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TevaPharmaceuticalIndustries(TEVA)EarningsReport:Q42014ConferenceCallTranscriptThefollowingTevaPharmaceuticalIndustriesconferencecalltookplaceonFebruary5,2015,08:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

KevinMannix;TevaPharmaceuticalIndustries;VP&HeadofGlobalIRErezVigodman;TevaPharmaceuticalIndustries;CEOEyalDesheh;TevaPharmaceuticalIndustries;CFOMichaelHayden;TevaPharmaceuticalIndustries;HeadofR&D&ChiefScientificOfficerRobKoremans;TevaPharmaceuticalIndustriesLtd;GobalSpecialtyMedicines

OtherPart icipants

ShibaniMalhotra;Sterne,Agee&Leach;AnalystAndrewFinkelstein;SusquehannaFinancialGroup;AnalystSiggiOlafsson;TevaPharmaceuticalIndustries;GlobalGenericMedicinesLiavAbraham;Citigroup;AnalystCarloDeNotaristefani;TevaPharmaceuticalIndustries;GlobalOperationsSumantKulkami;BofAMerrillLynch;AnalystDavidMaris;BMOCapitalMarkets;AnalystGreggGilbert;DeutscheBank;AnalystLouiseChen;GuggenheimSecurities;AnalystManojGarg;Healthco;AnalystKenCacciatore;CowenandCompany;AnalystChrisSchott;JPMorgan;AnalystRonnyGal;SanfordC.Bernstein&Company;AnalystRandallStanicky;RBCCapitalMarkets;AnalystUmerRaffat;EvercoreISI;AnalystMarcGoodman;UBS;AnalystDavidSteinberg;Jefferies;AnalystJasonGerberry;LeerinkPartners;AnalystTimChiang;CRTCapitalGroup;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator:

Ladiesandgentlemen,thankyouforstandingbyandwelcometotheSeniorVicePresident'sInvestorRelationscall.(OperatorInstructions).Imustadviseyouthatthecallisbeingrecordedtoday,Thursday,the5thofFebruary,2015.

Inowshallnowhandovertoyourfirstspeakertoday,KevinMannix.Pleasegoahead,sir.

KevinMannix(VP&HeadofGlobalIR):

Thankyou,operator.Goodmorningandgoodafternoon,everyone.ThankyouforjoiningustodaytodiscussTeva'sfourthquarterandfull-year2014financialresults.OnthecallwithmetodayareErezVigodman,Chief




ExecutiveOfficer;EyalDesheh,ChiefFinancialOfficer;SiggiOlafsson,GlobalGenericMedicines;Dr.RobKoremans,GlobalSpecialtyMedicines;Dr.MichaelHayden,HeadofR&DChiefScientificOfficer;Dr.CarloDeNotaristefani,GlobalOperations;andDavidStark,GeneralCounselforGlobalMarkets.

WewillstartthecallwithErezandEyal,whowillpresentforapproximately20minutesbeforeopeningthecallupforquestionsandanswers.Acopyoftheslides,aswellasthismorning'searningspressrelease,canbefoundonourwebsite,tevapharm.com,undertheInvestorRelationssection.

Duringthiscallwewillbemakingforward-lookingstatements,whicharepredictions,projectionsorotherstatementsaboutfutureevents.Thesestatementsarebasedoncurrentexpectationsandassumptionsthataresubjecttorisksanduncertainties.Actualresultscouldmateriallydifferbecauseoffactorsdiscussedintoday'searningspressreleaseandthecommentsmadeduringthisconferencecall,andintheriskfactorssectionofourForm20-F,Form6-KandotherreportsandfilingswiththeSecuritiesandExchangeCommission.

Discussionsduringthecallwillalsoincludecertainfinancialmeasuresthatwerenotpreparedinaccordancewithgenerallyacceptedaccountingprinciples.Reconciliationofthosenon-GAAPfinancialmeasures,tothemostdirectlycomparableGAAPfinancialmeasures,canbefoundinthismorning'spressreleaseandtheback-upsectionofthesidepresentation.Withthat,IwillnowturnthecallovertoourCEO,ErezVigodman.

Erez Vigodman(CEO):

Thankyou,Kevin.Goodmorningandgoodafternoon.In2014weembarkedonajourneytotransformTeva,solidifyingthefoundationfirst,unlockingsignificantvaluefromourexistingbusiness.Then,re-energizingourbusinessaroundcorecapabilities,calculatinggrowthenginesandestablishingastableunderlyingbasefromwhichwecouldgroworganicallyandinorganicallyinthecomingyears.

In2014wedelivered$600millioninnetcostreductions.Wesignificantlyimprovedcashflowfromoperations,from$3.2billionto$5.1billionandfreecashflowfrom$2.3billionto$4.3billion.Substantiallyelevatedqualityandgeneratedsignificantachievements.Andweareontracktodevelopthemostcompetitiveoperationalnetworkintermsofqualitystandards,scale,capabilityandefficiency.

Inourgenericbusiness,weimprovedoperatingprofitbeforeG&Aby510basispoints,from16.8%in2013to21.9%in2014.Welaunched19productsintheUS,29inEurope,87intherestoftheworld,delivering$1billioninrevenuesin2014.

Inourspecialtybusiness,Copaxone40mghasgained19.6%marketshareoftheMSspace.Anditaccountstodayfor63%ofourtotalfranchise,holdingstrongversusoralcompetition.

Welaunchedsuccessfullyfournewproductswithnetrevenuesof$200million.Wenarrowedourtherapeuticareasfocusonthosewehaveestablishedstrengthinandarepositionedtoclaimformarketleadership.

Andmostimportantly,wedeliveredonallourpromisesandrewardedourshareholders.Wecreatedaplatformtosupportcontinuedmarginimprovement.$5EPSfloorandgrowrevenuesandearningsorganicallyfrom2017onward.

Wedeliveredonthehighendofourguidance,achievingorexceedingallkeymetricsofour2014financialguidance,despitesignificantFXheadwindsandhighersharecount.Wereturned$1.65billionofcashtoshareholders,includingestimatedQ4dividendpayments.Wegeneratedtotalshareholderreturnsof47%in2014.

TodaywearestronglycommittedtodrivefurtherthetransformationofTevain2015andtheseareourkeyprioritiesforthisyear,generating$500millioninnetcostreductions;continuesolidifyingthegenerics




business,improveitsprofitabilitybyadditional400basispointsanddriveorganicgrowth;continueenhancingthecompetitivenessofouroperationalnetworkandelevatingfurtherthequalitybar;furthermaintaintheCopaxonefranchiseandmanagethelifecycleofkeyspecialtyproducts;deliveronthepromiseinourspecialtypipeline;strongfocusonbusinessdevelopmentand;continuethetransformationoftheCompanytocreateitsnewfuture.

2015isanimportantyearforourspecialtyfranchise.Wetargetfourapprovals:extendedreleaseofabuse-deterrenthydrocodoneintheUS;ProAirMDPIforasthmaintheUS;Copaxone40mgthreetimesaweekinEuropeand;SeasoniqueforcontraceptioninEurope.

We'llwitnessfourkeyclinicalmilestonesthatcandemonstratethepotentialinourspecialtyproductspipeline.SubmissionofReslizumabforasthma;alsoextendedreleaseofabuse-deterrenthydrocodonethatmightpossessatechnologyvalidationplatformforus;LBR-101forchronicandepisodicmigraine,phaseIIclinicalresultsbytheendofQ1,2015;thePridopidineinHuntington'sDisease,phaseII,IIIclinicalresults.

Andweplansevenlaunchesthatshouldgenerateforus$400millionofnetrevenues:QNASLPediatric;ProAirMDPIforasthma;Zecuity;extended-releasehydrocodoneintheUS;Copaxone40mg;DuoRespSpiromaxandLonquexintheEUandotherinternationalmarkets.

Ourtransformationisnotconfinedtojustprolongingthepast.Overtime,Tevawilladjustitsbusinessmodelinordertoclaimforauniquespaceintheindustry,developinganewdifferentiatednarrative.Westartedtoevolveourbusinessmodelin2014andwewillacceleratethepaceofthetransformationduring2015.

