Melissa Trombetta - Mylan NV Heather M. Bresch - Mylan NV Kenneth Scott Parks - Mylan NV Rajiv Malik - Mylan NV Anthony Mauro - Mylan NV.

Jami Rubin - Goldman Sachs & Co. LLC Elliot Wilbur - Raymond James & Associates, Inc. Gary Nachman - BMO Capital Markets (United States) Christopher Schott - JPMorgan Securities LLC Aaron Gal - Sanford C. Bernstein & Co. LLC Douglas D. Tsao - Barclays Capital, Inc. David R. Risinger - Morgan Stanley & Co. LLC Liav Abraham - Citigroup Global Markets, Inc.

Ami Fadia - Leerink Partners LLC Timothy Chiang - BTIG LLC Umer Raffat - Evercore Group LLC Rohit Vanjani - Guggenheim Securities LLC Irina R. Koffler - Mizuho Securities USA LLC Andrew Finkelstein - Susquehanna Financial Group LLLP.

Good day, ladies and gentlemen, and welcome to the Mylan First Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

We ask that you limit yourself to one question, and one – and if you have a follow up, please re-enter the queue. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host for today, Melissa Trombetta, Head of Global Investor Relations. You may begin..

Thank you, Sonja. Good morning, everyone. Welcome to Mylan's First Quarter 2018 Earnings Conference Call. Joining me for today's call are Mylan's Chief Executive Officer, Heather Bresch; President, Rajiv Malik; Chief Commercial Officer, Tony Mauro; and Chief Financial Officer, Ken Parks.

During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2018. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections.

Please refer to the earnings release we furnished to the SEC on form 8-K earlier this morning, as well as our supplemental earnings slides, all of which are posted on our website at investor.mylan.com for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements.

Mylan routinely posts information that may be important to investors on this website, and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC's Regulation Fair Disclosure.

In addition, we will be referring to certain actual and projected financial metrics of Mylan on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of our financial performance.

Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP.

The most directly comparable GAAP measures, as well as reconciliations of the non-GAAP measures to those GAAP measures, are available in our first quarter earnings release and supplemental earnings slides as well as on our website.

Let me also remind you that the information discussed during the call, with the exception of the participants' questions, is the property of Mylan and cannot be recorded or rebroadcast without Mylan's express written permission. An archived copy of today's call will be available on our website and will remain available for a limited time.

With that, I'd like to turn the call over to Heather..

Thank you, Melissa. Good morning, everyone, and thank you for joining today's call. I can't believe it's only been a few short weeks since we last spoke during our Investor Day presentation in New York. As we shared with you then, and as our Q results continue to reinforce, Mylan is a differentiated player in our industry.

During Investor Day, we had the opportunity to highlight the power of our business model, which revolves around access, diversification, and durability. We provided a comprehensive overview of our commercial and operations platforms, as well as our exciting global pipeline.

We also showcased Mylan's ability to generate consistent and durable results, supported by our diversity across geographies, product lines, and channels, all while absorbing evolving industry dynamics and natural market volatility. Our first quarter continues to build on this story and represent a strong start to the year.

We remain confident in our expectations regarding product approval timelines for key launches throughout the rest of the year and are reaffirming 2018 guidance. Since there have been no major changes since we were last with you, we're going to keep our remarks brief this morning, so we can get right into Q&A.

Before turning the call over to Ken to talk you through the highlights of the quarter, I'd like to take a moment, thank our employees around the world for their continued dedication and commitment to Mylan. And we look forward to answering all of your questions following Ken's remarks..

Thanks, Heather, and good morning, everyone. I'll take a few minutes to provide a quick overview of our financial results for the first quarter, which were in line with our expectations. Total revenues declined slightly compared to the prior year to approximately $2.7 billion.

We continue to benefit from our diversified and durable platform, with solid revenue performance from both our Europe and Rest of World segments, helping to offset most of the competitive dynamics in North America.

