Good morning and thank you for standing by. Welcome to Abbott’s Second Quarter 2014 Earnings conference call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star, one key on your touchtone phone. Should you become disconnected throughout this conference call, please dial 1-773-799-3472 and reference the Abbott earnings call. This call is being recorded by Abbott. With the exception of any participant’s 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. Brian Yoor, Vice President, Investor Relations.

Okay, good morning and thank you for joining us. Joining me today on the 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 opening remarks and Tom and I will discuss our performance in more detail. Following our comments, Miles, Tom and I will take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2014. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1(a), Risk Factors to our annual report on Securities and Exchange Commission Form 10-K for the year ended December 31, 2013. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law. Note that any sales or earnings per share guidance provided today on the call will continue to include the developed markets branded generics pharmaceuticals business in our forecasts. Tom will discuss in more detail how we expect to report the results of this big business beginning with the third quarter. 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 new release and regulatory filings from today, which will be available on our website at abbott.com. Our commentary on sales growth refers to operational sales growth, which excludes the impact of foreign exchange unless otherwise noted. With that, I will now turn the call over to Miles.

Okay, thanks Brian. Good morning. This morning we reported second quarter ongoing earnings per share of $0.54, above our guidance range and representing growth of 17%. As expected, sales increased 3% on an operational basis. This was a sequential improvement from the first quarter and we are on track to accelerate sales growth in the second half of the year. We are ahead of our expectations through the first half of this year and we are raising our full-year 2014 ongoing earnings per share guidance to $2.19 to $2.29 from $2.16 to $2.26. At the same time, we’re actively shaping Abbott for durable, long-term growth. Part of our growth strategy is to build critical mass and leadership positions in key emerging geographies across our diverse portfolio. In diagnostics, we were early to establish our presence in the geographies of China, Russia and Brazil. In devices, we have significant opportunity in the cataract lens and diabetes markets given demographic trends, as well as in our vascular business with innovative devices such as Absorb. In established pharmaceuticals and nutrition where we already have large and growing businesses in emerging geographies, we’ve taken a series of steps over the last few months to further shape these businesses for the long term. As I discussed on our conference call on Monday in our branded generics pharmaceuticals business, the recent acquisitions of CFR Pharmaceuticals in Latin America and Veropharm in Russia, as well as the sale of our developed markets business to Mylan, accelerate our strategic intent to drive balanced and sustainable growth in emerging geographies. The net proceeds from the sales of Mylan’s shares over time provide us with a number of choices and possibilities to pursue opportunities that continue to build Abbott for higher growth. Following the close of these transactions, our established…

Thanks Miles. Today we reported ongoing diluted earnings per share for the second quarter of $0.54, exceeding our previous guidance range. Sales for the quarter increased 3% on an operational basis; that is, excluding an unfavorable impact of around 1% from foreign exchange. Reported sales increased approximately 2% in the quarter. Operational sales growth was driven by strong performance in diagnostics and vision care and improved growth in nutrition and established pharmaceuticals. Sales growth in emerging markets approached 8% on an operational basis in the quarter. Excluding the estimated impact from the previously reported sales disruption in our nutrition business last year, sales in emerging markets increased closer to 10% in the quarter. The second quarter adjusted gross margin ratio was 55.3% of sales, ahead of our previous guidance due to continued underlying improvement in diagnostics and better vascular gross margin as a result of the resolution of an intellectual property matter that lowered product costs this quarter and will continue to benefit this business going forward. In the quarter, ongoing R&D investment was 6% of sales and ongoing SG&A expense was 30.5% of sales, in line with previous expectations. Before I review our financial outlook, I’d like to explain how we expect to report the results of our developed markets branded generics business going forward. As you know, we announced on Monday an agreement to sell this business to Mylan; therefore, beginning in the third quarter of this year, the sales and earnings from this business are expected to be reported as discontinued operations in our income statement. However, guidance for the third quarter and the full year 2014 that we provide today will continue to include this business in our forecasts. For the third quarter call, we will reconcile the combined results on both a GAAP and adjusted…

