For life. Excellent. Hi, I'm Joanne Wuensch. I'm the Medical Technology Analyst here at Citibank, and we are in Citi's Unplugged: MedTech and Life Science Tools Day. I actually love this conference every year, and I appreciate you coming and joining us. So second up today is the management of Becton, Dickinson, Tom Polen, and Chris DelOrefice. And thank you for coming.
Thank you for having me.
Our pleasure.
So I have a very long list of questions, but I'm going to start with there's a lot of news that came out of your first quarter report. It was not that I need to tell you what the news was, but obviously it was the delivery of the quarter, and there was a delivery announcement that you were pursuing a review strategy for your Biosciences division. So I think I want to start there. And I want to start thinking about what brought you to that decision and how you're thinking about it proceeding. And I'm going to let you just take it from there because I'm sure you're familiar with some of our questions at this stage.
You wrote a very nice report on that in support of that decision. So we've got good insights. So we've been investing very heavily on the tech side of BD, I think, as everyone knows, for not just the last five years, but the last 10 years. You look back at we've deployed about over $40 billion of capital in acquisitions over the last 10 years, starting with CareFusion, followed by Bard, obviously most recently the acquisition from Edwards Critical Care, a number of others in between, such as Parata and lots of tuck-ins. 99 point, a number rounding up to 100% of that capital deployment has been on building out a growth business on the MedTech side. And we're really excited to have done that. If you actually go back and look at our MedTech side, what is the new BD?
Since we've launched BD 2025, it's grown north of 6% every single year, straightforward north of 6% every year since we launched BD 2025, so strong mid-single-digit growth business with accelerating margins. And you can see that accelerating margin momentum coming from gross margins. We're really excited about the runway we have there. We're in the very early innings. It's a business we want to invest behind and continue to grow. We're really excited how we've built that portfolio, the growth opportunities ahead, the opportunities for continued margin momentum. There's very few companies who are able to truly not discuss, but post that mid-single-digit and very strong earnings growth at the same time, which we've been doing. At the same time, one of the things that we do is we constantly are looking at our portfolio.
And we started a process, as we shared on the earnings call in early 2024, because the transformation that we've been under, w e constantly look and challenge ourselves and say, we've been increasing the intrinsic value of the company. Is it being properly reflected in the stock? And if not, what actions should we as leaders take to unlock that value? And as we did that analysis, and we look at many different scenarios, what was clear was that, again, the opportunity for us to continue to invest behind this accelerating growth MedTech business that we have and great margin acceleration, which we'll talk about how that's actually disproportionately in the MedTech side.
There's an opportunity to focus the company there and continue to drive that while unlocking value on the Life Science business, which are two phenomenal assets, world leader inventor of flow cytometry, and which has great market opportunities through things like cell therapy, immuno-oncology, as well as basic research, and also our leadership positions in diagnostic systems with some really exciting new assets that are launching, like our BD COR platform, continued growth of BD MAX, et cetera. And so we made the decision to separate the two. And we can talk a little bit about that process maybe later on as a separate question.
Okay, and with the decision made, how do you think about the timeline and the pathway to next steps?
Yeah, Chris?
Yeah, I can take that. So a couple of things. One, first of all, we have multiple options to create value, which I think is a unique situation. As Tom said, these are super attractive assets. One, the leadership positions that they have in the marketplace. Two, the pipelines they have are some of the strongest in their sector. So there's a great innovation cycle for these assets. So heading into this announcement, there had already been a lot of interest in this. Certainly, as this became very open and public, the interest has only grown. It's also a unique scenario where kind of we have three different opportunities to create value. You can do a pure spin, but there are RMT and there are sale options as well on the table. And we have multiple options in each of those vectors.