North America was also negatively impacted in the quarter by the sale of certain contract manufacturing assets and the new revenue recognition accounting standard, both non-operational items. Moving to segment profitability.

Primarily as a result of declines in net sales from branded products, including EpiPen, the impact of the loss of exclusivity on olmesartan and olmesartan/HCTZ, partially offset by new product introductions, North America declined 22% compared with the prior year.

Profitability expansion in both Europe and Rest of World, including benefits from our ongoing integration activities and the continued benefit of stable business operations in many markets, substantially mitigated the North America decline.

We also invested in areas such as sales and marketing, as we focus on driving growth of several of our global key brands. Adjusted net earnings declined 1% to $496 million, while adjusted diluted EPS increased 3% to $0.96, both of which were in line with our expectations for the quarter.

The increase in adjusted diluted EPS includes the benefits from a lower share count, following the completion of our $1 billion share repurchase program in the beginning of the year. Adjusted free cash flow for the three months ended March 31 totaled $664 million.

That's an increase of 39% compared to the prior-year period and driven by improved working capital velocity. At the end of Q1 2018, we decided to proactively execute a $1.5 billion bond offering, further strengthening our capital structure and increasing our financial flexibility, as we continue to execute on our business plan for 2018 and beyond.

We also intend to repay €500 million of notes maturing in November of this year. And as a result, we remain committed to deleveraging and to maintaining an investment grade credit rating. We also continue to expect our leverage ratio to be below 3.5 times by the end of 2018.

Finally, for the full-year 2018, we reaffirm our previously disclosed guidance and business outlook, including our total revenue guidance range of $11.75 billion to $13.25 billion. That's a 5% increase at the midpoint versus full year 2017.

Our adjusted EPS guidance remains unchanged at $5.20 to $5.60 per share, an increase of 18% at the midpoint when compared to the prior year. We also continue to expect full-year adjusted free cash flow generation in the range of $2.1 billion to $2.5 billion. With that, we'll now open the call for questions..

Thank you. In the interest of time, we ask that you limit yourself to one question. If you have a follow up, please re-enter the queue. Our first question comes from Jami Rubin of Goldman Sachs. Your line is now open..

Thank you. Heather, just wondering if you could comment on the two upcoming GDUFA dates, June 4 for biosimilar Neulasta and June 27 for generic Advair. Specifically on Neulasta, there were some unrealized – Biocon received a Form 483. We don't know the magnitude of those issues.

Maybe if you could clarify that and just address sort of some of those timeline issues. Thanks very much..

Sure. Jami, I'll start off with the remark I put in my opening remarks, which was we have no changes to the expectations that we laid out at Investor Day with – and accordingly with both of those GDUFA dates and where we see our key launches for the year. Nothing has changed our expectations to that. I'm going to let Rajiv comment on the [Form] 483..

Yeah, so, Jami, subsequent to our Investor Day update, our partner Biocon's Johor (09:06) facility was audited by FDA. And in our opinion, the [Form] 483 observations they received fall in the category of continuous improvement.

These observations are already being responded as we speak, and it doesn't change our outlook about approval and launch of this product. And we also continue to prepare for the launch of this very important product. Your second question was around, I think, Advair. And I would say FDA continues to review our application expeditiously.

It has sought some further clarifications from us to the responses we have submitted in the March (09:45). Everything is going off smooth. And we remain optimistic about our projected outlook of this very important product also..

Thank you. Our next question comes from Elliot Wilbur of Raymond James. Your line is now open..

Thanks. Morning. Maybe just as a follow up to that line of questioning, is there anything else that you could provide us with or maybe give a little bit more color on in terms of new product expectations for the balance of the year? Mylan's never been about one product or one product in any one particular year.

But I guess increasingly, it seems like in the last 12 months, there's just sort of an excessive fixation on a couple of key assets, maybe given the lack of visibility into the much broader deeper pipeline.

So I don't know if there's anything that you could tell us or could share with us in terms of sort of some key new product assumptions, whether number of launches or revenue potential, something like that that might help alleviate some of the concern about the regulatory uncertainty on a couple of key products. Thanks..