Thank you, Tom. This morning, I will review our second quarter 2014 performance and third quarter sales outlook by business. As I mentioned earlier, my comments will focus on operational sales growth. I’ll first discuss our nutrition business, where global sales increased 3% in the second quarter, a sequential improvement versus the first quarter and on track for second half acceleration as we anniversary the August 2013 sales disruption in our international pediatric nutrition business. In our international pediatric nutrition business, we’re on track to return to double-digit sales growth in the second half of this year as we continue to recapture share in the affected markets and launch new products across several new segments and geographies. This includes Similac Chintea, a new infant formula we are currently launching into China. It’s the first product to be manufactured in our new China facility and is available in our innovative reclosable packaging. In addition, to further enhance our competitiveness and capture share in the Chinese infant formula market, Abbott launched a new infant formula, Elova (ph) in the second quarter and Similar Simple Pack late last year in the online segment of the market. Sales of international pediatric nutrition increased modestly in the second quarter, impacted by the unfavorable year-over-year comparison created by the previously reported 2013 sales disruption. The impact of this event continues to decline as we recapture share, and is estimated to have reduced international pediatric sales in the quarter by approximately $40 million or 7 percentage points. We also experienced some recent government-initiated pricing changes in Vietnam and Saudi Arabia, which we’re managing. International adult sales increased 10% in the quarter driven by strong growth of our Ensure brand and double-digit growth in the emerging markets. This marks the fifth consecutive quarter of high single to double-digit…

[Operator instructions] Our first question today is from Glenn Novarro from RBC Capital.

Hi, good morning. Thanks for taking my questions. Miles, I wanted to start with a question on nutritionals. It’s good to see nutritionals getting back to positive growth. We tend to focus so much on pediatrics, but what caught me by surprise was the strength is adult, particularly outside the U.S., up 10%. So I’m wondering if you can spend some time talking about adults – is that 10% growth sustainable, and how should we be thinking about that growth beyond this quarter, and what could be the key drivers? Thanks.

Sure. You know, the direct answer to your question is yes, I think it is sustainable. I mean, it might go up a point, down a point – who knows? – from time to time, but the general direction at that magnitude I think is sustainable. You know, as you know, Glenn, we are the world leaders in that category in almost every country, and there’s still enormous amounts of opportunity out there, given the demographics of the world not just in developed countries but also in emerging countries. There’s a big opportunity for us, I think, in China in particular, and part of our expansion in China will address that over time. We’ve got a big opportunity to enter that market, build that market, create it and do in China what we’ve done in a lot of other countries around the world. So I think there’s still a lot of opportunity. There’s always room for innovation, whether it be in the form—you know, we have a product now, Clear, in the United States that’s not a milk-based product that I think will be popular with consumers, and I think that given different flavors, different forms, different packages and so forth, I think there’s a lot of opportunity to expand the market and grow the market where we’ve already got pretty strong share. That’s an important part of our business. And you’re right – the pediatric segment tends to get a lot of the attention, but I think a lot of the growth and opportunity here remains in the adult segment.

And just as a follow-up, if I’m looking at the operating margins for the nutritional business, about 20%, yet some of your peers are closer to 25%. Now that you’re at 20%, is 25% the next goal?

You know something? My management in that business will say if we reach 25, are we done? And I’ll of course say no – 30 would be the next goal, and if we reach 30, would 35 be the next goal. I’m not sure I’m ever going to be satisfied, but I’d say this – we’re not done, and we’re not stopping. There’s a lot of things that go into determining what the margin is in the business and in terms of our cost to deliver. A lot of the moves that we’ve made in the last year with our supply chain globally, including some of the things that we’ve done with Fonterra with other suppliers, are aimed at lowering our cost to deliver. Some of the products that we’ve had manufactured by third parties, we’ll bring in house and do ourselves. Part of our plant strategy here with not only our liquid plant in Ohio but our plant expansion in China and India is to do that. There is obviously large freight savings when you manufacture in key markets as opposed to ship from the U.S. or Europe or other locations. So there’s a number of things that go into the overall cost structure, and I’d say there’s still plenty of room to improve our margins in this business, and the team has been very focused on that. Some of them take a little longer than others to realize because of structural or infrastructure changes in our whole supply chain system, but I’d say there is more room there.