The guiding principles, of course, as you can imagine, that will guide us as we think of this is going to be maximized value so we're going to take a purest view of that, where we're going to look at things net of tax. There's obviously the cost profile could be a little bit different in those different options, as you can have one-time costs or stand-up costs, things like that. We'll do it on a risk-adjusted basis, but at the end of the day, maximizing value creation will be our core principle. Timing and certainty is also another important factor that will be an important part of that, and I think what's interesting here is obviously sort of spin becomes the baseline of it. You have multiple options in the other two scenarios so it's not just one so we're excited to be engaging in that.
As you think of timing on earnings, we specifically said at the end of the fiscal year, I would kind of anchor you to the summer. So it's near-term catalyst to unlock value with a nice transaction here. I think beyond the summer timing in terms of kind of a more definitive announcement from there would be the typical sort of traditional closing pathways, right? What are the regulatory processes, et cetera? I would say that puts you probably in the first half of calendar 2026 in terms of a formal closing. So we're super excited about this. We think it's a great opportunity. As Tom said, I think that's just one vector of value creation. The second is really the exciting opportunity we have with new BD as well.
Sometimes I refer to a company after a separation as RemainC o, but other times it's NewC o, and so how do you think of NewC o and what that company will look like in terms of revenue, EPS growth, margins, and then also the opportunity to maybe accelerate that?
Yeah. Maybe I can start on the strategic and the portfolio side and Chris can share on the financial side. So as I said, we've been reshaping the new BD actually for many years. And I think the opportunity for it to be a focused MedTech company is something we're quite excited about. Focus not only for us as leaders, but focus for also investors to really understand the assets that we've built, which are some really special growth components that we have. So as we think about the business, we have our continued the Medical Essentials business, which is what folks have known BD for. It's what actually BD almost fully was not that long ago. And now it's going to be actually less than 50% of the new BD. Those are the products that you can't run healthcare without.
They're the 100% recurring revenue consumables that 90% of anyone going into a hospital will be touched by. We make tens and tens of billions of those devices. They generate fantastic, unusual cash flow that we've been using to invest in building growth assets and growth platforms over the last several years. And I think the opportunity for us to dive deeper in and continue to expand those growth platforms that we've built is really the opportunity of new BD. We are the world leader in delivering biologic drugs. That's something that we've grown our pharma systems business $800 million since we launched BD 2025. We have over a $1 billion biologic drug delivery business. We are the leaders in delivering GLP-1s, those today, but also have strong positions in the pipeline for future GLP-1s, including biosimilars.
We have some amazing products coming down the pipe that are in clinical trials right now for wearable injectors that will be used for technologies like Alzheimer's treatments that people can deliver themselves at home rather than going to an infusion center. So that's a great growth platform that we have, and it's been doing really well. Obviously, there's a cycle going through the market now, but we see that beginning to recover in the back half of this year and continuing to 2026. As we look at our interventional business, it's a business that's been growing above the BD average 6%-7% since we've come together with Bard. And we've only made it stronger. So if you think about our urology critical care business, a business growing 3%, I think we had it modeled in the Bard acquisition.
It's been growing well above the company average, 30 consecutive quarters of double-digit growth with PureWick. I mean, that's a durable growth trend. We continue to launch new innovations in that space. Probably the biggest clinical trial that we have in the company going on right now, or the most important one, most consequential, is our clinical trial to get at-home reimbursement for PureWick. It's going to unlock substantial value opportunity for us. That product's already hundreds of millions of dollars. We've already communicated we expect that to be a billion-dollar platform by 2030. So another area for us to continue to invest behind. Surgery, tissue reconstruction, not a platform that when we bought that business, it was plastic mesh. Now it's regenerative medicine using the Tepha acquisition that we did in P4HB.
We just got approval for our umbilical hernia claim as we've been building out, utilizing resorbable mesh to redefine how hernias are treated at higher ASPs, higher margins in that business. You can see it accelerating the growth of surgery over the last couple of years, but you've seen us now enter into on the last earnings call, we talked about beginning to enroll women in our first claim for breast reconstruction, and that's the first of three different indications that we'll be driving in that market for breast reconstruction using that Phasix biomaterial. We're really excited about entering into that. It's a large category, significant unmet needs that are great asset to go after that with. If you look at peripheral intervention, we're excited by our peripheral vascular portfolio that's also been growing high single digits.
