Ready? All right. Good morning. I'm Larry Biegelsen, the medical device analyst at Wells Fargo. It's my pleasure to host this fireside chat with the management team from BD. With us, we have Tom Polen, Chairman, President, and CEO, and Chris DelOrefice, Executive Vice President and CFO. In terms of format, as I said, it's gonna be fireside chat. If anybody has a question they want to ask, just raise your hand. And so with that, we'll jump in. Tom and Chris, thanks so much for being here.
Great to be here.
Thanks, Larry.
So, Tom, let's start with Alaris, which was cleared recently by FDA. It was obviously a very important milestone for the company. I think you said in the past-
Oh, wow.
It was your number one priority. So congratulations on that.
Thank you.
I'd love to hear, Tom, about the next steps in returning Alaris to the market.
Sure. So as you said, it's been our number one priority for the last several years, and so it was a huge achievement. Because we've got Mike Garrison here as well, who really led that effort, heading up our medical segment, had formerly run MMS. So with now Alaris cleared, which is fantastic. And just a reminder, Alaris was cleared against the most cutting-edge standards for the FDA. And so this has all the most advanced cybersecurity, wireless connectivity, WPA3, and a number of other upgrades. This isn't just the product that got put on hold, is now cleared. There are significant upgrades across many different attributes in this product, so we really feel great about the performance of the product.
Of course, the attributes of connected medication management are stronger than ever for the platform, and it remains the only truly, you know, single platform for infusion that can do all modalities in one, and there's nothing else, you know, from anyone, even in the pipeline, that will end up being able to do that, less well, all the connections to all of our other medication management systems. So that's fantastic. The other thing is, of course, as we were focused on remediating, getting the 510(k), we had to put innovation on Alaris on hold. Now, with the, the new 510(k), that baselines Alaris, where we're now re-accelerating innovation on the platform. And so we already have next 510(k) submissions planned.
We already have additional innovations in the pipeline that we've added in, and so we're really extremely excited about not only that platform, but continuing to drive the connectivity between Alaris and Pyxis and the rest of our medication management solutions. As we had shared on our call, we've already contacted essentially all of our customers on Alaris. Extremely positive feedback, and we've begun, you know, discussions around the remediation process. And so that is now our number one focus, is implementing the remediations. We've been advancing those discussions with the FDA per our discussion on the quarterly call. And again, the customer feedback continues to be positive, so you know, remediation remains our focus.
That, that's helpful. You know, we've gotten a ton of questions, and I don't... want to make sure we don't spend the whole time-
Sure
Talking about Alaris, but I think people are trying to understand kind of the financial impact. You've had $100 million a year in medical necessity the past few years. You talked about $200 million in sales next year. What goes into that $200 million? And the questions I've gotten around remediation.
Sure.
You know, if you are replacing the pumps for free? And are you able to charge? And if you replace, like, remediate a large number of pumps, you know, is that essentially eliminating the backlog?
Yeah. So you think about the backlog typically comes, and the majority of Alaris sales historically have been from people replacing aged fleets, right? So the pumps after 7, 8+ years, typically they would then purchase new pumps. And so aged pumps in that 7+ year timeframe would continue to be replaced and paid for by the customer in most cases. So that would be normal upgrade to the new Alaris product, right? As it reaches end of life. Pumps that are earlier in their life, we would be able to, for the most part, field upgrade those to the current version of the pump, and so that's our approach. Of course, there are many of them, but not as many as there normally are, because we weren't actively selling for the last 3 years.
As you think about how what portion of the fleet is under seven years versus older than seven years, that's kind of the way we think about it. Replacement versus field remediation by our services.
So if a pump is over seven or eight years old, and it has to be remediated, can you charge for that? Like, where-
We would replace those pumps.
You would replace them for free?
Not, not for free, no.
No, there is a charge.
Just like would be normal due course-
I got it.
... as has always happened.
Okay. And so why only $200 million next year? As you know, why only $200 million?
