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Executives

Mary Kay Ladone - Vice President of Investor Relations

Robert L. Parkinson - Chairman, Chief Executive Officer and President

Robert J. Hombach - Chief Financial Officer and Corporate Vice President

Norbert G. Riedel - Chief Scientific Officer and Corporate Vice President

Analysts

James Francescone - Morgan Stanley, Research Division

Kristen M. Stewart - Deutsche Bank AG, Research Division

David H. Roman - Goldman Sachs Group Inc., Research Division

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

Matthew S. Miksic - Piper Jaffray Companies, Research Division

Rajeev Jashnani - UBS Investment Bank, Research Division

Robert A. Hopkins - BofA Merrill Lynch, Research Division

Frederick A. Wise - Leerink Swann LLC, Research Division

Matthew J. Dodds - Citigroup Inc, Research Division

Baxter International (BAX) Q1 2012 Earnings Call April 19, 2012 8:30 AM ET

Operator

Good morning, ladies and gentlemen, and welcome to Baxter International's First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time.

I would now like to turn the call over to Ms. Mary Kay Ladone, Corporate Vice President, Investor Relations at Baxter International. Ms. Ladone, you may begin.

Mary Kay Ladone

Thanks, Sean. Good morning, and welcome to our First Quarter 2012 Earnings Conference Call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; Bob Hombach, Chief Financial Officer; and Dr. Norbert Riedel, Chief Science and Innovation Officer.

Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product developments and regulatory matters contain forward-looking statements that involve risks and uncertainties, and of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially.

In addition, in today's call, non-GAAP financial measures will be used to help investors understand Baxter's ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website.

Now I'd like to turn the call over to Bob Parkinson.

Robert L. Parkinson

Thanks, Mary Kay. Good morning. Thanks for calling in. We're pleased today to announce our financial results for the first quarter and also provide you with an update on our full year 2012 outlook. As you all saw in our press release that was issued earlier this morning, EPS of $1.01 per diluted share exceeded our guidance and increased 3% versus the prior year on an adjusted basis.

First quarter sales after adjusting for FX increased 4% and exceeded our sales growth guidance of approximately 2%. Our strong financial position continues to provide us the flexibility to make investments to grow our core product portfolio, expand further in developing and emerging markets, advance our pipeline, and pursue opportunities that will position us for the future all with an eye toward delivering enhanced value to our shareholders.

R&D increased 10% this quarter, as our sustained focus on innovation has afforded us with a meaningful new product pipeline that's as strong today as any time in our history. And I remain encouraged with the progress we're making, which has resulted in a number of recent accomplishments that I'd like to briefly highlight this morning.

First of all, within our leading hemophilia franchise, we've achieved a number of milestones. As you know ADVATE was approved in December by the FDA as the only recombinant Factor VIII prophylactic treatment for both children and adults. This approval was based on a study demonstrating that ADVATE significantly reduced median annual bleed rates from 44 bleeds when treated on demand to 1 when treated prophylactically, and included the approval of a new dosing schedule that offer some patients the choice of fewer infusions versus the current standard prophylaxis regimen.

The initial response from customers has been very positive as evidenced by the strong double-digit growth of ADVATE in the United States during the first quarter. We remain encouraged regarding the long-term growth prospects of our hemophilia franchise as we've secured both competitive gains and conversions from on-demand therapy to prophylaxis, and will continue to invest in additional marketing activities to promote our competitive advantage and drive awareness of this expanded label.

Also in hemophilia, we announced the initiation of a Phase I clinical trial of BAX 855, a longer-acting PEGylated Factor VIII therapy based on the full-length ADVATE molecule. The Phase I results will serve as the foundation for advancing this important program through clinical development and determining whether BAX 855 can offer a treatment regimen requiring fewer infusions than ADVATE.

In our regenerative medicine business, we initiated a Phase III trial to evaluate the efficacy and safety of an individual's own CD34+ stem cells to increase exercise capacity in patients with Chronic Myocardial Ischemia or CMI. CMI is one of the most severe forms of coronary artery disease causing significant long-term damage to the heart muscle and disability to the patient. It's often diagnosed based on symptoms of severe chest discomfort that do not respond to conventional medical management or surgical interventions.

In addition, in the quarter, we received approval for TISSEEL fibrin sealant for vascular surgery providing a broad hemostasis label in the United States. This is an expansion beyond previously marketed indications and represents a significant opportunity for this franchise going forward.

In Antibody Therapies, we filed GAMMAGARD LIQUID for use in treating multifocal motor neuropathy or MMN, representing our first neurological indication in the United States. If approved, GAMMAGARD LIQUID will be the first and only licensed immunoglobulin therapy for MMN in the U.S., where we've been granted orphan drug status by the FDA. This will complement the approval we received last year for MMN in Europe.

Also, we initiated a second global Phase III trial evaluating the use of GAMMAGARD LIQUID in treating patients with mild to moderate Alzheimer's disease following a successful futility analysis that was conducted by the Data Safety Monitoring Board in January. This trial complements our first Phase III trial, which is fully enrolled and will conclude by the end of 2012.

We've also announced an extensive study for those patients who completed 18 months of treatment in the first Alzheimer's Phase III trial and meet the clinical -- or the required inclusion and exclusion criteria. This study is intended to provide additional data related to the longer-term safety efficacy and pharmacoeconomic impact of immunoglobulin treatment in these patients.

These achievements that I just mentioned depict just a handful of the programs in our pipeline that will present great opportunities for Baxter in the years to come. And we look forward to updating you on further R&D achievements as the year unfolds.

Before I turn the call over to Bob in just 1 minute, I'd like to comment on the announcement this week regarding HyQ, and also the one issued this morning regarding the site selection of our new plasma fractionation facility to support future growth of plasma proteins.

First, we remain very positive regarding the long-term growth prospects of our plasma-based specialty therapeutics business including GAMMAGARD LIQUID, FLEXBUMIN, FEIBA, ARALAST and GLASSIA. As you know, many of these therapies are used in treating diseases that continue to be both under-treated and under-diagnosed globally. Our continued confidence stems from our global market position, the safety and efficacy profile that our products command, and our unique differentiation strategy focused on new delivery options, expanded indications, and broadening access to care in developing markets.