We've done a number of tuck-ins, whether a Straub or Venclose over the years there. We see those and overall BD Interventional as we think about capital deployment going forward, the focus of where we'd be deploying from a tuck-in M&A opportunity. We think from a margin growth, growth margin, unmet need perspective, it benefits the new BD from a mix and growth aspect as we continue to not just take new BD and manage it as it is, but continue to move it up on the growth agenda. But the last area I talk about is, and I'll turn it to Chris, is our Connected Care area of new BD. One of the most significant Connected Care footprints in MedTech, if not the most significant. We have over 3 million smart devices connected in healthcare ecosystems around the world.
We're connected to more than 70% of all U.S. electronic medical records. I think that's the high mark of any company. And it includes obviously products known and loved such as Alaris, Pyxis. We're really excited about the catalyst of the next-gen Pyxis coming up. And that will be our first ever AI-enabled Pyxis in a partnership with Amazon and cloud-based platform going forward. And we'll talk about that more as we approach launch. We've obviously built out the world's leader in pharmacy robotics and automation, which is in early innings of conversion of that market space. We see a significant runway ahead there. And of course, we've just added a business that's not even showing up in our organic growth rate yet, but is accretive to that, which is the APM business from Edwards.
Posted 8% growth in Q1, has a long track record of delivering growth above BD's historical rate, and we're really excited about that team being part of BD and how that's going to help us continue our agenda of accelerating our growth under new BD.
So before I go to Chris, because I want to get the financials, one of the things I always say is somebody walks into a portfolio manager and says, "They have a new product pipeline," and you just, "Many." If you were going to say three, what would the three be?
Yeah. One of the things that we often talk about that inside of BD, BD is a company, one of our strengths. And we understand from an investor perspective, there's not like you say like this product and that's it. We're a company of solutions, first off, right? So you say, "Well, why are you winning in biologics?" It's not like there's one product in biologics. It's because of formulation scientists. They don't know how much volume they're going to need. They don't know where they're going to manufacture it. We have pretty much every solution that's there. And the same thing's true when you think about medication management and others. So I named a lot of the exciting opportunities, but I think that's also part of the de-risk growth profile of BD, right?
There's no one product that's in our pipeline, et cetera, that you look at and say, "If that runs into problems, like my thesis is blown." BD is singles, doubles. We got some triples and PureWick's probably a homer in there. But otherwise, there's multiple products across the different platforms. But the ones I named are all delivering outsized high single-digit, double-digit growth platforms.
Excellent. The numbers.
Yeah, sure. So look, one, we look forward to sharing more as we kind of announced kind of the specificity that I talked about in the summer. We've given good color. Couldn't be a more exciting profile. I mean, maybe just to round out with Tom, the simple way to think of it is new BD is nicely positioned to compound earnings growth at a very healthy rate coupled with cash flow. It's really driven by two things. Tom really did a great job of highlighting the revenue growth profile, but maybe to just kind of put a stamp on that. I mean, it's solid, consistent, mid-single digit growth. It has over 90% recurring revenue. There's very few companies that have that kind of recurring revenue profile that's super healthy. And another way to think of it is maybe talked about these four segments.
If you just look at Interventional and Biopharma alone, it's over 40% of our business now that is in high growth categories. And then Tom talked about the other areas. And those have, by the way, four of those platforms that Tom was really just talking about. And there's still two in the other business that also has a solid kind of mid-single digit growth profile, right? Including APM, which is also actually high single digits, and then pharmacy automation. So there's a really good breadth of very attractive assets in our portfolio that support that strong mid-single digit growth profile. And then something that we can talk more about too, it was certainly reflected in our results that this BD Excellence and what you're seeing us do from a margin standpoint. We are still in early innings there. We had outstanding gross margin improvement in the quarter.