Yeah. So we're obviously early in the process, as we said last time. It is gonna take some time to ramp up, engaging with customers. Again, we're starting from a spot where we weren't able to actively engage with customers around expected timing of a 510(k), et cetera. And so as soon as we got the 510(k), we could start that discussion. We could start capital planning. We could obviously start re-ramping up manufacturing, et cetera. So again, we'll continue to give updates as we progress, but we think that's a good number, you know, as we start planning for 2024.
How long will it take to get back to the $400 million run rate you were-
We've said over a couple year timeframe to get into that.
Yeah.
I'm not in 2024 is not our expectation.
Yeah, I think let's see how 2024 plays out, right? It is early. We're just a month over this. I think engaging with customers is gonna be the critical factor here, the readiness on their side, the scale-up activities that Tom articulated. I think the nice thing. If you step back, right? One, through your lens, this provides a high degree of certainty, a critical kind of uncertain item that was out there. So not only does it de-risk, but it's a key enabler to our 5.5+. I would always elevate it back up and think about: How do you think of the BD growth profile? You get the balance of reliable, durable growth with an outsized strong growth profile with what we're doing from a transformative solutions.
So I think we talked about this happening over a multi-year period, and you should think of Alaris as contributing to that plus side of the 5-5 over a multi-year period. In addition to that, it gives us a platform to innovate against as well. So if you think of kind of future runway, now we have a cleared pump in the marketplace. We can continue to drive our innovation agenda. And I think the other thing is, in addition to Alaris on its own, bringing the power to bear of our connected care strategy, right, and our broader medication management portfolio, whether it be Pyxis, HealthSight, et cetera, there's more opportunity there as well. And when you think about the value of solutions that can help make things safer, simpler, and smarter.
When you think of nursing shortages, labor, et cetera, this is sort of in the sweet spot of that. So I think it offers a needed solution in the healthcare system as well. So I view this as a longer term growth catalyst. I don't think you'll see necessarily a big spike that goes away. Like, you should actually, I think, feel good about a nice growth catalyst over a multi-year period.
I think one of the other things we're seeing is, of course, not only did we, this is by far the most comprehensive, complex 510(k) in the history of infusion pumps, right? And it very likely, almost positive, it will be. Because again, it's the central PCU, the LVP, the syringe pump, the PCA pump, and interoperability, all simultaneously cleared in a single 510(k). There's nothing even remotely, even in anyone's roadmap. And so what that includes is interoperability, which we were on hold also for three years. Again, we have by far the largest footprint from an interoperability with electronic medical records, more so than I think everyone combined. But tremendous opportunity with still relatively low penetration of our customer base. And with nursing shortages and the focus on labor efficiency, that's a tremendous opportunity.
There's a great study out of Hackensack, for example, just before we put the product on ship hold. There's 1 million keystrokes per year savings for nurses. That's 1 million chances to get, you know, an error, now prevented, you know, for hospitals. That's a lot of time. That's just... anytime I was actually out in the field last week, traveling and speaking to a number of nurses who had interoperability, they love it, and once it gets in there, it—they will not let that go. So we're seeing a lot of great interest, too, not only in just Alaris itself being back, but in, okay, how can we now drive interoperability with the electronic medical record, taking advantage of this additional 510(k) that we just got for EMR interop?
So one more financial question. There are people who have long enough memories to remember when it was, you know, when the ship hold occurred and the EPS, the earnings impact and the margin, you know, assumed on that. How are you thinking about, like, giving that back to shareholders?
Yeah, so we had talked about and obviously a lot has changed since the ship hold. We did go through a pandemic, macro complexity, inflation. We haven't been sitting idle as well during that time, but our most recent communication, we had talked about there being about 80 basis points of margin opportunity to get back as a result. If you remember when Alaris went on ship hold, we did maintain our sales service organization, had other investments we had to make. So that 80 basis point is something that we had talked about that had been a headwind to our margin historically, something that would come back over time. It was part of our BD 2025 strategy.
So again, I think that you'll, over a multi-year period, there'll be a normal ramp up, as Alaris comes back, and over time, you'll get that 80 basis point of margin improvement back in. So the way to think of it is we're well on track to our 25% margin goal by 2025. As we exit this year, we'll be about 70% of the way towards that goal. We now have Alaris, which is another added catalyst that was always part of that. In addition to that, we have a strong pipeline of simplification initiatives. So I think in addition to the growth profile, we talked about this, this is also a nice catalyst from a profitability.
