Thanks so much.Operator Thank you. Our next question comes from Joshua Jennings from Cowen. Your line is open.Joshua Jennings Hi. Good morning. Congrats on the strong start to the year. I was hoping to ask one question and a related follow-up. What did, Rob, just to help think through some of the core gross margin and operating margin trajectories — of the core business with the COVID testing volumes coming down and the historic margin contribution in the last couple of years, but I’d love to just hear about drivers of gross and operating margin expansion. In pre-COVID, we were thinking 50 basis points or up to 50 basis points of operating margin expansion was plausible for your business. And maybe just help us think through the trajectories, but also any levers you can pull to support double-digit EPS growth trajectory in 2024, if there’s some unpredictable headwinds that pop up.
I just have one related follow-up.Robert Ford Sure. I mean, I think, as I said to Larry, I mean, I think it starts with the top line, right, and being able to drive that top line and especially the top line coming from our med device portfolio, which obviously has margins that are accretive to the overall company.So looking at the growth drivers there, whether it’s the Structural Heart portfolio, the EP portfolio, Libre in diabetes, a recovery in Nutrition, I mean, I think these are all important areas of top line growth that will drive accretion to our margins. One of the challenges that we all faced has been the impact of inflation on our input costs.And as I said, I think some of those are normalizing a little bit. I think last year a lot of the focus was just to ensure that we had access to all the raw materials, right.
And I think in those situations, we ultimately had to deal with elevated prices. And I think that some of these will unwind over time. This is not a — I don’t think this is a quick fix, but it’s definitely an area that we’re going to see steady improvement over the next couple of years here in terms of improvement.We’ve been able to take price where we can to offset some of those inputs, those cost input increases, but I think it’s really the focus on the top line with our device portfolio that drives the accretion and then combined with focusing on our gross margin improvement programs, which we have across all of the businesses and then get the attention and then focus every month in our operating meeting. So the combination of those two factors are what gives us confidence for that margin expansion.Operator Mr. Jennings, please make sure your line is not on mute.Joshua Jennings Thank you very much.
I was on mute. Apologize. Thanks for that answer. And want to just — related follow-up, you really touched on taking price, Rob. And would love to hear, mostly on the device business, how pricing is shaping up in 2023, but also if you could touch on any other businesses where price is turning into a tailwind for your business that would be great to hear. Thanks for taking the questions.Robert Ford Yeah. I think on price, we’ve historically, as a company, our high single-digit growth really driven by volume, whether it’s expanding markets or taking market share. I’d say on the device side, pricing historically has been a headwind for us. I’d say over the last 12 to 18 months, it hasn’t been one. So we’ve been able to at least kind of hold pricing, I wouldn’t say gone out and did big pricing increases, but at least been able to hold pricing.I’d say more on the consumer side of the business, Josh, is where we’ve been able to kind of take price.
If you look at our Nutrition business, we haven’t been able to offset 100% of the commodity increase, but we’ve been able to apply some price increases globally across the portfolio.In our Established Pharmaceutical business, there are segments of the market where it is more kind of cash pay, and we’ve been able to implement pricing increase in there. I think the team in EPD has done a pretty good job at how to implement those and still have good share positions across our therapeutic areas.So those are probably the areas that we’ve been able to implement pricing increases. And to your point on tailwinds, if we start to see the commodities and some of the input costs come down, especially in these more consumer based businesses, I think the strength of our brands, whether it’s in Nutrition or in EPD, there is an opportunity there to have that kind of tailwind.Joshua Jennings Great.
Thanks again.Operator Thank you. Our next question comes from Robbie Marcus from JPMorgan. Your line is open.Robbie Marcus Great. Congrats on a nice quarter here. Maybe to start, Robert, we just saw you get approval earlier this week for Medicare reimbursement for Type 2 patients that use basal insulin for Libre 3. Clearly, a really big opportunity, but would love to get your thoughts on, first, how this impacts Abbott and then broader how you see improving reimbursement both in the US around the world evolving over the next few years and the benefit it could add to the Libre business?Robert Ford Sure, Robbie. I talked about how this is an important part of the growth strategy and an important part of the market opportunity for CGMs as a whole.
We’ve been investing in generating the clinical data to be able to kind of support this.So this is a great opportunity for us. I’d say I talked about, there’s about 4 million Type 2 basal insulin users here in the US. About a third of them are on Medicare. So it will start there. I think we built a robust kind of position in this patient segment and that includes not only the clinical data that we produced, but building a sales force that’s focused more on the primary care side. I think the product lends itself very well to this patient population also.So I think we’re excited about the opportunity. I think I’ve sized it at about $1 billion plus in terms of opportunity in the short term here. And as the CMS reimbursement starts to play out, we know that there will be eventually a spill-on onto private payers here in the US.
It’s difficult to forecast that because each plan will look at its own population and make its own determinations, but I think that provides a nice tailwind of growth here over the next couple of years for this franchise.And I don’t think it’s just a US situation. We’re seeing other countries around the world also start to expand the reimbursement. And it’s a combination of both the clinical data that supports the use of CGMs on this patient group and also specifically, I’d say, for FreeStyle Libre, the value proposition in terms of being able to support a larger group of patients have the benefits without necessarily having to have a significant premium, I guess, call it over that.So we’ve seen markets outside US already kind of do that and we’re seeing good results in terms of its implementation.
