美國雅培 (ABT) 2009 Q2 法說會逐字稿

Good morning, and thank you for standing by.

Welcome to Abbott's second 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 be disconnected throughout this conference call, please dial 1-312-470-7334, and reference the Abbott earnings call.

This call is being recorded by Abbott with the exception of any participant 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 expressed 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 as usual will be Tom Freyman, Executive Vice President Finance and Chief Financial Officer.

Tom will review the details of our financial results for the quarter, and the outlook for the year.

I will then discuss the highlights of our major diversified businesses.

Following our comments as always, we will take any questions that 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 revisions to forward-looking statements as a result of subsequent events or developments.

In today's conference call as we have done 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 measure in the earnings news release and regulatory filings from today, which are available on our website at Abbott.com.

In addition, we will include operational sales results today as we did in the first quarter, which are given on a constant currency basis that is excluding foreign exchange.

Of course you can find all of that in our earnings news release.

With that, I will turn the call over to Tom.

Tom?

Thanks, John.

And good morning.

Today we are pleased to report second quarter ongoing earnings per share of $0.89 at the high end of our guidance range of $0.87 to $0.89.

We are also confirming our 2009 EPS guidance range, reflecting double-digit EPS growth, and issuing our third quarter outlook, the midpoint of which reflects EPS growth of nearly 13%.

This is particularly strong growth given the negative impact from generic Depakote this year, and the global economic environment.

Regarding sales this quarter, operational growth that is before exchange was 10.5%, reflecting strong growth in our global vascular, international pharmaceuticals, and US nutritionals business.

Exchange was unfavorable 8%.

So on a reported basis, sales increased 2.5%.

Recall that our international businesses report sales on a one month lag, so our exchange impact reflects year-over-year currency changes for the three months ended May 31st.

This is the largest negative impact from exchange we have experienced in a single quarter in many years.

Excluding the negative effect of the decline in Depakote sales from generic competition of more than 4%, operational sales growth was 14.6%.

Depakote negatively impacted global pharmaceutical growth by more than 7%, and US pharmaceutical growth by nearly 15%.

The adjusted gross margin ratio in the quarter was 59.2%.

This reflects an improvement of 80 basis points from the prior year.

This was driven by improved performance of the nutritional and diagnostics businesses, and the favorable impact on the ratio from foreign exchange.

This improvement occurred despite the negative impact from lower Depakote sales.

Regarding spending levels in the quarter both SG&A and R&D were in-line with our forecast.

R&D on an ongoing basis, and excluding impact of exchange increased nearly 6%, reflecting continued investment in our pipeline, including programs in vascular and biologics, as well as neuroscience, oncology, and HCV.

SG&A expense was 26.5% of sales, reflecting our 2009 expectation of significant SG&A leverage.

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

Non-op income was $13 million, somewhat below our forecast.

This line primarily reflects payments from Takeda related to our previous joint venture, but can also include other non-op items.

In the quarter we had some modest nonrecurring offset to amounts from Takeda, and somewhat lower sales related payments.

We expect this to normalize to the 50 million to $60 million range over the third and fourth quarters.

Tax rate in the quarter was 17.8% in-line with our previous guidance.

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

Regarding the 2009 sales outlook for the full year, we expect low to mid-single digit growth on a recorded basis, including the incremental sales from AMO.

Our sales forecast for the full year includes an estimated negative impact from foreign exchange of somewhat more than 5%, based on year-to-date performance and current exchange rates.

As a result, we expect operational sales growth for the full year excluding exchange in the high-single digits.

We are forecasting a full year gross margin ratio of approximately 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 somewhat above 26% for the full year, which will reflect a reduction of more than 100 basis points this year.

We continue to forecast R&D as a percentage of sales for the full year of approximately 9%.

Regarding other aspects of our 2009 outlook, we expect Other income to approach $300 million, related primarily to the conclusion of the TAP joint venture, and we are forecasting net interest expense of roughly $400 million, including financing costs associated with the AMO transaction.

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.

As we look at the third quarter, for the first time we are providing third quarter ongoing earnings per share guidance of $0.88 to $0.90.

The midpoint of this range reflects nearly 13% EPS growth.

Also in the third quarter we are forecasting low to mid single-digit sales growth on a reported basis.

This includes an estimated negative impact from exchange of approximately 6%.

So on an operational basis which excludes exchange, sales growth would be in the high-single digits.

We expect an ongoing gross margin ratio of 57 to 57.5% in the third quarter, which is consistent with the gross margin ratio, and the third quarter of 2008, despite the impact of Depakote.

Other income again primarily related to our previous TAP joint venture, is forecast at around $60 million in the third quarter, and the tax rate is expected to be between 17.5 and 18%.

Overall we are pleased with our second quarter performance, and our ability to forecast another year of double-digit EPS growth in 2009, including double-digit EPS growth in the third quarter.

We remain well-positioned with our diversified mix of global businesses, where we achieved market share gains in several of our leading growth franchises this quarter.

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

Thanks, Tom.

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

I will focus primarily on operational sales, which are given on a constant currency basis as I mentioned, excluding the impact of foreign exchange.

Our news release also contains a review of results for sales on both a reported and operational basis.

Let me begin with our pharmaceutical business, where worldwide operational sales increased more than 11%, excluding the impact of Depakote.

In our Immunology business, global Humira operational sales were up nearly 33%, to more than $1.3 billion.

This was driven by very strong international operational sales growth of 44%, and more than 20% growth in our US business, in-line with underlying demand.

US Humira sales were $635 million ahead of expectations.

We continue to grow faster than self-injectable anti-TNF market, as reflected in this morning's monthly prescription data, which shows an accelerating TRX and NRX growth for Humira.

In Crohn's Humira US prescription share is approaching 45%, and we are pleased with our performance in the dermatology market, where Humira total US prescription share now exceeds 35%, a gain of more than 20 share points since the psoriasis approval.

In western Europe earlier this year we surpassed Enbrel, and now hold the #1 share position in the total biologics market.

Strong double-digit market growth continues in each of the major European countries.

While we have seen several new competitors launch into the market this year, we haven't seen much of an impact, given Humira's impressive profile in what continues to be an efficacy driven market.

Our success across therapeutic indications is driven by Humira's Best-in-Class profile, and growing body of differentiating clinical data.