In the short-term standpoint, as I had shared on the earnings call, you know, it is diluted to GP, just when you think of consumables versus capital installations, which is typical, right? So diluted to GP, and there are, while we maintained a lot of costs, there are some additional new variable costs. Obviously, shipping, there's marketing-related costs and communication-related costs, and continuing to actually maybe early on ramp up service activities. There's labeling changes that have to occur, so it won't all just drop through, but it'll be an important contributor to earnings even next year and then certainly beyond next year, I would expect it to further ramp up.
So again, I think a nice de-risking and add to our 5.5 plus on the growth, but also certainly a big important enabler to achieving our margin goals.
That's helpful. All right, so let's shift gears. Tom, you guys, given your size and scale and global presence, you have a unique perspective on the healthcare environment. So I'd love to hear an update from you on just the macro trends. Sounds like on the fiscal Q3 call, things were generally getting better. I'm sure not everything is, you know, going at the same pace, but love to get an update from you.
Sure. So I think very similar to the last quarterly call, we continue to see stabilization in the US. US non-acute continuing to outperform the hospital inpatient sector. Capital equipment, you know, we've discussed that we haven't seen really any barriers pop up from a capital equipment, at least within the spaces that we've been serving. We see where there's strong value propositions associated with labor savings and efficiency, which a lot of our capital solutions are on the pharmacy, robotics, and automation. As a reminder, right, we have a $500 million plus pharmacy robotics business now growing teams, and we see strong value propositions there as that's helping customers face the labor challenges that they have. Same thing with laboratory automation, right? Our laboratory robotics business and microbiology are doing very well.
We're continuing to see strong demand for those types of capital solutions. We talked about dispensing last quarter, and had a phenomenal quarter. We're continuing to see strong capital placements in those areas. I know not everyone may be seeing that, but at least in the spaces we're in, we've seen that. You know, as we look beyond the walls of the U.S., I'd say Asia, we continue to see in China, and we're watching that area carefully. I was just in China a month or two ago. We are seeing Value-Based Procurement, we talked about this on the last earnings call, start to ramp back up after COVID, right? And so just generally across the industry, and these are comments just industry-wide.
If you look at the number of VBP tenders that are coming out, they're higher than they were before COVID. The numbers of provinces participating in a given tender has gone up since COVID. The numbers of different products in each tender has gone up since COVID. And so we expect that trend, not only that we're seeing that industry-wide in 2023, we expect that's going to continue in 2024. You know, we also watch very carefully some of the new anti-corruption policies that were put in place. And I was just with our team in China yesterday. You know, we are hearing, again, this is an industry-wide comment, we're hearing of physicians starting to do less overtime in the country with some impact on doing lower procedural volume as a result of that policy.
The crackdown has been on physicians and hospital executives as a result of that, and so they're, they're being more cautious to not... "Well, why are you doing extra overtime, and why are you doing additional procedures?" So they're kind of pulling that down a bit. We're watching that carefully. I think that's, again, that's an industry dynamic, not something specific to BD, but, but industry-wide, we are seeing that, and we'll watch how that evolves.
China's about 7% of sales for you guys. I think you guys had a good fiscal Q3.
Yep.
Good growth.
Very strong growth.
You know, you've talked about 6% growth in Q4, and I think it's 6% next year, Chris, or 5.5, with the fiscal 2024 base organic.
Base organic, yeah. There-
5. 5 you said, or…?
With Alaris, it was around six-
Okay.
- is what we had said. Obviously, that's early. You know, we mentioned that we're watching these various dynamics as we put together our final plan. There were two other adjustments, to make sure everyone's clear. We also have to absorb some-- We expect COVID-only testing to continue to go down. There was maybe about 30 basis points headwind there. That would moderate that a little bit. And then, of course, we have the surgical divestiture that we executed. That's an inorganic adjustment of about 70-75 basis points on growth. But yes, our base organic growth of about 6% with the tailwind of Alaris.