While we're committed to supporting global market demand in the near term, we've selected a site in Covington, Georgia for a new state-of-the-art plasma fractionation facility to support longer-term growth. Construction will begin this year and will include operations supporting plasma fractionation, purification, fill-finish and a testing lab. Commercial production is scheduled to begin in 2018 with the new fractionation facility, adding up to 3 million leaders of new capacity annually when fully operational. The investment at the Georgia site is expected to total more than $1 billion over the next 5 years, and provide us with the flexibility and necessary infrastructure to expand even further in support of additional global market needs.

Second, earlier this week, as you know, Baxter and Halozyme announced that the FDA has requested additional information to complete its regulatory review of HyQ. The agency is requesting additional data on the use of hyaluronidase for chronic administration, specifically in relation to the HyQ Biologics License Application.

Just to be clear, there were no safety concerns cited by the FDA with respect to immunoglobulin therapy which, as you know, has a well-established safety profile and has been approved for chronic administration for patients with primary immunodeficiencies.

Baxter and Halozyme intend to work closely together to further understand the FDA's request and develop a plan to provide additional data. In addition, we expect to participate in a future meeting of the FDA's Blood Products Advisory Committee to obtain clarification on next steps. In light of this request, we now expect a delay in the anticipated regulatory review and approval timeline, which could delay the launch of HyQ beyond 2012.

As you know, the change in the anticipated timeline for approval of HyQ is not material -- financially material to our 2012 guidance. And of course, as we obtain additional information, we'll continue to update all of you on our plans and expectations.

As always, I'd be happy to address any questions you might have on that or other topics during the Q&A this morning. But first, I'd like to ask Bob to review our first quarter financial results and also our guidance for 2012. Bob?

Robert J. Hombach

Thanks, Bob, and good morning, everyone. As Bob mentioned, earnings per diluted share in the first quarter, excluding special items, increased 3% to $1.01 per diluted share, which exceeded our guidance range of $0.98 to $1. As mentioned in the press release, our GAAP results included a net after-tax benefit from special items totaling $19 million of income or $0.03 per diluted share for costs and adjustments related to recent business development transactions. Specifically, we recorded a special after-tax charge totaling $34 million or $0.06 per diluted share, primarily related to the upfront cash payment to Momenta for the development and commercialization of biosimilar compounds. This charge was more than offset by a gain of $53 million or $0.09 per diluted share, resulting from an adjustment to estimated milestone payments associated with the 2011 Prism Pharmaceutical's acquisition.

Now let me briefly walk you through the P&L by line item for the first quarter before turning to our financial outlook for 2012. Starting with sales, worldwide sales totaled $3.4 billion in the first quarter and increased 3%. Excluding foreign currency, sales increased 4%, which exceeded our sales growth guidance of approximately 2%. Better-than-expected sales materialized in a number of key product categories in both Medical Products and BioScience, and we also benefited from the Synovis acquisition, which closed earlier than planned. As a reminder, the benefit from recent acquisitions, which includes Synovis and Baxa, was partially offset by the divestiture of the U.S. multisource generic injectables business. The net benefit of acquisitions and divestitures on sales in the quarter was less than $20 million.

In terms of individual business performance, beginning with BioScience. Global Bioscience sales of approximately $1.5 billion increased 4% in the first quarter, and excluding foreign currency, sales increased 5%. Within the product categories, recombinant sales rose 4% and totaled $533 million. Excluding foreign currency, sales increased 5% as double-digit growth of 10% in the U.S. was partially offset by the impact of the Australian tender. Excluding the impact of the tender, recombinant sales increased 8%. As Bob mentioned, we're very pleased with the strength of our U.S. business, where we are deriving benefits associated with the new expanded label of ADVATE.

Moving onto plasma proteins. Sales in the quarter were $316 million and increased 3% versus the prior year period. On a constant currency basis, sales increased 4%. U.S. sales declined 3% due in part to lower plasma-derived Factor VIII sales resulting from the continued conversions to recombinant therapies and lower sales of albumin as we aggressively manage our global supply. This resulted in strong growth in plasma proteins outside the U.S. driven by double-digit growth of albumin, particularly in China and robust demand for FEIBA.

In Antibody Therapy, sales of $388 million increased 4%. Excluding foreign currency, sales were up 5% as we continue to experience very strong demand for GAMMAGARD LIQUID, particularly in the U.S. And we remain well positioned given our successful launch of our SubQ therapy, where we continue to see momentum in share gains, given its favorable tolerability profile and low infusion site reaction rate.

In addition, as you know, Octapharma returned to the market on a global basis last year. As previously communicated, the estimated benefit of the Octapharma impact in the first quarter 2011 was approximately $30 million. Excluding the benefit from the prior year, growth in Antibody Therapy was 14% on a constant currency basis, significantly higher than estimated market growth, suggesting that we've retained market share on a global basis that was gained during Octa's absence.

In the first quarter, sales in regenerative medicine, which includes our BioSurgery products, totaled $154 million and increased 10%. Excluding foreign currency, sales grew 11% as a result of double-digit growth of FLOSEAL and the incremental benefit from the Synovis acquisition of just over $10 million.

Finally, revenues in the other category totaled $71 million in the quarter and declined 4%. Excluding foreign currency, sales declined 3% as growth of vaccines were offset by lower third-party plasma revenues.

In Medical Products, global sales in the first quarter totaled $1.9 billion, reflecting an increase of 3% on both the reported and constant currency basis.

Within the product categories, renal sales totaled $588 million and were comparable to the prior year period. Excluding foreign currency, sales increased 1%, as U.S. PD growth accelerated to mid-single digits supported by solid patient gains. This momentum was offset by lower HD revenues.

IV Therapies sales advanced 10% to $472 million. Excluding foreign currency, sales increased 12% driven by higher demand for IV Therapies in the U.S., strong performance globally of our nutrition franchise and the benefit of the Baxa acquisition with sales totaling approximately $35 million.

Sales in the Global Injectables category of $505 million declined 2% on both the reported and constant currency basis. Excluding the net headwind of $30 million from Baxa and the impact of the U.S. multisource generic injectables divestiture, organic growth was in mid-single digits on a constant currency basis. Performance was driven by our pharma partnering and compounding businesses, as well as significant growth of certain injectable therapeutics like cyclophosphamide, a generic oncology drug.

