A winner for investors over the coming months
Interview: Edward Ludwig --- Chief executive
>> welcome back to "world financial report." i'm peter cook. becton dickinson and company, the stock is already up over 22% for the year, so hrbeck ton dickinson prove a winner for investors over the coming months? earlier, suzy assaad spoke with chief executive edward ludwig about the outlook for his company.
>> bottom line, ex charges, will be over 15%. and we've been telling the street that, you know, the top line ex foreign exchange should be about a 7%, 8% grower. bottom line, double digit. good cash flow, expanding gross profit margins, and reinvesting in innovation. so good, steady performance, steady as she goes.
>> well, they say that really this is not a company that's necessarily one of those huge r&d spenders, and they see that your core business, that's one analyst that we spoke to, anyway, said that the core business, which is your syringes, they feel it's certainly doing very well, but it may be starting to tap out and they wonder how are you going to continue to generate these double-digit growth.
>> well, the business in safety products is one i'd like to focus on a little bit. you know, our medical business and in our diagnostics business, we have introduced over the last seven years a family of safety engineered devices, which is really redefining the whole sharp area, the whole syringe, catheter, blood collection area. that business is now running at a rate of $800 million a year, and we've said that business will continue to grow at about 10% a year. as we introduce new products and as we move off shore with this concept, we believe there's still good, solid, double-digit growth available in that business, and that's about $800 million piece of business for us.
>> what about the core business, the syringes?
>> well, that has basically become the core business. it is really traded out all of the basic products have now been upgraded or are being upgraded to these devices. also in diagnostics, we have two new instrument platforms, the pro tech and the phoenix, which are going to add to revenue growth, and our bioscience business, which last year in 2003 was not a big grower. this year we're going to do high single digits, and with our new aria and new systems in bioscience, we expect that could be a high single digit grower.
>> also in terms of expending your r&d budget, is that something that you feel needs to be expanded right now?
>> yes, very much. we have told our investors that we should expect r&d will grow at a rate that exceeds the sales growth rate, so we now spend about 5.5% in r&d. we expect that will pick up over time. growth in r&d, you know, 10% plus, we're going to pay for that by continuing to expand our gross profit margins and managing our ssg&a very carefully.
>> we want to move on to legal issues. your company was recently subpoenaed by federal prosecutors coming out of dallas. do you believe that the company is involved and is the focus of this probe?
>> no, in fact, we know that we are not. we are cooperating completely. we're providing basically a routine document request. we're complying, and we're very confident that all of our business practices are well within all acceptable standards and norms.
>> what kind of documents have they asked for, what kind of documents have you turned over so far?
>> well, i really am not at liberty to talk about that at this point, but, you know, these are fairly standard documents about, you know, business transactions. it's a very voluminous kind of thing. i'm not that involved with the day-to-day document production. but whatever they've basically asked for, we're providing, we're fully cooperating.
>> does it involve other companies?
>> i can't comment on that. i don't know if it does or not.
>> well, let's take to you something you can comment about, and that is, we'd like to get some more details on your inhaled vaccine, the one that is potentially could be a protection, for example, against anthrax. could you talk to us about that?
>> well, that's a very exciting development. you know, it's been a fundamentally sound company in drug delivery, and now we're coming up with new ways of delivering drugs. one is microneedles, which may be applicable, even in areas like insulin, which make the injection virtually painless and makes the drug work better. another thing that we've done is we've worked with new formulations of things like anthrax vaccine to do this in an inhaled fashion. it creates a stronger immunological response, and we think it's going to make the vaccines work better. that's still a couple of years, a good number of years away.
>> edward ludwig, chief executive of becton, dicken son, speaking with bloomberg's suzy assaad. public health advisors may recommend that all americans get flu shots every year. experts say that could cut the annual u.s. death toll from flu complications in half to 18,000, and it would establish a system that could be used for inoculations against bioterrorist agents and emerging diseases like sars. national vaccination campaign would also expand the potential market for vaccine makers like chiron and sanofi by almost 2/3. the current guidelines call for flu shots for 180 million americans, including health care workers, infants, and everyone over the age of 50. fewer than half of them get the vaccine. frank quattrone's friends and former clients are among 500 people who sent letters seeking leniency for the former credit suisse first boston banker. the chairman of cisco systems and adobe systems are among quattrone's supporters. letters were made public by the judge over quattrone's objections, and they illustrate his influence in silicon valley during the 1990's technology boom. the effort failed to sway the judge, who gave quattrone 18 months in prison for obstructing probes into how csfb allocated shares in public offerings. the sentence was longer than the 10 to 16 months called for by federal guidelines. citrus growing is a $9 billion annual industry in florida. losses from the two previous hurricanes are approaching half a billion dollars. that's before ivan. that story up next.