Elliot, thank you. Listen, I guess I've got to start off by saying, I think you summed it up correctly. There seems to be a fixation on a couple of product launches and timing. And I have to be honest with you, I can't give much more color to that other than, that's you guys. You guys are putting that fixation.

I think we have gone above and beyond of trying to explain that we're not a U.S. generics company. We're a global health care company that has over 7,000 products. And you look at our results and what we've demonstrated in Europe and Rest of World where our growth is, where we've continued to perform. And you look at our U.S.

business, which I would say in the environment we're in, not only continues to perform, but it demonstrates our ability to absorb the volatility that's going on.

So it's hard for me to step back and understand the disconnect, and the disconnect in appreciating the platform we have, discounting the performance that we've not only given historically but continue to produce and have shown a roadmap for growth over the next time horizon. And yes, we have some great important products coming up for U.S. launches.

We have some important products being launched throughout the world. And I can't let us feed into the fixation about one or two and a day here or there. What I can tell you is we're going to continue to perform. We're going to execute. We're going to launch our products. We're going to maximize those launches. And we're going to do that around the world.

So thank you for that. And like I said, what we're here to do is to perform. And one way or the other, I think that we'll continue to unlock the value for this company with our performance..

Thank you. Our next question comes from Gary Nachman of BMO Capital Markets. Your line is now open..

Hi. Good morning. Heather, just to your last point, I thought there was particularly good performance in the EU.

So what were the areas that drove most of the growth in the first quarter? When will Copaxone start to contribute there? And the new product contribution of $103 million in the first quarter, how much of that was North America versus EU versus Rest of World? Thanks..

Okay. No, thank you for that. I'm going to let Tony discuss a little bit about our performance in Europe..

Thank you. I would say the performance in Europe perhaps at a few different pieces. If you look at our core markets like France, Italy, Spain, and countries like Poland, we've seen very nice double digit growth year over year. We've had a great contribution from new products like Rosuvastatin in markets like France, the UK, and the Netherlands.

And I think finally, it's our global key brands. Brands like DYMISTA, Creon, Influvac, and Elavil that we're seeing growing on a full year basis. And specifically in Q1, Creon, DYMISTA, and Elavil driving those markets..

And on the launches, I would say it's almost 50/50. Fifty comes from U.S.A. and – 50% comes from U.S.A. and 50% comes from Europe..

And I – you asked a question around Glatiramer launch in Europe. We've launched in five markets. We look forward to continuing launching through May, June, and the months throughout 2018. And it is contributing. Certainly a great opportunity for us in Europe and the rest of the – in the U.S. as well..

Thank you. Our next question comes from Chris Schott of JPMorgan. Your line is now open..

Great. Thanks very much. Just two quick ones here. First, can we just hear an update on your capital deployment priorities from here? I think you've talked about your view that your stock doesn't reflect the diversification of the business.

So I guess how are you balancing further share repo versus acquisitions? And with acquisitions, what scale are you considering as you think about transactions from here? My second question was just on the generic Copaxone business and just a little bit more color on the commercial dynamics here.

How are you thinking about the ramp of the product? Looks like volume has kind of stalled out a little bit. Should we think about further share gains for Mylan as the year progresses? Or is this a reasonable level to think about the business? Thanks so much..

Sure. Hi, Chris. Thanks. Look, I think we've been consistent and we'll continue to be consistent with our capital deployment. As we've said, we've got obviously tremendous financial flexibility, so that we can maintain our investment grade, obviously with the priority of paying down our debt.

But obviously, given the over $2 billion of free cash flow, we have the opportunity to continue to look at – to look at opportunities that complement our assets. And when you look at the infrastructure we've built, our ability to add products, especially in our Rest of World region, that we can drive tremendous growth with bringing in products.

Obviously as we look at Europe, we're always looking at bolt-ins and products that could add to now this very balanced of brands, generics and OTC. And then obviously in the U.S., we still think we've got tremendous opportunity.