In2015wewillalsoshifttheorientationtowardsinorganicmovesthatsupportourbusinessmodelevolution,focusingoncomplexhard-to-producegenerics,growthmarkets,in-marketorclose-to-marketspecialtyassetsincoreTAs,attractivespecialtypipelineassetsorportfoliosincoreTAs.Andwemightalsolookatuniquehealthsolutiontechnologiesandservices.IwouldlikenowtohandovertoEyalDesheh.

EyalDesheh(CFO):

Thankyouverymuch,Erez.Goodmorningandgoodafternoon,everyone.Iamhappytoprovidethedetailsonthebusinessandfinancialresultsforthefourthquarterof2014,aswellasthefullyear.Asalways,wearepresentingmostofourresultsonanon-GAAPbasis,whileourGAAPresultsappearinourquarterlypressrelease,aswellasinthe20-SFormwhichwillbefilednextweek.

So,let'sbeginwiththeQ4review.Asyoucanseefromthesehighlights,ourrevenuedecreasedby5%duetotheimpactofforeignexchangeandduetothedivestmentofourUSOTCplants.However,operatingincomeincreasedby10%andnearly400basispointsyearoveryear.Also,positiveforthequarterandtheyearwasourstrongcashflowgeneration,morethandoublewhatwesawinQ4lastyear.

Foreignexchangefluctuationhadanegativeimpactof$227milliononourrevenuesand$55milliononoperatingincome.MostoftheimpactonoperatingprofitsresultedfromthedevaluationoftheRussianrubleagainstthedollar.

AsyoucanseefromthedetailsP&L,mostgrowthandoperatingmarginsshowedsubstantialimprovementfromlastyear.Totalexpenseswere$400millionlowerthaninQ42013,duetothestrongfocusoncostreductionandefficiency.Cashflowcontinuestoimprove,creatingadditionalfinancialresourcesof$1.75billionincashflowfromoperations,andover$1.5billioninfreecashflowdeliveredthisquarteralone.

Let'slookatthebreakdownofrevenuesbybusinesssegments.Thiswasverysimilartothepercentageswesawlastyear.However,ourgeographicalbreakdownshowsincreaseinUSsales,reflectingmostlytheforeignexchangeimpactonex-USsales.

Whilerevenueswereflatyearoveryearinrealterms,whencomparedtoQ42013,theresultsthisquarterdo




notincludesalesofthedivestedOTCplantattheendofJune.Whilehavingnoplanonprofit,thisplantgeneratedannualsalesofapproximately$250million,whicharenolongerincludedinourresults.Youcanalsoseetheimprovementinsalesofspecialtyproducts,OTCandotherproductsallgoingupforthequarter.

Whenwelookattheprofitdistribution,weseetheimprovementinthegenericprofitandalowerdependencyonCopaxoneprofit,whichwearedeveloping.Wewillseethesameimpactsfortheentireyear.

So,nowlet'smovetotheannualnumbers.Saleswereflat,yearoveryear,butouroperatingincomeincreasedsignificantly,resultingfromtheimprovementinourgenericbusinessandthefocusoncostreduction.

Year-over-yearforeignexchangefluctuationhadasignificantnegativeimpactofalmost$350milliononrevenues,duetoourbalancedbusinessmodelwhichcreatessubstantialnaturalhedge.Thehittothebottomlinewassignificantlyless,reducingoperatingincomebymorethan$120million,comingmostlyfromtheimpactoftheRussianruble.

Lookingbackatourguidanceweprovidedfor2014,resultsweremostlyatthehighendofourrangeorbetter.OurfullP&Lreflectsimprovedmargin.Totalexpenseswereapproximately$600millionlessthanspentin2013.Andthisyearwealsoproducedover$5billionofcashflowfromoperations.

Thepercentageofrevenuesbybusinesssegmentweresimilartolastyear,verysimilardistribution.Andtheirgeographicalsplitwasalsoveryidenticaltowhatwehaveseenlastyear.

Asyoucanseehereinourannualrevenuebridge,revenuegrewnicelyinallourbusinessactivities.But,thisgrowthwasoffsetbythedevaluationofmostglobalcurrenciesversustheUSdollar;endedupinasimilarplace,2%increaseinrealterms.

Themostnotablecontributionwasgeneratedbyourgenericbusiness,improvingprofitabilitybymorethan500basispoints.Thecontributionofourgenericbusinesstothegrowthofotheroperatingprofitwasnearly$500million,increaseditsshareofthetotalto31%.

Now,letuslookatthecontributionofthedifferentpartstotheEPSimprovements.Whilethegrowthinoperatingprofitcontributed$0.78toincreaseinearningspershare,highertaxes,asanticipated,foreignexchangeandahighernumberofsharesdrivenbyover43%increaseinshareprice,hadtheoppositeimpact.

Let'stalkaboutforeigncurrencyimpactwhenwelookatthebusinessoutlookfor2015.Firstofall,wearereaffirmingourbusinessoutlookfor2015,despitethecurrencyvolatility.Wehaveabalancedbusinessmodel,whichcreatessubstantialnaturalhedge.TheonlyoutlieristheRussianruble,whichcausedmostofthenegativeFXimpactonprofitsin2014.

Iwouldalsoliketodiscussthequarterlyprogressionofourearningspershare.In2015,weseeasimilartrendofthedevelopmentinthequarterstotheonewesawin2014.Thismeansthatearningspershareforthefirsthalfwillbearound48%ofthetotal,andthesecondhalfwillbeabithigher,about52%ofthetotal.

Lookingatourfinancialresources,thefinancialperformanceof2014enabledustoreducedebtby$2billion,improveleverageto31%andreducedebt-to-EBITDAfrom2.16to1.67,asubstantialimprovementinallourcreditmetrics.Andlast,ourdividend.Weareincreasingquarterlydividendby10%,toILS1.33pershare.StartingQ12015,ourdividendwillbedeclaredandpaidinUSdollars.ThankyouallverymuchandIwouldlikenowtoopenthecallforquestions.

QUESTIONS&ANSWERS

Operator:




(OperatorInstructions)YourfirstquestioncomesfromthelineofShibaniMalhotrafromSterne,Agee.

ShibaniMalhotra (Analyst-Sterne,Agee&Leach):

Hi,thanksfortakingthequestion.Iguessabiggerpicturequestionforyouguys.ObviouslywesawabigtakeoutthismorningofHospira.It'ssomethingweassumedthatTevamightbelookingataswell,givenyourfocusoninjectables,oryourdesiretogetintoinjectables.Butyoualsomentionedmanytimesyouarelookingatspecialtypharma.Givenwhatishappeninginoursectorandithasbeengoingonforawhilenow,howshouldwebethinkingoftheactionsthatTevaislookingatoverthenextyearorso?Thankyou.

Erez Vigodman(CEO):

Hi,Shibani.First,wearenotlookingatHospira.Second,IwasveryclearwithalltheprioritiesthatpertaintopotentialBDmovesduring2015.

Wewillbelookingatgrowthmarkets.We'llbelookingatcomplexgenericsandhowtoproduceourproducts.Iwillbelookingatin-marketspecialtyproducts.Andwemightalsolookatattractivepipelineproductsorportfolios.Basicallythatistheagendaforusin2015.In2015wearere-routingthedirectiontowardbasicallyinorganicmovesinawaythatwillbecomingintoplayduringtheyear.


CanIjustfollow-uponthat?Intermsofthespecialtypharmaceuticals,areyoulookingtostayintheCNSspaceforleveragewithyourCopaxonefranchise?Orarewillingtolookbroaderatotherareasaswell?

Erez Vigodman(CEO):

ThefocushereisoncoreTAs,whichmeansCNS,pain,respiratory.


Okay,great.Thankyou.

Operator:

ThenextquestiontodaycomesfromthelineofAndrewFinkelsteinfromSusquehanna.