It was 370 basis points. We're actually almost 150 basis points ahead of our full year gross margin from last year already. So just significant progression there. Again, this is very much in early innings. You're going to see us to continue to advance the BD Excellence capability. What is BD Excellence? We've had discussions with many of you, but in essence, it started in manufacturing. We're going to expand in other areas, and we can talk more later, but it's really driving performance to its max potential. So the principles of zero waste in manufacturing, any scrap that comes off a line should be viewed, how do we eliminate that? We're looking at your line and what is the max theoretical line yield output that you can get in that line? And how do we drive towards that?
And real time with BD Excellence experts that we have embedded in our business, embedded in our manufacturing plants, working real time through running specific Kaizen events to drive continuous improvement and productivity through their plants. And we're continuing to scale this. The first year, we're two years into this. The first year, we did 250 Kaizen events. Last year, we doubled it, and we're going to double it again this year. We did 250 in the quarter alone. What that is going to translate to is really strong. One, we're going to have strong margins, two, continued improvement in our margins. So really nice margin momentum driven predominantly by gross margin. That's going to fuel increased investment in R&D, selling, and help kind of the flywheel of driving that growth. The last comment I'll make is that profile I just talked about, we're not done there, right?
With a more focused MedTech company and how we're deploying capital in tuck-in M&A. Tom gave the illustrative example of APM, which has been a great addition to the portfolio. We are going to keep driving our growth profile up over time as well.
I think just maybe to build on the comment, the flywheel that Chris mentioned, that's something that all of our associates know about and that we talk about BD Excellence as the center of our flywheel, right? We're driving gross margin expansion on an outsized basis through our new business system, BD Excellence, which is based in Kaizen. We're utilizing that gross margin expansion to increase investment in innovation and selling. You can see that playing out this year. We're growing R&D and selling faster than we're growing revenue. And the midpoint of our EPS is still 10% this year, right? So exceptionally strong EPS growth at the same time. That's the flywheel, right? Is being able to continue to invest to drive growth faster. And of course, all of that as well, BD Excellence is driving cash flow in a positive way.
You saw cash flow has been growing in the teens the last several years, and we're being very smart and very disciplined in how we're deploying that capital, but it's being deployed. Obviously, we've done share buybacks. We're a dividend aristocrat, but at the same time, we've been very focused on accretive, non-dilutive tuck-ins that we've been doing, again, reshaping our portfolio, and the new BD gives us an opportunity to continue to do that even on an even more focused and smaller portfolio, which by nature, even any deal has even that much more of an impact on growth when it's a little bit smaller as well.
Thank you for that. Coming closer to the house, so to speak, there's a lot coming out of Washington right now. And you're in touch with so many different healthcare factors. I'd love to get your opinion in no particular order of things such as potential Medicaid cuts, tariffs, and then we can talk to my next favorite topic, which is China.
Yeah. I've certainly been swinging up and down the East Coast a little more than usual. I'll be there again next week for those discussions. We have a strong, we are America's largest manufacturer of medical devices, period, by many fold, right? So no one makes more medical devices in America than BD, period. And we've been doing that for 125 years. We have 30 plants and warehouses in the country spread across. It's also the largest manufacturing location for us in the world is America. And we export billions of devices from America each and every year to every corner of the planet, to 190 countries around the world. So that's the basis for our relationships in Washington. It's something that I think we're a case study for U.S. manufacturing excellence and have been able to compete for 125 years out of America and do so really, really well.
That's pretty exceptional history that we have. So on Medicare cuts, I think that's a very obviously politically- charged topic. I don't know how much I want to touch that.
I start with the best.
Yeah. You know, I think there's, I mean, there's such public push on that. Will that actually happen? Wait and see. I'm not as versed on that one as certainly on the tariffs, which has been our main focus and discussion point. For tariffs, that's one we watch very closely, right? We believe that medical devices should be exempt from tariffs coming from Mexico in particular. For us, the U.S. is our largest manufacturing footprint, followed by Europe, and Mexico would be number three of our manufacturing footprint perspective. I think we're also a case study for how it's an integral part of U.S. healthcare security. Healthcare security is national security, right? You can't have products that treat patients as a national security topic.