I guess what I'm wondering is, you know, the anti-corruption initiative or policy came up for most companies after they reported calendar Q2 earnings, right? So how much did you take into account? I know you did say on the fiscal Q3 call, China is a bit of a wild card. So how much conservatism for China was embedded in the Q4 guidance and the fiscal 2024 initial color?
I think we'll continue. Obviously, it wasn't even out when we gave that guidance. We'll continue to watch how that evolves. You know, I think we've got a strong team in China, but it is a very dynamic environment, so any other comments on that? But it is something that we're, you know, we're seeing VBP continue, but we are seeing this policy in place. And again, just yesterday was the first I had heard of, and I think probably everyone in the industry is starting to see, "Okay, what's the impact of this policy?" And I'd say the initial impact that we're seeing, that we're starting to hear about, is less overtime by physicians, which means less procedure volumes in certain locations. You know, what other dynamics happen?
I think that it's going to continue to evolve in terms of what crackdown, what, you know, what actions are happening to the physicians and the hospitals, right? This, the anti-corruption policy is not necessarily on the tech companies, it's on physicians and hospitals, which is by nature, going to change their behavior as to how they operate. And I think that's what everyone... The policy just came out, so everyone's watching to see how that is going to be changing physician and institutional behavior. There's obviously also been an impact. A number of conferences have already been shut down in China, right? Where med tech companies and physicians would typically get together. They've canceled a number of those. Again, physicians not wanting to have a perception of engaging with companies in inappropriate ways.
So those things are typically ways where they learn about new products and new technologies and get trainings. And so we'll watch to see if that's something that's going to continue. Is it going to start back up? I think everyone's watching.
I think, Tom, you touched about VBP ramping up. Are there any new...? You went through a period of that-
Sure.
- VBP, like most large companies have, and that you're certainly not unique in that regard. Are there any new categories popping up that impact you directly?
I mean, there certainly are new categories that pop up. Probably for every company, there's new categories popping up because they're doing more than they did in the past. Again, that's something that we're managing and working through. But we do have. You know, we've had catheters in the past. We've had flush now that's going through in some areas of VBP, and there will continue to be areas, no doubt, that will be added in the future, as there will be for other companies. Chris, you wanted to add something?
I'd just say, I mean, bigger picture, right? China, like, it's obviously an extremely attractive market. BD has always differentiated ourselves from a performance standard. I don't think anyone is going to be immune from the dynamics that could play out on the market. So we're watching it. We're probably a couple months in. I think the last earnings season, folks started talking about some reaction to the economic dynamics in the country and seeing some market softening, coupled with some of these other nuances. But those are going to be pervasive across. It's still only 7%-8% of your sales, right? Like, you're not talking about, you know, you're talking about growth adjustments on the fringe, depending on what happens.
I think the key thing is, BD has always. Our, our kind of posture has always been, one, we have a big portfolio, right, with this reliable, durable growth profile. We still have significant opportunities in other areas. And how do you best position yourself and lead through these other dynamics? So even as things played out, like go back to China, for example, as we went through shutdowns and various aspects, BD always sort of helped perform given the capabilities we have there. So that, that is our goal. Control what you can control. Long-term, we're also invested. It's an attractive market that has growth opportunity when you think of the population dynamics there. I think the other thing we've been very focused on is ensuring that we don't let. We're not relying on capabilities in China that could affect other parts of our market.
So we've done a nice job from a dual sourcing. We're not dependent on China from a sourcing standpoint, so we've protected our other core growth outside of China, for sure. So I think more to come. I think over the next quarter you'll see more, and we can give a more robust update. But I just would remind folks of kind of that, that bigger picture.
Just as a reminder, right? We do manufacture quite a bit in China, exclusively for China. And so as you think about syringes as an example, or sorry, catheters, they're mostly all made in China for China. There's really no products that are exclusively made in China and exported to other markets. Actually, of the tens of thousands of products we make, there's one product that we export out of China, for example, to the U.S., and it's - we also make that product in Boston. So we're not reliant on China at all for other markets from a finished goods perspective.