AndrewFinkelstein(Analyst-SusquehannaFinancialGroup):

Thanksverymuch.Youspokeabout,inthereleasethismorning,abouttakingboldstepsinorganically.CanyoucharacterizewhatkindsofrisksTEVAfeelsmostcomfortabletakingintermsofmovesyoumightmake?Iwouldsuspectthereareafewsituationsthesedaysthatarenoteitherexplicitlyoreffectivelyinauction.Isitawillingnesstoleveragepotentialsynergies,intermsofthevaluationsyou'rewillingtooffer,intermsoftheoperationalrisksofassetsthatyoumightbewillingtoassume?OrbeingboldintermsofgoingintonewareasfortheCompany?Maybeifyoucouldcharacterizehowyouthinkofboldactionsinorganically?

Erez Vigodman(CEO):

Basicallyitgoestowhereverwewanttobein2019.Tevain2019willbeaCompanythatisdrivenbypatientneeds,wherepatientinterventionwillbeequallyimportanttochemicalintervention.

Onthedrivefront,we'llputfocusoncomplexgenerics,howtoproduceproductsinthosepartandspace.Inthespecialtywe'llbasicallyhavenarrowedthefocusonareaswehaveestablishedstrengthandwearepositionedtoclaimforgloballeadership.

Alsowelookattheintersectionbetweengenericsandspecialtyinawaythatinvolvesuniquecombinations




thatfitsstronglythecapabilitiesofTeva.Wewillalsodevelopovertimethemostcompetitiveoperationalnetworkintheindustryandwillincreaseourpresenceinemergingmarkets.

Nowalltheinitiativewillbederivedfrombasicallythefutureend-gamethewayI'vejustsharedwithyou.Whichmeanscomplexgenerics,whichmeanshowtoproduceproducts,whichmeansgoldmarkets,whichmeansboldmoves,potentiallyboldmoves,inthespecialtyspace,butwithstrongfocusoncoreTAs.


Okay,thankyou.ThenifIcouldaskonespecificquestion.YougotanapprovalongenericNexiumintheUS.Isthereanycoloryoucanshareonthetimingofapotentiallaunch?AndwhattheopportunitymightberelativetowhatyouhadassumedinDecember?Thanks.

SiggiOlafsson(GlobalGenericMedicines-TevaPharmaceuticalIndustries):

Hey,Andrew,it'sSiggihere.WegottheapprovalforgenericNexiumasyoumentioned.WewillbelaunchinginFebruary,verysooninFebruary.

Weseethemarketedsellthatisprobablyjustunder$2billionasatotalbrandvalueofthemarket.Wereallydon'tknowhowbigtheopportunitywillbe.ThereisquiteafewapplicationspendingattheFDA.Ofthose,quiteafewarealsoona30-monthstay.

Weincludeditinourguidance,butwerisk-adjusteditintheguidance,Ithinkappropriately,becausewedon'tknowwhatthefuturebrings.Forus,thisisexcitingopportunity.WeareexcitingtolaunchthisinFebruary.Wearereadytogosoon.

Thereasonwhywehaven'tgonealreadytothemarketissimple.Thebrandchangedthelabeljustbeforethegenericapproval,sowehadtorelabeltheproduct.Butwewillbecomingoutverysoon.


That'shelpful,thanks.

Operator:

ThenextquestiontodayisfromLiavAbrahamfromCiti.

LiavAbraham(Analyst-Citigroup):

Goodmorning.Anotherquestiononthebiosimilarspacefollowingtoday'sannouncementofPfizeracquiringHospira.Iwouldbeinterestedinyourthoughtsonthespace,yourpresenceinthespaceandthesecondwaveofbiosimilarsgoingforward,giventhattoday'sacquisitionseemstolendcredencetobiosimilarsasalong-termvaluedriver.ThenIhaveafollow-upquestion.Thanks.

MichaelHayden(HeadofR&D&ChiefScientificOfficer):

Letmetakethat.IthinkfirstofallthisisaconsultationIthinkinthebiosimilarspace.PfizerwaslookingatitandHospirawasdoingthattoo.Ithinkthatspeakshighlytothatspace.

AlsoIthinkagoodindicationtothatspacewastheadvisorycommitteethatallofyousawrecentlyaroundtheSandozsubmissionintheUS.Wementionedthatpreviously.WementionedthatinourDecembermeeting,thatwehaveafewproductsinwavetwo.Wewouldlovetohavemore.Weareexploringtheopportunities.

IthinkTevahasextremelygoodcapabilitiesintermsofdevelopmentandcommercialization.Wearequitestronginwaveone,estimatedthisyeartobebetween$200millionand$300millioninrevenuethisyearfromwaveone.




WelaunchedGranixintheUS,eventhoughit'snotabiosimilarproduct.Ithinkithasbeenanextremelysuccessfullaunch,aclosecooperationbetweenspecialtyandgenerics.SoIthinkwehavetheinfrastructuretodothiswell.Butatthispointintimeweneed,inaway,alittlebitbiggerpipelineinwavetwotobearealplayerinthe22%2021timeframe.


Asafollow-uptothat,canyoutalkabouttheinvestmentsthatyouaremakinginbiologicsmanufacturing,areasyou'vespokenabout.ThisisanareawhereTevapotentiallyneedstoimprove.Canyoutalkaboutwhatyou'redoingtoaddressthat?

Erez Vigodman(CEO):

Well,maybeCarlocanstartandIwilltakethenover.Carlo,please.

Carlo DeNotaristefani(GlobalOperations-TevaPharmaceuticalIndustries):

Yes,thanksforthequestion,Liav.Wecurrentlyhavecapabilitiesandcapacitybothinmammalianandmicrobialmanufacturingatsmallscale.Weneedtoexpandthatandwearecurrentlyassessingthebestlocationtodothis.Itisreallyaboutexpandingthecapacity,becausewecurrentlydohavecapabilitiesforallthekeytechnologieswithinthespaceofbiologicsmanufacturing.

Erez Vigodman(CEO):

Liav,wefeelfairlystrongonanumberofkeyfronts,[RA],IP,clinicaldrugcapabilities,R&Dcapabilities.Wehavethescale.Wearedevelopingbasically,westarttodevelopaplanfortheestablishmentofbiologicsproductionfacility,asignificantone.Thatisonegapwehave.Andwe'llovertimealsocraftaplantodealwithwhatwecallthego-to-marketcapability.Wemightthenpursueapartnertoacceleratethepaceoftheexecution.


Thankyou.

Operator:

ThenextquestiontodayisfromthelineofSumantKulkamifromBankofAmerica.

Sumant Kulkami(Analyst-BofAMerrillLynch):

Goodmorning,thanksfortakingmyquestions.Thefirstoneis,we'veseenTevatakesomeboldstepsinsometherapeuticareas,drainandpricing.Howdoyouthinkthat'sgoingtoevolveintheMultipleSclerosisspaceifandwhenaonce-dailygenericCopaxonecomesin?AndhowisTevapositionedtotakeadvantageinthat?

Andmyfollow-upis,youmentionedcomplexgenerics.Thatisacatch-alltermandcanmeandifferentthingstodifferentpeople.SoifyoucouldgivesomemorespecificsonwhatTevadefinesasacomplexgeneric,thatwouldbehelpful.Thanks.

Erez Vigodman(CEO):

Okay,somaybe,Rob,youstart?

RobKoremans (GobalSpecialtyMedicines):

Pleasure.Thanksforthequestion,Sumant.Obviouslyrightfully,youknowtodaythereisanincreased



©2014TheStreet,Inc.AllRightsReserved Page8 of 21

pressureinthepayorenvironmentwithourCopaxone,boththreetimesweeklyandthedailyinjection.Wehaveaverycompetitiveprice.Threetimesweeklyisaccepted.

Wehaveaccesstoabout90%ofallpatientsintheUSandwesecuredourcontractsfor2015,andinmanycaseswellbeyondthat.Wecontinuetobeinastrongdialogue,obviouslysomethingtomonitor.

ButatthemomentwhatweseeisCopaxone40isavery,verycompetitiveproduct,bothintermsofsafety,efficacyandpricing.Thatexplainstheexcellentmarketingpredictiontoalargeextent,aswell.


