Question-and-Answer Session
Operator
(Operator instructions) Your first question will come from the line of Mr. Taylor Harris from JP Morgan. Please proceed.
Taylor Harris – JP Morgan
Thanks a lot. Rich, first question would just be on what’s going on, what you’re seeing in the surgical and energy market. You had a very nice sequential uptick. J&J did as well. So, maybe give us your thoughts on, is the market as a whole expanding? Do you think that we should look at this quarter's reported growth as a normalized number or do you think it’s more somewhere in between the previous two quarters? And then any comments on market share in those categories as well. Thanks.
Rich Meelia
Yes, sure Taylor. You’re probably somewhere between in terms of where we think the growth will settle out. We are benefiting from some good market dynamics, both us and our competitors, and I think you are seeing that especially in energy, it is a very strong segment right now. Bariatrics continues to drive a lot of growth I think for everybody.
In terms of actual share, if you go more specific product line by product line, I think we are getting some share in mesh and fixation within the hernia segment, might be some slight uptick in share in some of the other endomechanical pieces, but I think mostly we are benefiting from a good strong market growth with the exemption some of those areas that I mentioned previously.
And so going forward, we think the sales growth in these segments will be in that mid to upper single-digit numbers that we’ve been talking about from the beginning and that’s very good for Covidien because it really helps drive a lot of the value for our business.
Taylor Harris – JP Morgan
Great, thanks. And Chuck, just one for you. On the raw materials, cost of goods side of things, can you quantify at all what the potential impact would be in ’09 on gross margin, assuming some of these commodity prices stay where they are?
Chuck Dockendorff
Yes, it’s interesting. We are clearly beginning to see the increase in these raw material costs coming through and as we’ve mentioned, they are primarily in our patient care and safety division as well as the pharmaceutical piece of it and medical supplies. The ranges of it – it is following – you’ve seen the price of oil go up and down on these things, and the price of it has really come out from those increases and it is growing through our system now as we are beginning to get price increases from a lot of vendors and things like that, but we estimate the range of this to be in the 40 million to 50 million range at this point in time related to those specific things and may be another 15 to 20 pressure related around our freight and utilities from these higher costs. We’re still monitoring this and looking at it, and taking how this will impact our gross margins in the next year.
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