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EARNINGS CALL TRANSCRIPT
EARNINGS CALL TRANSCRIPT 2015 - Q3
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Executives

Kevin C. Mannix - Senior Vice President-Investor Relations Erez Vigodman - President, Chief Executive Officer & Director Eyal Desheh - Chief Financial Officer Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group Michael R. Hayden - President-Global Research & Development Robert Koremans - President & CEO-Global Specialty Medicines.

Analysts

Liav Abraham - Citigroup Global Markets, Inc. (Broker) Randall S. Stanicky - RBC Capital Markets LLC Douglas D. Tsao - Barclays Capital, Inc. Marc Goodman - UBS Securities LLC Ronny Gal - Sanford C. Bernstein & Co. LLC Christopher T. Schott - JPMorgan Securities LLC Gregg Gilbert - Deutsche Bank Securities, Inc. Sumant S.

Kulkarni - Bank of America Merrill Lynch Andrew Finkelstein - Susquehanna Financial Group LLLP.

Kevin C. Mannix - Senior Vice President-Investor Relations

Morning. Good morning, everyone. My name is Kevin Mannix, Senior Vice President of Investor Relations for Teva. I'd like to welcome you to Teva's Third Quarter 2015 Investor Meeting. I'd also like to welcome everyone who is joining us remotely by phone and on the web.

A copy of the slides as well as this morning's press release can be found on our website, tevapharm.com, under the Investor Relations section as well as on the Teva Investor Relations app.

Discussions during today's event will include certain financial measures that were not prepared – discussions during today's event will include certain financial measures that were not prepared in accordance with generally accepted accounting principles.

Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in this morning's press release. We'd ask that you take a moment to read the forward-looking statement on slide 2 regarding our projections in our presentation as well as in our earnings release.

During today's presentation and Q&A management will make projections or other forward-looking statements, which are dependent upon future matters or events. Before we kick things off I'd like to take just a quick moment to run through this morning's lineup of speakers, which can also be found on slide 3.

Including a review of the third quarter results we will have approximately an hour of presentations from Erez Vigodman, Teva's President and CEO; Eyal Desheh, our CFO; Siggi Olafsson, President and CEO of Global Generics Medicine; Dr. Michael Hayden, President of Global R&D and Chief Scientific Officer.

We'll then spend the rest of the available time taking any of your questions ending no later than 10 a.m. And also joining us for the Q&A session is Dr. Rob Koremans, President and CEO of Global Specialty Medicines; Dr.

Carlo de Notaristefani, President and CEO of Teva Global Operations; David Stark, General Counsel for Global Markets; and Mike Derkacz, Senior Vice President, Head of Global CNS. And now I'd like to turn it over to our CEO, Erez Vigodman, to begin this morning's meeting.

Erez?.

Erez Vigodman - President, Chief Executive Officer & Director

Thank you, Kevin. Good morning. Morning. I'm delighted to touch base with you this morning. We thought that it's important nowadays to touch base face to face with you in order to discuss our Q3 results, first 9 months of 2015.

Also to show and share with you the way we are delivering on all the promises since the beginning of 2014 in a way which gains more and more momentum as we go along. And also to address all the questions that you might pose to us, again especially nowadays.

So we are here, management team of Teva in order to address all the questions that you might have that pertain to performance, pertain to the Allergan deal, to the Rimsa deal, to the way we see 2015, to the way we see Copaxone, the way we see even first signs that pertain to 2016. So let's start with the numbers.

And what Q3 tells us is the continuous momentum that we have been building and accelerating since the beginning of 2014. $4.8 billion versus $5 billion quarter over quarter, minus-5%. On a constant currency basis Q3 2015 possesses 3% growth. Operating income plus 2%, on constant currency basis plus 7%. Net income plus 1%.

EPS plus 2% with $1.35 dollar per share. Cash flow from operations $2 billion, excluding the Modafinil payment, $1 billion including the Modafinil payment, versus $1.6 billion and $1.4 billion before and after one-time settlement litigation payments quarter over quarter. EBITDA of $1.6 billion, 2% higher compared to Q3 of 2014.

The 3 months (sic) [year-to-date 9 months] tell the same story in a very consistent fashion, and even underscore further the momentum that Teva has been gaining here. With minus-2% on top revenues year over year but 6% on constant currencies basis. 9% increase of operating income, 11% on constant currencies basis.

9% increase of net income of EPS and EBITDA. And a very strong cash flow from operations and free cash flow before and after Modafinil and other litigation settlements.

So basically the very strong Q3 results together with the performance during the last 9 months and Q4 outlook has taken us to raise for the third time during 2015 our full-year guidance from $5.15-$5.40 range to $5.40-$5.45 range. Or to put it another way we are raising today mid-point range by $0.15.

And that's the third time Teva is doing it during 2015. So the purpose of the next 10 minutes is to basically share with you the way we see Teva delivering on all the promises. All the promises, financial promises, operation promises, strategic promises, since the beginning of 2014.

We started 2014 with a promise to get our house in order first, to solidify the foundation of Teva. In Generics that's a totally entirely different business today. Sig is going to share with you, that's entirely a different business today on a standalone basis.

Specialty, we know they're on focus, three TAs, and we change profoundly the way we think and act in Specialty. Strong focus on core TAs, where we were able to establish strength, and where we are positioned to claim for global leadership. And that's the way we think today.

We are going to get – today share with you how we have been evolving and bolstering our pipeline in each one of these TAs. Cost reduction program, which is on track to deliver after the $600 million of net revenues, cost measures that were delivered during 2014.

We are on track to deliver on the promise to generate $500 million of net cost reduction in 2015. Operation network, we have been transforming the operation network of Teva. And we are on track to own one of the most competitive operation network in our space.

Quality, we are elevating the quality bar consistently, making quality more and more of core competency for Teva. And strong focus on cash flow. Strong focus on cash flow. That's something which is critical today. That's something that will be critical after we close the deal with Allergan.

Eyal will provide you with much more details here, but we are improving continuously at the cash flow we generate – cash flow from operations, free cash flow quarter after quarter.

Then based on debt and in conjunction with all the measures that were designated in order to solidify the foundation of Teva, we also did everything that was required in order to maintain the Copaxone franchise. I think Q3 2014 provides the evidence, maybe the most compelling evidence that one could have expected.

A number of figures which are relevant here. 40 milligram market share today from the entire MS space is 22.6%. That's today the leading mitigation in the MS space. The 40 milligram together with 20 milligram account for 94.5% of the Copaxone space together with the Glatopa.

The 40 milligram today accounts on a standalone basis for 72.5% of the entire MS space – Copaxone space including Glatopa. These are – and the entire Copaxone family accounts today for very close to 30% of the total MS space. These are very compelling numbers. And Q3 is an important milestone in the process of maintaining the Copaxone franchise.

Once we got the house in order and once all the measures that we conducted in order to maintain the Copaxone franchise started to deliver, we have taken the offensive. Here in December 2014 we promise that BD [business development] will play a much bigger role for us in 2014.

We promise that Teva in 2014 is taking the offensive, and we started to deliver against that. With basically five main buckets that were specified by the end of 2014 on the Generic side, on the Specialty side.

And also we said that if the right large transaction shows itself, we might entertain such a transaction if it delivers the targets that we aspire to generate. We worked very hard in order to make the right one showing itself.

But at the end of the day, Teva was able from the second half of 2014 and in the course of 2015 to deliver also on all the promises, on all the promises. We started with Labrys on the Specialty side, a growth enhancing deal.

We proceeded with Auspex, again another Specialty deal, growth enhancing deal for us, which provides us not only with very attractive pipeline assets but also with close enough to market pipeline assets.

And then we signed the agreement, which is not even mentioned there, with Eagle in the – generally 2015, in order to also to protect vast majority of net revenue and profits that emanating from TREANDA. And just recently we announced the very large Actavis – we call it Actavis Generics.

That's they – how we were asked to call basically the company we acquired from Allergan. So Actavis Generics, this transaction is transforming Teva. Siggi will shed more light on that, but the Actavis Generics transaction transforms Teva.

We were able also during the last number of months to announce another deal, which is fully in line with the promises and the strategic direction that we have embarked upon in a quest to reach out to billions of patients, to the billions in key growth markets. We executed the transaction in Mexico.

And there were a number of smaller transactions that were also executed over the course of 2015, Immuneering, Gecko Health, Amwell, and IBM Watson, a number of transactions that provide Teva with unique technologies that reinforce further the strategy that we have been accommodating.

Basically the conjunction of all the measures Teva has been conducting are changing profoundly Teva. We are changing Teva. We are basically solidifying the foundation of the company, unlocking value from existing assets.

We are – with all the measures that were conducted and with of course what we shall yet to execute pertaining to the Allergan deal and the Rimsa deal in the course of Q1 2016, we'll be able to enhance significantly the financial profile of Teva. To enhance significantly the financial profile of Teva.

To diversify net revenues and profit streams, to bolster even further our Specialty pipeline, and to position the company to continue the transformation journey we have embarked upon since the beginning of 2014.

And to put it another way, what we are generating here is a diversified growth platform with balanced portfolio of durable products that offer very attractive, very attractive growth prospects, bottom line and top line, or top line and bottom line.

And we believe that over time it offers also the opportunity to increase, re-rate, the multiple of Teva. So when you look at what we have been generating in here, that's a compelling, attractive platform that offers growth prospect top line, bottom line, and over time also the opportunity to re-rate the multiple.

Going forward, we'll put strong focus on two key areas in terms of future BDs, areas that are marked here by the two circles.

One is to continue bolstering our Specialty pipeline in order to drive even further the growth prospect, in order to drive even further the uniqueness of the products portfolio, and in order to drive to even further the EPS multiple.

But at the same time we'll continue to look actively at potential transaction in key growth markets after the acquisition of Rimsa in Mexico.

We decided that given all the questions that were posed to us by most of you, especially after the decision of the Patent Office to institute the IPR on three Orange Book patents out of four, questions that relate to how we see 2017 with generic competition to 40 milligram.

