tops, that can deliver the quality of this performance or this kind of performance in this kind of environment, in this kind of economy, and when a product as large as profitable as Depakote goes generic.

So do we have the fire power?

Yes, I think we have the fire power.

Going to the second part of your question, whether we would need any M&A activity, the answer is no.

We don't need it.

And we're not necessarily looking for any large M&A of any kind.

I'm amused by the Company X dust up, et cetera, as you might guess, but at the end of the day, we're looking at opportunities in the M&A field primarily as very opportunistic.

Strategically, we know places in our businesses where we would like to add to our business or enhance our business but we don't need it to make our goals and so forth.

But we're always looking to add strength to the Company, and I said that before.

There's nothing new there.

There's no new position in that or new philosophy in that.

Our philosophy regarding any kind of acquisitions or product deals and so forth has not changed and we don't need large deals to achieve our financial objectives or strategic objectives.

We're not evaluating any large deals.

I have a clear bias towards smaller to mid-sized type things that are quite manageable, at least relative to our size.

I think AMO is an outstanding addition to the Company.

I think it's an outstanding company, an outstanding business and an outstanding segment.

So I think that's a terrific addition.

So as there are opportunities that are on strategy for us to add to the Company, we will certainly evaluate it and we will certainly look at it and I think our M&A track record speaks for itself.

So that's a long answer but I think that answers your question.

No, I don't feel the need to run out and do a deal to sustain what we've forecasted to

Okay.

And if I could follow up up on that, so basically you're saying Miles, your goal is to still grow top line upper single digits and bottom line low double digits.

This year specifically, maybe for Tom, the 3.65 to 3.70 guidance unchanged but I'm guessing that with Miles' comments about, and the Company's comments about the weak economy and now with Humira in the US starting from a lower point, there might be a little less upside to that than you might have hoped when you conceived that kind of guidance as you reported the fourth quarter.

Rick, I'm going to take that one away from Tom.

I think it's premature to call that.

We beat our midpoint of our range this quarter, exceeded it.

And we didn't change our guidance because I think after one quarter in this year, with some of the things that we're all still watching, I think it's premature to make a call on that yet.

What I am confident of is based on everything I see, we're going to make the -- in fact, I'm very confident, we're going to be right where we said we would be in terms of our guidance.

Now, I said that last year too and we ended up exceeding by $0.10 for the year, but I don't think this is the same kind of year but I think we went into this year very confident with the conservative plan, et cetera, so that we could meet investor expectations that we set.

And do it in a way that's high quality and sets us up well for continued growth in '10 and beyond.

So I think it's premature to make the call.

I don't know what the -- other things that are overhanging this industry are going to turn out to be.

We tried to model healthcare reform and all the potential elements of it like everybody else.

We think the timing is late in the year if there's any at all.

We've estimated all that.

But I think the prudent thing to say right now is hey, look, the Company's strong.

The performance is strong.

We need to lap Depakote going generic here.

We are.

We're maintaining that earnings growth and I think what investors ought to have confidence in is we're going to deliver the earnings growth we said and we're not going to have to do anything extraordinary to do it.

Thank you so much, Miles.

Thank you.

Our next question is from Mike Weinstein from JPMorgan.

Good morning.

Thanks for taking the question, gentlemen.

Good morning.

Let me start with Humira, and I probably have a lot of questions here, but let me try and just narrow it down.

I guess two areas.

One, I think it would be helpful if you talked more about what you're doing to help patients out right now, and what programs are new versus existing programs and what impact we should expect.

And then second, maybe help us understand a little bit better, versus I think what the Street was expecting, Humira sales in the US were about $100 million light.

Your view of where that $100 million went.

And you talked about customers reducing inventories.

How much of that was wholesalers, how much of it was impacted by your move to specialty pharmacies, just different thoughts on components of the $100 million shortfall.

Thanks.

Let me take a start at that.