Yeah. You're the first large cap company to present here, and, you know, the anti-corruption initiatives are relatively new, and we haven't heard too many companies talk publicly yet about it. So it was a helpful update, and maybe we spent a couple more minutes on it because I think people are hungry for information on what's going on.
If I had talked to our China team yesterday morning, I wouldn't have known about the physician topic. So now, you know, I'd say it's real-time information that's happening across the industry. Our head of China has also been the head of AdvaMed China for many, many, many years, I think over a decade. So he has a great perspective on what's happening, just industry-wide as well, which is what we had a good discussion on.
Okay, that's helpful. You know, turning to one of your key growth drivers, which has been Pharmaceutical Systems.
Yeah.
Mid-teens growth last year, mid-teens growth this year. What's driving that, and how much can you benefit from these new GLP-1s?
Sure. Now we're really excited about the performance in PharmSystems. I think we're up to 14 consecutive quarters of double-digit growth. So, I think that's actually 3 years. So that we feel really good about, about that momentum. So there's a couple things as we look at, at PharmSystems. And I'll, I'll build up to the, probably the most significant growth driver, but start with vaccines, continue to actually do very well converting into prefilled devices. So where vaccines had traditionally been in vials, we're seeing a lot of the big vaccines, whether meningitis or HPV or RSV vaccines, going straight into prefills. People see the value of prefills in the vaccine space, so that, that continues to do well. Our self-injection business continues to do well with a lot of exciting new products in, in the pipeline there.
So self-injection, as biotechs continue to make up a predominant portion of the pipeline for most of pharma today, you're seeing people's desire to want to deliver those drugs at home by the patients themselves, not go into infusion centers, not have to go back to the physician for injections. But these are typically people managing chronic illnesses. Could be Alzheimer's, could be cancer, could be diabetes, could be, you know, lifestyle, could be in the future, obviously, and is today, things like weight loss, et cetera. And so the ability to self-inject is very important. And so our, our self-injection device portfolio, we have variable dose pen. So for example, 60% of biosimilar insulin are coming out in our variable dose pen. We have wearables, for more viscous.
So a number of the Alzheimer's or new oncology drugs that people are looking to convert from infusion into injection, we have wearables that would inject those molecules over a 15 or so minute timeline by the patient at home. We also have electromechanical devices that a doctor would put on you, and then you would go home, and it will inject you at a predetermined period of time later on. Like, 24 hours later, it will inject you, so that you don't have to come back to the physician office. So we're seeing strong demand in that portfolio and really see that as a big trend going forward, and it's only going to accelerate that shift into auto injector space and self-injection devices. And then finally, just biologics overall. Of course, we have the preeminent portfolio when it comes to biotech drug delivery.
We've really innovated in that space more so than anyone with custom coatings of our syringes, meant for very delicate biotech drugs to prevent interactions with certain molecules in the glass. We've developed specific types of needle technology that's thin-walled, that allows more viscous drugs, for example, to be injected in shorter periods of time into the body, which is typically something that's highly desired. Shorter is better in terms of injection duration. And so this portfolio, combined with what is by far and away the largest capacity, right? 5-6 times larger than the number two competitor in the space. If you have a big blockbuster drug that you're coming to market, right, you can multi-source across facilities we have in the U.S., in Mexico, in Europe, in Asia, de-risk supply chain.
And if you think your drug is going to be a blockbuster, there's a company with 5+, 5x more than the number 2 competitor. You've got much more runway in terms of making sure that the devices themselves never are something limiting your growth profile, as they're focused with, I think, what are probably a number of drugs that will potentially go down as the largest drugs of all time, as we look at new indications that are coming out, for example, for GLP-1. And so, we have devices that are perfectly suited in that category, and we are certainly seeing some benefits of that today and are well positioned in the future.
So mid-teens growth, you feel that-
We're not committing to mid. We don't give guidance by business unit by any means, but we feel good that Pharm Systems will continue to outgrow the BD average for sure.
Got it. And then just switching gears, maybe back to the outlook, Chris. The margins, you know, from Q3 to Q4-
Yeah.
It's a pretty, you know, steep ramp.
Yep.
What gives you that confidence?