Infusion system sales totaled $208 million and declined 1% on both the reported and constant currency basis. This expected decline was a result of lower access set sales, as we complete the transition to Spectrum and near completion of the COLLEAGUE consent order.

Finally, our anesthesia franchise posted robust sales of $138 million, reflecting a 17% increase versus the prior year. Excluding foreign currency, sales were up 18%. While growth was enhanced by easy comparison to the prior year, we did experience very solid demand for both Sevoflurane and Suprane on a global basis. This growth in volume more than offset continued pricing pressures for generic Sevoflurane.

Turning to the rest of the P&L. Gross margin for the company was 50.8%, in line with our expectations and lower than last year's gross margin by 20 basis points. Margin expansion resulting from mixed benefits was more than offset by headwinds, including incremental pension expense, austerity measures and dilution from business development transactions.

SG&A totaled $743 million in the quarter and increased 4% versus the prior year period as a result of incremental pension expense, promotional and marketing expenses, and investments we're making to enhance our global presence, particularly in emerging and developing markets. These investments were partially offset by business optimization savings and aggressive management of discretionary spending.

R&D spending accelerated 10% to $236 million as we continue to fund and advance a number of late-stage programs, including investments in our leading hemophilia franchise, Alzheimer's program and our Phase III adult stem cell trial.

The operating margin in the quarter was 21.9%, 80 basis points below the prior year due to lower gross margin and higher SG&A and R&D that's expected to enhance future sales growth and profitability.

Interest expense was $18 million compared to $10 million last year. This increase can be attributed to interest expense associated with the $500 million debt issuance in December of last year and lower interest income.

Other income totaled $4 million in the quarter compared to expense of $11 million last year, driven primarily by the impact of foreign currency.

The tax rate was 21.7% in the quarter, which is higher than our prior year due to a change in our earnings mix and slightly higher than our full year expectation.

And finally, as previously mentioned, adjusted EPS was $1.01 per diluted share, an increase of 3%.

Turning to cash flow. Cash flow from operations in the quarter totaled $413 million and increased 11% versus last year. Capital expenditures totaled $239 million, which compares to $198 million in the first quarter of 2011. DSO ended the quarter at 58 days, an increase of 2 days versus the prior year entirely due to an increase in international days outstanding. Inventory turns of 2.3 were essentially unchanged from the first quarter last year.

And lastly, during the first quarter, we repurchased approximately 10 million shares of common stock for $575 million, or on a net basis, approximately 7 million shares for $421 million, on track to achieve our full year objective of net share repurchases totaling approximately $1 billion.

Finally, let me conclude my comments this morning by providing our financial outlook for the second quarter and full year 2012.

First, for the full year, we have narrowed our guidance range and now expects earnings of $4.49 to $4.57 per diluted share. By line item of the P&L starting with sales, we continue to project full year sales growth excluding foreign currency of 4% to 5%. Given our current outlook for foreign exchange rates, we expect currency to negatively impact the top line by 2 percentage points. Therefore, we expect reported sales growth, which includes the impact of foreign currency, to be in the 2% to 3% range. We continue to expect full year gross margin rate for the company to be flat to modestly below the 2011 gross margin of 51.4%. We expect SG&A and R&D to grow in low- to mid-single digits. Interest expense is expected to total approximately $80 million and other expense, including noncontrolling interests, will be in the $20 million to $30 million range.

We assume a tax rate of approximately 21.5%, flat with 2011 and now expect a full year average share count of approximately 555 million, which assumes approximately $1 billion in net share repurchases.

From a cash flow perspective, we plan to generate cash flow from operations of more than $3 billion, which includes an outflow of approximately $250 million related to the finalization of the COLLEAGUE consent order.

Now to expand on full year sales assumptions for each of the businesses. First, on a constant currency basis, we continue to expect Medical Products sales to grow in the mid-single digits. This includes IV Therapies sales growth of approximately 10%, which includes the benefit of approximately $120 million in sales related to the Baxa acquisition. Anesthesia sales growth in high-single digits reflecting the strong performance in the first quarter. Global Injectables sales growth in mid-single digits, which includes the net benefit of Baxa sales totaling approximately $40 million and the divestiture impact of approximately $60 million. Infusion System sales, which are expected to decline approximately 5% and reflect a tough comparison for SIGMA as we complete the consent order later this year. And lastly, renal sales growth is expected to be in low-single digits.

For BioScience, we project sales growth, excluding foreign currency, in the mid-single digits and there's no change to our original guidance by product category. Our outlook includes recombinant sales growth in low-single digits, reflecting the impact of recent tenders; plasma protein sales growth in mid-single digits; Antibody Therapy sales growth in low single digits, which includes robust underlying demand and the impact from Octapharma.

I'd like to take just a moment to point out that in the second quarter, we face our most difficult year-on-year comparison for Antibody Therapy as sales increased 21% on a constant currency basis. And as you know, we expect to continue to improve our inventory position in advance of our third quarter shutdown of the old L.A. fractionation facility. Therefore, our expectations include an assumption that global antibody therapy sales will be lower in Q2 this year versus the prior year period.

Moving on to regenerative medicine. We expect sales growth of approximately 20%, which includes incremental sales from Synovis of approximately $75 million. And finally, the other category is expected to decline approximately 5%.

As mentioned in our press release, for the second quarter, we expect earnings per diluted share of $1.10 to $1.12 and sales growth excluding the impact of foreign currency of approximately 3% to 4%. Based on our outlook for foreign exchange rates, we expect currency to impact sales by approximately 3 percentage points. Therefore, we expect reported sales to grow in the 0% to 1% range.

Thanks, and now I would like to open up the call for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] I would like to remind participants that this call is being recorded, and a digital replay will be available on the Baxter international website for 30 days at www.baxter.com. Our first question comes from David Lewis of Morgan Stanley.

James Francescone - Morgan Stanley, Research Division

This is actually James in for David. My first question is on the new capacity plant in Georgia, a couple points there. One, I think given the 3-million-liter capacity, total spend in CapEx of $1 billion is a little bit more than we're expecting. Can you give any details on -- whether that also includes additional purification capacity? And is that -- would that be able to -- could you expand that capacity beyond 3 million liters with the infrastructure that you're putting in place? Second, 3 million liters actually seems a little bit less than we are expecting to meet your capacity needs over the long term. Can you talk a little bit about your ability to bridge to that new facility with the existing capacity at the old and new L.A. facilities?