Then I'm going to hand off to John to help me out a little bit here, Mike.

I'm not sure we can be terribly precise about that.

But we can be directionally correct, I think.

Wholesalers adjust their -- they manage their inventories to a certain level based on the growth trajectory of a product and we know that the growth trajectory of Humira was pretty strong here in the US.

Actually, it's still strong but relatively speaking at a higher level on a trajectory basis in October, November, December, et cetera, coming out of '08 and inventory levels were appropriate for that kind of growth trajectory.

We also know that it adjusted rather suddenly, right at year end and early in the year partly because of all the reasons I noted on the call.

The managed care plans change at that point.

The customer starts over again with their copays or their deductibles and so forth and we saw that same pattern last year, we just didn't see it to the same degree.

But when the growth trajectory of the segment alters, then I think it's natural for wholesalers and customers to alter as well to that new trajectory.

Secondly, though, I think there's an extra amplification on it because we've seen the distribution system and wholesalers for consumer products for any number of products out in other industries besides ours, all tighten up in this first quarter and all take their inventories down and manage their working capital much more efficiently.

In fact, there's been a lot printed about that.

I think we see it across a number of businesses here where people are tightening up and trying to be very efficient in cash management and so forth.

And so there's some -- I'd say some impact of that.

But there's a limit to how far that can go.

We've got a pretty good feel that our inventories are -- we have a feel for what they are out there.

We're pretty confident and know that they're less than a month so there's a limit to how far tightening can go until it's just not doable anymore.

So we're in a place where we think all right, that's kind of washed out.

They have made their adjustments, which is why we view it as kind of a one-time thing.

I think it's exacerbated to some degree by this notion of specialty pharmacies.

We like the role that a specialty pharmacy plays.

I would say more than half of the volume now goes through specialty pharmacies.

That's a good thing because that's makes a big difference in patient adherence and duration of time on the medicine.

This is particularly important for an injectable like Humira, so we view that as a positive for Humira and that shift we view as a positive.

But there is an underlying adjustment that goes with it, that they don't have a typical stocking profile that your standard primary care drug or something has with the wholesaler.

As I said, they tend to be more of a just in time type thing so that's added something to it.

Overall, and it's the first quarter, where you see these adjustments.

So I look at that and I look at last year's model or thing, and I think, you know what, we didn't adequately model it ourselves.

Obviously, analysts and investors didn't either.

But we look at the underlying strength of the business, you look at the sell-outs from the wholesalers to the pharmacies and so forth, that remains strong.

The underlying TRX growth rate as you've seen January, February, March, continues to get stronger and stronger again.

So I'm confident that a lot of the actions that we've taken to adjust, whether it's through specialty pharmacies or our marketing mix which I'll come to a minute on the copays and so forth, they're all going in the right direction here to support the product, support the product's underlying growth and share gain, et cetera.

It's taken a while for that to manifest itself and I think we're quite fortunate that we got this data on March this morning so that you all could see that too and see that what we're telling you is actually happening.

Now, with regard to the mix, we've had a number of patient assistance programs and so forth but in fact we've had to enhance those.

I would tell you that my view today is that the kinds of things we're doing to support patients and their ability to get access to and/or deal with copays and so forth in the insurance system are better bang for the buck investments for us than certain DTC advertising and other things that would be typical in our industry.

And we're seeing the impact of some of that already but I expect to see more and more as the year progresses.

John, do you want to add anything to that?

Yeah, Mike, I think as we talked about before, we've historically offered patient assistance programs to patients in need and those who are eligible.

What we've done here recently is expand those programs.

In fact, at the end of March we launched a new program that offers really a comprehensive support level for various types of patients who might be trying to make a decision between treatment that could really affect their disease long-term and potentially save their life and other financial obligations.

So we think we've made that easier for patients in terms of a new level of copay assistance.

There's a lot of this stuff is available on a website called MyHumira.com.