During the quarter we presented data [ular] showing that more than half of patients with early rheumatoid arthritis treated with Humira plus methotrexate showed no further joint damage at five years.

Successful RA treatment depends on early diagnosis and aggressive treatment to prevent joint damage, and these data serve as further evidence, that receiving the right treatment early yields the best outcomes.

The Humira product label includes five year radiographic progression data for established RA patients, which demonstrated that Humira not only treats the symptoms, but stops joint damage from getting worse.

Humira is the only biologic with this proven long term radiographic inhibition data, in both patients with established and early RA.

This is particularly important in today's efficacy driven market, significantly differentiating Humira from other products.

We also presented data at the Digestive Disease Week, or DDW Meeting, which continues to demonstrate that Humira improves symptoms, induces and maintains remission, and reduces the need for steroids in Crohn's disease.

The gastroenterology segment continues to represent a significant opportunity for Humira.

Beyond Crohn's disease, Phase III studies of Humira in ulcerative colitis and pediatric Crohn's disease are ongoing.

We plan to file regulatory applications for both indications next year.

Humira continues to represent a steady growth driver for Abbott in the coming years, and there continues to be room for additional patients to benefit, as penetration in this overall market remains low.

So based on the performance of Humira in the second quarter, we are very comfortable with our previous full-year outlook for global Humira reported sales growth of 15 to 20%, which includes the impact of exchange, and operational sales growth of 25 to 30%, excluding the negative impact of exchange.

Moving on to our Lipid franchise, where Niaspan sales were $208 million, up nearly 7%.

TriCor TriLipix franchise sales were 336 million, and that was up more than 9%.

Both Niaspan and TriLipix continue to outperform the total cholesterol market, which is growing in about the 4.5% range.

We are pleased with the results of the launch of TriLipix , our next generation fibrate, and the first and only fibrate approved for combination use with statins.

Prescription trends indicate continued strong acceptance of this product, growth of new patients has resulted in total market share gains for the overall franchise.

During the quarter, and ahead of expectations, Abbott and AstraZeneca announced the FDA regulatory filing for CERTRIAD, the fixed dose combination of Trilipix and Crestor.

Certriad provides comprehensive lipid management targeting all three lipids, HDL, LDL, and triglycerides, all in a single pill.

The filing for Certriad is supported by data from multiple studies of Trilipix in combination with the most commonly prescribed doses of Crestor, 5, 10, and 20 megs in large controlled clinical trials.

In these studies, combination therapy improved HDL and triglycerides compared to Crestor alone, and improved LDL compared to Trilipix alone.

Abbott and AstraZeneca also announced an expended partnership agreement, to include AstraZeneca copromotion of Trilipix in the United States.

As a reminder, Abbott began copromoting Crestor in 2008, both agreements strategically position the Abbott and AZ sales forces for the future approval of Certriad.

Also during the quarter at the American Diabetes Association Meeting, Abbott presented data demonstrating Trilipix in combination with Crestor, helped patients with mixed Dyslipidemia and Type II Diabetes meet ADA lipid targets.

The analysis of two large clinical trials show combination therapy helped up to 3 times more patient reach all three key lipid targets, than the predetermined monotherapy.

Approximately 100 million US adults have Dyslipidemia.

Of these, approximately 34 million have mixed dyslipidemia, a combination of two more or lipid abnormalities.

Prevalence is expected to rise, given increasing diabetes and obesity rates.

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 there continues to be significant opportunity for patients to benefit from adjunctive therapies, as penetration rates remain low.

As you look ahead for the third quarter in our lipid franchise, including Trilipix and Niaspan, we expect double-digit growth.

So moving on now to some other products within our pharmaceutical business, Synthroid is on-track this year to deliver more than $400 million in total US sales.

Global Kaletra sales were $343 million, including nearly 14% operational international growth.

Global Lupron sales were close to $200 million for the quarter, and we expect approximately $800 million in total global Lupron sales in 2009.

Briefly before we move to the performance of our medical products businesses, let me cover a few highlights from our pipeline.

As I mentioned Humira continues in Phase III development for indications for UC and pediatric Crohn's disease, and we expect US and EMEA regulatory filings next year.

Also in late stage development in our immunology pipeline is ABT-874, which is our anti-IL-12/23 biologic.

We are completing our Phase III pivotal trials in psoriasis, and planning for a global regulatory submission next year.

We also continue Phase II development in Crohn's disease.

In oncology, we have three compounds in Phase II development, our multi-targeted kinase inhibitor ABT-869.

Our PARP-inhibitor, ABT-888, and our Bcl-2 inhibitor, ABT-263.

During the quarter we presented data on ABT-263 and 869 at the American Society of Clinical Oncology, or ASCO Meeting, showcasing our progress in this area.

Both compounds were discovered by Abbott scientists, are being codeveloped by Abbott and Roche, formerly GenenTech, and we now expect to initiate pivotal studies of ABT-869 later this year.

We also have three Hepatitis C compounds in human clinical trials, including both 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.

These compounds have the potential to shorten treatment duration, improve tolerability, and increase cure rates, we have numerous programs 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.

So in summary in our worldwide pharmaceutical business, as we look ahead to the third quarter we expect sales growth to be flat on a reported basis, which includes the continued impact of generic competition on Depakote sales, as well as the negative impact of foreign exchange.

Excluding foreign exchange, we expect operational sales growth in worldwide pharmaceuticals in the mid-single digits.

Now let me move on to our medical products and our vascular business, where worldwide operational sales were $658 million in the second quarter, or up more than 40%.

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 approximately $330 million in the quarter.

In Europe last month, we received CE Mark for XIENCE V Prime, our next generation drug eluting stent.

XIENCE V market share in Europe is now in the high 20s, and with XIENCE Prime now approved, we would expect to see our market share position continue to steadily improve.

XIENCE Prime will be available in a broad sized matrix, including sizes for small vessels and long lesions up to 38-millimeters.

XIENCE Prime uses the same well study drug and proven biocompatible polymer as our market-leading XIENCE V stent.

In addition, it offers a novel stent design, and modified design for greater flexibility and improved deliverability.

XIENCE V Prime uses cobalt chromium technology, which allows for very thin struts, while maintaining strength to support the vessel, and excellent visibility under X-ray during a stent implementation procedure.

It is also based upon the proven design of the multi-linked family of stents, which is the most widely used stent platform in the world, and has been used in more than 2 million implants worldwide.