We decided – although we strongly believe that we'll be able to prevail, we strongly believe that the decision of the patent office to institute the IPR on three Orange Book patents is far from ringing endorsement on claims against the validity of the 40 milligram patents. We strongly believe that we'll prevail at the end of the process.

But our role is to be prepared for different scenarios. And Teva is preparing itself for different scenarios. And everything that we have been doing during the last 20 months is in a quest to be fully prepared for different scenarios.

And in order to share with you here first time how we see 2017 under a different scenario, which is generic competition to 40 milligram, that's basically the way we are seeing it impacting us. So 2017, a conservative estimate of full-year impact of generic competition to Copaxone is $1.2 billion in net revenues.

So less $1.2 billion of net revenues from Copaxone 2017, and $0.65 in EPS post Actavis Generics close, which means basically that it is based on share count after we close the deal with Actavis. By the way before – based on the share count before we close the deal, that's something in the neighborhood of $0.80.

So before we close the deal $0.80, after we close the deal $0.65. That's the number. Estimates include expenses reduction in COGS, S&M, G&A, and tax. And it assumes two generic competitors. So when you look at the number and you put it in the right perspective, I think it tells a very compelling story.

When we will be able to share with you the guidance for 2016 and maybe even beyond 2016, after we close the (21:01-21:05) deal, and we plan to do that early next year after we close the Allergan deal. We'll provide of course all the relevant numbers that pertain to that, including EPS numbers that we are not able to share at this stage.

At this stage we believe that the $0.65 per share tells and spells out the most important message to our investors. With that, I'm handing over to Eyal..

Eyal Desheh - Chief Financial Officer

Thank you. Thank you very much, Erez. Very happy to provide the financial review for yet another very good quarter for Teva. We have been beating and raising our results for quite some time, and we do it this quarter. We're not taking this for granted. A lot of work been invested in making these results happen, which is our obligations to you.

So review this quarter. Revenues were 5% down due to currency impact, which I will show in a couple of slides. But they were 3% up in real terms, very strong gross margin, very good cost control, very strong cash flow, which I will review in more detail.

And see how our cash flow picture is really supporting our ability to go with inorganic growth in business development transactions. When we look at the year-to-date results, very, very strong on minus-2% revenue, but 6% growth in real term. We have very, very strong results to deliver, 9% in all line items, 9% increase year over year.

In real terms, constant currency, this is 11% growth that we are delivering for operating income, net income, and earning per share. And a strong cash flow for the year. I will show a forecast of how we believe our cash flow is going to end the year. And last but not least, EBITDA. A lot of focus on EBITDA these days around Teva.

$5 billion year to date for the first three quarters of EBITDA. Very strong supporting our credit, supporting our cash flow, and supporting our results. Foreign exchange. We continue to see headwind compared to last year. Most of the decline of major international currencies against the dollar happened in Q4 last year to remind you.

So we compare Q3 to Q3 we see a real decline, which is resulting in $370 million (sic) [$371 million] impact on sale, $72 million impact on operating profit. For the three quarters it's almost $1.1 billion impact on our revenues and $120 million impact on operating profit.

So results were achieved despite this headwind in exchange rate, which made them even a bit stronger. EBITDA. Here is our annual EBITDA. CAGR here is about 8% from 2013. We estimate – this is an estimate, first three quarter plus an estimate to Q4. We estimate our EBITDA to be $6.6 billion in 2015 in total.

Just to remind you this is a non-GAAP EBITDA, which is based on our non-GAAP EBIT plus depreciation. Liquidity.

We are using the cash flow in order to improve our liquidity ratios in preparation for the funding of the Allergan acquisition, or the Actavis Generic acquisition that – we're not acquiring Allergan, don't jump – that I will review towards the end of my presentation. Our leverage has improved to 34%.

Our debt-to-EBITDA from 1.85x last quarter to 1.75x, so credit metrics are improving. And total debt is down from $12.5 billion to $11.7 billion. And when we look at cash flow, and we did have an event of a large legal settlement of about $1 billion which happened earlier this year, but was paid in Q3.

So when we exclude that our cash flow for 2015 – and again what you see here is a forecast for the year, first three quarters, plus our estimate for Q4 – is over $6.2 billion in operating cash flow. And what you can also see when you look at this slide is how we are becoming more and more efficient in capital expenditure.

So basically from over $900 million in CapEx investment in 2013, we estimate a little bit above $500 million in 2015. Let's look at our business by geographies and segment in a few slides. So first of all revenue by geographies, not much of a change. Compared to last year our sales in the U.S. have gone up as percentage of total to 57%.

This is mostly because foreign exchange is impacting most of our ex-U.S. businesses. So today with the update currency U.S. is 57%, Europe is 25%, and the rest of the world, mostly emerging growth market, is 18% of our total sales. And we see what drove our revenue up, we see that it's coming from almost all segments of our business.

Copaxone, our Specialty products, our other Specialty, other than Copaxone, which will be called Specialty, OTC and some others. Some decline in Generic as Q3 last year was very strong in the U.S. market. And then $371 million foreign exchange headwind that is reducing that. A few words about Copaxone.

Copaxone continued to demonstrate amazing strength against oral competition, now also against generic competition. You see the numbers. You see the green line is market share of our 40 milligram, the biggest selling MS therapy in the world today with over 22% market share in the United States. And we are seeing growth in market share in the ex-U.S.

territories, as we introduce 40 milligram. And wherever we introduce 40 milligram, we see it picking up and really gaining market share in every country. So Copaxone in total, strong quarter. Actually a record quarter in the United States, just a little bit above Q2, $878 million.

All in all very, very strong quarter with $1.080 billion in total sales, a little over that. So Copaxone very, very durable in the – so what we believe is going to be the impact in certain scenarios starting 2017. Some more words about a breakdown of revenues by business segment, not much of a change here.

As you can see from last quarter, Generics are 46% of the total, mostly impacted by the currency effect, which hits Generics and OTC more than the other parts of the business. Copaxone, the same, 22% of total. Our Specialty products are up in all areas, respiratory, CNS, three good quarter to 23%. And OTC & Other 9%, similar to last quarter.

And in parallel, the profit, again very similar picture. 31% of our operating profit is coming from our Generic business. It was improved profitability from the beginning of the year. 47% from Copaxone, a little lower than percentage last year. 19% from Specialty, a little higher from what we've seen last year.

And what is driving this operating income improvement is coming from all our businesses. Generics was a $54 million improvement. Copaxone was $53 million improvement, Specialty was $17 million, and negative mostly FX. Business creates a growth in operating profit and drives also the bottom lines up. So our business outlook.

So have here the detailed ranges by line items as how do we see this. Remind you I believe this is the fifth quarter in a row that we're beating and raising.

So what happened to our forecast from the original one that you see on the left hand side that we've guided in December last year? First of all sales are up to a range of $19.4 billion to $19.6 billion. So midpoint here it's about $300 million increasing sales. Gross profit, very nice improvement as you can see in the range and the midpoint here.

We're spending more money on R&D, which is a good thing, building the future. And we're keeping SG&A at the original plan that we had when we started the year. So all in all range of $5.40 to $5.45 [for EPS], pretty tight range for the year since it's only one quarter, and the results are looking very good.

We're getting a lot of questions on the financing of Actavis Generic acquisition. And I want to use this opportunity to provide the details. Nothing new here. You've seen this before. But I want to go through the details and take couple of minutes to do that. First of all, one piece of equity, $6.75 billion will go to Allergan.

The ratios are already fixed. So this is approximately 100 million shares, to be exact 100.5 million shares at a price that was fixed to $67.30 per share. $33.75 billion additional cash consideration.

First of all, it's fully backed by committed bank bridge financing from 2 years from draw down with 10 banks, 10 major banks sharing equally this financial secured facility. So how are we going to finance the range? I will start with this.

I'll try to – from the right hand side approximately $7 billion in common equity and mandatory convertible preferred. We plan to do it as soon as we have the audited financial statement for the carve out of the Actavis Generic business that we're buying.

Again given market condition, and the market looks reasonable today, to do that we plan to do it as soon as practicable, hopefully before the end of this year or before the holiday season. But I will still have to make a decision when we get closer. The rest, $27 billion in bond and term loans.

$5 billion term loans for 3 years and 5 years are syndicated to a group of bank. The process were already kicked off, and now we're putting the group of banks together. And then a multi-trench, multi-currency $22 billion bond offering in dollars primarily, but also in euro, British pound that we're going to split in different markets.

For all these financial activities our underwriter has been assigned, and all the plans are very actively underway. Last, dividend payment. Our board in its meeting this week approved $0.34 dividend per share, similar to last quarter, which will be distributed to our shareholders. Thank you very much.

And I would like now to invite Siggi Olafsson to discuss Generics and update on the Actavis acquisition. Siggi..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Thank you, Eyal, and good morning, everybody. Great to be here. As you've seen from the number, really the Generic business in third quarter continued to drive growth.

What wasn't in third quarter, which obviously happened first and second quarter, was there was hardly any exclusive products in the U.S., which clearly impacted our overall profitability of the Generic business, but that's to be expected. That's the nature of it.

The beauty is in the new Teva, when we close the transaction with Actavis Generics, we will have 110 of these one-offs to work with, so the first-to-files. But clearly I think all the businesses are improving the profit margin. You will see the launches, which are on time.

So I'm really pleased with what we are seeing in third quarter and a very good indication for the fourth quarter. So where is the business? We really have been improving the profitability over time. You see it on the right-hand side, where we were at 16.8% in 2013, 22.1% in 2014, and year-to-date number is about 28.9%.

Remember our guidance for the year was a midpoint of 27% operating profit from the Generics. I think we'll make that. This might go down a little bit, because it's skewed toward first and second quarter, because there's no exclusive product in the fourth quarter.

But overall we will be in the range of 28% operating profit from the Generics, which really is first class with the countries we are operating in today. Europe is doing extremely well. U.S. is doing well. And it's down to the people in Teva, the employees of Teva that have been executing extremely well on the strategy.

The second point here is about the successful launches. It's not easy in the competition today on when we are investing in R&D like we do, we need to have success on the other end in launching the product. 350 launches with $1.4 billion in revenue. Some of them are very small in small markets. But really the key launches we hit.