And for us, which is why we strongly argue that tariffs should be exempt for medical devices, but we don't import products from China as an example. Really, to the U.S., we have one product that's less than, much less than one-tenth of 1% of our revenue. It's never been a strategy. We have plants in China that are really important to serve the China market, but we don't import. What we've always done is we think a lot about healthcare resiliency. And so we use Mexico, where we can't automate products and we need access to great quality, low-cost labor because of manual assembly. We think it was important to be able to have that location in a non-hurricane zone, in an area that in a crisis, you can drive the product into the U.S. from a resiliency perspective, which we saw during COVID.
As field hospitals were being set up across the country, we were driving up mass quantities of IV sets that we're making in Mexico. And we're doing so in a cost-effective way that no one is making those products that we make in Mexico in the U.S. So there's no products we make in the U.S. I'm aware that anyone's making in America. They're making them in Asia. It's the alternative. And this is from a healthcare resiliency much stronger for our healthcare system. So that's our focus. We'll see how that goes. And obviously at this point, there's no color on what tariffs would be. Most of the products we make in Mexico, like most of what we make in Mexico, we end up shipping up to Georgia, where we sterilize it and finish the product, and then we ship it out of our U.S. warehouses.
We're creating jobs and we ship it around the world. So it all ends, Mexico ends in the U.S., where they're distributed around the world. So how tariffs work on those types of systems, et cetera, we don't know. Something we're following and being very active ourselves with our industry groups like AdvaMed, et cetera.
Excellent. And more broadly, not just tariffs, but China. And that, of course, is a tariff piece, but also it's the. And I'd love to, and that was part of your guidance. So I'm heading into the quarter question. But I am sort of curious about where the state of the union is on that.
Yeah. I mean, so China at the start of the year, right? I think there were two dynamics happening. There was research spending, and then there was the dynamic of volume-based procurement that was cycling through. It cycled through our MDS business. Actually, that business has performed really well in the quarter. And then you were starting to see it play through some of our interventional portfolio. But we factored that into our guidance at the beginning of the year. We had said we had expected China to actually be about a mid-single digit decline. It's playing out as expected, slightly better even. Of course, we continue to just monitor and watch for any sort of inflections or changes, but it was good to see the Q1 performance in that regard. And it's just playing out as expected.
We expected it to be a bit more first half loaded versus second half, just based on sort of natural cycling through the timing of how the VBP has played out. Because obviously, as you cycle through it, you kind of get through a more favorable comp. And so you have that dynamic first half, second half.
Okay, so let's get specifically to the fiscal year 2025 guidance. 4%-4.5%, including 105 basis points from China demand decline, Bioscience, Pharma dynamics. What gets you to the 4%? What gets you to the 4.5%?
Yeah. Yeah, I can take that. So first of all, Q1 is a very good start to the year. So one, we over-delivered on every metric, revenue, margin, earnings. The quality of the P&L was just absolutely incredibly strong, right? With 370 basis points, gross margin improvement. We're actually investing nicely in R&D. You saw that we're slightly deleveraging there intentionally to support growth. And we had double-digit operating income on the strength of that. We actually increased our guidance, right? Operationally, $0.18 at the midpoint of our earnings. There were some translational FX dynamics that everyone is navigating. But despite that, it was still a net increase at the midpoint. The midpoint of our guide now is 10% earnings growth on a reported basis, all in with FX. Operationally, it's actually closer to 11.5%.
It was just an exceptionally strong P&L when you think of one. There was over-delivery on every metric, but the quality of the P&L through margin to earnings is very strong. I think, again, going back to my comment earlier on BD Excellence, if there's one thing that I certainly think is underappreciated, it's that in the forward momentum that we have from that, it can also be a catalyst for growth. As I think of where we have areas of strength, which would more lean towards kind of the top end of the guide, it's definitely our interventional business. Some of the areas Tom touched on, PureWick, our Surgery business, peripheral vascular disease had nice growth in the quarter. APM, actually really strong start to the year, 8% pro forma growth. That will not start showing up as organic growth until basically the end of last month.