We recently made the first shipments of XIENCE Prime to select accounts, and have received very positive feedback from several of the key opinion leaders who have implanted Prime.

They are clearly impressed with the deliverability of the platform, particularly in challenging cases.

Last month, we also began enrollment in our US clinical trial for XIENCE Prime, that is called Spirit Prime.

This trial will build on the body of clinical evidence that supports XIENCE V through our SPIRIT family of clinical trials.

We expect to launch XIENCE Prime in the US in the first half of 2012.

We are continuing to promote our three-year SPIRIT II trial results, which demonstrated the clinical advantages of XIENCE, continued to increase over Boston Scientific's TAXUS Express, and TAXUS Liberte stents, between two and three years.

We are also continuing to execute on our strategy to drive XIENCE platform share, which as you know, includes both XIENCE, as well as Boston Scientific's PROMUS.

This has resulted in second quarter total XIENCE platform share, that accounts for more than half of the total US market.

XIENCE V alone holds share in the high-20s, and remains the #1 drug eluting stent.

The US DES market dynamics remain very positive, with PCI volumes up low-single digits.

and US DES penetration is in the mid-70s, up nearly 10 percentage points from a year ago.

XIENCE V has clearly established it's reputation as the Best-in-Class drug eluting stent, based on it's superior clinical data, as well as it's deliverability profile.

And with XIENCE Prime, we are taking a significant step forward.

The additional SPIRIT data presentations we have planned for later this year, including three year SPIRIT III data, and one year SPIRIT IV data at TCT, 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.

Behind XIENCE V and XIENCE Prime, we continue to advance several new products through development.

So let me briefly walk you through some of the more significant opportunities in vascular.

As I mentioned, we expect a fourth quarter approval, and an early 2010 launch for XIENCE V in Japan.

Japan is a more than $500 million DES market that has had consistently high DES penetration rates, and a preference for very low late loss, and highly deliverable platforms.

Another addition to our DES portfolio is called XIENCE NANO, this small vessel 2.25-millimeter stent is on the market in Europe, and it is in development in the US.

We are also working on a number of coronary products, including a next generation bare metal stent, a front line and high pressure balloon, and new guidewires, and we are launching multiple new products this year.

In fact our next generation balloon VOYAGER NC, continues to perform very well in the US, growing share by more than 50% in the noncompliance balloon segment since it's launch earlier this year.

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

We are actively enrolling patients in the next phase of our ABSORB clinical program, Abbott is the only company with long term clinical data, evaluating the safety and performance of this next generation technology, and we are pleased with our continued progress in this area.

So as we look ahead to the third quarter for Abbott vascular, we expect sales to be up low single digits on a year-over-year basis, reflecting the impact of foreign exchange.

Most importantly, we continue to drive considerable operating margin expansion in this business for the full year, as we have discussed in the past.

Now let me turn to our Diagnostic business, where worldwide operational sales increased about 4% in the second quarter.

In our core laboratory diagnostics segment, which includes immunochemistry and hematology, operational sales were up in the low-single digits this quarter.

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

At next week's AACC Meeting, we will launch our new ARCHITECT c4000 and ci4100 instruments worldwide.

Designed to meet the needs of small and mid-sized laboratories, these analyzers will complete our ARCHITECT family.

Prelaunch feedback from customers around the world has been exceptional, and we anticipate quick acceptance of these new ARCHITECT systems.

Also during the quarter, we continued efforts in our core diagnostic business to reduce overall costs, improve efficiencies, and expand operating margins.

In our Point of Care business operational sales grew double-digits in the quarter, driven by strong cartridge sales.

In molecular diagnostics, operational sales also increased strong double-digits.

In the quarter Abbott advanced key molecular diagnostics programs, showcasing our cutting edge science and disease monitoring in personalized medicine.

For example, the Ibis T5000 was instrumental in identifying the H1N1 virus, through collaboration with the Naval Health Research Center in San Diego.

Abbott's m2000 instrument and RealTime PCR HIV-1 assay, were recently recommended by leading HIV AIDS researchers, to be the standard system for NIH-sponsored HIV AIDS clinical trials.

Earlier this week we also expanded our work in Pharmacogenomics, and announced an agreement with glaxosmithkline, to develop a companion diagnostic for it's non-small cell lung cancer therapy currently in Phase III clinical trials.

These examples demonstrate Abbott's dedication in anticipating disease trends, to better develop future molecular diagnostic tests.

So for our worldwide diagnostic business, as we look ahead to the third quarter, we anticipate a mid-single digit decline, which includes the negative impact of foreign exchange, a mid-single digit decline is expected in our core laboratory business, with double-digit growth in molecular diagnostics, and high-single digit growth in point of care.

In our other medical products businesses, worldwide operational sales in our diabetes business increased 2.6% in the quarter, while the market has been negatively impacted by the economy to some degree, we continue to grow our prescription share.

We have targeted our efforts to continue to educate patients on the importance of regular glucose testing, and we continue to be focused on growing our share.

In the third quarter in our global diabetes business, we expect a low-double digit decline in reported sales, which includes the negative impact of foreign exchange.

Let's move on to the vision care business where sales in the quarter were $265 million.

AMO continues to hold the #1 market position in refractive, with leading share in both Excimer and Femosecond technology.

We also hold the #2 market position in cataract surgery, where we are gaining share with our Tecnis monofocal and multifocal IOL franchise.

We also hold the #3 share position in corneal care.

Next let me cover our global nutritional business, where operational sales were up 9.2% in the quarter.

Internationally operational sales were up 8.4%, with pediatric nutritionals up 11.7%.

We launched our next generation Similac and Gain products in Mexico, with plans to expand in to eight more countries this year.

The new formulations further build upon our scientific heritage focusing on brain, bone, and immunity claims.

We continue to expand our presence in emerging markets, as these areas present a growing opportunity for both pediatric and adult nutrition products.

In the US nutritional sales increased 10%, over the last year, this business has launched a total of more than 25 new brands, new product lines, or new packaging, allowing Abbott to gain significant share across it's brands in both pediatric and adult nutritional businesses.

We are now the leader in every category in which we compete.

In our infant formula business, where we have grown our share significantly in the last 12 months, we remain the clear mark leader.

In the retail segment, we hold a commanding share lead over the next competitor.