We had a home run on the key launches. But in the new Teva, in the combined Teva of Actavis Generics and Teva, we will have between 1,000 and 1,500 launches every year. So the execution is so crucial. But that's also the key to the growth of the new company. We really have the tools, we have the pipeline to grow this business.

We are really changing the business model. I decided to put in the third bullet around the litigations. You see this is really part of our business is the IP litigations. So 120 litigation and that has – either we have won in court or we have settled. That's about 90% success rate. That's not easy. There's a lot of hard work.

I think we have the strongest IP department in the industry, because on one hand we're defending Copaxone on for the damn generic companies, and on the other hand we are – obviously we are challenging the IP of the Specialty companies. So I think we have the best of the both world and really they have done an outstanding work for us.

The R&D pipeline, important, I think we are excited to see what we get from Allergan. But also on the Teva side we have been executing extremely well with one exception. I want to mention EpiPen. We have an action day on EpiPen from the FDA before the end of the year.

And based on the review today we really expect to get the complete response letter by the year end. Which to all of you mean that the delay in launch will be until probably second half of 2016. Simply we are not far along in the review of EpiPen, but we can expect approval by year end. Nothing new has happened. There's no negative feedback.

But simply based on the review, the status of the review, our assumption is that we will get a complete response letter, which will mean at least a 6 months delay into 2016. The last point there we talk about is Rimsa. It's exciting. It's the execution of the strategy of coming into the growth market. It's a great market, 120 million people.

But really it's an opportunity for a company like Teva, which is both in Generics and the Specialty to have a platform to sell in that market. And I will talk about that a little bit later. So what are we getting from the Actavis acquisition? Obviously it's highly synergetic and accretive, but it's not only the money.

It's highly synergetic in terms of commercial presence. Top three company – top three pharmaceutical company in over 40 markets around the world with our own presence in 100 markets, 100 markets. We offer a solution in Specialty and Generics in all these markets around the world, and we haven't put a value on it.

We haven't put a dollar value on it, because all of you and even us, we don't take the revenue synergies seriously. But at the end of the day when it comes down to execution, it's important to remember that there is a real opportunity to grow the business.

It really will transform the Generics space, and what I mean by that is you saw even yesterday how the consolidation of our customer bases, there's a constant consolidation. The top three customers in terms of value are 83%. The top four customers are 91% in the U.S. In Europe the top three customers are 65%.

So there has been such a transformation on our customer side, I think this move will change the Generic space in terms of product supply, in terms of pipeline, in terms of offering what our customers are looking for.

Enhanced financial profile is important, because also we are very clear with the Generic business, we want to continue to invest in the Specialty business. We're not changing into a Generic company. We are company with Generic and Specialty.

And we really want to improve and increase the R&D spending in Specialty and the opportunity of doing this together between the two. That's really where the opportunity is. We are creating a business model with this between, and we see this over and over again. I mentioned the opportunity for biosimilars. Some of you have seen the numbers on GRANIX.

Where we launched GRANIX, our Specialty group launched GRANIX, we got approximately 25% market share against Neupogen. But it's where the Specialty group and the Generic groups work together. We managed to take the space, and we are really I think transforming the business concept together between us.

And last but not least obviously it has to create value for the shareholders. But let's not take that as given. It's all about the execution. So what has happened with the Actavis Generics? Basically we are working hand in hand with preparation for integration. Obviously we cannot start the integration.

We are competing with them in the market on a day-to-day business. But we really have a plan in place what needs to be on day one, what needs to be on day 30, on day 100. We have started to work on the leadership team. We intend to have at least the first three levels of the company ready and announced on closing, hopefully more.

And then some of the key business unit we have already announced, pending closing, who will be the leaders of the business. The synergy targets are confirmed by the team. They are working that bottom up. You understand when you do a due diligence you don't have all the data to confirm it.

So one key issue in the integration was really to confirm these synergy targets. And the teams are doing that together. We really think that we have a good relationship with the antitrust authorities. We have had multiple meetings with the FTC, with the European Commission. We are moving forward.

The review is in line with what we explained to you before. It's a review of product-by-product competition like that. We don't foresee anything now for a delay, but obviously we need to focus on it. The European Commission started a little bit later due to vacation time in Europe.

But overall we have had a very good interaction, and this is really moving forward. And last but not least we have signed a CDA with over 40 companies that want to buy any divestiture we need to do. So we don't think that will be a delaying factor in the execution of the deal. Quickly on Rimsa. Key growth market, really amazing company.

They have 920 centers around Mexico. They're really a Specialty company, well-known brand. They have OTC business, but they also have a little bit of branded generics. But off their overall revenue only 6% is Generics. The rest is Specialty and OTC.

There's a very strong brand equity, but also what we use this for is the platform into the rest of Latin America. We have a strong business in Chile, we have a strong business in Peru, we have a relatively small business in Brazil, which we want to grow. But this is really an opportunity for us to take it to the next level.

So what's on our mind for 2016? First of all it's the integration. We cannot fail on this transaction, and we are not going to fail. I think we have everything in hand. We need to execute on the strategy. We need to execute on the launches. If you think about 1,500 launches, there's five new launches in Teva every day of the year next year.

So there will be a lot of people busy. But this is the key to the growth of the company, because otherwise we cannot grow the business which leads into the launches. So with that I want to hand it over to Dr. Michael Hayden..

Michael R. Hayden - President-Global Research & Development

Thank you, Siggi. Delighted to see everybody here and also so pleased to give you just some visibility into our pipeline and our products, although a bigger and deeper visibility will come in a more extensive discussion once following the closure of Actavis Generics.

So just to give you a perspective about our pipeline, these were some of the things we spoke about as the milestones that were important for 2015. We've had three approvals as you can see.

Importantly our first Specialty product for migraine approved, Zecuity, recently, Copaxone in Japan, and I'll tell you a little bit about some of the open boxes here, Vantrela, just in a moment. Major submissions of course, Reslizumab, SD-809, and also FS Spiromax for asthma in Europe.

And we have presented some of the clinical results of this year and mostly an outstanding year. Great results in migraine, good results in tardive dyskinesia. I'll show you the results today in Tourette's.

But as in any drug development portfolio we had two failures, one with a 1.7 antagonist in osteoarthritis and QVAR BAI for asthma, and I'll talk about that in a moment. We are waiting and looking forward to results in the very near future about FS RespiClick for asthma in Phase III and also FB RespiClick in the United States.

When you look at our pipeline, it's a pipeline filled with promise. We have 32 programs in Phase I to registration. And this is going to lead to between 35 and 40 submissions between 2015 and 2019.

As you can see the portfolio is focused in our key Specialty areas, migraine, pain in the dark green; movement disorders and neurodegeneration and respiratory disease as the key components and the key central focus in our core areas, where we hope to become and are becoming world leaders in these areas.

I want to share with you what I'm excited about in the pipeline. So I – just going to give you some highlights around the areas in terms of migraine, movement disorders, pain, and respi just to give you some visibility about what excites me about this.

Of course our Labrys compound, the first anti-CGRP antagonist, which has demonstrated remarkable effectiveness both in chronic and episodic migraine. We looked at many doses across two conditions. And all of these achieved outstanding significance, primary and secondary endpoints were met, and not only at 3 months, but also at 1 month of therapy.

And we are the only monoclonal antibody that is separated from placebo across the entire duration of study for both primary and secondary. And we – only company that has reported results for chronic migraine. Thus far no safety concerns have emerged for us or any out of the products in this space.

When you look at this particular product, there is the potential. The race is not over. We are at mile 20 of a 26-mile marathon, but it's looking good thus far. We achieved the best results in terms of decrease in migraine at month 3, the primary endpoint, placebo subtracted.

We had good results also in month 1, and in fact the effect and efficacy was seen at 1 week after therapy. And if you look at the number of patients who had actually 50% improvement, it was 44%. Importantly and not able to be predicted we had essentially no immunogenicity, very important.

And this may be the reason that we saw improved efficacy with this particular compound. So these are all exciting results, exciting for us, but particularly important for patients who suffer from episodic and chronic migraine.

When you look at the disability from episodic migraine, half patients' lives, 40 million in the United States individuals, are actually their lives are lost due to missing work, missing school, missing a family occasion as a result of episodic migraine.

We've seen a major impact on disability, improving these patients' lives, and making them feel better. Current status is that we have an outstanding end of Phase II meeting with the FDA. There was agreement and support for the CMC plan, the does, the Phase III clinical plan and strategy, total alignment with the regulatory authorities.

We will be starting both single trials, pivotal trials, in chronic and episodic migraine in early 2016. And our target for BLA submission is 2018. We are making great progress with this particular program. Importantly for us it is the product that is innovative and important that is crucial.

But around this product we also are providing services and solutions. We've already started this with Zecuity. And we believe that providing services and support for patients 24/7 enhances, improves their quality of life and really is critical. As we've seen with Shared Solutions for MS, we've learned from that.

And we've now established Migraine Support Solutions as a key part of our therapeutic strategy to enrich and enhance the quality of life of patients. Let me share with you where we are. So in migraine we have the potential for being a world leader in this very important underserved space. That's one of our goals. We have Zecuity already on the market.

And we're looking at deepening this portfolio and also improving this particular product in other indications in the area of migraine and headache for the future. When we look at movement disorders and neurodegeneration, here again the Auspex portfolio gave us the first product that already has been accepted for an NDA with the FDA just recently.

Important to understand of course that how this works. And this deuteration, and this deuterium substitution for hydrogen, it slows down the metabolism of key products and key parts of the metabolic pathway. And what you can see here for example, if you just look at this, what you see here is that here is the active metabolite.

And the metabolite is broken down into these products. These products cause some of the side effects. And if you slow down the product breakdown into these products, what you would expect by the hydrogen substitution with deuterium here, you would expect to see some decrease in side effects.

It would not have been predictable that deuterium substitution at this particular point would do this. Was not obvious. It was not predictable. Was even surprising. But the results that have been seen have really been remarkable. The FDA has accepted the NDA for SD-809 for treatment in Huntington Disease.

