Rainer Blair: Sure. Scott China, let me start with this. We continue to believe China is an attractive market in the long-term that is going to be accretive to our overall growth, and the reason for that is that the Chinese government and frankly, the Chinese people are prioritizing, among very few priorities, they’re prioritizing healthcare. More broadly, but also more specifically in terms of building their own pharmaceutical industry. With both generic and innovative and biosimilar type drugs. And that process, while it has taken a pause here, or certainly slowed as the funding environment has become more difficult in the short-term, we expect that process to work itself out here in the midterm. Now, for China this year, as it relates to our guide, we’re assuming that China will be down high single-digits.
Yes, because of the challenging macro. We actually expect that macro to be more challenging than perhaps even what we see in the healthcare market, but we’re not planning in that guide, a stimulus from the Chinese government, but more of the same and then of course, the reversing of tough comps here in the second half. So it’s going to be a tougher start to the year, as the activity level essentially remains where it has been here in the second half of 2023. Particularly in biotechnology and life sciences, and then as we get through those tougher comps in the first half, we’ll see the second half where we’re not assuming significantly higher activity levels, but we do see the math then working in our favor. Longer term, we believe the pull and the requirement in China for these innovative and highly effective drugs is intact and that the investment will continue.
Scott Davis: Very helpful. Best of luck in 2024, guys. Thank you.
Rainer Blair: Thanks, Scott.
Operator: Our next question comes from Michael Ryskin with Bank of America. Please go ahead.
Rainer Blair: Good morning, Michael.
Michael Ryskin: Great. Hi, Rainer. Hi Matt. I want to follow-up on a couple of your comments from earlier in the Q&A just on bioprocessing to make sure I got it right. I mean first, I think you called out that, you don’t expect a book-to-bill above one at any point during the year. So, I mean, that means you’ll be continuing to deplete the backlog all year, but you already cited that the backlog, is sort of at a normal level with 1.5 quarters. So, I’m just wondering, how low is that going to get over the course of the year then if your book-to-bill doesn’t break one? And then sort of related to that, if you’ve only gotten one to two quarters of backlog and yet you’re calling for this gradual improvement as the year goes on, high single-digit growth rate, just sort of like what underpins that improvement from what you do see in 1Q, 2Q to start the year?
Matt McGrew: Yes, I mean, I think the way we talked about the guide, I mean, I did say that it doesn’t go over one, but it gets pretty close in the second half. I mean, if you do the math, it does get pretty close to one. So I think, it is still a little bit early to call what we’re going to see in ’25, but I think you’re right. We are calling for gradual improvements in the book-to-bill through the year, and it will get pretty close to one, but not over one in the second half. That’s kind of how we’re thinking about it. And as far as the growth rate, first half to second half, I think was your question, is that right, Mike I want to make sure?
Michael Ryskin: Yes, just visibility, not improvement?
Matt McGrew: Yes well, I mean, like I said, it’s not a huge number, right? First half to second half, you’re talking about $250 million. So we are, I think the visibility, is improving a little bit here as we move into the year, and we expect that it will continue to do so, as we move past the inventory destocking in the first half. And so I think, with the assumption of a ramp, admittedly, but only on – only of a couple hundred million dollars. I just feel like, if we can get past the destocking, be aggressive with that, having a second half ramp that is, $250 million on $6 billion, it’s not that steep in reality. And frankly, we constructed the guide to have no real, kind of step up, or inflection either in bioprocessing. It may not happen that way, right?
And if it does happen, if we do see something, an inflection that’s higher, we obviously will update the guide and update everybody. But we are trying to just lay out how we are thinking about not having an inflection, not calling an inflection. Things are getting a little bit better. They’re going to get better through the year. And certainly given the math and the anticipated modest step up, that’s how you sort of get to a second half of tight single-digits. Remember, we’re also working on a comp of the second half that’s going to be down high teens. So, I think that’s what gives us sort of the confidence is, we’ve got a little bit better customer visibility. We think we’re going to be behind the destocking, and we’ve got some comps that will help those numbers.
Michael Ryskin: Okay. All right. I thought the $250 million was second half-to-second half, not first half to second half. But I can follow-up on that?
Matt McGrew: No, that is second half-to-second half. Yes, that’s second half-to-second half. I’m sorry yes, yes.
Michael Ryskin: Okay. All right. We’ll follow-up offline. Just a follow-up question. I want to ask a little bit on the Life Sciences segment and maybe put another way. I want to think about from a customer perspective, can you talk about pharma and biotech outside of bioprocessing, putting bioprocessing aside? For the rest of pharma and biotech, it seems like your outlook is still somewhat cautious. You’re talking about low levels of demand. I’m just curious, any early signs? I know we’re still in January, still early in the year, but just sort of how those companies are thinking about budgets for the year, how the Life Science segment and pharma and biotech specifically recovers post-2023? Thanks.
Rainer Blair: So, Michael, just to level set then, coming off a Q4, which the life science tools were down mid-single digits, and that was largely consistent with Q3, and we anticipate that this normalization in life science instruments, which really began in the second half of 2023, will continue in 2024. And if we think about it by end market, we do see pharma and biotech stabilizing, but at these lower levels of demand. Just because we believe and saw in the numbers showed here, over the last two years or so, an anomalous level of buying and pulling forward of demand, whether that was China through loan subsidies or whether that was COVID dollars infused for additional research, we expect that normalization to continue here.
Also, in the first quarter, where we expect life sciences to be down similarly to the fourth quarter. Now, keep in mind for us, life sciences instruments is only about 10% of the portfolio. So, we may not be a good read across here. Nonetheless, we do think it’s going to take some time here in the first quarter, first half, in order for that normalization to occur. But we do believe that it’s stabilizing at this lower activity level.
Michael Ryskin: Thanks.
Operator: Our next question will come from Rachel Vatnsdal with JPMorgan. Please go ahead.
Rainer Blair: Good morning, Rachel.