As you know, last year we launched our new Similac Advance Early Shield infant formula, which includes a unique blend of nucleotides, prebiotics, and antioxidants that support the baby's immune system, and are closer than ever to breast milk.

This new formulation when it was introduced in our simple pack, and innovative grip-flip-scoop design package, the inside and outside innovations of Similac Early Shield have been very well received by our customers.

Our adult business is also performing well.

We have launched a number of new ad campaigns, and we are focusing on the science behind our business.

We continue to be share leaders in both our Glucerna and Ensure brands, 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 third quarter and our nutritionals business in the US, we expect mid to high-single digit growth, and outside the US we expect double-digit growth, which includes the impact of foreign exchange.

So overall, in summary we are very pleased with our strong performance this quarter, our outlook for double-digit EPS growth this year, and the progress we have made regarding new product flow, including the earlier than expected submission for Certriad, and the CE Mark we received for XIENCE Prime.

And with that, operator we will now open up the call for

Thank you.

(Operator Instructions).

Our first question today is from Mike Weinstein from JPMorgan, you may ask your question.

Thank you.

Good morning.

Hi, Mike.

Let me start with Humira, the June IMS monthly RXs are out this morning, and the 12 RXs were up 28%, and I guess my question is, with the revenues you showed this morning, do you still think that there was some destocking this quarter?

I actually thought we might see some restocking in light of how much product came out of the category in the first quarter, because it would still appear to be that your growth is clearly still a little bit below demand trends?

Yes, that is an interesting question, and possibly true.

As you know we struggled with data for a number of months in this whole market, and what true demand is.

I can say, when we looked at inventories at the end of the first quarter, we are very comfortable with where we are at, and we continue to be very comfortable at the end of the second quarter.

The question is, was demand in the quarter a little stronger, underlying demand a little stronger than what our reported sales show, and with the data that came out today, I would say that is possible, but as I said earlier, we struggled with this data, I think everyone has in these segments.

I think as the year plays out, we will see if that is really true.

I would add to that, Mike.

This is John, there have been a lot of questions about the IMS data, and I think what it is demonstrating is that as this market, the self injectable market anti-TNF in particular, shifts from a retail focus to a specialty pharma focus, IMS, and they acknowledge this with a bulletin that they put out Monday morning, is having some challenges sort of capturing the full essence of what is going on in the market.

So it is just one data point, I think that what we would like to tell people is, it is interesting, it is important to track, but it is one point in an otherwise strong market, and it doesn't really reflect the overall reality, it is certainly not a perfect science, and our internal data that we see continues to support the expectations that we have put out there, that I talked about in my call script, about 15 to 20% reported, and 25 to 30%, and I think you are seeing that as some of these restatements come out, and we get a little clarity on what their real underlying strength is.

But obviously the second quarter does show that the acceleration in the market that we had anticipated and talked about on the first quarter call, is happening, and as John said, things are very much in-line with our expectations we set back at that point in time, and maybe going a little better than that.

Tom, you are going to launch XIENCE Prime in Europe in the third quarter, you already have the approval.

Do you know if your OEM partner, who markets right now, PROMUS, is going to market a PROMUS Prime, or are they going to wait until their own product gets approved?

Yes.

Mike, it is our understanding, and I think Boston has been pretty public about that.

They are developing their own Taxis element, and PROMUS element products.

Last I heard, they had every indication of launching those products in Europe later this year some time.

So it appears that is part of their strategy.

So I would let them, it is probably best to let them answer any specific questions about plans from here.

Okay.

So let me just make sure I understood that, so is it your understanding that you would be the only one launching a Prime product, there won't be a PROMUS Prime?

That is correct.

Okay, thanks.

Last question, you announced during the quarter the copromote on Trilipix, when should we see that kick into effect, and give us just some thoughts on marketing plans between the two companies?

We did announce this expanded agreement to copromote Trilipix in the US with AZ.

The sales force, their sales force began detailing that on July 1st.

So it is similar to the copromotion agreement that we had for Crestor that we signed, if you recall last July, and I think they are both reflective of both companies believe that this is a growing market, these are very strong products, and strategically positioned both sales forces well, as we prepare for the more important bigger opportunity Certriad, which is going address the modest to severe patient population, we think we will do that pretty well.

Thanks.

I will let somebody jump in.

Thank you.

Next is from Jami Rubin from Goldman Sachs, you may ask your question please.

Thank you.

I have a couple.

Tom, if you can go over again the issues related to other income this quarter which was just 13 million.

If you could clarify why there wasn't a TAP payment, what that payment would have been, and also if you could quantify what the nonrecurring charges were this quarter, should I assume a sort of normalized other income is around 50 million, based on my math that is about $0.02 per share, but if you can add color around that first?

As I said, certainly there were payments during the quarter, and there was a partial offset.

We took some small non-op charges associated with some equity securities we had, that would partially offset the number in the quarter.

There is always going to be a little noise in this line beyond the TAP payments solely.

We really believe that based upon the sustainable sales pace of the products that are subject to these payments, 50, 60, maybe even a little more than normalized quarterly level, obviously Takeda is in transition with their portfolio, as some of their older products are near the end of their life cycle, and they have got some other products ramping up.

There is always going to be some noise quarter-over-quarter.

And as I indicated in my remarks 50 million to 60 million over the last two quarters per quarter, is more of a normalized level.

Okay.

And then just some follow-up questions on Humira, obviously there are new competitors to the marketplace, with Simponi and Cimzia, but thus far it seems that those products have had a negligible impact.

Can you talk about what you are hearing anecdotally?

It is also early, and typically it takes managed care six months to add these products to their formularies.

So I am wondering if you can add a little more color around what you are seeing there, and then just third question around Humira, international operational sales growth up 44%.

How durable is the pricing environment, or the reimbursement environment in Europe?

Yes.

Jami, I would say to answer the, your last question first, it is very, very durable, we continue to see very strong penetration, good growth opportunities, and it has not been a significant factor, that we with understand the government cycles and the payor programs very well, and we forecast those out, and as we look into next year, we expect continued strong double-digit growth for Humira, internationally don't see payors as a significant hurdle.

I think they understand the benefits of the product, and as we continue to put out more clinical data that shows earlier treatment with the product is important for stopping disease progression and radiographic data, that all of these things help as we continue to penetrate in what is a very underpenetrated market.

With regard to new competition, there have been a couple of new competitors on the market.