Okay, great. Thank you.

Thank you. Our next question is from Mike Weinstein from JPMC.

Hi, good morning. Thank you. Tom, I want to spend a minute just on the operating line. If I look at the first half of the year, most of the incremental growth is coming from your work on controlling operating spending. Even if I adjust for—add back (indiscernible) down low single digits, and it looks like for the year the boost in the guidance is a function primarily of your operating spend coming in. So could you spend some time talking about where those reductions are coming from and how we should think about the trend, not just this year but going forward?

We’ve talked about this off and on over the last few quarters, Mike, and when we exited the separation, it was clear to the entire organization that our G&A levels in particular were higher than they should have been, and we’ve been working very hard to address that through process improvements in the back office, basic efficiencies, only providing the appropriate services to the businesses. It’s been kind of a steady progress we’ve made on that – you know, every quarter we’re able to change the trend of the run rate and just been steadily chipping away at that. I wouldn’t say we’re done – we still have a few things we want to do. We’re getting more efficient in the IT areas and some of the finance and accounting areas, and even—especially in the purchasing area where we’ve invested a lot of time and we think can drive savings as well. So it’s a very broad-based approach, I’d say a very steady approach; and to your point, it’s really contributed to the flattening of the SG&A. What we have not been doing is tuning back on productive SG&A – you know, things that really drive sales and growth. We’ve tried very hard to sustain and even increase investment in those areas while we’re tuning back in the other areas.

Okay. Can I just ask about one of the businesses that has struggled, and that’s the diabetes business and the impact of competitive bidding. Can you spend a little bit more time on the strategy of that business? I think everybody is aware that you’re working on coming out with this novel product in Europe later this year, but more broadly than that, what’s the plan for the U.S. business going forward? It is to largely run that business as a meter business and run it for cash and try and just maximize profitability?

Mike, this is Miles. I’d say for a transition period, that’s probably an accurate comment. I think that business has done a great job of managing its costs and its expenses and so forth. We still have a very healthy gross margin in the business, and so it’s sort of tale of two businesses, and particularly in the U.S. I’d say that because it remains profitable and cash generating, et cetera, you’ve got this older legacy circumstance of strategy market channels, products, et cetera that clearly is under pressure from competitive bidding and what CMS has done. Then you’ve got very new innovative products that, frankly, really matter and make a significant difference for patients, like Libre which is coming first in Europe. That, we believe, will be a significant growth driver for this business here over time, and it will come to the U.S. and it will be a global product, just like our core base business. So you’ve got a transition here of the core base business as we grow the more innovative future product and future forms of that product, because while it’s launching as a single product, there’s actually a product line coming here. So I think that will continue to drive the business and have a very different proposition for the patient.

Okay, thank you guys.

Thank you. The next question is from Josh Jennings from Cowen & Company.

Hi, good morning and thanks for taking the questions. So first, Miles, I just wanted to ask about the nutritionals business. You made some commentary in your prepared remarks about the strategic alliance with Fonterra and also opening up the new manufacturing plant in China as well. I just wanted to see if you could provide just a little bit more color on how important these two initiatives are in returning pediatric nutritionals to a sustainable higher growth trajectory, and can you also talk a little bit more about the ongoing broader strategy in China? One of the questions was on the adult opportunity there too, but just hoping to get a little bit more color.

Okay. First of all, I’d say Fonterra has been a partner and a supplier of ours for a very long time, and it’s no secret that a year ago they had a recall that impacted us, impacted other competitors as well, and nobody tried to have a recall, nobody tried to have a problem, but it set us back for a period in China, Saudi Arabia, Vietnam, some other countries. Out of our discussions came a number of ideas for the companies going forward. You can spend your time arguing about something nobody wanted to happen, or you can look ahead and say, where are our opportunities? The fact is China is an opportunity for us, as is the global supply chain in general because as we look at the growth prospects of both the pediatric and adult business worldwide, as I said, China is not the only growth opportunity. There’s a lot of countries out there where there is still a lot of opportunity for both companies. So we very constructively looked at what the companies could do together, and out of that came the notion of this dairy hub idea in China, which I think and they think will be very important for serving China. China is a big market and it’s big for pediatric nutrition, and it’s big for adult nutrition, I think. I mean, I think it will be – it’s not well established at this point, but I believe it will be. One of the key points of this business is you’re a lot more economically able to serve if you are in market or close to market and responding to the desires and the needs of local consumers. We have R&D in Singapore, we have R&D in Shanghai, we have manufacturing there. We are…