Robert L. Parkinson

James, let me -- this is Bob Parkinson. Let me maybe kind of address your question at a higher level, and then I'm going to turn it to Bob Hombach to take you through maybe some of the elements of the CapEx spending that we projected. First of all, just to back up a bit, if you look at our current plans with old L.A., putting it back in commission, as well as some expansion opportunities at new L.A., Vienna and Rieti, we certainly feel that our installed footprint of capacity can support, say, 6% to 8% kind of growth over the next few years, setting the stage, then longer term for the capacity expansion that we announced this morning. I would say the announcement this morning, first of all, is an expression -- I think, represents our confidence in the long-term global growth of the Plasma Protein business. A little bit of context, over half the world's population remains undiagnosed and certainly under-treated for many of the conditions that are treated today with therapeutic proteins, and being the world leader in this area, the announcement this morning is really an investment for the long term and speaks to our confidence in the business. As Bob will explain to you in a minute, the magnitude of the investment represents more than the initial phase of 3 million liters but sets the stage for the kind of expansion over time that supports the kind of addition that I just described. So with that as context, Bob, I'll let you maybe give a little more detail in terms of the breakout. Okay?

Robert J. Hombach

Sure. Yes, in terms of capacity and investments in capacity, historically, you've seen us both on additional capacity expansions on the existing footprint, and I think others in the industry. This announcement today represents a true greenfield site, where we are going to be putting infrastructure in place in addition to, and we were very careful to point this out in the press release, it is fractionation capacity, it is purification capacity, and it is fill-finish capacity, and an additional testing lab, which is another requirement in the overall plasma fractionation process that we need to have in place. So we are adding all elements in one location here whereas historically, you may have heard additional capacity investments talk about in a piecemeal fashion. As we look at this investment, approximately 30% of this investment relates to infrastructure. And as Bob just mentioned, that infrastructure will support both this initial 3 million in capacity but also significantly more capacity in the future. And by making the investment now, it will position us to add that additional capacity in the future at a lower marginal cost and in a much more timely fashion than this greenfield site is going to take for us to bring out.

Robert L. Parkinson

Does that answer your question?

James Francescone - Morgan Stanley, Research Division

That absolutely addresses my question, very helpful. And then the second is just on recombinant. Obviously, very strong growth in the U.S. this quarter. I was wondering, do you think that represents true -- presumably, that's growing faster than market at 10% figure. Do you think that represents more patient share gains and that patients are switching to ADVATE, or does it represent higher dosing and maybe a little bit more use of prophylaxis among your existing patients?

Robert L. Parkinson

I'm not sure, at this stage, we know. I think that it probably represents some of each of those elements that you just described, James. So I think it's too early to be able to quantify which of those variables is the most pronounced. But we know specifically that, on a patient-by-patient basis, that we are gaining conversions, one, from competition and then two, expansion and use of ADVATE given the broader label. So as we stated in our prepared comments, early start, but it's quite encouraging.

James Francescone - Morgan Stanley, Research Division

And maybe I can just get one more in on SubQ. I mean even if HyQ is a little bit delayed, I think one of the things that's interesting is that your non-HyQ SubQ product has been doing a little bit better than we expected. Would you be able to quantify either from a share or dollar perspective what the run rate there is now?

Robert L. Parkinson

Well, probably, I think too early to quantify. I mean, again as we commented previously, and I would reiterate today, James, we're very encouraged by the market response of our 10% SubQ. As you know that our SubQ is the lowest reported local site reaction of any of the SubQ products by far, and that's been really validated through use in the marketplace. Beyond that, quantitatively, Mary Kay, I don't if there's anything you want to share that might be helpful?

Mary Kay Ladone

Yes, I think we're off to a great start with SubQ. We continue to see patient gains both competitively, as well as conversions from IV to SubQ, James, and our assumptions currently include sales approaching -- on a global basis, because we do also have a product in Europe that we sell -- of about $100 million in 2012.

Robert L. Parkinson

And I appreciate your question. I mean, obviously, we'll talk more about this, I'm sure, with follow-on questions about the HyQ program, the delay and so forth. But your point is a good one because the reality is with a 10% SubQ, we got a great product. We've got something to promote, we're getting traction in the marketplace, and so growth in this segment is not exclusively dependent on the short term of the timing approval for HyQ. So that's an important point for everyone to understand.

Operator

Kristen Stewart of Deutsche Bank is on the line with a question.

Kristen M. Stewart - Deutsche Bank AG, Research Division

I guess I will follow up on just kind of any more specifics that you might have on HyQ. Maybe just helping us frame what your initial expectations are with the FDA's request and maybe some broad timelines, if you can.

Robert L. Parkinson

Yes, I don't know if we can define the timelines, Kristen. And there's still -- we're still engaged with a discussion with the FDA so I don't think we want to be premature. Maybe you'd want to -- I'll ask Dr. Riedel. Norbert, why don't you comment on this, if you could, so we can provide some help to Kristen.

Norbert G. Riedel

Maybe just as a follow-up to what we have announced at the beginning of the week and to just ground everyone, the study we have done in the administration of immunoglobulin therapies for HYLENEX or HyQ is a study where patients were treated immunoglobulins for more than 1 year. In the extension that we have ongoing, actually some patients are approaching 3 years, and we have not seen any serious or non-serious adverse events that would have actually given us any concerns in the clinical study. We have actually talked about the results as recently as last month, and we presented the longer-term studies. And the concerns of the agency are really around the long-term chronic use of the hyaluronidase that is part of this therapy and the administration of immunoglobulin. Immunoglobulin therapy, as you know from our indication in PID, is indicated for long-term chronic use. So the concerns that the agency has raised are around hyaluronidase in long-term chronic use. I can't really give you a lot of specifics or more specifics than what we have shared only because we are in dialogue with Halozyme and the FDA as to how to address the concern and what kinds of studies we would propose to address those concerns. But I will, of course, keep you posted on that, as soon as I have a clearer picture and better definition. But that's really all I can share with you at this point.