And in fact when you look at this, this has really been associated with significant improvement in the side effect profile associated with tetrabenazine. The potential to improve the quality of life for patients, this would be only the second drug in history to be approved by the FDA for this particularly important condition.

When we look at another drug in our pipeline, just to mention we have pridopidine. Results for pridopidine will be in the early part of 2016, a drug that we already know has impact on the movement disorder associated with this condition. And when you see here, this is total motor score, which is our endpoint.

We have two Phase III studies where it actually demonstrated already highly significant results, important other features including dystonia with no impact on chorea. So the tetrabenazine would be for the chorea, the pridopidine would be for other movement disorders associated with this particular condition.

This is now in a Phase II/III clinical trial. Enrollment is over. We're expecting the results in early 2016. And if we reach certain endpoints, this will be allowed to be submitted in 2016 as part of an agreement with the FDA. This is again our philosophy and our commitment to become world leaders in the spaces that we are.

And we are currently the world leader in this particular disorder with three programs in the clinic, significantly above any other company. When we look at SD-809 in tardive dyskinesia, we have reported on the ARM-TD study where it has been completed, and now the AIM [AIM-TD] study is also ongoing and in the middle of its phase.

And we're looking to the results for this study in 2016. The primary endpoint for the ARM study was achieved. It was superior, all the secondary endpoints favored. SD-809 was well tolerated. Importantly because this is a disorder affecting maybe up to 700,000 people in the United States, we'll be targeting maybe 140,000 of the most severe.

And we have seen already some very encouraging results associated with this. Importantly as would be predicted that both for the FIRST study in HD [FIRST-HD] and the ARM study, as we noted, the side effect profile for tetrabenazine, deutetrabenazine was just like placebo. Placebo-like safety now confirmed in two studies.

It's providing confidence that this is really going to create significant value for patients, deriving the benefits from this therapy without some of the alarming side effects. Of course, there is another product in development in tardive dyskinesia and from Neurocrine. And it's very hard to compare these compounds.

But what we know we've provided the data on SD-809 with its pharmacokinetics, its uniform metabolism. We provided data on safety and tolerability. The PK profile and metabolism of the Neurocrine product have not been disclosed yet, and the safety data has not been disclosed.

And the clinical designs of these study were really quite different and are not comparable in that particular way. So we await with interest to see additional data on the Neurocrine product. In Tourette syndrome, another important disorder, there is only one drug approved in the United States, aripiprazole. It has been approved.

But aripiprazole again has a very significant side effect profile for a group of patients who have abnormal movements, often have neuropsychiatric signs associated with that, big impact in children, but really seen throughout adult life. We have now completed a Phase Ib early study, as Phase Ib would be.

This was not controlled, not placebo controlled, so very important not to over emphasize these results. 23 patients in adolescence. Important for us, because it's the first time this has been given to people under – children 12 to 18.

And the key efficacy parameters in our Tourette syndrome study were the total tic severity as well as also the clinical global impression and also the patient global impression of change. Let me just give you quick insight into some of these. These are just the total tic score over time, 8-week endpoint. What you can see here, it's oral.

And the two endpoints are motor and vocal tics, the motor being the movement, the vocal being the utterances, often inappropriate. You see a significant decrease at 8 weeks with this drug. And when you combine the total tic score in green here, what you see is a highly significant result associated with this, with a P-value that's highly significant.

So this gives us encouragement. It's early, it's not placebo-controlled, important. But it gives us confidence to now develop the strategy and develop and go into Phase III for this particular study and this particular indication, which will be part of our strategy for 2016.

We will be a leader therefore both in movement disorders and neurodegeneration from Huntington Disease to tardive dyskinesia to Tourette's. And of course we'll be looking at other movement disorders where we can use these particular drugs where they may confer significant benefit for patients.

In pain we also have a major program to solve a major problem in the United States. As you all know, last year in the United States, there were more people who died of opioid abuse than all motor vehicle accidents combined, an epidemic. And in fact people are using various opioids.

They're crushing them into powders, they're extracting them and injecting, dose-dumping with alcohol to get higher levels. And our particular proprietary abuse-deterrent technology really prevents all of that. When we look at Vantrela, which will be our first abuse-deterrent opioid, this actually prevents all of these particular properties.

It has robust abuse-deterrent properties. And also oral milling, which is really grinding it up and taking it orally. It's able to prevent all of these particular properties in a profound way, also snorting. So it is a very significant abuse-deterrent capability.

And when we look at Vantrela, the NDA review, this would be important, we're now at the labeling review stage. We're expecting approval in the very near future. And so this is exciting, exciting because this will be a drug for patients who suffer from abuse. But also importantly, this will be validation of an important program.

And beyond Vantrela we have a whole host of programs that we are developing using this abuse-deterrence technology. And particularly focusing on the area which causes most problems, the immediate release hydrocodones and opioids are the major cause of opioid abuse. And so we have developed and developing additional products in this space.

And our programs here in immediate release hydrocodone with APAP or oxycodone with APAP. This will provide an immediate release and an analgesic profile when the prescribed dose is ingested.

But importantly, it limits the rapidly toxic drug release when a super-therapeutic dose is taken, either accidentally or intentionally, preventing abuse and potentially preventing suicide. So where we are with this, in 2016, we're now in Phase III.

We plan to submit the first immediate-release hydrocodone/APAP with some unique abuse deterrent properties as I've described to you. We plan and will be a leader in the pain space going forward from here. In respiratory disease, we also are making tremendous progress in our pipeline.

Uniquely, Teva has the opportunity to have novel molecules against unprecedented targets. We also have novel technology. And just to share with you this is the Gecko that we just spoke about. This is a unique device that goes onto Spiromax for example, links to your iPhone, it links to your computer.

It reminds you when you need to take the particular dose. It tells you if you've taken it appropriately. And also can be linked to the doctor's office in an effort to really provide additional information to the caregivers associated with that. A simple device that now being incorporated to enhance the connectivity of our respiratory devices.

And of course we have AB-rated generics also in development. And when you look at uncontrolled asthma, as you know importantly a significant number of patients with asthma have a high eosinophil count. And we then developed a product now that is focused on this particular area of severe asthma, inhibition of IL-5.

This of course is a target that also other companies have developed against. Our particular product, a humanized monoclonal antibody, has proven efficacy. We met all the primary endpoints in our Phase III study, decrease exacerbations and importantly the aspects of lung function and improved control and quality of life were enhanced.

We submitted this in March 2015. We have an AdCom scheduled for December 9, and a PDUFA date in March 2016. So you can see this is a program – in each of the programs that I've shared with you, coming to maturity, getting to the market, and providing opportunities for significant leadership in these areas. These are the current status.

We have DuoResp launched, we have ProAir RespiClick launched. We have Fluticasone Salmeterol Spiromax in the EU. And in the fourth quarter, we are expecting results for the U.S., for FP and FS RespiClick for the U.S. And these will be submitted again in the first quarter of 2016.

So this represents again culmination of a lot of work for a longer period and playing significant role in enhancing our leadership in the respi space.

Now as we look into 2016,it's going to be an exciting year for R&D, as we see additional approvals, deutetrabenazine for HD, Reslizumab, the Bendamustine Rapid Infusion, important to enhance the delivery of TREANDA. We'll have major submissions for asthma, a lot in the respi space in FP RespiClick, FS RespiClick, tardive dyskinesia.

As I've told you about our hydrocodone IR, which is the major problem in abuse. And we'll be getting clinical results in a whole host of conditions here, pridopidine, our postherpetic neuralgia study towards the end of the year. Also some others that are looking at long-acting injectables for schizophrenia.

And a whole host of abuse deterrent products that are enhancing our program and will enhance our leadership in this particular space. And now just before I end just one more thing. I haven't mentioned laquinimod. And that doesn't mean that I'm not excited about this particular product. But laquinimod is not going to have major milestones in 2016.

Laquinimod's time for really talking about this in great detail will be 2017. But it's important to note CONCERTO is fully enrolled. We're looking forward to those results.

Laquinimod has a chance, and it's a first study in relapsing remitting multiple sclerosis where the endpoint here is in fact confirmed disease progression and not relapse rate, where laquinimod has significant opportunities. We will also get some results for Huntington's toward the end of 2017.

So now I'd like to ask and hand the microphone to Erez to provide the final remarks..

Erez Vigodman - President, Chief Executive Officer & Director

So 65 minutes, which were designated in a quest to share with you why we are really excited about the present and the future of Teva.

And we are strongly committed to continue delivering on all the promises, to continue executing in a seamless fashion, to exhaust all the new possibilities that emanate from everything we have done during the last 20 months, since the beginning of 2014.

And to continue allocating capital in order to enable us the accelerated transformation even further in a quest to continue delivering significant value to our shareholders. And we plan to meet you next time in the course of Q1 2016 after we close the Allergan deal.

And until then, until then, until February, maybe March 2016, these are important milestones that we shall deliver on.

Execution of Actavis Generics financing, Rimsa deal closing, FTC and EC clearance of the Actavis Generics acquisition, Actavis Generics deal closing and integration, and combined company guidance, which we plan to deliver here in the course of Q1 2016.

On key product and pipeline milestones in a way that is fully associated with all the messages that were conveyed here by Michael, Vantrela ER FDA action date and launch, Bendamustine Rapid Infusion FDA action date and launch, Reslizumab BLA FDA action date and launch, pridopidine Phase II results early next year, commencement of TEV-84125 (sic) [TEV-48125] Phase III trial, an important milestone for us, FS and FP RespiClick Phase III results.

These are not basically milestone, relevant milestones for 2016. These are milestone till only to next time, early 2016. And in summary we have made significant progress in 2015 and are delivering on our promises. Combination of organic growth and strategic business development moves positions Teva for a new era of growth and leadership.

2016 is an important year for Teva with the integration of Actavis Generics, important Specialty pipeline milestones, and product launches. Combined company business outlook and strategy overview will be delivered in Q1 2016 after closing of the Actavis Generics deal. We together, we are building a new future growth for Teva. Thank you very much..