Great, thanks for that. And just to follow up, the ability of large corporations with breadth and scale, a product portfolio being better positioned to partner with hospitals and win contracts and gain share has received a lot of attention – we see this in the medical device industry. I know you spoke to this on the call on Monday to a degree. I just wanted to return to your strategic outlook for the medical device division – you know, with vascular, diabetes and ophtho units. Is the strategy for the divisions to build breadth and scale there, or is that enough to bolster the growth profile of the entire unit, or do you need new divisions in medical devices to compete more effectively as the healthcare delivery systems in both developed and emerged markets evolve, and just where are your priorities there strategically? Thanks a lot.

Well, the first part of your question, I’d say the answer is both – not only do we want breadth and scale, but I’m open to expansions that are in new areas, provided we believe that we can add value or do better than with them than they might stand alone. So there’s a delicate balance. There are times—you know, when we acquired AMO in the ophthalmology business several years ago, a lot of people kind of raised their eyebrows and said, gee, what do you guys know about ophthalmology? You might say, well, that was an expansion into a different area – it was one that we had very carefully studied for some years. It was very intentional and it’s one where we believe the demographics, the economics, the future of the business is frankly very favorable for us and for that particular segment. So we made that step to expand, and I think that was a good addition for Abbott. The first couple of years of performance with that business were a little less than anybody really wanted, and right now it’s probably the fastest growing division in the company. So I think that there are times when adding to the company that way will make sense, and I think there’s times when clearly if we can broaden our footprint, expand our position in a business, whether it’s diagnostics or pharmaceuticals or whatever, I think that’s to our advantage – I think that’s good. So we look both ways, I guess is the point. And what was the second half of your question? Did I get that?

You did. Thank you very much.

Okay, good.

Thank you. Our next question is from Kristen Stewart from Deutsche Bank.

Hi, thanks for taking the question. I just wanted to clarify – I know you had talked about how you’re going to be reporting going forward for the third quarter with respect to the, I guess now discontinued operations, so you’re going to report both, I guess? And then thinking ahead to 2014, will you have to do anything in terms of the ownership that you’ll have with respect to the Mylan business since it’s going to be a—

Well again, today the guidance we’ve provided is on a consistent basis with the way we started the year and continued through the first quarter, and it’s the combination of both the continuing operations starting in third quarter as well as the discontinued operations of the EPB established developed markets business. We’ll just very simply show those two pieces and reconcile it back to the guidance provided today, and I just think this is cleanest way to bridge to the new reporting. Obviously for 2015, since we will also be reporting that business as discontinued until it’s actually—the deal closes early in the year, we’ll more likely be giving guidance obviously on that basis. And what was the second part of your question, Kristen?

I was just wondering if since there will be a 21% ownership interest, I guess, if I understand it correctly—

Yes, I mean, we’ll be basically carrying this investment at cost, and when it’s sold hopefully at gains, those gains will be reflected as specified items throughout the period during which we sell it.

Okay, perfect. Then any color just on the performance of the MitraClip program?

MitraClip continues to progress nicely. We had a very good progression in the second quarter. We still are on track for this product to approach $200 million in sales, which would be up 50% over the prior year, and we’re getting better coverage in Europe, more reimbursement in Europe, and we’re making very good progress through the U.S. reimbursement process and we hope to have some good news on that in the second half of the year.

And then more broadly, I guess, just on transcatheter valves, can you comment on whether you feel like you need a whole portfolio to be more—to more effectively compete within that space?