I would say they are tracking in-line with our very modest expectations, you probably see this as well, and being a pharma analyst I am sure you can appreciate, that the first 8 to 12 weeks of a product's launch, pretty much defines the long-term success of the product.

So I would say that both of those products are going as we expected.

In fact if you look at the one larger product from our competitor in the self injectable category, Simponi, I believe that last I checked it had about 500 TRXs total on a weekly basis, and that has been about the same for the last three weeks.

To put that in perspective, there are 61,000 total prescriptions in this market every week.

We have about 26,000 total prescriptions.

The other product, Cimzia, really hasn't had any, their indication for RA has had negligible impact if any on the market.

It is going along as we expected, and as we look at Humira, we are obviously very comfortable with the overall competitive profile, the clinical profile, and as I said in my remarks, it is an efficacy driven market, and the anecdotal feedback was are getting is there is a full appreciation for the fact that Humira efficacy is Best-in-Class.

Thank you.

Thank you.

Our next question is from David Lewis from Morgan Stanley, you may ask your question please.

Good morning.

Tom, a couple of questions here on leverage, any maybe going back to TAP here for a second, if we assume, I assume you are still saying that TAP is going to come in close to 300 million for this year, or do you think that is going to come in--?

Yes.

If that is the case, what do you think about the sustainable gross margins that you see largely in diagnostics and some other areas, why don't we see upside to numbers this year, if those gross margins hold, and TAP returns here in the back half?

Obviously, TAP doesn't impact the gross margin line, that is in the non-op category.

As I have said regularly over these calls, over these last few calls, and as we forecasted '09, Depakote has been a big wind for us, as we go through the year.

It is a profitable pharmaceutical product, and I think the fact that we are holding gross margins steady to slightly favorable for the year, is a huge testament to the underlying profitability of our growth products, and how they have overcome that Depakote situation, obviously we will have lapped the Depakote this year by the end of the year.

And I think we can start seeing a little more of the underlying profitability, the improvements in margins in the diagnostics business, continuing leveraging of volumes through vascular, and our pharma portfolio, start moving that gross margin a little faster the way we all want to see it going.

So I think the accomplishment this year, in light of the headwinds, is very good.

So if gross margins hold these gains, and obviously TAP returns in the back half, you still don't believe there can be upside to these expectations?

What expectations are you talking about?

Earnings expectations.

We held our guidance steady.

I would remind you that our guidance, the upper end is 3.70, so there is plenty of room to overdeliver midpoints, and the type of things we talked about earlier in the year.

I think in this environment at this point in time, we have pretty much chosen to keep our powder dry, certainly the possibility of dropping more pennies is there, and we also have to look at 2010, and ask ourselves if we really want to set ourselves up, to continue to drive the momentum we saw in this quarter.

If you look at what happened in the pharma business this quarter compared to the angst in the first quarter, it was really a return to normal, and so I feel really good about our momentum, not only with Humira, but with all of the products, and carrying that momentum into 2010 is something that we are going to have to think about, as we look at the earnings power of the Company, and what we want to do with that.

Tom, maybe just a related question you are heading in 2010, if we think about your operational growth at 10.5%, which is effectively one of the highest in healthcare, still driving earnings growth in-line with that topline, as earnings or topline decelerates heading into 2010, how confident are you in your ability to still deliver 10 to 12% earnings growth?

I don't know what you are talking about about the top line decelerating.

We have never provided any forecast for that at a;;.

As a matter of fact on the last quarter call, Miles talked about sustainable growth of our topline of upper single to low double.

So we feel very good about our ability to maintain sales growth, and if you are touching on 2010, what I would say about that obviously it is six months from our typical time of providing guidance, very, very early, and there are a lot of things going on.

But we always target double-digit growth, and that continues to be, as a baseline, and that continues to be what we do into 2010, and I think we will have a very healthy topline to support it.

Okay.

And John, just one quick question, and I will jump back in queue.

Just on AMo specifically, can you just talk about trends in that business, whether you see relative stabilization, or whether that business is tracking in-line with plan?

Thank you.

It is definitely tracking in-line with our model.

Remember when we announced the deal, we took a conservative stance on this business, given the economy and the fact that LASIKs is a big part of their business, and we know that LASIKs is affected by people's decisions around something like that, and people are trying to save, and so forth, so I would say it is going as we thought, it is to some degree it is a smaller business, but it is a wild card, if you will on the economy, when the economy starts to improve, we would expect that in particular, LASIK procedures would pick-up, and that would be a strength for us going forward.

So I would say in-line, cataract continues to do well.

It is a mid/high-single digit type grower, the solutions business is a mid-single digit type grower, and as I mentioned, once the economy starts to turn, LASIK is clearly a double-digit grower, and obviously has the largest installed base.

Okay.

Thank you very much.

Thanks, David.

Thank you.

Our next question is Glenn Novarro of RBC Capital Markets.

Your line is open.

Good morning, guys.

Hi.

When I think about the two issues that we get pushed on the most, obviously Humira, and I think you put that issue to rest today, with an excellent Humira quarter.

The other tends to be the tax rates.

So I am just wondering what your views on what the government may do with international earnings.

It seems like from what J&J was saying that issue is put to rest, but I just want your thoughts on that, Tom.

Yes.

Should I answer that, first?

Sure.

Go ahead.

There was a lot of noise on this earlier in the year, there was a proposal floated, but things have gone very, very quiet in the last month or so, last six weeks, there is a lot more focus on healthcare reform, and I think that is what everyone is talking about.

To me it is encouraging that more and more it seems like any proposals in this area are not going to be used as a pay for for healthcare reform, and that if anything changes, it would probably push more into 2010, and be more in a comprehensive approach to tax policy, which is obviously a wise thing to do, and it is very unclear where that would ever lead.

So I agree with the comments made yesterday, that it seems to have gone to the buck burner, and the fact that it is not being linked to health care is a positive.

Okay.

So when I think about the tax rate for 2010 and beyond, we are modeling the tax rate moving up a bit, from 18% maybe to 19%, that is realistic.

We shouldn't expect any major uptick over the coming years?

Even on the tax reform proposals that were floated earlier, they were talking about implementation starting in 2011.

So even if there were changes, I don't think 2010 would be inconsistent with the trends we have had.

Okay.

Great.

Then just quickly, across the tape very early this morning, there was some M&A speculation regarding Solvay, and Abbott was mentioned in that.

I wonder if you can provide some comments there?