With that said, obviously, it's a value-creating opportunity as that continues to perform well and sets up nicely as that moves into our portfolio next year and becomes part of our organic equation. Alaris continues to do really well, and then even our Medical Essentials business, like MDS, is delivering really strong mid-single digit growth. I mean, it was over 6% actually Q1, so a lot of positives in the portfolio. I would just say you perfectly outlined kind of the areas that we highlighted at the start of the year where there's some market dynamics. I think the BD Research one is the one that we continue to watch and monitor. That was probably the one coming into the year that had the most uncertainty. But again, we over-delivered growth in Q1, which was great. It actually enabled us to de-risk the second half.
And we're going to have to continue to monitor that. That business is positioned very well again from an innovation point. And importantly, when you go through these market dynamics, you're always asking yourself the question, are you competing and winning in the marketplace? And we continue to outperform. And there does continue to be, where funding's available, really strong interest in our FACS portfolio. I think the last comment I would make is remember that business has a strong clinical business. It's been very durable. It also has a reagent business. It's less exposed to kind of the research spending dynamic. So it's actually a more isolated piece of the business within that we're monitoring mostly.
How do you think about what's implied by your guidance for an acceleration of revenue growth throughout the year? I feel like all of fiscal year 2024 was like, "Oh no, it's a back-end loaded year," and then similar kind of acceleration, although different. Help me understand how you build quarter to quarter.
Yeah. So last year was definitely a more extreme ramp. So this year is much more moderate. You have a one-time item in the first half of revenue that's worth 75 basis points. So you're talking about the first half to second half being basically about a one-point acceleration, well within where we've been performing, by the way. I should point to the fact that in Q1, that almost 4% growth for kind of the new BD MedTech business is about 5. So it fully comes down to you have the licensing comp that disappears second half. And then you basically have this 125 basis points, which weighs stronger to the first half in the second half, some of which is very much just comp driven. I'll give you one simple example. In 2024, our BD business in Q1 still grew almost 6%.
By the back half of last year, it was low single digit declines. You have a very big spread there. And this becomes us cycling through some of those market dynamics. So again, based on Q1, things played out as expected. We maintained guidance, actually de-risked the second half by about 25 basis points. And I think the last thing I would just say, again, going back to sort of how does that all translate to cash value earnings? We increased our operational and reported EPS on the bottom. So certainly signaling confidence. And so we'll continue to monitor that area and feel good about how we're executing.
I'd like to spend some time on Alaris. And you got back to a $400 million annual run rate quickly. I hate to ask for more, but where do you go from here? And you've annualized all the introductions. So that sort of starts to play in.
Yeah. No, we couldn't be obviously more pleased with the teamwork to first off get Alaris back to market. That was a very challenging period. And we're really proud with that. And the product is doing very, very well. Customers are extremely excited by it. Of course, we have an additional new 510(k) under review right now. It's moving through nicely, the FDA. That includes over-the-air upgrades, be able to push remote software updates like you have on your iPhone, as well as new hardware, including an EtCO2 monitor. We're the only company that has a sensor so that if you're getting narcotics in the hospital and it starts detecting that your respiratory rate is changing, it will shut off the narcotic pump so you don't die of an overdose of drugs, which unfortunately there's too many stories of that happening.
That's a really important safety mechanism that we uniquely have measuring EtCO2. The new module of that will come out with the 510(k) as well. From a momentum perspective, as you said, we were ahead of our expectations last year. We actually exited the year at or above our historical sales rate, which was pretty amazing work by the team to do it that fast after having been off the market for several years. I think it shows the pent-up demand and it's just if you're a nurse, clinician, how integrated Alaris is to your workflow and how simple that is to help you care for patients. It's one of the devices that nurses touch most of any device, and maybe the most commonly touched device in a hospital. That familiarity is important.