Okay, that’s one I probably wouldn’t answer directly for you, even if the answer was no. You know, I’ll put this in the context, Kristen, of yesterday I saw an article in the media where many buy side and sell side analysts speculated on what the next steps would be that we’d be interested in, of course which was very interesting. It was interesting to know the thoughts of a lot of people, but what I almost never do is try to telegraph where we might be interested, because a lot of times that’s going to affect other companies and stuff, too. So if you don’t mind, I’m just going to avoid that question.

That’s totally fair. Thank you.

Thank you. Our next question is from Jason Bedford from Raymond James.

Good morning. Thanks for taking the question. I guess just on EPD, you witnessed a pretty strong acceleration in growth from your key emerging markets, and I just wanted to get a little more detail on some of the factors that drove the acceleration in the second quarter, meaning how much was just better execution, contribution from new products, or just stronger end markets?

This is Brian. How are you doing, Jason? I think I’d start—you know, first of all recall with India, which is our largest market, last year I think we all experienced a little bit of a slowdown in that market when they implemented what was called the Drug Price Control Order, so the whole industry, which is good news for us – I mean, this is our largest presence, the market has come back up into what I’d say is more high single digits. It had actually reached low single digits through some of the disruption around the implementation of this control order last year. But that also with execution is serving very well for us in India, driving double digits growth. We’re set up very nicely for the second half of the year as well, both from our execution as well as nice comparison in terms of that market’s rebound. As I move to Brazil, that was one that was more about portfolio expansion. We had expanded out our products along the therapeutic area that we refer to as our women’s health, so that’s going very well. As I mentioned in China, again, execution but also coupled with—recall in the first quarter, we talked about a plant shutdown to build out capacity for one of our most successful products in the women’s health arena. That’s starting to come back. It doesn’t come back all at once, but I talked about seeing some benefits in the second quarter and third quarter now that that plant is online. So we expect the key emerging markets to continue to do well for the rest of the year, and when you look at this thing globally with the developed markets business, it’s still that nice, steady sequential improvement that we were talking about from the beginning of the year.

Okay, that’s helpful. I guess just sticking with EPD, and it may be a little premature, but lingering question from Monday – from a management perspective, you’re bringing on a couple new businesses, shedding another one. So my question is who is going to lead the new and refreshed EPD business? And I realize the end markets are growing a little faster here in emerging markets, but is the business going to be run any differently than it is today? Thanks.

Well, it already is being run differently, and the management that’s going to run it is already there. There were a number of changes that had been made in the last year and a half or so and some new folks brought into the company, some others moved. I’d say no change anticipated in the management team, and I’m sure they’ll be glad to hear that; but that’s already in place. We’re executing against the plans we have, expanding our product lines and our depth in various therapeutic areas. We’re rolling out our branding strategies in a number of these countries, and I think while it’s difficult when you have a whole portfolio of a lot of countries to see the specific needle move in general, we track them all pretty individually and by detail, and we’re seeing progress on the initiatives that we have in place. So I think the management and I both expect to see continued improvement in those countries, and I think even this year in the third and fourth quarter, so I think you’ll see that play out in the second half of the year here.

Great, thank you.

Thank you. Our next question is from Ben Andrew from William Blair.

Great. Two questions for us. I guess first, can you talk about where the adult and infant nutritional businesses will sort of settle out over the next several quarters as we annualize the one-time and, you know, a bit easier comps here with all the manufacturing capacity increases, and what that does for gross margins over that window?

Once we get through the second half of the year, where again you’re going to see strong double-digit growth for the nutrition business, we believe that when you weight the two businesses, which as you now we’re 55% pediatric, 45% adult, this should be an upper single-digit growing business. Interestingly in all the forecasts we look at, the adult is growing at roughly the equivalent rate as the pediatrics. So as Miles indicated earlier, it’s an extremely important business to us strategically. So once we’re through—as you know, with this kind of being a first half, second half story this year with the recovery, I think that upper single digit range is one that we view as sustainable for a business that has great demographics on both the pediatric and adult sides, and obviously we’re well invested in a broad range of more rapidly growing markets around the world with our emerging markets strategy.