When you look at diversifying with cash-pay products, when you look at consumer goods, when you look at things that we've got an ability to continue to leverage the current infrastructure we have built. So we're looking at everything.

We're looking at everything out there that would be very complementary to the platform we've built and – but not – with maintaining, like I said, our focus on investment grade with our flexibility..

And, Chris, I'm going to give you a little bit high level on Copaxone's launch. And then Tony will chime in on specifically on U.S.A. For products like Copaxone that you – and there will be many more like those, when you see – you will see it's not going to be traditional front and (16:56) – steep gain of the market share.

You will see slow ramp with a long NOD (17:04), and it will be over a period of time. For example, in Europe when we launched, based on the market type of the tender market, you can get to the 50% market, where like Norway or Nordics we have that.

But in other markets somewhere that you're building up, it can be a slow ramp, but we have the same roll out markets here.

Specifically, on U.S.A., Tony? Why don't you?.

Yeah, I think, to Rajiv's point, we see some of the tender market in Europe is where we see increased conversion. But the U.S. specifically, Chris, I think, as Rajiv just articulated it, the launch value capture has pushed out from what we're used to in this U.S. market, where it used to be generics captured all the value in six months.

We're seeing a slower capture and slower peak value generation. But we also see extended length of time for value. That over the long term, the value is worth more. And yes, we think that between 15% and 20% share of the Copaxone market is a very nice foundation. Actually, as we expect, we expect it to grow.

And we're going to do everything in our power from a competitive landscape to go out there and do more and get more, because we think we've got a holistic program that benefits the patients. And we're going to go out and do our best..

Thank you. Our next question comes from Ronny Gal of Bernstein. Your line is now open..

Good morning, everybody. And thank you for taking my questions. First, Ken. Could you help me a little bit in deciphering a little bit further where the contribution is coming from? I think you had $460 million in the United States, which is about 55% of your contribution, as you describe it.

Any chance you can help us remove the injectable business and the branded business from there to just kind of like figure out where the kind of main channel oral generic business contribution is? And then second, either to Tony or Rajiv.

Speaking to peers, I'm hearing some very positive comments about your ARV business or your ideas about those 505(b)(2) new products.

Can you describe to us what your strategy is there? What you're trying to accomplish? What do you think of those four I've said (19:01)?.

Hi, Ronny. Thank you. I'll start and then I'll let others chime in.

Ronny, I guess when we moved to these three segments and provided more transparency around each of the segments and the products and the profitability, that was very much driven because of what we said was our ONE Mylan approach to the market and our ability to leverage the very – the multiple dosage forms and the different products and the different channels.

And really again, that leading to Mylan's durability, which continues to allow us to drive access and diversification. So we believe that we've given much transparency around these segments and our profitability and the key drivers behind that. And further than that, we're not going to be separating any doseage forms..

And on ARVs, Ronny, actually this whole franchise globally is doing very well. This quarter, we saw almost 20% growth year over year on this franchise, launching – launches of the TLD and TLE400 and gaining that market share. And now, not just U.S.A., we have, I think, achieved a critical mark in the European launches.

And as far as this 505(b)(2) opportunities in the U.S., I'd say I've hit a great sweet spot, where we are offering the patients a much more affordable combination of the products, which have been tested or used by the millions of patients across the world.

And that's what we are trying to impress upon with the payers and partners like Kaiser (20:39) have to achieve a reasonable penetration. And we are seeing very good response as we have launched this franchise..

Thank you. Our next question comes from Douglas Tsao of Barclays. Your line is now open..

Hi. Good morning. Thanks for taking the questions. Just two, I think, quick ones. Just first on Neulasta, just curious, Rajiv, if you expect there will be a need for another reinspection of the Bangalore site. And then two, maybe Tony, one thing we've heard from several generic manufactures in terms of the U.S.

market is it sounds like people are being a little bit more opportunistic in terms of taking price opportunistically for some products. And I'm just curious if you're seeing that as well across the portfolio. Thank you..