Kevin C. Mannix - Senior Vice President-Investor Relations

Okay. We're going to start the Q&A right now. Gentlemen, if you could just join us on stage. And there are going to be a couple people walking around with mics. Just get everybody settled. Yeah..

Liav Abraham - Citigroup Global Markets, Inc. (Broker)

Thanks. Good morning. Liav Abraham from Citi. Firstly on the Actavis Generics transaction, Siggi, can you just remind us what if anything could derail the transaction? And this is – is it 100% go? Is there anything that could stop it from happening? Secondly, for you on EpiPen you spoke about a second half 2016 launch.

Can you talk about your confidence level in a second half 2016 approval? Any additional commentary on your interactions with FDA? And then thirdly, perhaps for Michael or Erez, interested in your capacity for incremental branded deals, given your success with Labrys and Auspex.

And to what extent this is a focus and feasible from a balance sheet perspective over the next 12 months. Also given the dynamics in terms of asset prices at the moment. Thanks very much..

Erez Vigodman - President, Chief Executive Officer & Director

So I'll start with number three. Will modeled $5 billion of capacity for additional BD transactions until the end of 2016. Rimsa basically occupies $2 billion out of $5 billion, rest is going to be dedicated for Specialty deals until the end of 2016.

And as we go along with the integration and basically generate a caseload from the business combination, we'll very rapidly be able 2017 onwards to continue directing our resources towards the Specialty deals in order to bolster further the Specialty pipeline..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

So we have on question one around the deal. The deal with Actavis is fully sealed. You can read it from the MPA. Obviously the MPA is available online. The only thing is the customary antitrust issue that needs to be reviewed before closing, so no other transaction can derail our acquisition of Actavis Generics.

With regards to the EpiPen, my comfort, I think I will comment on that when or if I see the complete response letter, because it's important to not – I really don't know what the issues are.

At this point in time the reason why I'm making this statement is having been in this industry for 22 years, I know that we are not at the point of getting approval. There's an action date before the end of the year, so we felt it was important to inform you that we expect a complete response letter.

With regard to my comfort I think let leave to see what the FDA comes up with in December, and I'm then happy to talk about my comfort..

Erez Vigodman - President, Chief Executive Officer & Director

So there is – I want to underscore it. There is no way out from the Actavis transaction. No way out. We sealed it in the agreement with Allergan. It's clear. I am underscoring given the basically noises around us, no way out. The deal is sealed..

Kevin C. Mannix - Senior Vice President-Investor Relations

Randall?.

Randall S. Stanicky - RBC Capital Markets LLC

Randall Stanicky from RBC Capital Markets. I just want to follow up on that.

Siggi, does the fact that you have a CRL make you more confident that you are looking at an AB-rated approval versus a non-interchangeable approval, number one? Number two, we published some work this week that suggested that the average target action dates as a percent of overall backlog for companies was 7% in June.

And now is 30% to 60% of the overall backlog for most companies. Can you confirm where you're at with respect to that? And then the follow-up to that would be, what's your best guess of a hit rate there? Obviously you can get an approval, a tentative, or a complete response letter. And it's early. I don't think we know.

But is it 50-50? I mean how are you thinking about the potential for I guess an approval bump off of these target action dates?.

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

So if we take the target action date, so we are getting them, quite a few of them for our backlog. We are probably – I don't know the exact number but we are probably close to the average you mentioned in your question. In terms of what actually we get, I think really the FDA has stepped up.

I told some of you that FDA was disappointing in first quarter where the backlog even increased. I think now we are have started to sit down to negotiate a new PDUFA which somehow has impacted I think the acceleration of the FDA. FDA has also presented to us the – how many new reviewers they have working on it.

And really I think FDA has also stepped up in terms of communication and working with us. So in terms of the action days we feel that they pretty much – they meet them so far. But you either get the complete response letter or an action on your application. With regards to the comfort as I've said before, our EpiPen was followed by 505 BA application.

And it doesn't automatically switch into a 505(b)(2) overnight. There's no magic that can happen down in Washington. So my assumption is, and we still think we are going for an AB-rated EpiPen. That's our strategy. And until I see what I get in the complete response letter I don't think – I can't even speculate.

But our application is for AB-rated, not for non-AB-rated..

Randall S. Stanicky - RBC Capital Markets LLC

But the back and forth so far with FDA suggests that you're on the path for an interchangeable....

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

We have had multiple interaction with the FDA, and so far there's no roadblock. But basically the review isn't far enough to get action of approved on or declined..

Kevin C. Mannix - Senior Vice President-Investor Relations

Doug [Tsao]? Can we get a microphone?.

Erez Vigodman - President, Chief Executive Officer & Director

Go ahead. Doug, you're next. Yeah. Please go ahead..

Unknown Speaker

Oh, okay. Thank you. Thank you for taking my questions. So I had quite a few here. First question I had was your thoughts on a generic Restasis. And if you will acquire something like that through the Actavis deal.

And then secondly, any update on how we should think about divestitures needed to actually close the deal? And then last thing here is just on your thoughts on the budget debt ceiling proposal and the potential limit to generic drug price increases..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

All right. So let's start on generic Revlimid. Of course I love that asset. There is only one filer, and that will be coming with the transaction. The challenge there – just keep in mind the challenge there is not the formulation of the product itself. It has to do with the availability of the RLD of the product.

I have said it before I think Celgene is at the high tide of settling this issue, because who knows what comes up from discovery. So I think it would be an opportunity at some point in time to sit down. I obviously from my previous life, I know the application, I know the status of it.

But somehow I managed to forget that all when I signed my CDA and left Actavis to join Teva. But I think we have a great comfort in the asset that we are getting over and it's a good opportunity. The brand has been growing extremely well. And what we have in hand here is I think something – it's probably not 2016.

But going forward I think it's a great opportunity for the new Teva. No question about it. In terms of the proposed legislation on pricing control on generics, first of all we don't really know what it's going to be. But let me give you an example. So Teva has the largest portfolio on the U.S. market. We are offering approximately 275 products.

And we have told you that overall on our whole portfolio, we have a decline in price. The talk about the inflation in generics when you have a big portfolio is really not there. 95% of our portfolio is declining due to the consolidation of the customers I talked about.

There might be 5% of the portfolio that is either flat or increasing in pricing due to some abnormalities in the market. The proposal on the table now is that you cannot increase prices for more than inflation of generics.

But it doesn't take into account that anti-climbing, or 95%, of my portfolio, because they want to look at it molecule by molecule. That's number one. Secondly, from what time point will you look at the price? Will you look at the price from when the generic launch? Which would be fair.

Or do you look at it at the low point after four quarters or five quarters when you have a fierce competition in the market? I think this could easily lead to shortages in the market, because there's product out there, if you cannot take a price increase, you simply go off the market.

Secondly, it doesn't take into account that API increases are not according to inflation. So not that you don't notice, but I'm quite excited about this. And really I think it's an unfair proposal.

And I think the government is shooting their self in the foot in terms of shortages in the market and how unfair this will be I think to the patient at the end of the day, because when the patients don't get their drugs, I think that will really be when people speak up. And your third question you have to say it again..

Unknown Speaker

The divestitures..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

The divestitures..

Unknown Speaker

Yeah..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

So as we told you in the beginning, in our modeling we were very conservative in our modeling, which we showed you when we announced the deal. So far we are well within that conservative. So it doesn't affect the model. But it's too early. Basically the decision on the divestiture comes at the last moment.

I think today we have a very healthy discussion both with the European Commission and the U.S. FTC. No surprises, really no surprises. I think in Europe just to keep in mind the main divestiture would be in U.K. and Ireland. And then the U.S.

we are moving along, but it's exactly as we expected in the beginning and within the limit of the business model we put forward of impact of divestitures..

Unknown Speaker

Well can you – oh sorry. Just can you just comment on....

Erez Vigodman - President, Chief Executive Officer & Director

All right. Doug [Tsao] and then Chris [Schott].

Kevin? Kevin, speaker please?.

Unknown Speaker

Question..

Erez Vigodman - President, Chief Executive Officer & Director

Right..

Unknown Speaker

Yeah, could you just follow up, Siggi, on what your pricing trends are here in the U.S. for the Generic business and abroad? Certainly I think there's a lot of questions that we get about how sustainable pricing trends are in the Generic business.

And then secondly, on the complete response letter for EpiPen that you think you will get, do you think it would be unreasonable for the FDA to ask you to do a head-to-head study versus EpiPen?.

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

So on the pricing, I think pricing is obviously based on the competition. We have talked about that the overall pricing trend is down. What will change that? Obviously there is different things. I think the consolidation of the customers affect pricing. I think the backlog when the FDA releases the backlog of 3,000 NDA affect pricing.

I still think the pricing environment has been quite favorable for Generics versus 6 years ago. But it's impossible for me to guess how – what will happen. For me to guess what the FDA is thinking I think it's highly unlikely a head-to-head study, because first of all it's an injectable product.

So it's not the bioavailability of the product we are talking about here, it's an epinephrine that's injected to the body. So it's not the bioavailability. So I think that's highly unlikely, but obviously I can't comment on what the FDA is going to do..

Unknown Speaker

Just really quickly I mean there have been other BX-rated epinephrine injections made available in the U.S. market, but never an AB-rated version.

And I think the question the market has is, what is the hurdle that you think you have to cross to get that AB rating?.

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

And that's exactly I hope to tell you when I see the complete response letter..

Unknown Speaker

Okay. Great. Thanks..

Erez Vigodman - President, Chief Executive Officer & Director

Yeah. Go ahead..

Douglas D. Tsao - Barclays Capital, Inc.

Thank you. Doug Tsao from Barclays.

So, Siggi, maybe a first question for you in terms of how you see durability of GRANIX, given the fact that we now have RTO, a true biosimilar to the Neupogen product approved? And then also maybe for Rob a comment in terms of Copaxone 40 milligram, sort of what you've seen in the 20 milligram market with the competition from Glatopa in terms of what you've learned and the durability of that brand's – the franchise of that thus far that gives you sort of more confidence when we sort of think ahead to 2017 or 2018? Or whenever you potentially have competition there sort of on the ground, what you're seeing, that is enabling you to sort of keep that share instead..