Okay, and then on the diabetes side, you talked about Libre being a family of products. Can you give us some more insights into what that looks like beyond the initial flash version, and what sort of time frame we might think about as well as what the regulatory requirements may be for those products, given some of the claims you’ve been talking about.

I’d probably say it’s little premature for us to forecast that. I would only say it’s not a one-off product. There will be other manifestations of it, other versions of it over time. I think our first priority is to get this first one launched. I think it will be very well received and very innovative, and then it will be followed by others, other versions for various segments of the market. I think it’s just premature for us to comment on what that might be.

Okay. Maybe I can sneak in another one on the diagnostics side. You all have talked about kind of a handful of instrument systems coming. Obviously core labs has been great, but within molecular it’s just been a bit weaker. We haven’t seen those new platforms launched. Can you give us a bit of an update on any of those and when we might see those? Thank you.

There’s kind of an unprecedented number of systems in development in our diagnostics business broadly defined. There’s a new family of hematology analyzers, new family for blood screening, new family for core lab immunoassay and chemistry. We also have a program underway in our molecular space. There is our Ibis system in addition to that in molecular, a second system there; and then next generation for our point of care business, so across the board literally, new systems and updated systems in development for all of these businesses. They obviously can’t all launch at exactly the same time, so I’d say there’s sort of a, call it a three to five-year frame here where they will all sequentially roll out, God willing and everything staying on time. I think as I said, it’s unprecedented for that much to be done in a similar period of time, but when and as complete, I’d say our diagnostics business will have the most up-to-date delivery platforms in their various spaces across the board in the industry and we’ll be very, very well positioned.

Thank you.

Thank you. Our next question is from Jeff Holford from Jefferies.

Hi, thanks for taking my questions. I’ve got three questions, the first on gross margins. So you’re flagging that you’re going to have a drive on purchasing going forwards, and obviously you’ve been putting out some new manufacturing facilities, so it sounds like you’ve got quite some opportunity to increase gross margins going forwards, unless there’s something in the mix that’s going to pressure that against some of that. So maybe you can talk about opportunity for gross margin expansion maybe over a two, three-year period. Then second, just wondering if you can help—

Would you mind holding the second and third question until we answer the first? I’m finding I don’t remember the third by the time I get done with the second.

Sure.

Let’s answer that one first, and then we’ll go right back into the second question. You’re right – you characterized it well. I think that our manufacturing and supply chain and distribution initiatives and so forth will in fact improve our margins across the board. That’s been the case for the last three years as well in nutrition, and I think that’s primarily what we’re talking about here. All of the business is focused on margin improvement, and as I said, there are a number of things that will improve margins; but that has been the case. Some of that, as we’ve seen, has dropped into gross margin improvement in the overall company P&L. In some cases, that gross margin improvement has offset either currency fluctuation in the wrong direction, or in some cases price pressures in markets or other things from time to time. I think we call it out pretty well when it occurs where the gross margin improvement has occurred and so forth, and as you know price is part of that, and price is generally not going up in our businesses around the world. It’s usually under some pressure somewhere. So that improvement in gross margin also preserves margins where we do have price pressures, and every now and then there’s some country that determines it’s going to have a pricing action of some kind – you know, Saudi Arabia, Vietnam, others from time to time do that, and our gross margin improvements have either offset that or further added to the bottom line, and I think as we said earlier, there’s opportunity here going forward and there continues to be margin expansion opportunity with it. Second question?

So the second one is really if you can help us a bit more about the base cost of developed EPD from the perspective of just thinking how much net cash will drop through for share repurchases as you dispose of the Mylan shares.

Well first of all, there’s an assumption there that I would use it all for share repurchase, which I’m not. So I would just call out the fact that it gives me a lot of optionality in terms of cash disposition, but I’m probably not going to tell you today what that’s going to be.

Okay. The third question – and just to be clear, this is related to a wire that’s come up this morning saying you may have talked with Sanofi about their mature products business. Just a little bit more general question off the back of that, do you think there is significant opportunity for you to add significant more product breadth to EPD, because in the past you’ve talked just about geographic bolt-ons and infilling, but obviously a transaction like that – I’m not saying that you are doing it, obviously – would add significant product breadth. Would that be something that was important for the business?