Well, as I have said many times before, as we have said, Glenn, we always look at opportunities across our businesses, as you know, we just don't comment on rumors or speculation, I did see the article you were referring to.

I guess I can say as I read it, that we have no interest in expanding our participation in the fibrate market, which was implied in that article, because we already have a very strong presence there, and an adequate investment.

That is all I can say on the article I saw today.

But just as a follow0up on the M&A strategy, I think you have been consistent this year, saying there is nothing major on the horizon.

Is that accurate, or maybe just to reiterate what your thoughts are on M&A for the rest of this year?

We have always said that we have no interest in mega-mergers, if that is what you are talking about major.

We have always done very well with either smaller niche or augmentations of our business type acquisitions, or medium sized deals that are very manageable from a synergies point of view, or from an integration point of view, that have interest and characteristics, and I think that continues to be our strategy.

We are very comfortable with that, and really consistent with my earlier comment.

We are always looking at things, and there is nothing that I can talk about today.

But if anything did come to pass, it would be something that I think would be strategically beneficial for Abbott if we pursued it.

Great.

Thanks, guys.

Thanks.

Thank you.

Our next question is from Bruce Nudell, UBS.

Thanks for taking the question.

Hi, Bruce.

Hi, good morning.

When we look at the IMS scripts for Humira, clearly the restatement had a big impact on the impression people come away with.

If you just say absolute scripts stay about where they are for the last month or so, and no restocking in 4Q, which has historically been a strong restocking quarter, you kind of get to like 14% revenue growth or so for the year, a little under 2.6 billion.

First of all, is restocking in 4Q a thing of the past?

And also the one lingering thing that is in the IMS data, is NRX trends which had in the past pretty well paralleled TRX trends, they have diverged, and they have gotten better with the restatement, but they are not where the TRX growth rates are.

Do you have any feel for the technical significance of that, or is it just remaining undersampling of NRX, given the channel change?

I will take the first question real quickly.

Obviously in the fourth quarter of '08 as we talked about on the first quarter call, in the anticipation of continued very strong growth that we saw in the fourth quarter of '08, there was some purchasing of inventories by the trade getting ready for that, and so the fourth quarter was strong.

We do not expect that to recur this year.

Obviously you won't have that buy-in that you saw in '08.

So I think you are going to see probably the fourth quarter Humira sales be below the script trend rates, because the comps to the prior year will not be there.

So I think you are going to see a break in that trend, consistent with what you suggested.

And John can talk about the NRX data here.

Yes Bruce, as I mentioned earlier, I think this shift from retail to specialty pharma, where we are seeing a growing shift in use of specialty pharma, which is good for the product, good for patients, and that shift has definitely impacted data collection and reporting, by services such as IMS, and so they are trying to keep up with that.

I would say that there are going to be fluctuations in this data, the internal tracking data that we use, as I mentioned before, supports our position of strong continued growth, and probably low double digit to mid teens type of growth in the US.

On a revenue base?

On a revenue basis, right.

What with volume being more closely approximated by TRX trends, is that fair?

Yes.

TRX has been more reflective of really what is happening, and that has been in the low 20s, if you look at the new data that came out today, the June monthly data that was out, actually the TRX, as somebody mentioned earlier, that was up to 28, and NRX was 16.

We think the overall average there is probably in the low 20s for TRX growth for the quarter, and I think that is fair.

That is probably a pretty accurate assessment.

And there was another bit of news that came out that was opaque to the Street, pertaining to I think it was ARBITER-6 with Niaspan versus Zetia with a neointimal endpoint, everything was on top of statin therapy, do you guys have any insight into what actually happened in that trial, and when might those be results be disclosed, and do you think it is fundamentally important for Niaspan?

Well it is not our study.

It is an independent investigator study, and what appeared to happen there, is in June that independent steering committee for this ARBITER-6 HALTS trial stopped the study, based on the results of a prespecified blinded interim analysis.

What they did say is that it wasn't stopped due to any safety concerns.

They didn't say anything further than that.

So we can't really speculate on it since it is not our study, but I would tell you there is a pretty significant body of clinical evidence if you look back at some of the previous studies, that show the ability of niacin to promote regression of Atherosclerosis.

So that is encouraging, but we don't know the study results, and we will find out probably when you do.

Thanks so much.

Okay.

Thank you.

Our next question is from Rick Wise, Leerink Swann.

You may ask your question.

Good morning, Tom, good morning, John.

Hi Rick.

A couple of vascular and stent questions, if I could.

Boston has promised a Taxis element products are possibly set to launch late this year early next year, who knows, but are orders to you for PROMUS likely to affect second half sales, and are you seeing any pull back, or would you expect to see any pull back in orders, and just how do you want us to think about the second half as those events possibly approach?

Clearly we forecasted in the numbers we provided today for the likely slowdown of those purchases.

I think John can add a few things here.

Yes, we are not in a position to comment specifically on the ordering patterns.

I would say just that as we said many times before, we have and will continue to meet the customer demands for XIENCE V, and we will continue to supply our partner here, in accordance with the distribution agreement.

So we have ample supply of XIENCE to provide them, within set ordering pattern parameters.

Okay.

Let me follow up from a different angle.

Help us think through, let me start again.

The international stent story seems very dynamic in the near term with a lot of product launches, Japan, et cetera, obviously US, the big deal will be 2012, but US vascular business overall in the last three quarters has been about 395 million.

Can you give us some perspective on how do we think about that going forward?

Is it basically static, what are the moving pieces there, and more specifically driveling down to the US stent number, it was something like 9 million or 10 million sequentially less.

Are you losing ground on the stent side, is it something else, and maybe what turns that around in the second half of 2010?

Thanks so much.

We are pretty pleased with our DES franchise sales, they are in-line with what we expect for the quarter and the year.

As you know there are different components in that, including XIENCE, PROMUS, and some third party revenue, that we get as a result of Medtronic Endeavor agreement.

As that Medtronic revenue has gone down, as their market share has gone down, that has affected it to some degree.

We have seen XIENCE go up, we have seen PROMUS go up.

We like that.

I think what has changed there is that in those accounts, in those Boston accounts where they have strong holds, we are encouraging, our sales force is encouraging them to if they can't choose XIENCE, to choose PROMUS.

So as a result, the platform share between XIENCE and PROMUS has grown nicely up into the kind of low to mid-50s, and so that is pretty good.