This year, we are very much on track to repeat that again. We will continue to be above our historical run rate, perhaps even above last year's run rate. We continue to have strong momentum there. From a share position, we're holding share very well, not increasing share a bit this year. We have strong backlogs, not only for this year, but strong backlogs already built for next year as well. Many times when we're doing large system deals, we're going to install all 100 of our hospitals simultaneously. We're going to do 50 this year. We're going to do another 50 in 2026. So we have our 2026 pipeline, our backlog already being built very nicely as well.
And I think we shared at the end of last year, what was so impressive of what happened last year is we normally go into a year with the majority of Alaris revenue for that year already in backlog, right? Where we already have visibility, we already have contracts in hand going into the year. Last year, we went in with zero because the product wasn't even approved for us to talk about it with customers until late Q4. And so we went in with zero. We ended last year being back to the historical backlog that we would have, which gave us confidence in this year. And we're fully back to that. As we go into 2026, we'll be back at kind of that higher backlog that gives us visibility revenue for 2026, which is good. We feel good. And then obviously complementing with the new Pyxis coming out.
We're excited by that.
That's where I was going next. Tell me about the new Pyxis.
Yeah. So we'll hold more. And by the way, we obviously canceled our Investor Day given the news of the separation. We want the team focusing on executing that with excellence. We see that as a really meaningful near-term value creation driver for the stock and for our shareholders. So we want to stay focused on executing that and be able to give some more color on the financials, et cetera, of new BD, which we need to complete the transaction structure to be able to share that. So we will be rescheduling that likely for, we said, once the transaction in the summer. Think fall basically as we enter into the fiscal year for our next analyst day.
Told Joanne we just prefer to be with her. That was the.
I'm just doing it here. Here's the analyst day.
So on Pyxis.
The Pyxis. Thank you.
So we'll share more of the story as we'll share more key approach launch at the end of this fiscal year there. But this is the first new Pyxis, certainly since BD's owned Pyxis. Pyxis was launched 30 years ago. I think it's the first new hardware in 15+ years . We're really excited by it. A couple of features that it has is it's unmatched from a storage perspective. So it redefines the ability for nurses to actually make sure that the medications are available that they need. And that comes from storage capacity, right? As you need the right number of drugs so that when you go there, they're always available. The other big thing is the restocking rate from the pharmacy is a big labor draw. The more that you have from a capacity is really important there.
And so we'll share more as we show the product, but it does some really unique things. It's AI fully enabled and cloud enabled at launch. And again, we'll share more, but we have a specific AI partner that we've been working with that we've built a new platform called internal name BD Connected. We'll launch it with a new brand name. But that's our new AI platform that will launch with Pyxis, Pyxis Pro, which is the name of the new Pyxis. But it will be used Alaris, APM will all end up going into BD Connected. And what it allows you to do is one of the things is it's like a BD ChatGPT. So just free flow. Please give me a chart of which nurses across my institution are overriding alarms on the pump and require training. Boom, boom, boom.
Charts, graphs pop up with exactly what happened. Please tell me which drugs I am wasting across what hospitals and how much is that costing me. The AI will pull all that data out of the system and make beautiful graphs and charts, et cetera for you. It's free flow form. It really takes what people are using pivot tables and analysis to do and just makes it like AI. It's extremely powerful for people to start drilling into improved medication management. Obviously, the more platforms, as we stack more platforms in BD Connected, we're just feeding more and more data into that platform. BD Connected will be the basis. We've already invested several million dollars when we bought Edwards Critical Care business. One of the things that we identified was, again, we build solutions.
One of the things that clinicians want most on the pump side is in the ICU, when hemodynamic monitoring is off, they need to adjust the flow rate of the pump. Your blood pressure is too high, too low. You change how much fluid's going into the system, right? How much the pipes have in them changes the pressure. And that's all. It's the equivalent of like in your home needing to keep your temperature at like within a tenth of a degree, and you need to have a thermometer and look at the thermometer and constantly be adjusting your thermostat. That's how it works in a hospital today, right? They constantly adjust the pump thermostat, and they're looking at the thermometer, which is the Edwards system. We want to close that off like everyone's house works today, right? You just set it and forget it.