Well, I’d answer that two ways. First of all, I saw the report on Sanofi, and my understanding is that’s a reference to their European-based business, and we just are in the process of selling ours, so I think these are two completely different questions here. Would I be interested in broadening our emerging market portfolio? Sure. Yeah, we’re always interested in broadening or deepening our portfolio in our EPD business, but for us going forward, that’s going to be an emerging market business and so consequently businesses that are similar products but in Europe or the U.S. would not be of interest to us.

That’s great, thank you.

Okay, we’ll take one more question.

Our final question today is from David Lewis from Morgan Stanley.

Good morning. Miles, just a quick kind of maybe trip down memory lane for you here. As nutritionals approaches normalcy, I wonder if you can provide us some perspective 18 months post-spin. If you go back to the time of the spin, you talked about the Abbott growth story. I think you discussed upper single digit growth. As we sit here sort of 18 months later, I wonder are you getting the growth contribution from the areas you expected, and do you still think you have the access to get back to upper single digit growth here?

I do. I think if I look at the single biggest event that was a setback for that business, it was the recall in Asia approximately a year ago in that nutrition business, which clearly impacted us in China and other countries, as I mentioned earlier. When that happens, it’s a year to recover because the consumer is an incredibly quality conscious consumer that once that consumer has shifted to another brand, it’s very difficult to regain them. That wasn’t something anybody anticipated, it wasn’t something anybody wanted to happen, including Fonterra; but when that happens, it does set you back a bit. I think we’ve recovered about as well as we could have within that year time frame. I like the progress that our team is making in China and other countries. The world is volatile. The great thing about emerging markets is they represent, I think, terrific growth. The unfortunate thing about them for businesses that measure their success every 90 days is that they can be pretty volatile, and in our case we are in a number of emerging markets, like a portfolio, which one hopes over time dampens the overall absorption of volatility, and I think it does. I think you have to kind of learn how to shape your portfolio and shape your approach to minimize volatility of markets, whether it’s currency driven, politically driven, whatever the case may be, and deliver that growth on a more consistent, durable basis for investors. And of course, that’s our intent and that’s what we’re trying to do. So if I look at our businesses across the board, I always think we can do better. I think we’re getting back to the track we want to be on with nutrition. I think we’re getting back to the track…

Great. Maybe just a quick follow up for Tom. Tom, your guidance for gross margin remains unchanged but it still implies that back half recovery. I guess where you sit now, what are some of the factors that give you the confidence that you can get back to that gross margin improvement in the back half of the year? In general, I feel like investors are very focused on the Abbott SG&A story and a little bit less focused on the GM story. What are some of the opportunities for Abbott, both in the back half of the year but more specifically over the next couple of years? Thank you.

Well you know, the guidance I provided on gross margin was pretty steady really from the second quarter through the fourth quarter. You know, it’s a situation – and we talked about this at the very beginning of the year, it was a particularly acute exchange year on the gross margin ratio, and that’s playing through—you know, it played through in the second quarter, it was a bit of a headwind, and it’s playing through a little more in the third quarter. So I think on the gross margin level, pretty much all the guidance is steady the rest of the year. Certainly we’re going to work hard to do as well as we can in that area, but I think once we’ve lapped through this year of exchange challenges, we’ll be back on the fundamentals and it is something that we’d like to see some steady improvement over time, even taking into account some of the challenge Miles outlined in his earlier remarks. So I think the second half is really more of a sales acceleration story and continuing to drive down these G&A costs to ultimately deliver on the forecast.

Okay, well thank you, Operator, and thank you for all your questions. That concludes Abbott’s conference call. A replay of this call will be available after 11:00 am Central time today on Abbott’s Investor Relations website at abbottinvestor.com, and after 11:00 am Central time via telephone at 203-369-0489, pass code 3332. The audio replay will be available until 4:00 pm Central time on Wednesday, July 30. Thank you for joining us today.

Thank you, and this does conclude today’s conference. You may disconnect at this time.