Kristen M. Stewart - Deutsche Bank AG, Research Division

Okay. And then, I guess, your expectation is to go before a panel. Am I reading into it then, or should I read into it that, that seems, at least, to be positive and that I would imagine you would be able to give some of this data from the extended study. So I guess, how should we think about the panel just in terms of possibly helping maybe to support an approval?

Norbert G. Riedel

So the Blood Products Advisory Committee is the panel that you are referring to. It will actually be involved in looking at the proposed studies that we will put forward as to how to address the concerns of the agency. So I think you're right. I think that's a positive. And actually, it's also really a pretty normal course of action and a regular path, so there's nothing particularly unusual about it. And that's the ground plan, that we will actually have the panel and discuss the study design with the panel.

Kristen M. Stewart - Deutsche Bank AG, Research Division

Actually, can I ask one other question just on the gross margin? Given the recombinant strength in the quarter, I was a little surprised that we didn't see a little bit more upside there. Can you maybe just walk through in any granular detail the moving parts there?

Robert J. Hombach

Yes, what I would say is, first and foremost, Q1 is always the lowest quarter from a margin standpoint for us in most cases. So again, this was in line with our expectation. There were some positive mix benefits, as we mentioned. There are some headwinds built into 2012 that we've talked about quite a bit. As we mentioned, we remain very confident in the full year guidance of flat to very modestly down, which implies that the gross margin will increase in subsequent quarters. I'd also highlight that the one aspect of seasonality that's pretty consistent in our results is Q2 tends to be a higher margin quarter for us, primarily due to the fact that we have sales in Europe of our FSME vaccine, particularly encephalitis. And so that's a high-margin product that tends to augment the Q2 margins. So we're certainly expecting margin to improve as we move throughout the year with Q2, again, likely to be the highest of the quarters and again, very comfortable with the full year guidance.

Operator

David Roman of Goldman Sachs is on the line with a question.

David H. Roman - Goldman Sachs Group Inc., Research Division

I was hoping you could comment just on HyQ and the extent to which the FDA review, how that influences the international approval timelines and what the latest thinking was there.

Norbert G. Riedel

So as you know, we have actually submitted our dossier in Europe and in Canada as well, and it's under review there. And we are in dialogue with those agencies, but there's really nothing in particular or specific that I need to comment on or can comment on because it's an ongoing review process, and it's taking, likewise, its normal course of action at this point.

David H. Roman - Goldman Sachs Group Inc., Research Division

Okay. And maybe a follow-up on the CapEx questions for Bob. The $1 billion, how should we think about that getting layered into the cash flow statement? Is that something that you're swapping on existing CapEx for that, or that's a true gross or net addition of $1 billion spread evenly over the next several years?

Robert J. Hombach

That will be -- that is incremental in the sense that -- we always invest in our plasma footprint, and as we've mentioned, we've got additional capacity coming online in Italy, as an example. So there's an existing base of expense of spending that's going on even today. Given the nature of bringing a new plant up, though, the spending tends to be a bit more front-loaded because you need to get the facility in place, the equipment in place, build a conformance lot, submit stability studies and all of those things. So I would say 2013 and 2014 are going to be the peak years. And from an incremental standpoint of where we're sitting today, I think about it in kind of $400 million of incremental spend in each of those years, with some flex between '13 and '14 to accommodate this additional spending. But what I would add is given our strong cash position, our strong cash flow that we expect to have going forward, our very strong balance sheet and flexibility within our current credit ratings, this additional investment is not going to constrain our ability to continue to do the things we've been doing, which is reinvesting in other parts of our business, turning significant value to shareholders in dividends and buyback, and doing select bolt-on acquisitions that augment our portfolio.

David H. Roman - Goldman Sachs Group Inc., Research Division

Okay, that's helpful. And then lastly, maybe Bob Parkinson, you can provide just some context for the acceleration in R&D spending. I mean, this has been a pretty consistent theme at Baxter, certainly since you've been there. I think R&D spending is up over 50% since you joined the company. Maybe -- the HyQ disappointment on Monday, I think, does raise some questions just about the return profile of some of that R&D. Could you talk to us how we should think about the return on that investment and when we start to see a little bit more top and bottom line contribution from those investments that you've made?

Robert L. Parkinson

Well, first of all, I don't think anyone should associate the disappointment and the delay in HyQ with the broader pipeline. In my prepared comments this morning, I cited just a few examples of many in terms of how we're progressing in all of our businesses on multiple fronts. I mean, the ramp-up in R&D since I've been here, as we've discussed many times, is a reflection of, at the end of the day, what's our most important strategic priority, which is the ability to innovate because that's really the only sustainable business model in this industry, in my view. And again, as I've commented a number of times, I try to be as objective about this as I can. I really believe our pipeline today is the strongest that it's been in the history of the company. The profile of what's in our pipeline are largely products that are higher margin than the overall company, clearly, that represent a better growth trajectory with primary focus on core franchises, hemophilia being one, renal and dialysis being another and then so forth. So in terms of the impact, obviously, we all know HyQ was the near-term opportunity to have some material effect on our sales growth. But I mean things that we've already got approved and launched from the 10% SubQ, we talked about the expanded label on ADVATE. Sometimes we don't typically associate this with R&D spend. But these are all programs that required R&D investment, and the highest payback and the most significant return are on those things that further enhance the position of franchises or businesses that are already established. There's just a couple of examples. We hope to get the approval on the MMN indication and so on. So I'll stop short of playing back the entire pipeline, but let's not associate the shorter-term disappointment on HyQ as a reflection of the broader pipeline because the strategic priority is as I described.

Operator

Mike Weinstein of JPMorgan is on the line with a question.

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

So, Bob, maybe I can just ask a question on HyQ, because I do want to focus on it, and I think there are probably 2 questions. I think the first question is what does Hylozyme have available in terms of its data set, both clinical and nonclinical, that you think could be a value to the FDA? That the FDA has not already seen? And second, this response by the FDA has certainly surprised the company. This is an issue we've discussed over the last couple of years, the FDA's comfort with the chronic usage of hyaluronidase. So why do you think this surprised the company, and what was missing in the back and forth with the FDA that had this come out last minute?