Patients who go there, this will triage them to various programs that we have that have either existed or expanded to cover people and help people with insurance, who have insurance or don't have insurance.

So either way, we think those things are the right thing for patients.

They're also beneficial as I mentioned earlier in terms of longer adherence to therapy, which is also beneficial to patients.

If I could just ask Tom one follow-up, just a couple points in your income statement guidance, Tom.

You reduced your SG&A expectations for the year.

I think you had been guiding to 26, 27%.

I think you talked about on the call being 26%.

Some of that's driven by the increased FX impact on the Company, but I was hoping could you give us some sense of where you are tightening the belt and then the second item you adjusted was your interest expense guidance for the year which you brought down your expense by $50 million, is that from lower rates or are you paying down debt faster.

Maybe just give us some insights, thanks.

On the interest, basically we're seeing lower short-term interest rate on the data.

We do have higher cash balances than we expected, so we're earning a little more on that side.

The SG&A, there's certainly -- we're expecting a degree of tightening here.

It's really less critical areas, more administrative type areas that are not impacting the business in any way long-term.

So I think in this environment, given what we saw in the first quarter, a little tightening is appropriate, and you're right, we'll be a little bit lower than the original forecast we had at the beginning of the year.

Thanks, Tom.

Thank you.

Thank you.

Our next question is from Bruce Nudell from UBS.

Good morning.

Thanks for taking the question.

I had a question regarding the average size of copay that the average patient pays and also how are the copays accounted for?

Do they come off the top line of reported numbers or are they embedded in SG&A or cost of goods somehow?

And then I have a follow-up, please.

Yeah, the average copays for most patients are $40 to $45.

And --

Per script?

Per script.

Are we talking all drugs or -- ?

No, Humira.

We're talking about Humira and those programs are an offset to sales.

An offset to sales.

So in part was that part of the explanation for the weakness this quarter.

Very little in the quarter.

There's a little bit of that.

It's not a dramatic impact but it will result in somewhat lower sales as we progress through the year.

And so if we look forward on that regard, Humira's been taking about 5 points of price per year for a while.

Is a way to think about it to just if these programs persist to assume that ASP inflation is going to be more moderate than that?

Yeah, we -- that is an offset to sales I'd say for the --

Probably not a bad assumption.

For the full Company we expect low single digit type impact from price.

Okay.

And then just a more structural question about the markets, it looked to us that both IBD and psoriasis were the growth drivers for the TNF category in the US last year.

Crohn's looks decently penetrated or pretty well penetrated.

Ulcerative colitis is not, but you don't have a label there, and psoriasis has always been a tough nut to crack, despite the fact that both categories showed good growth last year for the market and you especially.

Just qualitatively, do you think that those markets are sufficient to sustain a healthy rate of growth for the TNF category in the US and Humira specifically?

Yeah, Bruce, I'll tell you what.

We actually do.

I mean, those are not well-penetrated markets at all yet.

And in fact, the penetration, whether it's rheumatology, gastroenterology or dermatology, it's low, very low, in the US and it's especially low overseas so we think there's frankly an enormous amount of penetration and growth potential left in all of those markets to drive continued growth.

Thanks so much.

Thank you.

Thank you.

Our next question is from David Lewis from Morgan Stanley.

Good morning.

Hi, David.

Tom, just real quick, a question on international Humira.

Two questions on international Humira.

One, the 20% currency rate or FX effect on Humira, versus 12% for pharma, could you talk about that, specifically explaining why you see such a dramatic disconnect?

And secondarily, international inventories we have not talked about yet on this call.

A lot of companies are talking about international weakness, not so much from managed care obviously but certainly destocking in emerging market weakness.

Can you talk about how we're not going to see that type of effect in Humira?

We have not seen any of that in international markets in the first quarter.

We've been pretty resilient, particularly in the pharma business, but really everywhere.

So we as yet have not seen much and we're not anticipating a lot.