Andthen,onthecomplexgenerics.Asyourightlysay,it'sabroadterm.Buthowweidentifyitisalsoquitebroadlyatthispointintime,whenwe'rethinkingaboutthestrategy,itcanincludeeverythingfrombiosimilars.

Itincludesalsomoredifficulttodevelopdosageforms,forexample,intermsoflong-actinginjectables.Itcouldevencoververycomplextopicalswherehaven'tbeenanygenericcompetition,vaginalrings.Allthedosageformsthatreallyisassuredit'sinthemarketandwherethere'saspaceforustoclaimourownopportunities.

So,welookatitbroadlyatthispointintime.Butthere'snicheswithinthisbroadspectrumwherewethinkwecandobetterthananyothercompanytoexecute.

Erez Vigodman(CEO):

Andatthesametime,webelievewearepositionedtowinintwovery,Iwouldsay,challengingareas,injectablesandrespiratory.

Sumant Kulkami(Analyst-BofAMerrillLynch):

Thanks.

Operator:

ThenextquestiontodayisfromthelineofDavidMarisfromBMOCapitalMarkets.

DavidMaris (Analyst-BMOCapitalMarkets):

Morning.Acouplequestions.First,ErezandSiggi,doestherubledevaluationmakeyoumoregunshyaboutinvestmentsinthatpartoftheworld?Andmaybeinemergingmarketswherethereishighgrowthbutlotsofrisks?Andthenseparately,intheoralMSmarkettherearealimitednumberofprogramsinlate-stagedevelopment.Howattractivedoyouthinkthatareaisfromabusinessdevelopmentstandpoint,giventheinterestintheareabyothers?Inotherwords,isthissomethingthatyouhavetodotobuildouttheCopaxoneMSfranchise?Orisit,youknowwhat,ifit'stherightopportunitymaybeyouwilldoit?Howhighofafocusisthat?Thankyou.

Erez Vigodman(CEO):

Onthefirstone,yes,therearemorerisksinemergingmarkets,buttherearealsoopportunities.Everythingwedowillbeinaquesttobeabletomitigaterisks.Thereareopportunitiesoutthere.

PersonallyIthinkthatthereareverycompellingopportunitiestodayinRussia,especiallytoday.Andifyouareablereallytomitigatetherisksthewaywedotodayinothercountrieswheretherearefluctuationofcurrencies,wewillbeabletobasicallygeneratevalueforourshareholdersovertime.

Welookatemergingmarkets.Weseetheopportunitiesandweputthefocusonkeyonesinawaythatwill




enableustotapintoopportunities,buttomitigatepotentialrisks.Andmaybe,Siggi,you'dliketoaddsomethingtothat?


Ithink,David,onRussia,perse,wearefullyalignedthatthisisstillanopportunity.Thisisstillaveryfast-growingmarketforus.WearenumberfiveinRussiatoday.

Ourvolumegrowthinthemarketandanypriceadjustmentwehavemade,wearestillbeingveryclosetokeepupwiththecurrency.WefeelthatwearewellpositionedonexpandingourbusinessinRussia.Wehaveamazingmanagementteaminthecountry.

Sowearenotgunshy,maybeforthereasonofthecurrencyperse,butweneedtobecareful.ThereisriskintheRussianmarket,butthereisalsoriskinotheremergingmarketsonthegrowthmarketswearelookingto.


AndIwouldjustliketocommentontheoraltherapies.Ofcourse,wearemostinterestedintherapiesthataregoingtobeeffective.Numberone,dealingwithnovelmechanismsofactionthatreallyhaveachancetonotonly,callit,relapse,buthaveabigimpactonthethingthingsthatmattertopatients,whicharedisabilityandprogressionofillness.

Ofcourse,inourownpipelinenowinphaseIII,wehaveLaquinimod,averyinterestingmoleculethatplaysintothatparticularspaceintermsofhavingabigimpactondisabilityandalsoshowinggreatpromiseintheareaofhaltingordecreasingprogression.Then,ofcourse,andassuch,wehavealsobegunastudyofLaquinimodinprogressiveMS,becausewebelieveitmayplaytothatparticularverydifficult,andcurrently,forwhichthereisnotherapy.Verydifficultandadiseaseforwhichthereisnowaytohalttheillness.

Butofcourse,we'remostinterestedinotherpathwaysaswell.Pathwaysthatremyelinationpathways.Pathwaysthatwillimpactforthelongtermtopreventsomeofthedisabilityandearlytreatment.

So,Iwouldsaythecrucialissueisnotthemodeofadministration,butisreallyalsothepossibilityofreallyreducingillness.WehaveseenwithadruglikeCopaxone,whichissafe,hassuchasafetyrecord,thatsubQinjectionhasn'tbeenanobstacletopatientstakingthisparticulardrugup.

Soweareofcourseopentootheroralformsthatmatchourtargetnewmechanism.Butthekeythingisfindingawaytostopthedisabilityprogression.AndLaquinimodrepresentsamoleculethatwearequiteexcitedabout.

Erez Vigodman(CEO):

David,withoutdelegatingfromtheimportanceto,ofcourse,todevelopsolutionsintheoralspace,IthinkitisimportanttounderscorethatCopaxoneholdsverystrongversusBiogen.WehavetodayatthesamenumberofpatientswehadbeforethelaunchofTecfidera.SoweservetodayandtreatbyCopaxonebydefinitivesamenumberofpatientsthatwereservedbyusbeforethelaunchofTecfidera.

Copaxone40-milligramstodaybasicallywasabletogain19.7%marketshareintheMSspaceinawaythatbasicallyputsitinaleadingposition,toaddtoitTecfiderajustbeinglaunchedlessthan12monthsago.AndthatistodaybasicallyacompetitionbetweenTecfideraand40million-gramonastand-alonebasisonthelucrativepositionoftheMSspace.SowefeelstrongaboutthewaywecancompeteagainstBiogenwithoutdelegatingfromtheneed,ofcourse,tocomeupwiththerightsolution,ofcourse,forthatsegment.

DavidMaris (Analyst-BMOCapitalMarkets):

Great.Thankyouverymuch.




Operator:

YournextquestiontodaycomesfromthelineofGreggGilbertfromDeutscheBank.

GreggGilbert (Analyst-DeutscheBank):

Thankyou,andIappreciatethat10%dividendincrease.Greatcallonthat.IhavetwoforSiggi.YouarecommittedtowesternEuropeinthegenericsbusinessinawaythatsomeothersarenot.AndIsuspectthat'sduetoyourscaleandtheeconomicbenefitsthataretiedtothat.Butcanyouprovideussomecoloronhowyouseegrowingthatbusinessprofitablyoverthenextcoupleofyears?Andhowmuchisinternallydrivenversusbeingabletoboltthingsonthere?Andthenmysmalladd-onquestionthereisaboutNasacort,thestorebrandNasacortOTC.Whenmightweseealaunchbyyourpartner,Perrigo,onthat?Thanks.


OnWesternEurope,IthinkweareinaverygoodpositioninWesternEurope.Wearethelargestplayer.Outofthe28markets,wearetop3in20markets.

Asyoumentioned,Gregg,itisallaboutscale.Itistheopportunityusingourscale.Wehaveaverygoodmanufacturingnetwork.Weworkcloselywithmanufacturingofselectingtherightportfolio.

IntermsofwhatwehavedoneinWesternEurope,itwasmentioningthatwehaveimprovedtheoperatingprofitfrom13%toapproximately20%in2014,from13%2013.ThisisagreatachievementbytheEuropeanteam.

Howthiswasdonewasinthreeways.Intermsofcostofgoodssoldwasveryimportant.Intermsofthefocusoftheportfolioandwheretodobusiness,bemoreselectiveinthebusiness,bemoreselectiveinthetender.Thatwaspartofit.Andobviously,costcontainment,bothontheG&Aandthesalesandmarketing.

Howdowegrowinthesemarkets?Wearethinkinginorganicterms.WesternEurope,acquisitionisnotourfocusatthispointintime.Westillthink,yousawthatwehadover200launchesinWesternEuropein2014.Wehaveanamazingpipeline.