Robert L. Parkinson

Well, I mean, look, the one thing we all know is it's difficult to speculate on the motivation or rationale of the FDA. I think it is fair to say that we were surprised, certainly disappointed. Norbert, I'm going to have you address the first part of Mike's question in terms of Hylozyme data, what do we have and so on, recognizing that we're limited to talk about it until we get further down the path in our dialogue with the agency.

Norbert G. Riedel

Right. So, Mike -- because we have talked about this before. You and I have talked about this before. I was very much focused on the actual clinical trial results that we saw in our first Phase III trial with in HYLENEX in PID. And as I mentioned in my earlier comments, we have seen a very clean efficacy and safety profile in that study, not only within the Phase III that was submitted to the agency, but also with respect to the extension that we have ongoing where patients have been on therapy for almost 3 years now. So clearly, I have and continue to have a high level of confidence that the clinical trial data is very strong data, and we published that and you referred to that in your write-up. With respect to the agency's concern, it's really about introducing the recombinant human pH 20 or hyaluronidase as a long-term chronic administration of a molecule, and questions or concerns around that. We are truly working with Hylozyme on a daily basis to identify what data exists and what data the agency is looking for and how to best design studies around those data. At this point, that's really all I can tell you. And as soon as we have that better defined, we will of course communicate that. That's the current status.

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

Bob, does the potential pushout of Hylozyme, and I'm not talking about 6 months, but -- of HyQ, the pushout maybe beyond 6 months, making this a longer pushout. Does that potential change your thinking at all on M&A in terms of appetite, not only for the -- you've talked about wanting to do a series of smaller deals but potentially doing anything larger?

Robert L. Parkinson

No, it doesn't. Our priorities in terms of M&A are consistent with what we've -- I don't see any correlation between the 2 at all. Just a straight out answer to it.

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

I understood that. I think the question from the street would be if the targets you have internally for re-accelerating revenue growth, and a lot of that's going to be driven by the pipeline. If those targets get pushed out, does that -- would that lead you to pursue M&A more aggressively or sooner than you would have, otherwise? That's the thinking behind it.

Robert L. Parkinson

I don't think so. I think our outlook -- and obviously, we look forward to get together with everybody at the investor conference in October to talk about this. I mean, let's just back up and put this in perspective. We're disappointed in the delay of HyQ. Only a handful of analysts, I think yourself included, Mike, had even quantified what the long-term impact was or longer-term impact. I think the average incremental revenue associated with this in 2014 -- so in other words, 2 years post the launch, it was somewhere between $100 million and $200 million. I don't want to minimize that. That's not insignificant. But in the context of a company of our size, particularly -- just to be very candid with you in view of the reaction of the market this week, is a total disconnect, okay? The other point I would make is assuming this represents just a delay -- as you all know, because we talk about capacity, fractionation capacity all the time, the incremental value of HyQ is more price-related than it was volume-related, because to be very candid, with the 10% SubQ, which I commented, robust market growth, opportunities globally, we can sell as much IVIG as we can make, independent of whether we have HyQ approved or not. So again, I don't want to minimize the incremental value primarily associated with the price. But if the composite or consensus average of incremental sales 2 years out was somewhere between $100 million and $200 million, that puts it in a quantitative perspective vis-à-vis the reaction to the market this week. So you know what? I'll just leave it at that.

Michael N. Weinstein - JP Morgan Chase & Co, Research Division

I think that was perfect. Let me ask you just a couple other pipeline follow-ups. One, can you just talk about ADVATE approval in China? Is that coming as well as from other emerging markets I know you're waiting on? And second, where are you on timeline for filing your recombinant Factor IX product?

Robert L. Parkinson

Okay. Well, the ADVATE -- Mary Kay, help me. I mean, Russia and China are still on track this year.

Mary Kay Ladone

Yes, still on track. On track, Mike, second half of this year, no change at this point to our expectations for both China and Russia. And in regards to the recombinant Factor IX, we are looking -- that's also on track to be completed here and filed in the second half as well.

Operator

Matt Miksic of Piper Jaffray is on the line with a question.

Matthew S. Miksic - Piper Jaffray Companies, Research Division

Just -- not to beat a dead horse here on your points you just made, Bob, on HyQ, but just -- I want to be clear about one thing, and I think you talked about this in the past. Let's say hypothetically, it was going to be a $100 million or $200 million product in 2 years. Is it also fair to say that your thinking was you get into the SubQ market with SubQ, and then you add to that, drive mix, drive some incremental share possibly, but to some degree, penetrate your SubQ business over time with HyQ?

Robert L. Parkinson

Yes. And clearly, that was the original strategy, and it still is based on the timing of approval of HyQ. I think the difference is, originally, when we launched the 10% SubQ, we saw it as a catch-up to be then competitive with other SubQs on the market, okay? In other words, a catch-up launch to set the stage for HyQ. What we've learned, as I commented, we have the superior SubQ product right now, which has a lot more traction and opportunity than what we had earlier anticipated. So the strategy remains the same to over time upgrade to HyQ when and if we get approval for HyQ. But in the meantime, we have more upside and opportunity on 10% than what we had estimated at the start, if that makes sense to you.

Matthew S. Miksic - Piper Jaffray Companies, Research Division

It does. And so there I'd look at that $100 million to $200 million number and I'd, say, "Well, part of that was sort of an overlay on the existing business at that time." So, yes, I would agree with your earlier comments, and those are very helpful. One just point, if I could, on what the FDA has said or focused on in terms of the chronic use. You mentioned, I think, clearly, that there's no safety concerns for IVIG, which is used chronically and widely. Was there any observations or any blip in the data that the FDA had seen or focused on for hyaluronidase? Or is this a matter of routine that they've just decided to be more careful?

Robert L. Parkinson

Norbert? So I'm going to ask Norbert to comment on this.