That's all going to be enabled by BD Connected, right? Connecting those systems to talk to each other and eventually make recommendations first to adjust and eventually close loop as our vision. And we already have full-time teams working on that. So we're excited by not just the launch of Pyxis, but the launch of our new cloud and AI platform that will come with that, that will have a runway of other things that we'll be doing with.
The first one out of the chute is Pyxis Pro. That's the cloud-based. Alaris goes into that.
Alaris will go into that as well.
Immediately or that's next? So layer onto that. And then APM goes into that also. And then they all will sort of speak with each other. Because I run financial models for a living, what does that mean?
Yeah. So we think it means a number of things. One is that cloud gives you the opportunity to, there'll be different software modules that you can access, just like we do today in HealthSight, right? If you want narcotic diversion, that's an additional payment per bed hospital we charge per, if you're a 300-bed hospital, it may be $5 per bed per year for that module or whatever the number is. And there's other modules that we do. Inventory management, you want to reduce inventory. We have specific modules that we charge today that create revenue for that. So there will be revenue models off of BD Connected. At the same time, the power of that ecosystem, just again, the solutions that we offer, no one else has those solutions to offer.
And the more that you're pulling those together to create better outcomes for hospitals, the more that they buy across the portfolio. It's not an open system, right? From a cybersecurity and other risks, we don't open it to just other devices. We keep it within that BD. If there's complementary devices to the system that we're not in, we certainly can look to add those. But there's also the power of that. So there's the.
Excellent. So my final closing question, which is one of my favorites, but I think you've got so much going on. Lastly, when we are here together this time next year, what do you think we will be talking about?
This time next year?
Yeah. End of February. I can give you the date.
Yeah. Yeah. Obviously, we're very focused on executing.
I know. That's why I asked.
We'll be talking about this summer.
Yeah. You've been through the summer. You've done a lot with the analyst. What do you think we're going to be talking about?
Obviously, I mean, we'll be talking about the new BD, and we'll be talking about all the growth platforms and innovations that we've talked about. And there's a number of new launches we've launched. I think another thing that are important to note, when we launched BD 2025, we said our goal was to double new product net of cannibalization, new product revenue by 2025. And we've done that, right? So we said that we wanted to double that from a little under $800 million to over to around $1.7 billion. And we're right on track to do that, having launched over 100 products over that time period. So we're really excited by our innovation pipeline. We'll share more about also, I think what we'll be talking about are some of the things that we'll have shared at analyst day between now and your conference.
We've been continuing, as I mentioned, BD Interventional as a real focus for us, not only as we think about capital deployment in the future, but it's also been, we've been feeding it with outsized R&D investment. So by far and away, the largest beneficiary of our R&D increase in 2025 is our Interventional segment. And it was last year as well too. So as products that are early, we don't talk about as they advance through the pipeline, we talk more about. So I think we'll be talking more about what's driving an accelerated growth profile for the new BD over the years.
Excellent.
Yeah. Just, I mean, look, for me, I think we'll be entering an exciting next phase. I mean, one, if I just look at where we are today, we're successfully completing BD 2025. We've delivered against every metric. We've driven the intrinsic value up. I feel like it's a very attractive time to think about BD as an opportunity. You have a near-term catalyst in terms of a very exciting separation that's value creating. I think the new BD profile that we talked about will be really exciting, and as Tom said, unveiling kind of all the growth catalysts there and bringing that to life even more with more clarity, including BD Excellence, kind of bringing that to life for everyone in person, and then lastly, I just, again, we're not done with capital deployment, so the new BD profile is already exciting.
And then, just continuing through discipline, tuck-in capital allocation, continuing to drive that up, I think, just keeps setting the future nicely.
Excellent. Tom and Chris, thank you so much for joining us today.
Thank you.
Have a great day.
Thanks, everyone. Appreciate it.