IthinkonethingyoushouldnoticeiswearetheleadersinlaunchingatriskinEurope.WehaveanextremelystrongIPteamandregulatedR&Dteamtosupportthat.

Ifeelwiththemachinewehaveinplace,withtheinfrastructure,withoursize,wecancontinuetogrowtheWesternEuropeanmarket.YouseeafastergrowthinthebottomlinesimplyalsoduetotheFXimpactontherevenueline.TheFXimpactinEuropeisverylittle,asEyalmentioned,onthebottomline.SoIfeelthatthereisarealopportunityforustogrowthatbusinesswiththeinfrastructurewehaveinplace,asanorganicmove.

WithregardtotheNasacort,Ican'tcommentonit.ThisisaPerrigoproduct,perse.SoIthinkyouhavetoleavethatquestionwithPerrigo,howtheyseetheopportunityforthisproduct.

GreggGilbert (Analyst-DeutscheBank):

Okay,thankyou.

Operator:

ThenextquestiontodayisfromthelineofLouiseChenfromGuggenheim.

LouiseChen(Analyst-GuggenheimSecurities):

Hi,thanksfortakingmyquestions.Myfirstquestionis,withrespecttobusinessdevelopment,curiousifyouhaveanyinterestinexpandingintotheareasofanimalhealth,storebranddrugs,and/ororphandrugs.




Andsecondquestionis,howconfidentyouareinanapprovalthisyearforanAB-ratedgenericversionofEpiPen.Andifyougotthatapproved,howmuchmarketsharedoyouthinkyoucouldtake?Thankyou.

Erez Vigodman(CEO):

So,wedon'tlookatwomenhealthmaybeopportunities.Wedon'twanttoallowthepossibilityoflookingatopendrugspotentialinitiatives.Siggi?


So,IthinkonEpiPen,aswementioned,wesubmitted,wedealtwithall-outslantingqueriesfromtheFDAinDecember.Wefeltwesubmittedaverystronginformationandwehavedealtwithanyoutstandingissue.

Ofcourse,asyouknow,MylansubmittedaCPafewweeksback.TheCPfocuswasmainlyaroundthedeviceandusabilityoftheproduct.We,ofcourse,willrespondthat,butwefeelthatinourfilingwehaveaddressedthat,butwewillrespondtotheCP.

ItisverydifficulttosaywhenyougetapprovalfromtheFDA.AswementionedinDecember,wehaveappropriatelyrisk-adjustedthisinourfocusfor2015.Butit'sstillinourforecast.Itisexcitingopportunity.Ithinkit'salargebrandandIthinkouropportunity,if,andIhighlightif,wegetanAB-rated,Ithinkwecanhaveasignificantgenericproductinourhand.

Erez Vigodman(CEO):

AndIunderstandthatyousaidanimalhealth,soIamstickingtotheanswerthatIprovided.Wearenotlookingatopportunitiesintheanimalhealthspace.

LouiseChen(Analyst-GuggenheimSecurities):

Thankyou.

Operator:

ThenextquestiontodaycomesfromthelineofManojGargfromHealthco.

ManojGarg(Analyst-Healthco):

Thankyoufortakingthequestion.Twoquestions.One,onainjectableandthen,two,onyourguidance.Onstoveinjectable,that'sisaspacethatyouknowwellfromyourpreviousSicoracquisitions.ButyouindicatedyouhadnotlookedatHospira.I'mjustcurious,doesthatspeaktoyourbeliefsoryourforwardbeliefsonthatsegment?


Letmetakethat.IthinkourstrategyhassimplybeenthatobviouslyTevawastheleaderinthefield,aftertheacquisitionofSicorandupuntilwehadchallengesinourmanufacturingafewyearsback.

Whatwearedoingnowiswearereenteringthemarket.AlreadyinJanuarywehaveintroducedthreeorfournewinjectableproducts.Wearebuildingupourportfolioagain.Ourthinkinghasnotbeentobeinalltheinjectablespace.Wearenotlookingforantibiotics.Wearebeingfocusedontherapeuticareas,onfocusedonwhetherthere'sapatientneedforourinjectables.

Wearealsolookingverycarefullyindevelopingthelong-actinginjectableswherewehaveanexcellentknowledgeandexpertiseduetocombinationofspecialtyandgenericdevelopmenttobringsomenichesinthemarket.Butwereally,ourstrategyhasnotbeeninthemassmarketofinjectables,moreinthenicheand




theopportunisticmarketofthisspace.


Okay,thankyou,that'shelpful.Thenjustaquestiononyourguidance.AtyourAnalystDay,youhadindicatedthatyourguidanceassumesgenericentrybytwoANDAfilersinSeptemberonCopaxone.Iamcurious,areyouusingtwobecausethatisthemidpointofzerotofour,whichisthenumberofknownfilersweknow?Oristheresomethingabouttwoapplicationsthatgivesyouconfidencethattherewillbetwoapprovals?

EyalDesheh(CFO):

It'sEyal.Idon'tthinkthatwehaveanychangestoouroriginalestimationgenericentry,ofcourse,onthe20-milligramone.Betweenonetotwoplayers,thisiswhatwehaveguidedoriginallyandweseenochangetothatatthispoint.

Erez Vigodman(CEO):

No,andbytheway,noindicationtheconverseistrue.Wearejustcarefulandthat'sbasicallythewaywemountedthebusinessplan.Andwearetoassumethatinthecourseofthedaywemightsee,butnoindicationandwemightenduptherewithoutgenericcompetition.


Andjustonethingtoaddtothatisthatthenumberoneortwodoesnotindicateanyassessmentorconclusion,orevenperception,astothequalityofthesubmissionsorthequalityofthepurportedgenericsthathavebeensubmitted.Thisisunrelatedtothesubmissionsoranythingaboutthem.


Okay,thankyou.Thatisveryhelpful.

Operator:

YournextquestionisfromthelineofKenCacciatoreformCowenandCompany.

KenCacciatore (Analyst-CowenandCompany):

Thanks,guys,goodmorning.Youhavebeenveryclearaboutyouracquisitionstrategy,yettherehasbeennotransaction.SoI'mjustwondering,isitpriceorisitlackofopportunities?Andthenalso,Iwouldliketohearyourviewonwhetheryouwouldeverconsidergoinghostileasanapproachtoapotentialtargetifconversationsweren'tgoingthewayyouwanted?Thankyou.

Erez Vigodman(CEO):

Ourstrongfocusduring2014wasongettingourhouseinorderfirst,solidifyingthefoundation,developingthecylindersthatwillfireforusinyearstocome.Justnowwearesayingthatwearereorientingthedirectionduring2015towardsinorganicmoves,aswell.Sothingswillfallinlinewiththewaywehavedesignedasetofmeasuresfor2014versus2015.

Basicallywedon'twanttoholdupanypossibilityintheBDlandscape.Weprefernottogohostilebutwedon'twanttoruleoutanypossibility.Wewilldowhateverisneededinordertogofortransactionthatwillenableusfirsttogenerateanoutlookvalueforourshareholders.EPSaccretionisalsoimportant,butwhatreallymattersforusistobeabletogeneratevalueforourshareholdersinthelongterm,inawaythatreinforcesourprofitingdirection.

KenCacciatore (Analyst-CowenandCompany):




Thankyou.

Operator:

ThenextquestiontodayisfromChrisSchottfromJPMorgan.

ChrisSchot t (Analyst-JPMorgan):

Great,thanksverymuchforthequestion.Justhadtwoquickoneshere.First,itseemslikemuchofthegenericspacerightnow,alotofpeoplearepursuingcomplexgenericsasagrowthdriver.Areyouconcernedatall,asyoubuildoutthiscomplexgenericportfolio,thatbythetimeyougettothesemarketsthatwe'regoingtoactuallyendupseeingtoomuchcompetitionandsomeoftheattractivepricingdynamicsmightnotbethereinafewyearsrelativetotoday?

AndthesecondquestioniscomingbacktothePfizer-Hospiratransactionthismorning.Iappreciatetheearliercomments,butwhenwethinkaboutthatcombinedentity,canyoutalkaboutwhatthatcombinedentitymeansintermsofindustrycompetitivenessandtherelativeattractivenessofthespace?Basicallydoesthiscreateamorepowerfulcompetitorasyoulookouttobuildoutyourinjectableportfolio?Thanksverymuch.