Norbert G. Riedel

Maybe, I'll just expand on it just in the following way. There was nothing in particular. I think it has to do with, and in a reasonable way, has to do with the recombinant hyaluronidase being positioned for chronic long-term use for which it is currently is not indicated. And I think the questions and concerns are all around that aspect of this therapy. And keep in mind, maybe as a follow-up to the earlier questions, while our SubQ is positioning us extremely well in the space of this cloud of administration, we have always looked at the HyQ as truly a transformational, game-changing incremental improvement, much beyond what SubQ does. And so it's one of those pioneering programs in our pipeline that we think are highly promising, but also in a way, go down a new path with the regulators. And therefore, there's a little bit more uncertainty than there would be in a Factor IX or a Factor VII or a von Willebrand Factor, which is a more straightforward -- maybe a life cycle management product development approach versus pioneering new ground. And that also speaks to the pipeline being really balanced between life cycle management opportunities that are truly enhancing existing core businesses and new opportunities like HyQ, like stem cells, for which I think we need to make resources available. Because that is our legacy of truly premium first-to-market innovations to our patients and customers. If I was to draw conclusions from HyQ in general onto the pipeline and the productivity of the pipeline, I think we'll be [indiscernible] in this place.

Matthew S. Miksic - Piper Jaffray Companies, Research Division

That's very helpful. And then one, if I could, just on -- Bob your comments on -- I think holding share obtained from Octa last year was sort of the math that you were doing with the $30 million benefit that you saw in the first quarter of '11. When does that -- you'd sort of given -- if I recall correctly, your guidance assumes that you'd surrender something like $100 million of gained share last year back to Octapharma as they got into the market. It doesn't seem like that's happening yet, or it -- from the numbers you're reporting, I guess, when does that turn into potentially edging up some of the expectations for the year?

Robert J. Hombach

Well, a couple of things. As we pointed out in our prepared comments, we are going to have a tough comp in the second quarter, but we will see stronger growth in the third or fourth quarter. But as we also mentioned, because of shutting down the old facility, extending its useful life and providing important flexibility going forward, we are going to be constrained this year. We have shifted product to meet market needs. And so I didn't want to imply here that the specific customer-by-customer retention of share from Octa because different price points, different geographies where they're stronger and so on. But in aggregate, stepping back and looking at the level of demand we're seeing for our product, again, augmented here with a strong uptick for SubQ in the -- 10% SubQ in the SubQ market, we feel very good about how our share position overall has evolved. And we have not competed to try to retain some of those more price-sensitive customers that we've talked about before that are likely targets for Octa's reentry.

Operator

Rajeev Jashnani of UBS is on the line with a question.

Rajeev Jashnani - UBS Investment Bank, Research Division

Just on the recombinants business, there's obviously a robust result there in the U.S. And I was just wondering if you could help us understand what we could expect there, maybe in the U.S. and x-U.S. across the remainder of the year. One quarter obviously was very strong, but can we expect the same kind of growth across the balance of the year and maybe x-U.S. declines widening? Or if you could throw out any other color there?

Robert J. Hombach

Yes, I mean, recall that we're in the process of the Australian tender playing out, so we're going to have tough comps throughout the course of this year on the international front related to the Australian tender, which is going to murk up the picture here as we go forward. Again, we're very encouraged by first quarter results in the U.S. and the reaction from both treaters and patients to the very strong data from the ADVATE label expansion and prophy indication for adults and so on. But again, it's early days. So I would say we expect to be in good position to grow, at least with the market here in the U.S. throughout the course of this year. But again, we're going to have tough comps internationally, and that's reflected in our global guidance for the full year.

Rajeev Jashnani - UBS Investment Bank, Research Division

Okay. And I had one follow-up on the IVIG market. I think there was a pretty healthy increase reported in the CMS database for pricing for the fourth quarter, and I was just wondering if you could comment whether you saw that sustained over the first quarter.

Robert J. Hombach

No. We've got to be careful here because, as you know, there's a number of dynamics that come into play with CMS reporting. We've talked about the fact, in terms of the contracting process here for 2012 with our customers in the U.S., we had a very modest price increase, certainly well below 6%. And so that has to do with timing and how we report certain adjustments and rebates and following their rules and so on. So I would not attribute much value to that 6% because that is not what we're seeing.

Robert L. Parkinson

Mary Kay, would you follow on to the other -- first part of the question?

Mary Kay Ladone

Yes, I just was going to add, Rajeev, that in recombinants, as Bob mentioned, we didn't change our full year guidance at this point. The Australian impact is about $60 million for the full year, and that will pay out over the course of the year. We'll have a little bit easier comps outside the U.S. as we get into the back half of the year. But just an example of the impact Australia has had, international sales were flat in the quarter, including the impact of Australia. And x that, they were up 6%, in line generally with the market upgrowth that we're seeing and estimating.

Operator

Bob Hopkins of Bank of America Merrill Lynch is on the line with a question.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

So first on HyQ. I assume the FDA has seen the data approaching 3 years that you mentioned in your comments earlier?

Norbert G. Riedel

No. The answer is no. We have not yet submitted the data on the extension study to the FDA.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

And how many patients are out beyond 1 year at this point? How many patients do you have that are out to that 3-year mark or close...

Norbert G. Riedel

Just a few more than 50 patients that continue in the extension study, and recall the Phase III study itself was just shy of 90 patients. I think it was 87 -- no, 56, I believe, are continuing in the extension study.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

So the data -- obviously, we they've seen the 1-year data on all patients, so you're going, at some point, present to them the incremental data here. I'm just trying to frame the timing. I know there's not much you can say on this, but listening to the conversation, you're talking about you're designing new studies and questions about chronic use. It would seem to me that we should really be thinking about this in terms of an 18-month delay. I mean, from your -- at least. I mean, from your perspective, is there a better scenario here that's possible from a timing perspective? Or is the 18 months that I'm using as a placeholder probably not a bad way of thinking about it at this point?

Norbert G. Riedel

Well, truly, I don't know what actually leads you to the 18 months that you are using. I can only tell you that at this stage, I really can't put a 3-year time frame around it, because that will depend on not only the design of the studies, but also the discussion with the FDA and with the advisory committee. So it's truly too early. But I do believe that we will be pushed out beyond 2012. As I get closer to understanding what exactly needs to be done, then I can help you with the timeline. But at this point, I would be speculating and I'd rather not do that.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

Okay. And then a question on plasma capacity. Your guidance for this year is for basically low- to mid-single-digit growth in those businesses. At what point do your capacity constraints ease? And one way to ask the question is, if we look out beyond 2012, if the demand were there, could you grow those plasma businesses more in that 6% to 8% type of area as we think about 2013? Again, if the demand were there? So I'm just trying to get a sense as when you think these capacity constraints will ease? And is about high-single digits possible beyond 2012 if the demand warrants it?