As I mentioned, on Neulasta, these [Form] 483 observations are of very routine nature on the continuous improvement time. And in my opinion, I don't see and they didn't indicate any need for them to come back in the wrap-up. And I don't have a crystal ball beyond that.

But as of today, we don't see any indication or, in our opinion, any need for any re-inspection..

And maybe, Doug, just briefly as it relates to your commentary around opportunism. I think as we look at this U.S. business, we manage our business as a very large portfolio of products. And supply and demand have a very important role on that. And as supply and demand shifts, equilibrium does.

So we look at our portfolio as a balance between yes, there's products we've lowered certainly, and there's opportunities for us to take products at different price levels, whether it's new or existing. So I think we'll continue to manage our business in that manner. And we think – we feel really good about where this business is right now..

Thank you. Our next question comes from David Risinger of Morgan Stanley. Your line is now open..

Yes. Thanks very much. Rajiv, I was hoping that you could just paint a picture of the development of Advair. I'm sure you've been a little frustrated that it's taken this long to get to where you are with an Advair approval. But I know that Mylan originally purchased the facility from Pfizer maybe seven years ago.

You helped the FDA draft the guidelines for generic Advair maybe four years ago. And then on the call today you mentioned you got some additional questions recently. So I guess I'm sort of wondering why the FDA still has more questions. And then wanted to get your level of conviction that the drug will be approved in June on the action date. Thank you..

David, thank you for your question. First of all, let me say I'm not frustrated. Products of this complexity, products of its kind, first-in-time, I think they are complex. And that complexity has taken – we didn't buy the facility. In fact, we built the facility. We bought it sort of conceptual, very early stage device program from Pfizer.

And took a lot of work for us to bring it up to where we are today, worked with the FDA. All has gone well. And don't misconstrue my questions. These are minor clarifications. When you submit response to 50, 60-odd questions that are part of the information request, they still want to seek some clarity about what we meant and what we said. So that's all.

And regarding my conviction, I'm very convinced with the science of the – about the science of this program. I have no doubts in my mind about the science of the program or the scientists. Now I – that's right. When you asked me maybe last time that question, I said if and when. And sometime it's just blown out of the proportion.

We don't have a crystal ball. We – I'm exactly telling you what we see today. I don't see any hiccup. I don't see any indication from FDA about any more further red flags and stop that. And I'm conveying you the same optimism today through this answer..

Thank you. Our next question comes from Liav Abraham of Citi. Your line is now open..

Good morning. Thank you for all the color this morning. Just one additional question on Advair, and apologies for beating a dead horse here.

But can you just remind us where you stand on the manufacturing front? And whether you anticipate any additional inspections by FDA prior to the action date? And from a manufacturing perspective, are you manufacturing commercial batches at the moment? Thank you..

Regarding your first part on whether we expect any more inspection. We were audited last year, sometime around summer, sometime in the summer. And there are no outstanding issues as far as that is concerned. And do we expect? Perhaps not, but I can't tell that. If they want to come sometime, we are manufacturing for last six months.

We have validated the process, and now we are in the state of commercial manufacturing..

Thank you. Our next question comes from Ami Fadia of Leerink. Your line is now open..

Hi. Good morning. Thank you for the questions. I have probably three.

Firstly, just on Advair, can you confirm that you continue to expect it to be AB-rated to the brand? And as you've seen the ramp with Copaxone being a little bit slower than what at least some on the Street had expected, how would you anticipate the ramp for Advair being – would it be different or similar to that of Copaxone? That's one.

Secondly on Copaxone, could you elaborate for us, where are you getting your current prescriptions from? Are they primarily new patients? And why are we not seeing a faster ramp? Is it more to do with the type of indications this product is for? Or is there something different about how payers are adopting a more complex product? And then thirdly, just on biosimilars.

You have several new biosimilars opportunities in Europe and Rest of the World.

Could you give us some color around the type of pricing that you are seeing for the product and other certain markets where you're seeing – or where you expect faster uptake relative to other markets where it might be relatively slower? Just give us some color around that. Thank you..