Thanks,Chris.Ithinkonthefirstone,yes,itisalittlebitofabuzzwordtotalkaboutcomplexgenerics,butitisalsoeasiersaidthandone.Ithinkweareinaprimepositiontodothis.Wehavetheinfrastructureofdoingthis.Ithinkwehaveaprovencapability.Wehaverecentlywhatwasapossiblefirsttofile,whichincludedaninjectableandadeviceontheproteindrug.Soweareinaspecialposition.

Alsokeepinmind,evencomplexgenericslikethetransthermalpatches.Manycompanieshavetalkedaboutitforquiteafewyears,andstilltodayyousee,atmost,maybefourtofiveplayersinthemarket.SoIthinkyouareright,itiswidelytalkedabout.ButIthinktheexecutionwillbeharderandIthinkweareinabetterpositioninthisfieldplanthanmostothercompanies.

WithregardtoPfizer-Hospira,clearlyifthismergergoesahead,thiswillbeapowerhouseintheinjectablespace.Hospiraobviouslyisverystrongintheinjectablespace.Alsointhebiosimilarspace,Pfizerwasdoingsomeworkinthebiosimilarspace,andHospiraalso,bothwithjointventurepartners,butalsoalone.So,thereisnoquestionaboutit,thatthecombinedentitywillhaveastrongpresenceintheinjectablespace.

Butthatbeingsaid,IwanttomentionagainwhatIsaidpreviously.Ourportfoliostrategyandourapproachtothemarketisalittlebitdifferent.Wearemoreinthenichespaces.Weareinthesmallerproducts.Wearenotcompetingonthebigvolumeantibioticsoroncologyproducts,perse.Butclearlyifthismergergoesahead,itwillbeastrongcompetitorinthemarket.

Erez Vigodman(CEO):

And,Ken,Ithinkitisalsoimportanttounderscoremaybeanotionthatwasmentioned,butisimportanttoshareitwithallofyou.Althoughwesaidthatwewanttomovemoreandmoretoallthehard-to-producecomplexgenerics,itdoesn'ttakeawayfromthefactthatwehavetodaythecapability,theskill,thetechnology,theinfrastructureandthepipelinethatsupportsaleadingpositionincomplexgenerics.Sothatissomethingthatshouldbeclear.Wewanttoreinforceitmuchfurthergoingforward,butitdoesn'tdelegatefrombasicallypositionthatwehavetoday.


Andalsojusttoadd,forourpipelineaswetalkaboutthis,westartedin2014thepipelinewasaround35%ofourpipelinecomplexgenericsintheUSandalsoinEurope.ButinUSit'sgoingtobeabout75%in2015.Soit




isamajorinvestmentandamajorcommitmenttospecificproductsinthecomplexgenericspace.

Operator:

ThenextquestiontodayisfromRonnyGalfromBernstein.

RonnyGal(Analyst-SanfordC.Bernstein&Company):

Goodmorningandthankyoufortakingmyquestion.I'mgoingtostartwithahousekeepingquestion,andthenI'vegotacontentone.Thehousekeepingoneisabouttheshapeoftheyear.Youmentionedthatyouexpectslightlymoreprofitinthesecondhalf.IbelieveyouwereassumingthePulmicortwillbelostduringtheyearandyouareassuminggenericCopaxonecomingin.Itfeelsasifthesecondhalfshouldbeactuallyalotlowerthanthefirsthalf.Whatisoffsettingthat?

Secondonthecontent.Canyoutalkabouttwoissues?ThefirstoneisthemarketingpracticeinvestigationinRussia.Ifyou'dmentionedtoustheriskthere.

Andthensecond,theZecuitylaunch,thisisoneIguessisupcoming.Canyoudiscussalittlebitthecoverageyouwereabletoobtainforthatdrug?Relativepricingversustheotherproductinthemarket,andwhatyouseeasthebigsalespotential.Mentiontousthepotentialofthisproduct.

EyalDesheh(CFO):

Ronny,Iwilltakethefirstoneregardingtheso-calledlinearityoftheyearandthequalityprogression.Yes,weseethesecondhalf,despiteeverythingthatyouhavementioned,morelaunchesofnewproducts.Ourlaunchesfortheyeararegoingtobesecond-halflaunches.Morerealizationofcostreductionastheyearprogresses.

So,allinall,whenwelookatit,itisprettybalanced.Butthefirsthalfwillbealittlelighter,thesecondhalfwillbealittleheavier.Notabigdifference,butinlinewithwhatwehaveguidedearlier.


Okay.

Erez Vigodman(CEO):

Onthesecondone,wehavenothingtoaddbeyondthenotetothefinancialstatements.AndontheZecuity,Rob?


Yes,Ronny.Zecuityisplanningtolaunchforquartertwo.Soatthemomentthisisallbeingprepared.Wewillbeable,asweseetoday,todothatlaunch.Andintermsofcoverage,itisabitearlytotalkthat,butyoucanbesurethatwehaveaworld-classteamonthat.Wehaveourassumptionbutnotactivenegotiationswithpayorsatthismoment.


Okay.Inyourmind,comparingtosomeoftheotherbrandedproductsthatyouhave,isthatlikeaQvarsize,aNuvogilsize,aCopaxone-sizeproduct?


No,itisnotaCopaxone-sizeproduct.Butitisanimportantproductforanichegroupofpatientswithmigraine.Verydifficulttotreat.Webelieveit'sgoingtobeaviableoption.Youshouldn'tlookatitasaproduct




thatwillallofasuddendramaticallyexplodeinsales.Itwillbeaslow-growingproduct.

Itisacomplexsupplychain,perse,sothereisenoughchallengesonthat,butwebelieveitisarealniceopportunity.Anditisdefinitely,ifwemanagetogetittomarketwellandmanageeverythingwellthere,youarelookingatacoupleofhundredmillioninpotential.

Butitwillnotcomeinthefirstyear.Thisisprotecteduntilwayinto2020andweexpectpeaksalesnotbefore2024.Butitissomethingthatfitsfantasticallytoouroverallportfoliointhemigrainespace.AndwebelievewecanserveasmallbutimportantportionofmigrainesuffererswithZecuity.


Thankyouverymuch.

Erez Vigodman(CEO):

Ronnie,itplaysaverylimitedroleinourworkplanandinthenextfive-yearplan.Averylimitedrole.Wewantto,basically,towatchthingsaswegoalongandtodrawconclusions,basically,fromwhatweseeinthemarketplace.


Thankyou.

Operator:

ThenextquestiontodayisfromthelineofRandallStanickyfromRBCCapitalMarkets.

RandallStanicky(Analyst-RBCCapitalMarkets):

Great,thanks.Justtwoquestions.FirstforErez.Asyouthinkaboutcreatinglong-termvalue,howdoestheimportanceofdiversifyingawayfromCopaxoneoverthenextcoupleofyearsfactorintothatthinking,specificallytheM&Astrategy?

AndthenaquickoneforSiggionbudesonide.Youguysrecentlyhadahearing.Whatisyourlatestthinkingontimingastowhenwecouldgetanupdatethere?Thanks.


Randall,Iwilltakethebudesonidefirst.Soasyousaid,theclosingargumentswereattheendofJanuary.Youhavetokeepinmindwearenotpartofthistrial.ThisisAstraZenecaagainstallthegenericplayers.

Obviouslywedon'tknow.Wegavetheguidancethatweestimatedthatwewouldhaveadditionalgenericcompetitioninthefirsthalfoftheyear.Justkeepinmindthatevenifwegetadditionalgenericcompetitioninthefirstquarteritwillnotchangeourguidanceinanywayorform.

TheinjunctionisinplaceupuntilMarch1.Sowereallydon'tknowwhatthejudgeisgoingtodo,buttheseareroughlythetimeframes.Westillstickwithourguidance.