Robert L. Parkinson

Well, yes. This is what I tried to comment on at the outset is with keeping up old L.A. in commission and some of the other expansion initiatives we have, we believe our installed capacity can support growth over the next few years, let's say, in the 6% to 8% range, Bob?

Mary Kay Ladone

That's volume growth.

Robert L. Parkinson

That's volume growth, yes.

Robert J. Hombach

Yes.

Robert A. Hopkins - BofA Merrill Lynch, Research Division

Okay. So when specifically do the capacity constraints start to ease? Is that really not until the kind of beginning of 2013?

Robert J. Hombach

Yes, I would say kind of towards the middle of 2013, because as we've talked about, we're taking old L.A. down for 5 months towards the end of this year. But with the plasma production cycles that you're familiar with of up to 6 months, it's going to take into the second quarter before we've got it back up running and go through the process and have sellable product. So I would put it as kind of middle of next year before that's online. But as we also have mentioned, we're bringing additional capacity on to the back half of this year in our Rieti, Italy facility. We are ramping up production this year and continuing to ramp up the utilization level in new L.A. We'll take another step-up in early 2013 as well, so that will alleviate some of the pressure here. But I think really to be in the most robust situation, it's middle of 2013.

Robert L. Parkinson

But the 6% to 8% over the next few years is reasonable, and that's IGs really.

Robert J. Hombach

Yes, that's IVIG.

Robert L. Parkinson

And albumin would have.

Robert J. Hombach

And other. We'd be in better shape.

Robert L. Parkinson

We'd be in better shape with albumin, okay.

Operator

Our next question comes from Rick Wise with Leerink Swann.

Frederick A. Wise - Leerink Swann LLC, Research Division

Just a couple of things, and I apologize. I jumped on a little bit late. Did you review any update on the home hemo product timing, and when you're expecting to get that product launched and going?

Robert L. Parkinson

Yes. Actually, we did not, Rick, so it's a timely question. So Norbert and Mary Kay, you want to give the specifics?

Norbert G. Riedel

So the study is actually ongoing, the clinical study, and I would characterize it as patients on therapy really liking the therapy. So since we restarted, we have had no further issues to deal with, and therefore our projected timeline remains for a CE marking in Europe in 2013 and for U.S. launch in 2014 -- a U.S. filing in 2014, I'm sorry.

Frederick A. Wise - Leerink Swann LLC, Research Division

So filing -- U.S. filing in 2014?

Norbert G. Riedel

Correct.

Frederick A. Wise - Leerink Swann LLC, Research Division

And that would take another -- if some of the things went normally, that might take another year. So it's 2015 if all goes well for a launch theoretically?

Norbert G. Riedel

It shouldn't take that long because we've -- but I'd rather not speculate on it. So let's stay with filing and then see what happens thereafter.

Robert L. Parkinson

Yes, and, Rick, as we've mentioned in the past, I mean, we're as excited about the opportunities for home HD outside the U.S. as we are inside. And while we would love to have an approval in the U.S. as soon as possible, we certainly can make a lot of headway on this program by getting a CE mark and moving forward in those markets where today, we have a well-established PD business. There is a well-accepted approach to home treatment for dialysis in Europe and reimbursement rates are attractive.

Robert L. Parkinson

And we still have 80% of our renal businesses outside -- PD business outside of the U.S. So sometimes people lose sight of that. So that's really the big opportunity in the short term, Rick.

Frederick A. Wise - Leerink Swann LLC, Research Division

Right. Just 2 more questions, and I'll let you pick and choose if you've discussed it before. Just an update on the integration of med delivery in renal. It sounds like we're pretty much done and so, Bob, I'd be curious to -- Bob Hombach, I'd be curious to hear if there's further cost cutting beyond that? And last, Norbert, any update on the Alzheimer's program and Phase III data, next reported milestones, anything would be appreciated.

Robert J. Hombach

Okay. So on the Medical Products integration front, the way we characterized it up to this point, this was a $75 million to $100 million cost opportunity for us over time. We're probably 2/3 or more down the track of realizing that. But there still are additional leverage opportunities in front of us over the next couple of years, but the lion's share of it we have already baked into our expectations.

Norbert G. Riedel

And, Rick, on Alzheimer's, the first Phase III trial, as you know, will complete with the last patient out at the end of this year. We still expect to have the data analyzed and available in the first half of 2013. The second trial, which we initiated after the futility analysis turned out to be positive, has begun to enroll patients. Sites have been initiated, so we are off to a good start on the second Phase III trial.

Frederick A. Wise - Leerink Swann LLC, Research Division

And data presentations interim, anything coming up the next 6 to 12 months, Norbert?

Norbert G. Riedel

No. I don't think so.

Operator

Your last question comes from Matthew Dodds with Citigroup.

Matthew J. Dodds - Citigroup Inc, Research Division

A couple of questions. On the new facility for plasma, is it going to be similar to L.A., because I'm just wondering why you might not want to try to tweak it a bit and see if you can get a little bit more yield out of IG?

Robert L. Parkinson

Actually the layout, Matt, we're going to take a little different approach, more of a modular approach than we took in L.A. I think that does several things for us. One is to, I think, relative to the yield question you asked, perhaps do a better job in terms of yield. It also allows us to scale up beyond the 3-million-liter incremental capacity that we cited this morning in a quicker fashion if we choose to do that. So the approach is actually quite different than what we took in L.A.

Matthew J. Dodds - Citigroup Inc, Research Division

And then one final question on renal. Internationally, it grew, I think, about 1%, and it looked like it was off a pretty easy comp. Is there anything unique that happened that quarter? Or was it PD, HD? Anything you can give me color on that?

Mary Kay Ladone

Yes, Matt, it's Mary Kay. We did talk about this when we gave our guidance back in January, that we did expect that given the Yako [ph] reimbursement. That's a biannual, every 2 year, basically price reduction in Japan, as well as we are seeing some of the EU austerity measures that we discussed, which has, for the full year, a $30 million to $40 million impact over the total portfolio. But there is a significant portion that's in renal as well. So that will be an ongoing difficult comparison that we'll have going forward.

Operator

Ladies and gentlemen, this concludes today's conference call with Baxter International. Thank you for participating.

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