Erez Vigodman - President, Chief Executive Officer & Director

So I think probably Rob is the best one on both these questions..

Robert Koremans - President & CEO-Global Specialty Medicines

So let me talk about Copaxone. What we are seeing is really an incredible durability. Basically patients, doctors continue to stick with the products, they feel confident, they trust these products. And it's very important, and they've been on it for many years.

Right? And its combination of our patient solutions, the way we interact with our patients, the trust they have in the brand itself, and also doctors and really also payers supporting that in full. And the dynamics at the moment are better than what we could've predicted 2 years ago. And we're seeing that going forward.

We expect like this is not going to change dramatically. So Copaxone really is an incredible product in that respect. And the way we bring it to market with the Shared Solutions, our sales force, the medical force, and the relationship we have with the payers is working quite nicely.

And so we don't see that going forward going to be changed dramatically at all. Copaxone 40 also really offers a value over Copaxone 20. The three times week injection, it really makes a different for the patients.

And what you see in Europe where we're now launching the products as well, in fact in Germany we've taken the largest number of new patients on the market, beating Tecfidera in taking new patients in there. So when you bring Copaxone 40 in those markets, you see an altogether new dynamic, which is really good.

I think it's important to remember, because in the statements there's also volume goes down a little bit, but Copaxone 40 you use less volume then on Copaxone 20. So there's an automatic impact of that when you switch and you convert.

And going forward we feel very, very confident that we understand what's happening and don't see any major changes in that. Right? The dynamics are just very, very favorable..

Douglas D. Tsao - Barclays Capital, Inc.

GRANIX?.

Kevin C. Mannix - Senior Vice President-Investor Relations

GRANIX..

Robert Koremans - President & CEO-Global Specialty Medicines

GRANIX is really – at the moment it's close to 25%. Going forward we don't expect also major impacts there. It's really doing well, it's holding, and we expect that it will hold its ground there. It's a combination of being – the different dynamics in the market of clinics and hospitals have different buying patterns.

We have a fairly high share in the hospital part. And we expect that we will be able to do that. And what Siggi alluded to before, the ability to deal with the hospitals on a bigger level from the Generics and very specifically on the customers, the deal with the G-CSF. That combination works out really well, so we're confident in that field as well..

Douglas D. Tsao - Barclays Capital, Inc.

Do you see an opportunity to pick up some additional share through any sort of additional contracting with sort of IDNs and hospital chains?.

Robert Koremans - President & CEO-Global Specialty Medicines

We expect that it will stay stable. We obviously try to get better, but in our forecast models everything is more like – more stable market share there..

Marc Goodman - UBS Securities LLC

Should I go? Okay. Thanks. Marc Goodman at UBS. Siggi, can you talk about a little more detail in some of the key o-U.S. markets? Japan seems to be a continued weak area. What are you going to do to kind of fix Japan? And then secondly, on the margins you had a very aggressive goal over several years to improve margins.

Can you talk about like where you are on that? And if you need to re-up those goals, because you've met them so easily? And if – where you can move there? And then lastly just on the OTC business, we haven't talked a lot about that. But it seems like it's going really well. Can you talk about like what's going so well? Why? Thanks..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Yeah. So I think if I go quickly through the markets outside of U.S. With regards to the Europe, our European business is really going well. I think the top three markets in Europe for us now are U.K., Germany, and Italy. All of them are really firing on all cylinders, mainly also due to very successful launches.

Pregabalin was a big launch for us in Germany. The U.K. team, I think the supply chain in the U.K. is – has improved significantly, and we have taken opportunity when there are shortages from other companies. And in Italy we have steadily be building our business in Italy.

There's challenges of course in pricing in Germany and Italy, but I think the breadth of the portfolio we are offering and also really the leadership team we have in these markets have made this a very good market. I don't know if you saw earlier this week, but the Spanish government changed the discount policies.

So I think this will be a fairer discount policies for Generics going forward. So overall for Western Europe it's going well. With regards to Japan it's still a challenge. We have committed and we are still really much of the – focusing on improving our business in Japan. We have an action plan in place with regards to how we can improve it.

And we hope really that within a short period of time, we can explain to you how we see the Japanese business. The reason why we are enthusiastic about Japan, it is the second biggest market in the world. And you can't ignore it. But also I have been very open about it previously. It's important to have the right profitability in Japan.

And as of now our profitability is about half of our competitors in the Japanese market. And just quickly on the rest of the world. We have a strong presence in Russia. Russia is growing year over year. But overall the impact of the FX has overshadowed that.

I think the ruble a year ago was in the RUB 30s [per $1], where the ruble now is in the RUB 50s [per $1], close to RUB 60s [per $1]. So really has had the major input. But in volume, in terms of launches, we have really been doing well there. Quickly on the OTC business, I'm very pleased with the joint venture with P&G.

The underlying growth has been approximately 9% on the bottom line, which is quite amazing. The challenge that the OTC has is they have all their revenues in non-U.S. dollars, and they report in U.S. dollars. So they have been worst hit of any of our businesses. So when you see a decline on top line in OTC, it's really all FX.

And they have been doing extremely well. They have been – obviously the cough and cold, the Vicks and line extension of Vicks has been doing well. But also we have introduced for example in Russia a line of products under the Teva brand name, which is a real opportunity in Russia. We are taking that into other markets.

And the last thing in the OTC is we have recently launched the Swisse vitamin line in Singapore. And just a week ago we launched Swisse in U.K., a big launch. I think it's already in approximately 500 food stores in the U.K. A huge vitamin line and an opportunity to grow the business. So I think overall the OTC business is doing very well.

They have more of an FX issue than anyone else, but a really good, down to earth business that we are really fond of and want to grow further..

Ronny Gal - Sanford C. Bernstein & Co. LLC

Good morning, and thank you for taking the time to speak to us today. Ronny Gal from Bernstein. I got three questions I want to ask. The first one on the respiratory side.

We're seeing pressure in the respiratory market, and we're seeing – also seeing you taking some interesting steps to kind of enhance the value of your branded reformulations of existing products.

Can you talk a little bit more about it? If you kind of think about you're going to market strategy, how will you differentiate from the generic in one side and the establishments in the other? And when do you expect your branded fluticasone/salmeterol, the same active as Advair to come to market, versus the entry of the generics, especially your generic? Second, around Copaxone retention.

You've mentioned the doctors and patients supporting it. The concern is that some of the payers will simply get over time better and better offer from the generics and begin to shift market share to those.

Can you comment on this? What are you seeing? And also if you can discuss the role that your hub services center plays in the retention of patients? Any numbers you could provide there by number of patient you have, people waiting for you to contact and so forth would be useful.

And third, on the anti-CGRP the class looks fantastic – class in headache. The class looks like a fantastic class in headache.

What are you planning about introducing that class in other pain indication? Is there a broader plan to use anti-CGRP class? And where do you stand on this area versus your competition?.

Robert Koremans - President & CEO-Global Specialty Medicines

Let me maybe around – talk – first take the Copaxone question. What we're seeing there, so we have our in-house Specialty pharmacy, which delivers – the first delivery typically it's 0.5% of the Copaxone business in total. And it's really there to make sure that patients when they're initiated by a doctor get on therapy real fast.

It's fully every – all those claims go 100% through the – just to get at the payer network, so that it's very, very transparent. And there's no issue whatsoever there. But it really is to serve to get patients on their therapy. Where typically before this could take well over a month, and you know that this is then very difficult.

And what we tried to do and we successfully managed to do, is that a patient gets the product, gets the auto-injector needed for the injection and the training on how to do the real best way of injecting your product simultaneously. And that it doesn't appear in three of – and far away from each other. And so far that really, really works well.

So the role that this, the pharmacy plays there is really making sure that all the logistics work and patients get started on therapy really fast. The Shared Solutions, they really help them do two things and do – first of all make sure that patients have financial access.

Work with patients and help them to address the questions with their individual plans really well. And that really works. And then second they're there with nurses to help and coach. What you have to remember I think for MS, those patients, they start on therapy. They don't feel the benefit immediately. Right? The benefit is far out.

But they have an opportunity to feel side effects. And the injection, even if it's three times a week, it's something that is not necessarily pleasant for them. So helping them through their journey over all those years, and we have patients on the product for 20 years. And some of – many are there for 10 years.

That service really helps them to deal with the disease, deal with the injections, coach them. And that is creating a huge value. To your questions on payers pushing back we've not seen it. We have 98% coverage. There really isn't anything happening at the moment, no dynamics, nothing coming from patient – payers in that respect.

That everything in that Copaxone franchise, the entire effort since 20 years really has been serving the patients as good and as fast as possible and demonstrating the value that we have in that franchise..

Michael R. Hayden - President-Global Research & Development

Just a comment on the CGRP. So of course what we've learned, what's really – the big breakthrough here is understanding that excessive CGRP induces pain, migraine, but also other forms of pain. And this also includes visceral pain, abdominal pain. So we are looking at a whole host. Choices haven't yet been made.

But planning, looking at the various indications, of course without saying we will or won't go into these indications. Cluster headache is an important – the Lilly products have gone into that. We see cluster headache as an important indication, particularly because it is the most severe. Leads to suicide in some patients.

So this is really a tremendous need. We also see needs in posttraumatic headache and other forms of pain where CGRP is now being – the data is showing CGRP has. So we hope to be able to announce our new indications at our meeting in the first quarter after the closure with Actavis Generics, where we'll be able to give you much more visibility.

But we are committed to CGRP and its role in pain, not only in migraine. And there will be other indications that we'll be prosecuting in the near future..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

And maybe on your respiratory question. So there's a group of patients – it's a huge market. Right? Michael showed you the figures. There's a huge unmet need. And two out of three patients don't use their devices accurately, which leads to morbidity, mortality, cost. But there's a fairly big group of patients who do fairly well.

They have a moderate asthma or mild asthma, they're well controlled. For those patients adding – coming with a very connected, expensive, and extensive service around it doesn't make a lot of sense. The generic is a fantastic offering, and that's why we continue to develop. It will be much more in the masses.

