00:00 Speaker A
earlier this year made a really important announcement, investing what, $500 million in in to boost your US manufacturing in two plants, Illinois and Texas. What’s the what’s the update on those plants? Where is the progress?
00:13 Speaker B
Uh so those those manufacturing sites are for our diagnostic products and those will be up and running. So one in Illinois and another one in Texas. Uh those will be up and running uh by the end of the year. We also announced uh a a couple weeks ago a new manufacturing cardiovascular uh investment. We have a very strong cardiovascular portfolio. We’re making a new investment in a new manufacturing site in Georgia. Uh so yeah, so we’re reallocating our capital to ensure that we can ensure that we’ve got resilient supply and can capitalize on the demand that we’re creating with this incredible pipeline of products that we have.
00:43 Speaker A
How do how do the economics change for your business making more products in the US?
00:50 Speaker B
Well, we’ve always had a philosophy to align our demand with our production. So we have about 90 manufacturing sites. Uh about 40 of them are here in the United States.
1:04 Speaker B
So a very large percentage of our US revenue is supported by US manufacturing and our international revenue is supported by international manufacturing sites. And one of the things that we’ve done over decades is we do that because it helps uh mitigate kind of the impacts of foreign exchange, aligning your cost structure with your revenue structure. Uh so, um so that’s been a philosophy of ours. We’re seeing a lot of demand here in the United States for some of our products. So that’s why we’re building these manufacturing sites over here. And also we we we made an announcement a couple years ago of for a new nutritional manufacturing site uh that will be um uh working on also in the United States. So, um so it’s really thinking about a a much larger context. It’s not necessarily driven by tariffs, but it’s about really aligning our cost structure with our revenue structure. And we’re seeing demand grow outside the United, international markets, we’re seeing growth here in the United States and that’s how we’re that’s how we build our supply chains.
1:49 Speaker A
So Robert, I’m going to tell you this, you’re sitting on a a lot of cash, that’s a good thing to be in. You have uh those manufacturing plants overseas. The dynamics in the economy have changed in large part because of tariffs relative to April. Could you see yourself making another $500 million investment in this country? Does the business support doing that as you look out over the next decade?
2:09 Speaker B
Well, so we’ve got a very disciplined capital allocation plan. Uh we obviously allocate uh to the uh programs, our internal programs, our internal cap X products that generate great returns. Uh so building new manufacturing sites, whether it’s international or here in the United States to support the growth is provides a great ROI. Uh we also allocate some of that capital, some of that balance sheet that you refer to back to our shareholders. So we play uh a growing dividend. We’ve been growing our dividend for over 53 years. Um, so we have this ability to really invest in the future, uh to drive the future uh through our pipelines and manufacturing while at the same time having our shareholders uh be rewarded uh with that in the short-term through our dividends.
2:48 Speaker A
What’s the impact uh broadly speaking for the pharma industry as these tariffs come into play? You know, what’s what’s the trickle-down effect uh as we look out?
2:57 Speaker B
Well, we’re not really, I I’d say I think pharma is is is I won’t comment too much on pharma because we’re not a pharmaceutical uh here in the United States. Uh so the majority of our business in the United States is nutrition, diagnostics and medical devices. And like I said, most of our sales here in the United States, we have manufacturing sites that support those products uh in cardiovascular, in diabetes, in nutrition and diagnostics. So, uh right now our impact uh between the whole network uh is just under $200 million. Uh, but I think the key thing here is one thing that we have learned is once tariffs come in place, whether they’re in the United States or in another country, they do not go away. So we need to think about how do we mitigate that not just in the short term, but also long-term. And that’s really about making long-term investments uh in your manufacturing your supply chain.