Well, I'll start, and, Rajiv, chime in. I guess we'll repeat the color that I think we've given pretty exhaustedly over the last few months. I'll start with Copaxone.

We have said that any time that you're dealing with a product and a disease state where patients are put on a product, and they're on that product for life or a very long time, that yes, the uptake, we anticipated it being lower. We've continued to see U.S. dynamics continue to evolve with the payers and the distribution.

But as Tony I think very well stated, that yes, there's a slower uptake. But we see a long tail. And these products will continue to deliver a lot of value for Mylan over the longer term, especially around the globe. I think as we think about Advair, it's a very different product, very different distribution network.

And it's a product that's getting refilled very regularly. So we see from a patient perspective that dynamic being very different. Now how the payer dynamics play into this? I mean what we can tell you is we're going to continue to compete.

And as this market evolves, we feel that there's no one better positioned than Mylan, given our portfolio of products and the channels we compete in, to be able to optimize the product. And I assure you that will be our objective.

And as far as biosimilars around the globe, I think that we have said for a long period of time that we believed our biosimilar portfolio would generate much more revenue for us around the globe before it would here in the United States. We continue to believe that U.S.

will lag Europe and other countries as far as the interchangeability and the uptake. But we think that, obviously, they're going to be the next bolus of products of growth here in the U.S. And again, we believe Mylan is better positioned than anyone, with one of the largest portfolios of biosimilars.

And lastly, just to finish on Advair, we absolutely expect for it to be AB-rated..

Thank you. Our next question comes from Tim Chiang of BTIG. Your line is now open..

Hi. Thanks. Heather, along the lines of the respiratory segment that you're planning to build out with Advair, could you comment on any updates on Revefenacin? I know that you guys have highlighted the fact that you have an FDA decision coming in November.

Do you need to build up your commercial infrastructure in front of that launch? Or are you basically already set on the respiratory side for this launch?.

So, Tim, we had a mid-cycle meeting on April for Revefenacin with FDA, which went very well. And there were no outstanding questions. It's a routine review. And we don't see any red flags. And we remain optimistic about November approval of this product. And as far as the infrastructure, we have respiratory infrastructure.

We have been marketing prototype performance (30:30) and even now DYMISTA and even in EpiPen. So we have the infrastructure. And we don't need any more extra infrastructure but we – for Revefenacin launch..

Thank you. Our next question comes from Umer Raffat of Evercore ISI. Your line is now open..

Hi. Thanks so much for taking my questions. I wanted to focus on the pipeline in these next two questions.

First, maybe for you, Rajiv, the scientific approach you adopted on getting around Advair's inherent variability was primarily around establishing the in vitro, in vivo relationship and running a crossover study on one batch, at least per my understanding.

So my question is, do you have data for more than one batch? And is that something FDA has ever asked for? Or do they only want to see that one batch? And I ask that, because there's been a lot of questions around whether or not Novartis is going to run additional batches or not, with the underlying assumption being Advair has that up to two full (31:28) variance.

Second one, Ken, we're getting very close to some of your key launches on the biosimilar side, starting with Neulasta potentially very shortly and Herceptin next year and onwards. So my question is, we still – like, I personally still don't have a good sense for how to model the accounting and the profit split on this.

And since it's going to be so important to the model, so we would really appreciate any clarity on that. Thank you..

Hi, Umer. I guess what I would say is, Umer, a few weeks ago, we gave I think about as much transparency on our pipeline as anybody out there.

And I think that we exhaustively talked about not only our near term, mid-term, long term opportunity, but reconfirmed that we believed that we had no outstanding issues, no outstanding science, no outstanding inquiries from the FDA. I think Rajiv has reiterated that several times this morning.

So please just know that we absolutely are sitting in a position to understand and are the ones having the discussions with the FDA that we think have been very productive and very much feel that nothing has changed our expectation around our approval for Advair. And as far as any more transparency on the products and their contribution.