Yeah, appreciate the question. So I think it's important to note throughout this, the past two years, actually, we've executed exactly as planned every quarter. We had strong line of sight to our simplification programs. We understood how inflation was going to play out, how that would flow through cost of goods, was the predominant space as you think of another year of 200 basis points improvement. Obviously, our strong growth profile has been a key enabler to supporting our margin as well. So again, we're about 70% of the way towards our 2025 goal. This year, we committed to about a little over 100 basis points of margin improvement.
Over the two years, we'll be just under 400 basis points improvement, and that includes us absorbing over 400 basis points of outsized inflation. So just really strong execution on all dimensions. We've been focused on growth. We've been focused on portfolio mix. Strong portfolio of simplification programs that are well underway. And we've built on that inventory of programs that we have to enable that. As you think of how the year has progressed, we saw a really nice margin improvement as expected in Q3. Q4 has timing dynamics, so actually, the ramp looks much higher than it is. If you remember, in particular, R&D, we talked about investing at about 6%. We had some lumpiness in terms of timing of milestones and the programs, how they were executed throughout the year.
So we were heavily invested in the first half versus the second half. You saw that moderate back in Q3. It's going to take another moderate step in Q4. So almost 45% of the margin improvement is just timing alone. Combination of not repeating prior year testing reinvestment that happened, the R&D timing. There was also some timing associated with, selling, as an example. We got back to bigger field in-person meetings that happened in the front half. So if you normalize for that, there's really two other factors that give us confidence. One is just the growth profile and natural leverage. That gets you to almost 75% of the margin goal, and then the balance is just a residual of the simplified programs that, again, they're basically fully executed, and it's more just the run rate of how those occur throughout the year.
We feel really good about that, and I think it sets us up nicely for 2024 and 2025.
And 24, basically the initial color with 6% base organic-
Yep.
10% base EPS or overall EPS growth.
Yeah. So just unpacking that a little bit. A couple of things. I get asked the margin question a lot around, like, how do you see the rhythm of margin in 2024, 2025? The simpler way to think of it is just we're committed to this 5. 5+ growth profile. We want to have 10% FXN on the bottom line. Obviously, as the growth rate moderates, the higher we can get the growth rate, it gives you more flexibility on margin, and margin becomes kind of the lever that's the solve in between that I can moderate. I can decide. Every year, we'll have some degree of margin improvement to get to the 10%, but if I have a higher growth profile, we can invest more to keep fueling growth.
Or if there's headwinds that come in, like we were able to do during kind of these macro inflationary and complexity, right? You use simplified programs to moderate them. You may need to deliver a bit more margin to offset some of that. So I think there's a lot of flexibility in how we deliver that formula, and feel really well positioned to that. As we look to 2024, obviously, this is informal guidance. We were just trying to give some color around how we were thinking in the business. Obviously, there's, you know, we'll continue to assess various factors like we talked around, around China as a simple example. But we feel really good about the 5, 5+ that we've been doing, right? Our organic growth rate the past two years is actually 7%, so we've been outpacing that.
Alaris gives us another 50 basis points of lift on the 5.5, so that gets you to about the 6%. We will absorb about 30 basis points of the COVID-only revenue going away, so that gets you to about 5.7. And then we have an inorganic adjustment, which obviously doesn't affect the true underlying organic growth rate of the divestiture we did, which created nice cash for us that we can reinvest. And the formula there is going to be, you're seeing the benefits of our portfolio shifts within R&D, right? 60% of our portfolio is now towards transformative solutions. The tuck-in M&A that we've done has been super impactful. It's contributed 30 basis points to organic growth after anniversarying those assets, and we have more firepower that we can continue to execute that.
And then we think with our margin improvement programs, we think we can get to, we said about 10%, but that 10% importantly includes absorbing the impact of the EPS loss from the divestiture we've talked about in the COVID-only testing. So it implies a, call it a base EPS growth, it would be just above 10%, and we think all in, we could be right around 10%. So I think it's a very compelling profile in this time.
All in includes currency, so it's not a 10%, FX neutral.
It's an FXN neutral. I mean, we'll adjust for currency as we see how that plays out, right?
Any idea where currency is right now?