We are encouraged by the trends in the market with PCI volume increasing low single, and DES penetration rates in the mid-70s.

So we see steady improvement and further execution from our sales force, as we continue to promote the good clinical trial results that we just had.

So we are still expecting about $1 billion in sales this year, and that is right in-line with our thinking, and obviously Tom can talk more about this, but the big impact is to the bottom line this year.

Yes.

We saw again in this quarter very, very strong op margins for vascular, which was losing money a couple of years ago, and all of that is playing out very nicely, but the profit contribution is significantly more than the sales contribution.

We think that is going to continue into 2010.

Okay.

Just a final push on that if I could, Tom, so do we think about this, the US business in dollars as roughly flat until we get to the approval in 2012?

I wouldn't think that.

You have got market growth.

You have got share opportunities, and you have got other things in the portfolio.

John went through a long list of innovations planned in that vascular area, beyond stents.

So I foresee growth in the US market, even before the timeframe you mentioned.

Okay.

Thanks so much.

Okay.

Thanks Rick.

Thank you.

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

Great.

Thanks.

Let me just go back to the AMO business, just to clarify there, is the revenue performance this quarter in-line with your expectations, and if you could just give us an update, now that you have got it under your belt here, plus the close for four months plus.

What kind of changes or integration progress have you made with that business?

I will just say the sales are right in-line with our model expectations.

This has been a very straightforward integration.

We have left the management team intact, and the organization is operating independently, as most of our medical devices businesses are, and I think the chemistry with the team there and with the Abbott team is very, very good.

So we are pleased with the way it is progressing, and there have been no surprises.

We have got a little more work to do to fully integrate, but that should be completed by the end of this year.

Okay.

And on TriLipix, can we just get an update on the formulary status of that product, what has the progress been?

And just a sense of where it is tracking relative to your plan this year?

Yes.

We continue to make very good progress as we have said in the past, our managed care organization does an excellent job of getting on formulary, and we would expect that we continue to gain formulary position, not able to give you specifics today, but I would say we are very well positioned very pleased with how that product is performed with the launch, which is going according to expectations, and we continue to pick up more Tri-Cor patients, that are now taking TriLipix, as well as new patients to combination therapy.

Okay.

And just a last question on Humira.

Last quarter your talked about some of the new marketing programs that you had initiated earlier in the year, some of the patient assistance programs, and things like that.

Can you just give us an update on the progress of those specific marketing programs?

And what you have continued, what you think has been successful or not?

Thanks.

Yes, we did talk about that earlier in the year, as we responded to some modest economic pressure that we are seeing for higher cost therapies, that other companies are seeing as well, with a new copay program, and some new efforts to further expand awareness of our patient education initiatives, and patients assistance programs through Humira.com, MyHumira.com, and some other things.

I would say those are going very well, clearly they are having an impact, patients appreciate it, and we are retaining more patients, and also picking up new patients.

So I would say overall we are very pleased.

Last question for me would be on SPIRIT IV.

How significant is the trial do you think, in terms of the potential post-release market dynamics if it was in fact to be positive?

What is your latest on that?

There is clearly some retention around that.

We will see at TCT.

By the way, it is likely we will do an Analyst Meeting at that event.

We will get you details on all of that later, but we are anticipating the release of SPIRIT IV, as well as SPIRIT III three year data.

I think given that it is evaluating a more real world patient population, that is more complex and in some cases up to three lesions, with a maximum of two lesions per vessel, some bifurcations, and the fact that more than 30% of those patients in that study are diabetic, I think there is a lot of focus on it, and rightly so.

We will see what the results will show, and that could give us an opportunity if it is positive, to have another advantage against our primary competition.

Thanks so much.

Thanks.

Your next question is from Derrick Sung, Sanford Bernstein.

Your line is open.

Thanks for taking my call.

Hi, Derrick.

So a question on the stent market and pricing there, we have heard that at least in the ortho markets, hospitals have been getting more aggressive and sort of pushing back and renegotiating contract, et cetera.

Can you speak to the pricing environment is in the drug eluting stent market today?

I would say we are very pleased with our premium price, which is still the high end of the market.

There has obviously been some downward price in that market, but that is particularly amongst a couple of our competitors, and not XIENCE.

We have held price very well.

Our average ASP is still the highest in the market, and relatively stable based on a market average.

So we think it deserves a price premium.

We are still doing quite well, as you know, gaining share.

So I would say that there are always pockets here and there that people hear about, but nothing overall, in terms of overall price.

So you are not seeing any more aggressive stance from the hospitals, in terms of their push back on pricing?

There is a little bit of that, obviously there is some economic pressure on hospitals overall, but we have been able to maintain good pricing, and very reasonable rates and prices for XIENCE, given it's clinical advantages.

Okay, thanks.

Let me ask you to dive into a little bit more detail on gross margins, I think you called out earlier in the call nutritionals and diagnostics, as contributing to some of the gross margin improvement you have seen.

Can you get a little more specific there, in nutritionals how much of that is commodity prices, and in diagnostics just specifically, so where is that margin coming from, and give us a sense of how sustainable that would be, say going on in 2009?

Diagnostics as you know, we undertook a pretty extensive cost reduction initiative in the middle of '08, and we are starting to see some of the fruits of that.

Interestingly, we are seeing a firmer pricing in diagnostics too, and we have talked a little bit about the way we have approached our product portfolio and our offerings, and this was a business that saw steady modest declines in price year-over-year, and we have been able to firm that up, and actually do a little better in price historically.

So diagnostics it is really a broad based approach to improving the profitability of the business.

We are starting to see some of the benefits of that on a gross margin line, and on the op margin line.

Nutritionals, obviously commodities are much better than they were a year to 18 months ago.

This is a market where we have been, particularly outside the US, when the commodities went up, we were able to pass some of that through in the form of price.

So that has been a mitigator, and some of that has carried forward, and a lot is to move the gross margins a little bit better in nutrition.

So it is just basic blocking and tackling, good trends, good cost management, and some degree of price.

Okay.

And just lastly on Humira internationally, so you have been seeing about 40% growth for the last few, more than the last few quarters, that is a pretty high growth rate.

How sustainable is that?

And I know that you have been talking about international penetration being low, but is there more to it than international penetration, how can you get us comfortable with the sustainability of that?

I would say a couple of things, the execution of our organization outside of the US has been outstanding.