I think there's a lot more durability of the reimbursement for pharma products in particular that would result in that.

I think the reason you're seeing more Humira exchange effect than your average product is it's more of a Europe-centric business for us.

Our other pharmaceutical businesses tend to be more evenly dispersed across the various countries and so year-over-year, as you know, the Euro has moved quite a bit and that's why you're seeing proportionately more impact of exchange on Humira.

Okay.

That's helpful.

I guess secondarily, this relates to a question you had before for Miles, but this inventory dynamic is really sort of a wash.

The key dynamic is underlying fundamental demand.

Your guidance implies that the next three quarters of the year you're going to average sort of 15% US market growth.

Besides script data I wonder if you could point to any, that gives us the comfort that that 15% US growth is achievable or maybe growth higher than that is achievable.

Are we talking all the business or just Humira.

Humira, the script data that we mentioned this morning, the underlying quarterly data at about 18, 19% for TRX is now going up, accelerating to 24% in March.

I think that gives you a pretty good sense of underlying demand in the U.S.

that continues to be pretty robust there and obviously outside the US we talked about we continue to grow about two times the rate of Enbrel and outside the US.

This is when all the adjustments happen in the insurance plans and so forth.

One of the biggest reasons that we see what we've seen is the copays, is the deductibles and so forth.

We tend to get through that in the first quarter.

We saw the pattern last year.

I think we're seeing it again this year, just more dramatic.

We've addressed it, so at this point I think the dynamics in the remaining three quarters are not the same and the barriers to the patient are not the same.

In fact, considerably reduced at that point.

If you look at the sell-outs, the script rates, the new script rates and so forth, I think all of that underlying evidence is there to validate what we're telling you.

Just a follow-up on that point.

Obviously US pharma was weak, probably an economic sensitivity.

Obviously they're exposed to some of the same managed care issues.

The reason Humira is being more adversely affected do you think is just the relative growth rate and the inventories?

Is it a psoriasis issue?

Let's say it's an expensive product.

I think that expensive products like Humira are going to experience that kind of focus more than your less expensive primary care drug.

This is one that gets a lot of inventory attention by a wholesaler.

You know, it gets a lot of attention by the managed care plan.

It gets a lot of attention by the patient because the patient I will tell you is economically very, very sensitive to copays and a $5, $10, $20, $25 copay matters to a patient.

This is a significantly more costly drug and so I think you see a disproportionate impact on it to a degree.

Or at least a greater sensitivity to it.

So I do think it gets a disproportionate sensitivity.

It isn't an infused drug.

You don't have to go to an infusion suite like a cancer oncology drug and so forth.

The dynamics around it are a little bit different and I think that's why products like this will see more sensitivity that way than others.

But we've seen it.

I'm glad the first quarter's done.

Miles, one last question.

I'll jump back in queue.

Humira is.

Your view is this is much more transitory or economic and you don't believe this is going to change Abbott's strategic planning as it thinks about its business the next 12 to 24 months.

Definitely not going to change my strategic planning.

I will give you this information.

I'm sort of a combination of annoyed and amused with the reaction investors have to Humira.

We look at the growth rate of this product, and people are disappointed that some how 20, 25%, isn't seemingly attractive enough.

This product over the next several years will add several billion more dollars to Abbott laboratory's performance which is equivalent of another Humira and the reaction of some analysts and investors to that just boggles my mind.

Okay.

Thank you very much.

Our next question is from Glenn Novarro from RBC.

Hey, good morning.

I'd like to switch the conversation to the other major growth driver, at least viewed by investors, which is Xience.

And if I heard correctly in your prepared remarks, US Xience, if I heard correctly, I think maintained market share but did not gain share so is that correct?

And then my follow-up would be if it didn't gain share, is it because of the Taxus trialing or Endeavor RX trialing and then lastly, because some of that trialing probably ended earlier in the quarter, were the month to month trends improving for Xience throughout the quarter in the US?

Thanks.