But there's a small group, 15% to 20% of patients, and that's still significant in terms of numbers out there that really drive almost all of the cost. They're really expensive. They're hospitalized frequently.

And where we with small changes showed for instance through something like a dose count from QVAR, we've been able to demonstrate in controlled clinical study that the hospitalization rates reduce by 50%. This makes a huge impact.

And improving a third of it with what we've seen with the Gecko and then the new devices, making sure that those severe patients that are really badly controlled that drive the majority of cost in asthma and afterwards also COPD, that's where the more elaborate devices, the e-connected devices that give feedback and make sure that you use your products in the right way.

That's where we see a role for them. And in our portfolio we believe then also Reslizumab for the very severe asthmatics with the high eosinophilics. We have an offering that is basically there to just through the severity of the disease and a tailored offering to patients, rather than one solution for everyone. And that's our go to market model..

Erez Vigodman - President, Chief Executive Officer & Director

We believe that we can claim for year for a space, which is unique. We believe that when we look end to end, Teva is really positioned very nicely here. We change even the organization structure of our respiratory business, and we are running today basically end to end Generic, Specialty devices, technologies, and services.

And we believe that with a number of anchor products, innovation that basically centers on devices and on unique technologies and with the capabilities we have on the two ends of the spectrum here, we believe that we can target a unique space here. A space that would enable us to generate compelling value for Teva from that franchise..

Kevin C. Mannix - Senior Vice President-Investor Relations

Chris, questions?.

Christopher T. Schott - JPMorgan Securities LLC

Great. Chris Schott from JPMorgan. So a couple questions here. First on Rimsa.

Can you just talk about the multiple paid for that asset, relative to putting capital to work into other Specialty deals? Or even just reducing the equity associated with the Allergan deal? I guess just help us understand how quickly can you take advantage of the platform there? Because it does seem like the multiple on the current business seemed high relative to maybe some historical comps there.

Second question is on the timing of synergies from Allergan. I think originally you kind of roughly talked maybe a third, a third, a third in terms of how quickly you can achieve those. Now you've done some more time on integration planning, is there any ability to pull that forward faster? And then my final question was just a bigger picture one.

I think we've had some questions about pricing. We've had – on the generic side. I mean how do you respond to the questions – we get this quite often now. Just the generic industry is kind of at its peak now. You guys are creating a clear dominant player in that space, but it's a space that its best days are behind it.

And just – I think people are struggling with actually the multiple of the stock, et cetera. Just can you keep growing this business, even with the platform you have? And just any thoughts you have on that front would be appreciated..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Yeah. So let me start on the first question – no, on the last question first in terms of the generic industry. So we have talked about it many of you over the years. For all the 22 years I've been doing this, this has been the peak of the generic industry. And we are still going up.

It really has been – the first-to-files were dead 10 years ago, and I should definitely go into the Big Pharma. This was not the right move for me. It's still going pretty strong.

And when you look at the pipeline, when you have 300 ANDA pending, when you have 110 first-to-files, when you are operating in all these markets, there is still a significant growth in it. But not only in the generics.

And this is I think what investors need to understand is we are in the whole space from generics, from volume and value generics, which are so important in some of the growth market and the emerging markets to go to more complex generics where complex technology, small proteins. You go to more complex generics, which nobody has challenged.

Where are the (1:41:02) and all these product, (1:41:04). These are product that are still not challenged by the generics and who can challenge these generics? There's at least 15 products like that. You go into the middle space between Specialty and Generics in terms of biosimilars, in terms of some special technology.

You go into the Specialty phase where you have a new devices with known molecules. And then you go into the innovation space like Labrys, like our anti-CGRP. Really and we are playing in the whole space. So to say maybe the volume value generics is challenging, that's absolutely right.

But I think with the infrastructure we have, we still have a lot of growth to do in the whole space. And that's really what's exciting. If you're a small company with one product or two products, it's much more challenging..

Erez Vigodman - President, Chief Executive Officer & Director

So maybe on that one, just to add, two, three insights. One, the world is not confined to the United States. There are huge opportunities in the United States. Right? The world is not confined to the United States.

And we see huge opportunities that extend from much more focused governments all over the world, put in more and more so on generics in general.

In the United States, we see a new set of possibilities from basically the way we'll be able to clear the conjunction between volume generics and high value generics, and then the intersection between generics and specialty the way it was articulated by Siggi. So that's point number one. Point number two, I just – Siggi put it one way.

I want to put it another way. For the ANDA and all the way to lifecycle management, basically we have developed I believe end-to-end capabilities which are unparalleled. So when you look at it, I believe over time that's the direction the entire space will embark upon. Yes, we'll see products on the right hand side of the spectrum.

We'll see products on the left-hand side of the spectrum, i.e., volume generics, right, high risk apparently high return products, okay. We'll see more and more TAs converted to all the kind of a middle ground. And Teva is positioned to capture – to target that space in a way which will be unparalleled..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

And let me just add one point to that. In the area of innovation using existing molecules, what's very exciting about the Actavis Generics acquisition, together with our own portfolio, the largest portfolio in the world from which we can then think about novel formulations, new ways to deliver.

Our whole abuse-deterrent technology platform is based on two things. Firstly, the ability to have these generic drugs already manufactured. Plus a unique proprietary technology platform. You put them together, you now have specialty products that can be leading in the world.

There will be many other opportunities in this middle space that build on the pillars that are already there with novel technology that will take us in many different areas. And just as you see we go from a Phase I to a Phase III much quicker, lower risk in terms of development, the technology's in place, no CMC risk, no manufacturing risk.

The ability to go from concept actually to submission, the time is shortened, the risk is less with significant returns on these products..

Erez Vigodman - President, Chief Executive Officer & Director

And with all that, Chris, you have to remind me of the first two questions again..

Eyal Desheh - Chief Financial Officer

Timing of synergies..

Christopher T. Schott - JPMorgan Securities LLC

(1:44:52-1:44:57).

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Yeah. So if we think about Rimsa, we obviously didn't give the multiple, we gave the revenue in 2014 and obviously the acquisition price of $2.3 billion. First of all, the multiples in the growth market are significantly higher than in the rest of the market, simply because the opportunity is greater.

The going price in Latin America, in markets that are growing double digit like Mexico, there is a higher multiple, that's number one. Secondly, what we are doing here is a Specialty platform. Their infrastructure is like NTE, 505(b)(2) Specialty products on the liquid branded Generics and OTC.

So really they are running a Specialty operation in terms of sales force, all the things like that. That's number two. Number three, is with the Actavis Generics acquisition we get approximately 30 to 40 products in Mexico, which we needed a platform to sell. Teva was undersized in this market significantly before.

What we have now is a platform to take these products to the market. And the fourth point is around the Teva strategy around Mexico. What we have done is basically we have over-invested in Mexico. What I mean by that is we have treated Mexico as a key market, even though we didn't have really the sales infrastructure to take advantage of that.

So we have over-filed in a way too many products in that market. And the same applies on the Specialty side, which gives us a significant growth. So we haven't given out the growth. We might do it at our – because this is not the – we are not giving guidance here.

But there will be a significant growth of this platform going forward with all these pillars. And we are really excited about this opportunity, because it's a well-known brand and will take us to the next market on the fast growing..

Erez Vigodman - President, Chief Executive Officer & Director

So maybe again to maybe underscore another dimension. A number of markets in the world, Teva will – aims at generating anything between $700 million to $1 billion net revenues in a way which is very profitable. And when we say growth market, we are talking about those markets. Okay? So these are growth markets. It encompasses also Japan.

And at least apparently Japan is not a – is a mature market. But when you look at the penetration of generics within Japan, you see the opportunity. That's why we are committed. Do we promise it? We are committed, and we deliver on it. Japan, we transformed the business we have in Japan sooner than later.

And again when you look at it there, one of the market where we aim at generating $700 million to $1 billion at least of net revenues in a very profitable fashion. Okay? Mexico is high on that list. So it includes Japan. It includes Mexico. It includes Brazil. It includes China, which is a much longer term player. But China is on our list also.

And we are basically aiming at markets where we can generate these numbers top line and bottom line..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

And on the synergies finally, I think for now I think it's the right thing to do one-third, one-third, one-third. I think when we give guidance we will give more details around the synergies. But what I mentioned is we have validated, we get to it. But I think we leave it to the guidance to talk how they kick in the first few..

Erez Vigodman - President, Chief Executive Officer & Director

John (1:48:32)?.

Gregg Gilbert - Deutsche Bank Securities, Inc.

Thanks. It's Gregg Gilbert from DB. On Copaxone first, could you remind us the key exclusivity periods that expire outside the U.S.? And then within the U.S. I can understand why you'd want to quantify a very negative scenario in 2017. But I see David [Stark] falling asleep over here.

Maybe you could tell us what would have to happen legally to actually see Generics in 2017, because I think folks are assuming that's a likely case, as opposed to a worst case.

And on bendamustine, Rob, can you share some commercial strategy at this phase, given how close it is and how important it is? And whether Eagle's launch of a different benda product in 2016 factors into your thinking at all..

Erez Vigodman - President, Chief Executive Officer & Director

So let me maybe start, and Rob will take over. We spelled out in a very consistent manner during the last 2 years that we strongly believe in the – our 40 milligram IP. And there were a lot of question that were posed to us during – and question that – especially after the patent office has instituted the IPR.

And we decided that we are open enough to discuss with the Street scenario which is different. For us it is the less likely scenario, but it's a scenario that we need also to prepare our self for that scenario. And we believe we are fully prepared.

Look at everything we have done during the last 2 years in a quest to diversify net revenues and profits in a form from – to diversify in general away from Copaxone in particular. Okay? Now at the end of the day when we come at with a scenario which is very conservative, $1.2 billion 2017 is very conservative scenario, and ends up with $0.68.

And you put it in the context for Teva, let alone Teva after we do this combination with Allergan, we'll be generating in 2017 onward, I believe it put everything within the right context. $0.68, okay? Now it's too early for us to deliver EPS 2017 – 2016, 2017, onward. We will do it one way or another during or early 2016.