So I think it’s a great opportunity for the category and more specifically for Libre.Robbie Marcus Great. And maybe a quick follow-up here. Structural Heart had been challenged throughout the pandemic and here we are with a nice double-digit growth quarter from you. Can you speak to — is this the start of a strong recovery here? Anything in the quarter that feels durable to you? And then also, you had some, in my opinion, good TriClip data at ACC earlier this year. Your thoughts on how that might evolve over the year as well. Thanks.Robert Ford Yeah. I mean, I think we’ve always looked at our Structural Heart portfolio over at least the last three, four years and made all the investments in terms of building a product pipeline, building commercial infrastructure globally in the market.So this is definitely an area of growth.
I think the entire portfolio there looks really strong and really durable and really sustainable, Robbie, whether it’s our position in mitral, our building of our position in the tricuspid area. We’re entering the aortic area with Navitor, seeing good momentum over there also.Amulet, the launch of Amulet also. So I think we’ve really built a strong pipeline of products and commercial footprint here. So I think it’s doing what — this quarter, what we’ve always envisioned it to do, which is to be a top-tier growth contributor to Abbott.Regarding your question on TriClip. Yeah, I agree, with you too. I was pleased with the results. I was pleased with the outcome. As I said in the past, I don’t think it’s a one study and that’s it. I think you have to continue to invest in generating clinical data.
It’s what we did with MitraClip. But the trial enrolled really fast and I think that’s always a good sign in terms of the speed of enrollment. In terms of its acceptance and excitement from the physicians. And that’s because there’s not a lot of good treatment options for these patients.As you know traditional surgery over here has got a high mortality rate and diuretics don’t really work well. So I think the measures we saw in terms of the TR reduction, the quality of life improvement scores, I think they are probably some of the best that we’ve ever seen in a heart failure trial. So the bottom line, I think, these patients are in rough shape and I think the physicians know this. So we feel good about the data.We’ve already submitted it to the FDA.
So that’s been submitted. I know the CMS will probably review this in parallel and I believe that clip based devices here are going to be the first option. They’ve got strong efficacy data and a very good safety data also. So I think — you think it’s good data, I think it’s good data too, and I’m cautiously optimistic here of bringing this product.We’re seeing great momentum in Europe. So that’s a proof point here that I can tell you there is a lot of great growth that we’re seeing in Europe. So –Robbie Marcus Thanks a lot.Operator Thank you. Our next question will come from Rick Wise from Stifel. Your line is open.Rick Wise Good morning, Robert. Good to hear your voice. Sorry for my scratchy voice a little bit. I was hoping we could talk about diagnostic, broadly ex-COVID.
You are thinking about what’s next, broadly for the franchise as COVID wanes, but more specifically, we haven’t had an Alinity update in a while. I know this is a multi-platform, multi-year rollout process. Where are we in that process? How much more do we have to go? And any other diagnostic perspectives you’d want to share? Thanks, Robert.Robert Ford Thanks, Rick. Yeah, I mean, I think so the way we were thinking about Alinity and Alinity rollout, it was a multi-platform, multi-year rollout, right? If you look at these contracts that you enter in there between seven to 10 years, you’re really looking at 12%, 15% of the market that’s up for renewal every year.So we always looked at this as multi-year. It did take a back seat a little bit, I would say, during COVID as a lot of the hospital systems weren’t necessarily focused on RFPing their diagnostic, really just focusing on treating patients and doing the tests related to COVID.
So what we began to see, I’d say, probably middle of last year, definitely into the end of the last — definitely into Q4 of last year and going into this quarter is those RFPs in that process are restarting back up again. So and I think we saw this a little bit on our growth rate here, again, excluding COVID.And you look at our Core Lab business, which is the predominant base of our diagnostic business growing 7% if you take out China, which started off a little bit roughly in the 8%, which is the range that we tend to target here, Rick. So I think we’re restarting the process and reaccelerating it. I think it’s going well. I think we saw a good growth in the US and good growth in Europe and that’s good.One of the areas that got impacted during COVID also was transfusion.
So we saw a drop in donations during COVID. So I’m glad there was inventory in the blood banks to be able to deal with that, but now we’re starting to see donations start to ramp up again and the rebuilding of inventories and the picking up of donations.So I think that that’s also another positive sign. And specifically on the blood bank side, our system, The Alinity s System, it really requires a lot less manual labor. There’s a lot of automation in there. And I think that’s something that we’re seeing a lot from the blood banks as donations are ramping up again, the ability to take advantage of that increased demand with our system.So I would say that we could probably grow faster than that, but I think it would come at some margin erosion because you’re going to have to place a lot of boxes to be able to get to the double-digit growth.
So I think that this growth rate that we’ve established here 7%, 8%, 8.5% is the right growth rate where we can actually drive top line growth and at the same time, drive bottom line profitability.I think our margin profile in this business is probably one of the highest amongst the industry. So I think the team has done a really good job at finding that right balance. So all-in-all, I think it took a little bit of break during COVID, but it’s restarted right now, and I like the systems we have, the position we have, and the commercial execution that’s in place.Rick Wise Okay. It’s very thorough. Thank you. As a follow-up, I wanted to focus on Nutritional, but I’m going to also sneak in a quick CardioMEMS as well. Nutritional, it’s great to see the 10% performance, the strong US recovery.