Look, Umer, that's why we give guidance out there. And I think this management team has a track record of close to a decade of delivering on our performance. So all I can say is that you should expect us to continue to do that. Thank you..

Thank you. Our next question comes from Rohit Vanjani of Guggenheim. Your line is now open..

Great. Thanks for taking the questions. I believe you had a facility inspection for biosimilar HUMIRA around the time of the Investor Day. I was just wondering what the results were there? Or if there was a Form 483 issued or any observations there? And then secondly, for that Bangalore facility....

Yeah..

I think Herceptin, Neulasta, and Avastin are being made there.

Are there any other products with 2018 and 2019 catalysts being made there, i.e., Lantus that they have still finished there? Or anything else that might be there?.

We didn't understand your first question around....

We didn't hear your first question around HUMIRA. I guess on the second question, we're – obviously for a lot of reasons, competitive and otherwise, don't talk about where we're manufacturing our products.

But what was your question on HUMIRA?.

Look, we can just go to the next question.

Our next....

And then we can come back. So, Rohit, if you can get into the....

Yeah, Rohit, can come back and handle it, yeah (34:05)..

Our next question comes from Irina Koffler of Mizuho. Your line is now open..

Hi. Thanks for taking the question. I just wanted to hear from the team about EpiPen and the supply disruption. If you could just help us understand what remediation is being done? And maybe a little bit more on the timelines around it? Just because third quarter is typically seasonally the strongest quarter.

And curious if you might be able to resolve a number of these issues by that time. Thanks..

Sure. So look, we – obviously we recognize the importance of EpiPen product to the patients that it serves. And as you know, Pfizer is our manufacturing partner. And Pfizer has experienced some manufacturing setbacks, but have continued to work very closely with FDA to be able to continually supply.

And I know there's been a lot of misinformation generated out there in the last few days. And we appreciated FDA taking the step to put up on their website, notifying that EpiPens are available. That – and ironically, they have to put that on the shortage, their shortage list, to say there's not a shortage. There is intermittent supply.

We've had – we've absolutely had fluctuations in that supply. But we've continued to see Pfizer being able to step up their ability to supply month over month.

And we're continuing to have a very, very close watch on that and work very closely, again with not just Pfizer, but FDA, in making sure that we're getting – we're able to supply everybody who needs one.

And we've put our number on our website, on the FDA website, is the number anybody can call who's having – experiencing difficulty receiving an EpiPen..

Thank you. Our next question comes from Andrew Finkelstein of Susquehanna. Your line is now open..

Hi. Good morning, and thanks for taking the question. Just in Europe if – I noticed that the segment contribution grew year on year at a little bit slower rate than revenue. So if you could talk at all about the dynamics there, I would think there could be some gross margin headwind, given product supplied out of India.

And any investments you're making in Europe. And then just in the U.S., I noticed this morning a couple notices of product discontinuations. Any color on efforts to continually optimize the portfolio in the U.S.? Thanks..

So, Andrew, on the European segment profitability, growing a little bit slower than the top line. Remember that in Europe, we have a lot of R&D and manufacturing costs, as it relates to the products that we've been talking about today. So we have relatively more costs being converted back at a stronger euro and pound rate year over year.

And that's the primary driver of the slightly lower growth..

And regarding some product discontinuation, look, our Morgantown facility is perhaps one of the largest or solid (37:14) facility with the capacity to do about 18 billion to 20 billion doses. In the evolving FDA standards, especially around the cross contamination, we find it hard to keep pace with making hundreds of molecules.

We make more than – over 200 molecules in the facility. And we have taken our time now to simplify the operations and make it less complex and rationalize some of the portfolio. We have been very prudent. We have taken patient considerations in mind. We have kept our key customers and their needs in the mind.

And have taken some decients (37:50), which will have some impact on as we go along, you will see us dropping some volume. So I just want to highlight that. And you will see some volume shift over there as we drop some of the products but in a very diligent and prudent way..

Thank you. And, ladies and gentlemen, this does conclude our Q&A session. Thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day..