So, we continue to see China as a opportunity here in the mid and long term, because the fundamentals are in the right place, although we are going through, if you will, a reset here with different funding sources and so forth in the short term.
Operator: Thank you. We’ll take our next question from Puneet Souda with Leerink Partners.
Rainer Blair: Hi, Puneet Souda.
Puneet Souda: Hey, Rainer, thanks for taking the questions. Quite a bit of coverage here, so maybe let me ask about something that is being discussed in healthcare markets and even now food and consumer markets, and that’s the GLP-1s and the diabetes weight loss drugs whose indications are expanding here. So, I’m wondering if you can provide some context on if you see contributions from these drugs in sort of 2024, anything there that can potentially help you offset some of the headwinds? And maybe within that context, if you could also just talk about how should we weigh the GLP-1’s opportunities versus Alzheimer’s, which is also a very large market, I believe, for the mAbs?
Rainer Blair: Thanks, Puneet. Let’s start with the GLP-1, which are real and they are growing, and Danaher is represented into some extent, stacked into all of them, and we expect over time for those to contribute to our growth. Having said that, GLP-1s are a class of drugs where the intensity of the use of, if you will, the standard inputs of biologic processes, for instance, such as mAbs, and I’ll come back to that part of your question in a second, is not as intense. So, you have synthetic processes for GLP-1s, you have biologic processes, and depending on how that mix develops, that also impacts the degree to which this contributes to our business. This will contribute to our business, and we think that, that provides a modest tailwind here over time.
Now, as it relates to your question around Alzheimer’s drugs, those are typically monoclonal antibodies, and the use of our industry’s products there is far greater than, for instance, in GLP-1 processes. And as those continue to make their way through the development pipeline, through the regulators, and ultimately get reimbursed and then adopted by patients, we expect that to be a more significant tailwind certainly than GLP-1.
Puneet Souda: Got it. Super. And then if I could follow up on Abcam, could you talk about where you see the biggest opportunities for cost reduction here in the antibodies business and the protein reagents business? And maybe where DBS can have the most impact? And wondering if — what do you have in your algorithm longer term for the op margins for this business eventually? Thank you.
Rainer Blair: So, Puneet, we have yet to close on this transaction, so we won’t be able to talk about the model and its contents in any detail here. But I do want to take a second to reiterate that this acquisition, if that’s an entry into a really highly attractive protein consumables market, we estimate that market to be over $8 billion and growing high single digits. And very importantly, because of new detection technologies and other approaches, protein detection is now moving from research to biopharma, and we believe over time to the clinic. And so, you can see how that fits our strategy of helping to map complex diseases, accelerate drug discovery, and hopefully someday even help identify these diseases earlier in their progression.
Now, this is a differentiated company with a really terrific brand and a great long-term sustainable business model. We’ve talked about this, but this is accretive to us in growth, in earnings and also in talent. And we’re looking forward to welcoming the team here. We’re still focused right now, Puneet, on closing this transaction by mid-2024.
Puneet Souda: I appreciate it. Thanks, Rainer.
Operator: Thank you. Our next question comes from Rachel Vatnsdal with JPMorgan.
Rainer Blair: Hi, Rachel. Good morning.
Rachel Vatnsdal: Yeah, good morning. Thanks for taking the questions. So, I want to follow up with a few more nuanced questions on China. So, first you mentioned that anti-corruption had some impacts to the Life Sciences segment. So, could you quantify the impact there? And then, can you walk us through, are you just seeing that impact in the healthcare and diagnostic hospital settings, or has that started to bleed into pharma and biotech as well? And then, shifting over to more the Diagnostic side for China, another dynamic that we started hearing about in recent weeks is just China volume-based procurement. So, can you walk us through what you’re hearing on that front and what your potential exposure to that would be?
Rainer Blair: Sure, Rachel. Starting with anti-corruption, we really do see this as a transitory effect. There were some weeks, if I can say it that way, where we saw particularly equipment tenders being postponed, delayed, as well as the installation of hardware, so larger capital equipment. But frankly, we’ve seen that wane here, so come back to normal, if you will, in the last couple of weeks. And that applies both to what we saw there in Life Sciences, really, at the margin, as well as what we see in Diagnostics. So, I would not view the anti-corruption initiative as a shorter or even mid-term growth headwind. Frankly, in the long term, we think this is a positive as it levels the playing field for multinationals in China.
Matt McGrew: As far as the value-based procurement, Rachel, I think the best way to kind of think about it is I think we think it’s going to be about a $50 million kind of annual headwind here for us over the next couple of years. Most of that is at Beckman Diagnostics. So I mean maybe kind of a simple math is $800 million of Beckman revenues and maybe 40% of that is sort of subject to the VBP kind of assume a 50% type price reduction there and you get to $150 million. We think that’s kind of two, three year kind of run rate here. So, pretty modest and manageable for us over the period.
Rachel Vatnsdal: Great. And then, my follow up is just around Diagnostics. So, you guys listed that respiratory expectations for the year to $1.6 billion versus prior assumptions around $1.2 billion. So, how should we think about that endemic number for respiratory? Is $1.2 billion still on average the really way to think about this respiratory market? And then just heading into 2024, giving you guys listed expectations for this year by $400 million, should we expect a softer year next year for respiratory as well? Thank you.
Rainer Blair: Yeah, I mean, I think it’s a good question on the $1.2 billion. I think that’s probably where my baseline would be, Rachel. And I think we did a little bit better this year because we had another respiratory season that started earlier than normal, right? Just like last year, similarly, we saw sort of September and October, the ILI kind of spiked up. That is usually something in the past that we have seen more in the January-February timeframe. So if I think about the last couple years and think about that, I think $1.2 billion would be sort of where I would base it as a planning kind of purpose going forward. But we sort of typically, as we look forward from planning perspective, do that. We look at the last couple years of ILI and try and mirror that. So that’s kind of where I think I’d be.
Operator: Thank you. And that was our last question today. I will now turn the call back over to John Bedford for closing remarks.
John Bedford: Thank you everybody for joining. We’ll be around the rest of the day for questions.
Rainer Blair: Thanks, everyone.
Operator: And this does conclude today’s call. We thank you for your participation. You may disconnect at any time.