Glenn, I think the key there is we're growing internationally.

We grew about 2 share points quarter-over-quarter, where we continue to gain share.

We have the leading DES product by far now in most markets outside the US or we will be soon.

In the US, yeah, there's a little bit of impact as expected from some of the sampling of products, which looks to be that they've -- they had a -- these are modest sized products that had a temporary blip in market share.

That's coming back down.

Xience continues to hold steady in the high 20% range.

The overall market, we're seeing a little bit of pricing pressure and I think a competitor talked about this yesterday.

Not in the Xience platform, per se, where share and price have been pretty steady, but in some of these other products that have to compete on price and I think this competitor mentioned they had about a 5% reduction in price.

So that is having the effect of the flattening, if you will, quarter-to-quarter, fourth quarter to first quarter.

But with these new products launching, the pipeline that I mentioned, we expect that we will continue to see some very steady performance in the US and probably more rapid growth outside the US.

I guess to my question, though, I could see how Xience would lose share in the early part of the quarter, just as Taxus was launched late last year, Taxus Liberte, So did share dip in January and February and come back in March?

I'm just trying to understand why Xience has continued to gain share outside the US but share -- ?

It's really a result of the sampling that we talked about.

Okay.

And the trialing.

You know, that is the main reason why there was some temporary dip in share in January, February and now it's back up.

We'll see what March does, but it's been holding up in the high 20s.

Okay.

And one just thing on pricing.

Who's using price in the marketplace to try to gain share?

And maybe -- and can you -- what are the dynamics occuring in the labs between Promus and Xience, is there any price competition between the two stents.

I don't think -- the price has been pretty healthy.

We've maintained a healthy ASP, Boston has talked about this.

I don't speak for them.

But they've maintained price that they said many times, a pattern would suggest that they're not selling it broadly at a discount.

Like I said, I think where we're seeing some of that is certain competitive products like Cypher, in certain accounts where they're selling short dated product at a discount and you would expect that given the data set that we have versus them.

Our data is superior.

It's superior to Taxus.

We just showed some additional data.

We'll have more data coming out throughout the year.

That data has yet to play out into the marketplace.

The ACC SPIRIT 2 three year data, which was very positive and confirmatory in longer term, and you'll see some of the results of that probably in the coming months.

Thank you.

Our next question is from Sara Michelmore from Cowen and Capital.

Hello?

Can you hear me?

Yeah.

Thanks for taking the question.

Just one question back on Humira.

We talked a little bit about the total prescription trends, but it does look like some of the new prescription trends have started to slow.

Just wondering if you could just give us your thoughts on -- ?

Actually, Sara, this is John.

If you saw the March data which I understand most people haven't because it's hot off the press, the TRX growth was 24% and there was 11% new RX growth and that's up considerably from the last couple of months.

Okay.

And if you thing about some of the economic sensitivity that you're seeing, I mean, can you just discuss -- is it really a compliance issue with people that are already on the drug or are you seeing it also in terms of people getting on those new prescriptions?

Well, it's a combination of both, really.

We're disproportionately disadvantaged along with the other self-injectable in terms of copays and the other product, the IV product doesn't have that same dynamic so it's been a case as we talked about of higher copays and those copays are up year-over-year in the double digits for most patients.

The prior authorization is part of it.

So what used to take two weeks to get a prior authorization is taking four to six weeks.

So I think it's a combination of all those different dynamics.

Okay.

Can you give us --

We're addressing those through the programs that we mentioned.

Can you give us an update on the formulary progress with TRILIPIX?

It's making steady progress.

Our managed care team does an excellent job with that.

I will tell you that in the lipid franchise in general with TriCor, Niaspan, we've had very good coverage in the 80, 85% coverage and we're currently -- we're moving up.

It's very early.

So it's probably 20, 30%, in that range right now, but we would expect it to get up into that normal lipid range of 85, 90%.

Okay.