Wethinkitisappropriateatthispointintimetoestimateacompetitioninthefirsthalfoftheyear.WillthatbeinMarch,April,May,wedon'tknow.OrcoulditbeintothesecondhalfoftheyearorinfactobviouslythecasecouldgothewayofAstraZeneca.Wewouldcontinuetosellbudesonide.Soitisverydifficulttoreadintoit,butthesearethefactsofthemarket.

Erez Vigodman(CEO):




So,basicallywe'veputstrongfocusoncorecapabilities.Wetookadecisiononwheretoplay.Weknowwherewewanttobein2019.Andbusinessstrategyisbeyondthat.Bythesametime,ofcourse,thequesttodiversifyawayfromCopaxoneisanimportantentityintheequation.

RandallStanicky(Analyst-RBCCapitalMarkets):

Okay.Thanks,guys.

Operator:

ThenextquestiontodayisfromthelineofUmerRaffatfromEvercoreISI.

UmerRaf fat (Analyst-EvercoreISI):

Hi,guys,thankssomuchfortakingmyquestion.Iwanttotouchonacoupleoftopics.Numberone,maybeaquickfollow-upontheHospirastuff.Iwantedto,Siggi,maybeaskyouhowlargeisyourspecialtyinjectablesbusinessintermsofrevenuesrightnow?AndwhatpercentageofitactuallyoverlapswithHospira?JusttryingtounderstandwhatpotentialcompetitioncouldlooklikeunderPfizer.

Andsecondly,onCopaxone.IknowtherehasbeenalotofdiscussiononCopaxonegenerics.MyquestionwasonCopaxone-likedrugsotherthangenerics.Specifically,theplovameracetatefrom,theweeklysubQfromMerckKGaA.Thoughtsthere.AndthemonthlyformdepoformofCopaxone.Justcurioushowyouguysthinkaboutthose.Thankyouverymuch.


So,Ithinkontheinjectablesbusiness,globallyweareprobablysomewherebetween$500millionin$700millioninrevenueofinjectablebusiness.IntheUSwearerelativelysmall.Weareapproximatelyjustover$100millionlastyear.

Butwearegrowingthatveryquickly.ImentionedthethreeorfourlaunchesthatwehadinJanuaryalready.AsImentionedinDecemberweassumethatthegrowthinUSweestimatetothree-foldthatrevenuein2015.

Intermsofoverlap,thereisobviouslysomeoverlap,especiallyintheEuropeanmarket.ButintheUSmarketthereislessofanoverlap.OneofourlargelaunchesthatwedidnowinJanuarywasgenericEnoxaparin,veryimportantworktous.Wehavelaunchedthatverysuccessfully.Thereisnooverlapthere.

WealsolaunchedLinezolidinJanuaryandourloanonthemarketthere.ThatisobviouslyaPfizerproduct,sothecombinedCompanywouldhavethatgoingforward.Soitisdifficultformetogiveyouanaccurateoverlapatthispointintime,butmaybeanindicationthereismoreinEuropethanthereisintheUSatthispointintime.


Gotit.


AndjusttocommentonotherCopaxone-likedrugsorCopaxone.Firstly,justtosaythatwhatwe'velearnedaboutCopaxoneoverthelastyear-and-a-halfinparticularlyingreatdetail,ishowCopaxoneworks.AndcertainlyweareveryinterestedinthepathwayswayCopaxoneworks.Weunderstandsomeofthemolecularbentunderlyingthosepathways.Andofcourseareinterestedindrugsthatmightmodulatethatpathway.

IntermsofotherformulationsofCopaxone,theyareinveryearlydevelopment.Wehaveofcoursedominatedthisworkourselves,butthereareothersalsodoingthis.Andwewatchthiswith,I'dsay,carefulinterest.




Wedoknowaswehavegonefromoneinjection,oneeverydaytothreetimesasweek,thatthiswasveryconvenientforpatients.Itwouldhavetoseesignificantimprovementinoutcomeforpatientsandthesestudiesareveryfaraway.

Sowewatchwithinterest.Wepayattention,butwhatthewholeCopaxonestudieshavedoneisreallyalertustothepathways.Andalsootherdifferentandnewmolecularentitieswhereweareparticularlyinterestedtoplayarole.


Thanksverymuch.

Operator:

ThenextquestiontodayisfromthelineofMarcGoodmanfromUBS.

MarcGoodman(Analyst-UBS):

Siggi,couldyougiveusalittlemorecoloronsomeofthekeymarketsforyououtsideoftheUSinthegenericsbusiness?Youknow,FranceandGermany.Andthenalsoinsomeoftherestoftheworld.ObviouslyRussiawasmentionedalittlebit,butmaybesomeoftheotherkeycountriesforyou.

Secondquestionis,isthereanyupdateonlifecycleextensionstrategiesforTreanda?Andthird,women'shealthseemedtobealittlebitweakinthequarter.Justpointoutwhy.Thanks.


Yes,soifIstartontheinternationalmarket.IthinkwehavehadgoodresultsinEurope.Ithinkthemarket,whichIwasverypleasedwith,wasfirstofallUK.UKdidverywell.

Ithinkwhatwemanagedtodothere,therewasanupsetinthesupplysituationofourcompetitorsandIthinkthisshowsthestrengthofoursupplyteam.Wewereabletostepinandtakeaspace.TherewasaneedforourproductandthatgrewourbusinessintheUK.

IamalsopleasedinmarketslikeGermany.TheGermanteamhasbeendoingextremelywell.Theyareobviouslybothworkingforthespecialtyandthegenerics.Theylaunchedspecialtyproductsverysuccessfullyontherespiratoryfield.

ButinthegenericsIthinkwehavetakenasmarterstrategy.Wearemoreselectiveonthetenderbusiness.Westillhaveavery,verystrongbrandinGermanyintheRationpharmbrand.AndalsoonourjointventurewithP&G,thePGTjointventure,wehaveaverystrongpositionintheOTCbusinessinGermany.

Spainhasbeenalittlebitmorechallenging.ThereissomeregionsinSpainthathavegoneintotenders.Wehavenotfollowedthat.Wereallydon'twanttogotoomuchintothetenderbusinessintheSpanishregion.

OntheFrenchmarket,Ithinkwearedoingokay.Ihavesaiditbefore,theFrenchsystemisquiteacomplexone,wherethepriceshavegonedown.Theutilizationisstillrelativelylow.Andyoustillhavetohaveasalesforceinplacetodrivetheusageofyourmedicine.SoIthinkweareafairlylargeCompanyinFrance,butIhopeinthefutureIcanseetheprofitabilitygoingupthere.

MaybethelastbittoadduptothiswasRussia,asyoumentioned.Ifitwasn'tfortheFXchallenges,IthinkRussiaprobablywouldbemybestmarketoutsideoftheUS.Bytheway,UShadanextremelygoodyearanddidextremelywell.ButRussiateamdidanoutstandingwork.

AsImentioned,intermsofvolumegrowthandanypriceactiontakeninthemarket,theynearlymanagedto



©2014TheStreet,Inc.AllRightsReserved Page18 of 21

keepupintermsgrowthwiththeplanwehaveinplace.Itisaverychallengingmarket,butalsoIthinkbeingnumberfiveintheRussianmarkethashelpedus.Andweseeasignificantgrowthgoingforwardinthatmarket.So,overall,Ithinkinternationally,beingtopthreein30marketsaroundtheworldgivesusaveryspecialpositionversusourcompetitors.

Erez Vigodman(CEO):

Marc,nothingnewonTreandasinceDecember2014.IthinkwemeantwearebasicallyalossofexclusivityisexpectedinMay2016.Wearecheckingallthepossibilitiestoextenditfurther.Rob,women'shealth?


Yes,thanks.Sotheperceptiononalittleweak,wehavedonesalesforthefullyearinwomen'shealthareinalmostthesamelevel,actuallyalmostexactlythesamelevelastheyearbefore.Maybeyourefertothefactthatfrom2012to2013therewasquitesignificantgrowthrelatedtosomeofthelaunches.Butthisisabusinesswemanageforsustainedprofitability,competitivebutverynicemarketplacetobein.