A lot of this has been market growth, but a lot of it has been share gain, and I don't think you can diminish that at all.

I think we are really good at it, and Olivier Bohuon's organization has just done a tremendous job on execution on all of the indications.

That has been a big part of our success.

As we look at '10 we see continued very strong double digit growth for Humira.

It is going to be a nice contributor for us outside the US, as it will be in the US.

Can you grow 40 to 50% forever, obviously not, but we see 2010 as very, very strong.

Great.

Thank you very much gentlemen.

Thank you.

Your next question is from Larry Biegelsen of Wells Fargo.

You may ask your question.

Good morning.

Thanks for fitting me in.

Just a couple of quick ones.

Following up on ARBITER-6 HALTS, do you guys have any idea when we will see the results, and based on your reading of the design paper, do you think it was not stopped for futility?

It is not our place to comment on that, Larry.

And it is the investigators responsibility and decision as to where that data may be presented, or if it is going to be in a major scientific publication.

You would be better off asking him, certainly there are some big conferences coming up, like ACC in the spring, and AHA in November.

So we will have to see.

It is his decision.

Then on the Humira monthly study that you guys completed.

I understand you don't want to say much for competitive reasons, but when could we expect to see that data for the first time, would is just be if the trial was successful, and you had an updated label, and then I just have one follow up?

I don't have any further information there in terms of timing of when that might happen.

That is a small study, and it is interesting, we are evaluating it, but there is really not much more to say at this point.

On the ACCORD study, do you guys know when that is going be presented, you have commented publicly that you thought it was a poorly designed study, what are you doing to mitigate the risks, and do you plan to do a better design study?

Thanks.

Well, obviously, the ACCORD study is not our study.

It is an NIH study, it is still in progress.

So we can't speculate on results.

I believe it is fairly well known that it is expected in early 2010, or late this year.

I would just say that it is I think pretty well known in the physician community that the expectations on that study, given the trial design and the baseline characteristics of the patient population, that the expectations are modest.

And so we continue to talk to clinicians about it.

I don't think it is from the ones we have talked to, expect to change anybody's treatment practice patterns based on the data that is already existing out there, with the benefits of triglycerides, and the fact that these are patients that had only a moderately elevated borderline normal trigs.

They are not your typical patient that is treated, which is generally defined as patients who have trigs well in excess of 200.

So it is not clear when that will be out, but I think the expectations are pretty modest, and they should be.

Thanks, John.

Operator, we will have got one more question, potentially?

Thank you.

Our final question today is from Catherine Arnold of Credit Suisse.

Your line is open.

Thanks very much.

I just wanted to ask you about Vicodin CR, and given the FDA panel, if you could just talk about what you think the process is there in terms of approval, and if you have any change in your view on the opportunity?

And then I wanted to comment on the currency hit to Humira, obviously the last two quarters you have highlighted that it has been more powerful for Humira than the consolidated impact, can you give us any guidance for the back half of the year, if you would think about currency staying where it is, or even the average rate for the second quarter, how we should be thinking about modeling Humira currency impact international sales?

Thanks.

Okay.

Let me take your Vicodin questions first.

This is John.

Hi, Catherine.

I would just tell you we are continuing to evaluate next steps on a program path for Vicodin CR.

We have nothing specific to share at this time, but I think the expectations have been dialed back on that program.

As you know, we don't have any Vicodin CR sales in our model for this year.

I think most people have taken it out, and we dialed it down.

That is fine.

I would say, and you have probably seen, there is something posted to clinicaltrials.gov, we are developing a modified formulation of Vicodin CR.

It is Phase II study, so we are looking at potentially next steps to bring that program forward.

The CLR we received last year we are not talking about the details, but I would just say that the previous formulation we had of that Vicodin CR program is no longer in development, but we do have this Meltrex form, and we will see, I would consider it a wild card type R&D program.

As far as the FDA panel on pain products, I think it is important to put that in context, for Abbott we showed up in some reports on that, as if we were selling all of Vicodin, you probably know 99% of the market is generic.

We don't sell that.

Our branded Vicodin is only about 30 million to $40 million per year.

I was thinking more forward-looking.

Yes, the panel is really I would say it is an advisory panel, it is not binding.

It is the Agency's call.

I think a ban on these products as it was discussed is probably not going to happen.

That seems pretty unlikely.

These are products that have been used safely for decades, and a lot of patients need them and trust them, and some of these panels sometimes as you probably know, there was an FDA advisory committee with Darvon/Darvocet, and the committee voted for a ban, but the FDA decided that a stronger warning was more appropriate.

So perhaps we will see something like that.

I can take the Humira question.

What you have got here is a country mix issue.

This is similar to what we saw in the first quarter to give you a few data points.

During the quarter, the Euro was about 15% weaker than the prior year, the Sterling was 26% weaker, and in both of those markets, Humira is a larger percentage of the sales base than other products.

It is a very large percent of the sales base, whereas the Yen was about 6% stronger in the quarter, and it is a very small percent there, because we are still ramping up in Japan.

When you run all of these mix effects through, that is really why Humira has a bigger exchange impact relative to the average product in our international pharmaceutical business.

I think you can expect that to continue in the third quarter, as we have talked about, roughly 6% across the business, across the Company is what we would get, exchange is going to be in the quarter, assuming current rates hold.

I think by the fourth quarter we see exchange being pretty flat to slightly negative, and so pretty much that will have all played through by then.

Anything else?

Great.

No.

Thank you.

Okay.

Operator, that concludes our conference call.

I would say in conclusion that we are obviously very pleased with the strong quarter, which we believe was ahead of the estimates, as of a few days ago at least.

We delivered very strong double-digit operational sales growth.

We confirmed double-digit EPS for the full year.

As Tom mentioned, we continued to target double-digit going into 2010.

We have good momentum in our base businesses, Humira performance was very strong this quarter.

We look forward to a full year that is continued strong growth with that product, as well as some of our other major operating businesses.

And with that, we are going to conclude the call.

A replay will be available after 11:00 Central Time today on our Investor Relations website at Abbott.investor.com, and after 11:00 Central via telephone at 402-220-0185, confirmation code 9401.

The audio replay will be available until 4:00 p.m.

on Wednesday, July 29th.

Thank you all for joining us.

Thank you.

This concludes today's conference.

Thank you for participating.

You may disconnect at this time.