But it is tracking in line with your expectations?

Yes.

And lastly, John, I I don't know if you talked about Kaletra specifically.

I'm sorry if I missed it.

It was a little bit lighter than we expected in the quarter.

What's going on there?

Yeah, so Kaletra, we did see a decline there as we expected, particularly in the US where there's more competition.

We saw an adjustment here, a temporary effect of some of this reduced purchasing that happened in a couple of our other products.

Kaletra is one of them.

So you've got that dynamic, together with the PI market in the US that's a little bit slower and some new competition.

So we expect that it will perform better going forward.

Outside the US, obviously the situation is different and most of that was foreign exchange impact.

Okay.

Thank you.

You're welcome.

Thank you.

Our next question is from Catherine Arnold from Credit Suisse.

Thanks very much.

I know that Humira has been a constant point of conversation and I just need to ask a couple more questions because I think obviously the normalization of expectations here is really everybody's goal in this call, so I apologize for that in advance.

A couple things.

I wondered if you could comment on the IMS audit and how reliable they are, given that there's now a bigger move of Humira through specialty pharmacy and how it impacts it.

Are they on the lower side or the high side versus real demand compared to your comment about 18% for the quarter, it seems like they may actually be on the low side relative to what you were seeing.

And I want to ask a couple follow-up questions, thanks.

Yeah.

Well, as you probably know and most people know, there has been some changes with IMS and fluctuations and some restatements, so we tend to buy our data directly from specialty pharma, and as we mentioned, specialty pharma is becoming a bigger piece of the mix.

It's now over 50% of total Humira sales.

Specialty pharmacies.

Yeah.

So that data is very accurate so we feel very comfortable with our projections for the full year and the acceleration of the growth.

I'd say IMS has been a little bit up and down but overall, I think that the current data that you're seeing is pretty close to what we expect, at least in March.

Okay.

And then on the prior authorization cycle, I believe that you had said that there was -- there used to be more typical two week prior auth cycle for new patients as they move from plan to plan in the beginning of the year.

We saw an extended prior auth cycle for Humira given that their managed care put in place some higher hurdles to try to get that process done.

I want to make sure, is it your take that we're largely through this disruption and even as we've been on this call, getting questions about some of the statistics on demand, I know you mentioned the 24% March growth, but as you look at the IMS adjustment factors, it looks like February was not 19%, it was 23%.

And March was closer to 21%.

So roughly they're about the same.

So the questions I'm getting as I'm listening to your call is, was this really an uptick or are we sort of February and March growth looks pretty comparable.

Wondering if you could comment on that that, and that might be because of the prior authorization situation has kind of settled down in the February March normalized growth.

We definitely think we're through the main bulk of these prior authorization extensions.

So I think that was a temporary effect.

That does happen t at the beginning of the year.

We're obviously in the second quarter now.

So that should be for the vast majority of it done.

Our data is very accurate, like I said, and we expect that it's the February, March data looks good.

It looks strong.

It's in the mid-20s.

And then I just have two small other questions.

I wondered if you could tell me what percentage of patients are now enjoying your copay assistance programs in the US?

We have about 12% of our total patients are on various types of assistance programs.

Okay.

And then your guidance for the year on Humira, are you assuming that you get any of the downfall in inventory back that you lost in the first quarter and if that happens would that be a positive or is that already baked in guidance.

We are not expecting that throughout the year and we're not expecting that in the fourth quarter.

So if there was any increased purchasing activity by the wholesalers or others in the fourth quarter, that would be incremental to the guidance we gave.

Okay.

At risk of overstaying my welcome I just wanted to ask Miles one more thing which is about Company X.

I appreciated your comments about it.

I know that was something that people focused on and I wondered could you just give us your side of the story on that reference?

It's real simple.

If the Company X comment was intended to imply that Abbott competed for Wyeth, it is false.

We did not compete for Wyeth.

Okay.

Thank you.

You're welcome.