Ourtwokeyproducts,PLANBOne-StepandPARAGARDareactuallydoingverywell.NottobeatPLANBOne-Stephasexceededallofourexpectations.Also,goingforwardyouwillprobablyseemoreofthesame.Itisanicelyprofitablebusiness.Wehaveaveryniceposition.Wedon'tover-investinit.Itisimportanttokeepitgoing,andweareoptimisticalsogoingforwardforthis.

Operator:

ThenextquestiontodayisfromthelineofDavidSteinbergfromJefferies.

DavidSteinberg(Analyst-Jefferies):

Thanksverymuch.BacktoyourM&Astrategy.Youhavebeenveryconsistentaboutpayingdownyourdebt,Ithinkacouplebilliondollarsoverthelastfourquarters.What'syourcurrentthinkingintermsoftodoanall-cashdealandleverup,whatisyourcurrentdebtcapacity?

Thenontheequityside,youcontinuetobuybackstock,Iwouldthinksignalingthatyouhaveanundervaluedshareprice.Butifyouweretodoamuchlargertransaction,Iassumeyouwouldhavetouseequity.Wouldyoubecomfortableusingequitytomakealargeracquisitionatcurrentsharepricelevels?Thanks.

EyalDesheh(CFO):

Thanks,David,itisEyal.Withoutgoingintohypotheticaltransactions,becauseeverydealisdifferent,structureisdifferent,webelievethatourbalancesheetandequitypriceandcapabilitiesenableustogoafterallreasonabletransactionsinthemarket.Andputmoreofthatonthebalancesheet,dependingontheEBITDAcontributionoftargets.

Andthemixofdebtandequitywilldependonthetypeofthetransactionandtheappetiteforriskderivingfromit.SoIwouldrefrainfromdoingahypotheticalanalysis,butobviously2014hadincreasedourborrowingcapacity.Thatsaid,we'lllookspecificallyaseverdo.


Thanks.Andthenyouhad,onyourslide,aboutpotentialgenericlaunchesforthisyear,youhadputongenericVenofer,ironsucrose.Justcurious,whatsortofprobabilitydoyouplaceonlaunchingthisyear?Whatsortofsharecouldyoutakeif,infact,youdogetapproval?





Thatisoneoftheinjectableproductsthatwehaveinourpipeline.Wehave,asIsaid,howwebuildourfocusandhowweguidethemarketiswehavemultipleopportunities.Wehavesomanygoal,butweareappropriatelyrisk-adjustedwhenweforecasttothemarket.

Wedon'tknowifwegetifapproved.Weareready.Ifwegettheapproval,wearereadytolaunchinthemarket.Theinjectablemarketisalittledifferent.Thereiscontractsinplace.ThereissometimeslongtermcontractswiththeDPOsandthingslikethat.Soitisdifficultformetogiveyouanestimationofthemarketshere.Butclearlyifwegettheapprovalintime,thiscouldbeagoodproduct,butitwillnotoverallaffectourguidancefortheyear,perse.


Thanks.

Operator:

ThenextquestiontodayisfromthelineofJasonGerberryfromLeerinkPartners.

JasonGerberry(Analyst-LeerinkPartners):

Hi,goodmorning,thanksfortakingmyquestions.First,forSiggi,thinkingabouttheUSbiosimilarmarketandthinkingaboutthePfizer-HospiraentityandNovartis,youreallyhavetwoprettybigbehemothsinthespacethataregoingtohaveamixofinnovativeandlow-costbiosimilars.Ifthemarketultimatelyendsupevolvingintoapositionpull-throughtypecategory,wonderingyourviewsontheattractivenessofthatmarketfromaTevaperspective.

Andthenmysecondquestion,asyouguysthinkaboutbolsteringyoursecondwaveofbiologics,thereisanemerginggroupofsmallercompaniesouttherebuildingoutandrunningphaseIIItrialsonbiosimilars.Kindofcurious,yourgeneralthoughtsonthequalityofthoseassets,andifyouguysthinkaboutacquiringaportfolioofde-riskedphaseIIIassets.Thanks.


IthinkontheUSbiosimilarproducts,Ithinkwearealigningwith,Ithink,mostofthemarket.Wedon'texpectanyinter-changeability,atleastinthefirstfewyears.Sotherehastobesomepull-throughwiththephysician.

IthinkTevaisideallypositionedforthis.Wehaveastrongspecialtybusinessandwehaveastronggenericbusiness.Becauseyouneedtomanagebothends.YouneedtomanagetheDPOs.Youneedtoworkwiththehospitalsettings.Andwedothatverystronglyonthegenericside.

Thenwehavethesalesforceonthespecialtysidetodrivetheprescriptionthrough.AndIthinkIwanttouseGranixasanexampleagain,whereweareover15-plusmarketsonthisproductintheUSmarket,eventhoughweonlyhaveoneindication.AswefiledisasaBLA,itisnotabiosimilar.ButIthinkitisanindicationofwhatwecandointhemarket.

Youareright.Pfizer,Hospira,Sandoz,Novartis,thesearepowerhousesintermsofbrandedmedicines,andtheyalsohavegenericbusinesses.ButoverallIthinkwearepositioned,veryideallypositioned,tobeabletotakeadvantageofthemarket.

Intermsofsecond-wavebiologics,yes,there'squiteafewcompaniesthatsaythattheyhaveassetsforthesecondwaveandthirdwave.Weobviouslyaremonitoringthat.Ithinkperourcount,there'sover100companiesthatsaytheyhaveassetsthatareusable.

Ithink,fromourpointofview,there'sclearlynot100assetsthatweareinterestedin.Wehavelimitedthat




downprobablyto5to10companiesthatreallyhaveastrongasset.Andanyoptioninbusinessdevelopmentisopen.Itcouldbeanacquisition,itcouldbeajointventure,itcouldbeaco-development.Weareveryopen.Wearelookingfortherightasset,fortherightpartner,wherewecanbearealplayerinthemarketinfivetosixyears.

JasonGerberry(Analyst-LeerinkPartners):

Great,thankyou.

Operator:

AndourlastquestiontodaycomesfromthelineofTimChiangfromCRTCapital.

TimChiang(Analyst-CRTCapitalGroup):

Hi,thanks.Erez,IthinkwhenyouguyshadyourpresentationlastDecember,oneoftheinitiativesyouhadsetwastoregainleadershipintheinjectablebusiness.IwanttogetyourthoughtsonwhatpreventedyoufromlookingatHospira.IthinkMylanalsohadlookedatHospiraandtheysteppedasideaswell.WastheresomethingthatyousawwithHospirathatyoudidn'tthinkwasagoodfitforTeva?

Erez Vigodman(CEO):

Wefailedtoregainleadershipinthegenericbusinessandbasicallywedon'twanttosayanythingwhichisnotappropriateonHospira.WeappreciateHospiraasacompetitor,butwebelievethatwecanbuildbasicallythefranchise,injectablefranchise,inanorganicmannerbasedoncapability,infrastructurethatwehavein-house.Wedon'tneedtoinvestinHospira.Wedidn'tneedtoinvestinHospirainordertoclaimforleadingpositioninthatspace.


Andmaybejustonefollow-upthere,Erez.YouguyshavedoneprettywellwithGranixalready.WhatareyourexpectationsintermsofmarketsharewiththatproducthereintheUS?


Actually,sinceweareover15%now,actuallyapproaching17%,actuallyaswegotoalmost20%withitgoingforward.ItisaniceandinterestinggoodproductandaniceexampleofsynergybetweenthegenericsandspecialtygroupsintheUS.


Okay,great.Thanksverymuch.

Operator:

Therearenofurtherquestionsatthistime.

Erez Vigodman(CEO):

So,thankyouforattendingthecallthismorning.Andforyourreallyactiveparticipation,verygoodquestions.Ilookforwardtocontinuingthedialoguewithyouduring2015.

Operator:

Iwouldliketoadviseallparticipantsforthoseofyouwishingtoreviewthisconference,thereplayfacilitycanbeaccessedbydialingwithintheUKon0-845-245-5205oralternativelyoncountrycode+441452-550000.




Thereservationnumberis66308620.Thankyouforparticipating.Youmaynowalldisconnect.

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