But you have all the relevant ingredients in the recipe here. And you just look at the number, look at the $0.68, I believe it spells out a very strong message to the investment community.

Yeah?.

Robert Koremans - President & CEO-Global Specialty Medicines

And maybe on bendamustine, so what we expect the registration, the FDA approval by the end of this year in December. And then it's a product that only needs 10 minutes for infusion form. There's some customers who will go for a much cheaper, if that would be available, generic version. And we know more or less where to expect them.

But there are many customers also who really value that offer that you can make to a patient where you just in 10 minutes instead of that hour in getting your infusion. And that's what we expect going forward.

We will see a drop in the numbers and the volumes in – of versus the current TREANDA, but it's still going to be quite significant and an important product with an opportunity to prolong it for a couple of years. So we're excited about it, looks good.

The FDA – it's done by Eagle, but everything we've seen so far, we're optimistic that – to expect this in December. And then we want to do the introduction of the rapid infusion bendamustine as soon as possible. It'll take a couple of weeks, but we'll do it sooner – as soon as we can..

Unknown Speaker

Thank you. You spoke about the respiratory business a little bit. But what stood out in the third quarter results was the rapid growth of both ProAir and QVAR, up 34% and 44%.

Could you elaborate a little bit more on why those products are growing so rapidly? What the benefit is? And what your medium- to long-term outlook is for those products?.

Robert Koremans - President & CEO-Global Specialty Medicines

So I think both ProAir and QVAR you see there's a little bit of an uptick as well in net sales, due to we have a conversion. So there's the Clobex that's come and there's a – it's not related to prescription. But both products continue to do really, really well. There's a real growth in just about 10% or so.

We have in QVAR, we've introduced a dose counter. And with the benefits that I discussed before, it is really helping patients. And you see the uptake there, it's very good. People see it and it has continued to stay. We expect it will continue to grow steadily going forward.

ProAir, we have the RespiClick form in the market as well, which is – since we really started launching in June, there's a lot of education that still needs to happen around that product.

It's different, it's not and MDI, but a multi-dose dry-powder inhaler with all the benefits that we can see in terms of intuitive views and really delivering into the lungs much better. It's also something that patients feel different. The aerosol you feel in your mouth often. So we have to really explain this and educate patients.

And that's going to take a bit of time. And so far we still need to up there on the RespiClick. ProAir, it's the overall product brand is doing really well. And going forward it's a beautiful opportunity into 2016. And we're happy with that.

Right? But the focus is going forward on the promotion will be on the RespiClick form, which has a longer life, a better protection, and offers benefits to patients..

Sumant S. Kulkarni - Bank of America Merrill Lynch

Good morning. This is Sumant Kulkarni from Bank of America Merrill Lynch. I have three quick questions.

First, how quickly does Teva need to move in terms of biosimilar business development to get to where it wants to be and what it wants to achieve on that front? Second, do you want to gain more scale in genetic injectables? And third, do you have any target rates for switches on Copaxone 40 milligrams outside the U.S.?.

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Yeah. So let me take the first two. Biosimilars is a very good question. Remember that we have today a revenue of approximately $350 million from biosimilars. These are all that they've won plus GRANIX in the U.S. with (1:54:59) is a biosimilars but registered under the VLA.

We have a strategy in place for wave two with Lonza joint venture, which we walked away from. We currently have in our pipeline three biosimilars, but with a focus on wave three. I think and we have said it previously we are looking at some kind of partnership. It's important to us. We have a lot of offered to the partnership in terms of R&D.

I think our biologic R&D, which is obviously doing the Specialty products in reslizumab and Labrys, but also biobetters and biosimilars (1:55:38-1:55:44) infrastructure, where we talk about the space between Specialty and Generics are essential to sell the biosimilars. So I think we clearly are looking for partnership in this field.

There is an opportunity. The time is ticking on us for sure. But we really will be a player in this space.

The question is, how do you select to come into this space? Again do you want to play in the wave two space? Or should we focus on wave three more than anything else? In terms of injectables it's a fair question, because 2010 – or 2009 in fact Teva was one of the leader in injectables.

There was a quality incident around that time that took our revenue down. The good thing now is with the operation, TGO strategy that Carlo [de Notaristefani] and his team have been doing. We really have done an amazing job in both relaunching products but also moving it to a different plants around the world. So slowly we are growing our share.

Also exciting is with the Actavis Generics, there comes a big pipeline of Generic products into that field. So I think going forward we will be a much, much stronger player in injectables than we are today..

Kevin C. Mannix - Senior Vice President-Investor Relations

And the – it was the....

Robert Koremans - President & CEO-Global Specialty Medicines

Copaxone, right? So the uptake, it's now in Europe in 14 markets. And frankly in a country like Germany the uptake of Copaxone 40 and the conversion from the 20 daily to the three times weekly 40 is even faster than what we've seen in the U.S. So it's really doing well.

And what's also very, very striking and for us very encouraging is the fact that we're picking up not just switches from Copaxone 20 but also new patients. And it's actually the number one product in new patients in the German market for instance. In Europe it typically takes about a year before it's rolled out.

And this is a product that was registered many, many, many years ago before there was centralized procedures. So there are three or four waves or registration procedures going in. So we expect to be launching in Europe over the next 18 months really. And that's the time lines that are related to getting the registrations and getting the prices.

We just got the registration in Russia, which is a tendered market. Now you have to get into those tenders. And we're racing to be there. Clearly we'll have to compete also with the [Copaxone] 20 in the same tenders. The opportunity short term in Russia is probably smaller than what we've seen traditionally with the [Copaxone] 20.

But we're excited to get the opportunity as well, adding it to our [Copaxone] 20 offering. And it really strengthens our franchise position there. And that's what we've seen, not just in the U.S. We're seeing it in every country where we're launching. It really helps us in – continue to lead – to be the leading products in the MS space..

Erez Vigodman - President, Chief Executive Officer & Director

25% today, that's the average....

Robert Koremans - President & CEO-Global Specialty Medicines

Today..

Erez Vigodman - President, Chief Executive Officer & Director

Yeah. Adoption rate, but uptake is impressive..

Andrew Finkelstein - Susquehanna Financial Group LLLP

Great. Thanks very much. Andrew Finkelstein from Susquehanna. I was hoping on the Generic side, since we have perspectives here that looked at the Barr deal internally and from an external perspective.

What were the learnings from that transaction that could be applied to buying the Allergan business, which is driven by first-to-file opportunities in the U.S.

and how that can be sustained as an engine going forward? Then on the branded side if you could talk in any more detail about how the Copaxone net pricing looks? The impact having Glatopa on the market, what that means in terms of the net price you're getting on the 20 milligram and the 40 milligram? And also from the patients' perspective? How the economics look in terms of what's out of pocket for them? And then finally in emerging markets if you could review how you do the due diligence for transactions like that to make sure that you can operate as successfully in those markets as a domestic company with the compliance that's needed from your perspective? Thanks..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Yeah. So I'll take one and three. I think first of all the beauty is Teva has done multiple transaction through the period. I think been very successful, especially successful in delivering synergies. The company has always delivered the synergies. And in terms of integration there's lessons to be learned.

Some things we've done extremely well, and some things we could have done better, especially around people and retaining people. I think also maybe I bring to the table the experience of having bought the Actavis Generic business twice before.

So buying it for a third time I think gives a little bit of a comfort in that we understand how to integrate the business. But the key in the integration is people. Because people are the one thing that delivers the numbers at the end of the day. It's not the top-leading presses, it's not the manufacturing plants, it's not the offices, it's the people.

And we really have been careful in selecting the people, the best of both worlds. I think we have a fair process. And this has been a key. And this is why we are going early with announcing the organization. That's one of the learnings from the previous acquisitions. I think in terms of how we get comfort in the growth market, it's a very good question.

For us first of all Rimsa was in a process. They have prepared the process extremely well. They have open books. They were very valid word. As you read in the media – we obviously don't know, it was a closed process. But there were many, many Big Pharma companies in this process.

There was an opportunity for a very thorough due diligence on compliance, on finances, on registration, because that sometimes has been an issue where the registrations are not done in the right way. On their sense practices, on the numbers overall, and on the forecasts, so we got comfortable. The sellers were very open, very good people.

They thought about their employees very much in this process. But we really have super opportunities to get a full access both to management, the numbers, and all the data in the company, because it was in a process, had been preparing itself probably for over 2 years to make this transaction happen..

Eyal Desheh - Chief Financial Officer

On Copaxone so the product is competitively priced per se. We really would make sure that patients have access to this product, no what plan they are on, no matter what part of the health insurance coverage they are in the U.S. Copaxone 40 doesn't have any co-pay.

And on 20 it really depends on their plans, but we really make sure that people have access to this product. Obviously the gross to net, the discounts have increased a little bit on Copaxone 20 with generics, but nothing that wasn't expected or foreseen by us. And so far we don't see any signs that this is changing..

Erez Vigodman - President, Chief Executive Officer & Director

Okay. So maybe something that I would like to add here. We're very – and are very responsible in everything that portends to prices on the Generics side and on the Specialty side. And I would even put it another way, all the improvements you see in our – in margins is not driven by price. It is driven by quantities and by mix and by efficiency measures.

Not by price, 2014, 2015, and that's a very important message..

Kevin C. Mannix - Senior Vice President-Investor Relations

Okay. Thank you very much. Thank you for joining us today. If you have other questions we'll be available to answer them. Thank you..

Erez Vigodman - President, Chief Executive Officer & Director

So just we thank you for joining us today and have a good day..

Sigurdur Oli Olafsson - CEO & President-Global Generic Medicines Group

Thank you..

Kevin C. Mannix - Senior Vice President-Investor Relations

Thank you..

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2018 Q-4 Q-3 Q-2 Q-1
2017 Q-4 Q-3 Q-2 Q-1
2016 Q-4 Q-3 Q-2 Q-1
2015 Q-4 Q-3 Q-2 Q-1
2014 Q-4 Q-3 Q-2 Q-1