Yeah, we'll keep watching it. I mean, I think it's easier to share that. Look how much it changed at the end of last year-
Right
In one quarter. I wouldn't even want to comment on that. I think the important thing is, when we think of the economics under like FXN, I think is the right way to look at kind of the true underlying economic value creation, right? It's, it's more of a mathematical translation adjustment that doesn't change the underlying cash or earnings, delivered in any particular market. So I think FXN is the right way to look at it, and we'll adjust that when we get to that point.
That's helpful. Tom, Tom, a few minutes left here. A couple of different places to go. Well, let me just ask you on 2024, the assumption on price. I know you're not going to talk about numbers, but you do disclose it. How are you thinking about price in 2024 relative to 2023?
Yeah. So what we've said before, that we think 23 is the high watermark from a pricing perspective. Again, our pricing approach has always been, it's been aligned with inflation and the cost that we've borne, and passing through a portion of those increases to our customers, not all of them. We've done significant restructuring, driving higher CI, negotiations with our suppliers, but we've passed through a portion of those. So and as you know, we've probably done among the best in med tech from that perspective this past year. As we look ahead, what we've said is that we expect that we'll do better than we have historically, but certainly not at the 23 levels that we see. So you know, we've invested in capabilities during the pandemic.
We had already had some capabilities, but we've invested in additional IT systems. We use a standard pricing system called Vendavo, across all businesses that they use to manage price and optimize margin, in every business unit. We have dedicated pricing experts in every business unit, every region. We have a corporate function, just like we have a regulatory quality manufacturing function. We have a pricing function at BD, and so that's given us a level of capabilities and skills that we believe will allow us to, on an ongoing basis, continue to do better than we did pre-pandemic, which was, call it flat. Flat to slightly down, which was better than kind of the med tech average always, but it, it certainly wasn't consistently on the positive side.
We think we'll do better than we did historically, but it won't be at a 23 level, which was an exceptional period of time, obviously, from an inflation perspective.
That's helpful. Two minutes left. M&A, you seem to have kind of a nice rhythm going with, you know, tuck-in acquisitions. Parata seems to have been a successful-
Yeah.
- deal for you. You know, how are you thinking about kind of the cadence going forward?
Yeah, and Chris can jump in. We have a strong pipeline. We continue to be very focused on inorganic M&A as part of our strategy. We view it just as much as our organic pipeline. We look at inorganic, you know, additions to our innovation portfolio that we have. And again, Parata has been a phenomenal addition to BD. We took our Rowa business, which was a pharmacy automation in Europe, combined that now with the leading pharmacy robotics platform in the U.S., to end up with a $500 million plus pharmacy robotics business growing mid-teens. And we continue to see a strong runway ahead that has relatively low penetration still, as you think about not only hospitals, but, you know, the retail centers, long-term care facilities, etc.
They all have opportunities to have pharmacy robotics in those locations. So we continue to, again, be very active. We have shared that, you know, the first couple of years of BD 2025, we were focused on kind of rounding out the portfolio across our businesses, and so you saw us do smaller tuck-in M&A. I'd say we're as we move into the next phase of BD 2025, which we're in now, and this isn't the first time I've made this comment, we've shared this before, is expect more Parata-sized acquisitions, you know, mid-size, tuck-in M&A. We're still not looking at transformative M&A, we're looking at tuck-in M&A. But we think that we have a really nice roundout of our portfolio, and now we're looking at those kind of more solid-sized tuck-in acquisitions as we go forward. We'll still do smaller tuck-ins.
We've said, I think, maybe 70% of our M&A capital would go towards the beefier tuck-ins, with 30% still rounding out the portfolio, particularly in areas like BD Interventional, which has always been, you know, the legacy Bard business. Lived on smaller tuck-in M&As, bringing them in-house, iterating them, and having phenomenal success. PureWick is probably one of the industry's best examples of that, of some very small tuck-in M&A opportunity that's been a great addition, and really transformed the UCC business and continues to do so today.
Great. Well, unfortunately, we're out of time.
Tom and Chris-
Thanks so much.
Thank you.
Okay, thank you.
Thanks, everyone.
Great to-