Operator, I think we have time for one more question.

And our final question is from Larry Biegelsen from Wachovia.

Good morning and thanks for fitting me in.

Can you hear me okay?

Yeah.

Hi, Larry.

Hi.

What are you guys assuming for the approval of Golimumab in your Humira guidance for 2009 in the US and international?

We have baked that into our model.

We expect them, I think they've got a PDUFA at the end of this month here in April.

We've expected that.

That's in our model.

For many of the reasons that we talked about, we do believe they'll have a position in the market but it won't be a significant impact to Humira for all the reasons we mentioned before, fourth or fifth products to market that don't offer any additional clinical benefits, typically, are not picked up and don't drive as much.

So we've baked that into our forecast.

We fully expect new competition, which also has the benefit of driving increased promotional activity.

And then my second question is non-Humira related.

In the past you've traditionally provided some peak sales estimates for late stage products.

One of which you've already filed Flutiform and the fixed combination of TRILIPIX and Crestor.

Care to give us any kind of expectations on those two products at this point?

That would be helpful.

No.

The answer is no?

No is the simple answer.

No.

All right, what's next?

That is -- well, Miles, while we have you, healthcare reform, do you see upside from increased coverage of the non-insured?

People have focused mostly on the negative pricing pressure aspects of it but how do you -- do you see some upside potentially?

Thanks.

I don't know that I would characterize it as upside, per se.

I mean, I expect that out of healthcare reform an awful lot more people are going to be covered, and that's obviously going to create, whether we call it volume opportunity for additional expansion in a number of categories, but at this point I think it's all speculation.

It would probably have some offset, some positive offset to whatever we may see that people have speculated is negative.

But at this point, we have so many different models of the impact of the various aspects of healthcare reform.

We obviously would expect that to be an offset but where it all settles out depends on what the whole mix looks like.

If you told me which things were going to happen and how I would tell you well, here's what it's worth.

But as it is today, it is just speculation at this point.

I think that's why there's so much uncertainty among people out there.

We've all done our models.

We've all done our estimates.

You could ask me is its positive, is it negative.

I think it's going to sort out with some balance in the middle where a lot more people will have coverage, that's good.

We'll see a lot more pressure on industry pricing and other things.

That's not good.

Will it net all out?

I think it will net out in a balance somewhere.

I just don't know where.

Your view, Miles, on the taxing of overseas products?

And then I'll just drop.

I don't think it's a real good thing but at this point it too is speculation.

And there's -- you got to look at what happens in Washington.

Because the drill is always the same.

The most extreme proposals and ideas get floated, so that people can react to them, and they react, and then there tends to be this negotiating in the public domain back and forth with speculation and at the end of the day we tend not to see the most radical things happen.

So in this case, I think it's kind of the same.

I think this government obviously is looking for sources of revenue.

They think that's a source of revenue, but I would reiterate, this country already has the second highest corporate tax rate in the world, and no country in the world taxes overseas earnings.

So if the government were to determine that that was somehow a favorable thing to do, I think they would severely impact the competitiveness of multi national corporations.

US multinational corporations in a lot of these countries around the world.

And I think you would see companies react accordingly.

You know, we are -- we serve investors.

We serve returns, et cetera and companies would react accordingly and I think that implies a broad range of potential activities.

At the end of the day, that certainly mitigates against what the government may think it gains from something like that.

So at the end of the day, I think it's all speculation, designed to see what kind of reception such a thing would have, and I think if they're listening, it's got a bad reception.

So we'll see.

Thank you.

Okay.

That concludes our conference call.

A replay will be available after 11:00 central time on our investor relation's website at AbbottInvestor.com and after 11 a.m.

central via telephone at 402-220-3880, confirmation code 7609229, the audio replay will be available until 4 p.m.

next Wednesday, April 29th.

Thank you all for joining us today.

Please call us if you have any follow-up questions.

Thank you and this concludes today's conference.

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