Greetings ladies and gentlemen and welcome to the Teva Pharmaceutical Industries Q1 2006 results conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the full presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Kevin Mannick. Thank you, you may begin. Kevin Mannick, Director Investor Relations. Thank you operator. Good morning and good afternoon everyone. Welcome to Teva’s first quarter 2006 earnings conference call. I hope you all had a chance to review our press release which we issued earlier this morning. A copy of the press release is available on our website at www.tevapharma.com. Additionally, we are conducting a live webcast of this call which is also available on our website. today we are joined by Israel Mackoff, President and CEO, Dan Suskind, CFO, George Barrett, President and CEO, TEVA North America, Bill Marth, President & CEO, Teva USA, and Moshe Manor, Group Vice President, Global Innovative Resources. Israel and Dan will begin by providing an overview of our results. We will then open up the call for a question and answer period. I’d like to remind all of you that we will host a special quarterly luncheon today in New York. For those of you who haven’t received an invitation or have not RSVP’d yet, please call 215-591-3056. if you are unable to join us, we are also conducting a live webcast of the event, which will also be available on our website. Before we proceed with the call I’d like to remind everyone that the safe harbor language contained in today’s press release also pertains to the this conference call and the webcast. I would now like to turn the call over to Israel Mackoff, our President and CEO.

Thank you Kevin and thank you everyone for joining us as we announce the results for the first quarter of 2006. this is the first time we are reporting both results for Teva and Ivax combined. Please note though, that Ivax numbers are included for the last two months of the quarter only. As you might expect, this quarter’s financial results include a number of write-offs and charges related to the acquisition. Dan is going to take you through these items steps by step. What I would like to do is underline our operational results independent of these items, which I believe (inaudible) our ongoing business. Setting aside the R&D write off of approximately $1.25 billion and the inventory step up of nearly $64 million, the results of our operations on an adjusted basis would be as follows: We achieved sales of $1.672 billion, gross profit margins of 47.1%, operating profit of $369 million and net profit of $286 million. Sales for Teva, including Ivax, were strong in Latin America, Central and Eastern Europe and Israel and moderately strong in Europe and the US. There were no significant new launches in the US or Europe for either Teva or Ivax in Q1. Our results in these markets were therefore similar to other periods in which we did not have major launches to compensate for natural price erosion, in general, and specifically on products launched in previous quarters. In the US, Ivax lost the distribution rights for several authorized generics, as a result of the acquisition. As we anticipated, the loss of sales of these large volume products, when combined with the relatively small loss in net sales from the products we had to (inaudible) as a requirement of the acquisition, amounted to a decline in 2005 base sales, exceeding $200…

Thank you very much Israel and good day to all of our friends in whatever time zone you are. I hope you have had a chance to review the figures we released this morning. If you have, you will have seen that they are more complex than usual, due to the Ivax acquisition and the first time consolidation. This quarter, we have recorded acquisition related charges amounting to $1.29 billion after tax. Excluding these charges, our adjusted net income reached $286 million, representing 17% on sales with EPS of $0.37. When we speak of adjusted results this quarter, we are reserving to do all the figures before the acquisition write offs. You can view the reconciliation between the reported GAAP and net income and EPS to these adjusted numbers in appendix one of our press release, which is available on our website. The acquisition charges recorded in Q1 resulted mainly from the purchase price allocation (inaudible) related to the acquisition of Ivax and include $1.238 billion of in-process R&D and $54 million pre-tax or $45 million after tax of a step up in inventories that increases the quarterly cost of goods sold by this amount. This step up of inventory represents about 2/3 of the total step up created through the acquisition of Ivax. The balance of $32 million was included in the cost of goods sold in Q2 and should be excluded from the analysis of most quarters. In addition, we recorded additional charges of $3 million that relate to the restructuring of Teva’s operations (inaudible) the Ivax acquisition. As you know, restructuring costs, as long as they relate to Ivax operations are recorded under the purchase price allocation. The restructuring costs that relate to Teva go into a separate line item in the GAAP P&L and are deducted…

Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate you’re slotted in the question cue. You may press star 2 if you would like to remove your question from the cue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. The first question is from Dimi Tomsulis, with UBS. Dimi Tomsulis. Good morning, just a few questions. Israel, you made some comments about your ’07 growth really looking toward more of the international whether the European or Latin American type markets; can you give us a little more color on that? Is it generic? Is it brands? Can you give us a little bit of strategy around the respiratory brands and how you intend to promote those? And then two questions maybe for George. George, any color or expectation around when you might hear from the FDA with respect to Vilcor and can you comment at all on the Privostatin pricing environment? Israel Mackoff. Thank you very much for your question. What I said is the relative contribution of the other territories which include Europe and Latin America and other territories will be relatively higher in 2007. But we are still going to have growth both in the US and in Europe. The markets there are branded generic markets, mostly branded generic markets. We are in many of these markets we are now in a leadership position. That means one of the three leading companies in most of these markets. We are now supporting these markets with our global capabilities, that means in…

The next question is from Elliott Wilbur with CIBC World Markets. Elliott Wilbur. Thanks, good morning to everyone. My first question has to do with respect to the Ivax topline contribution in the first quarter. I understand the impact from the disposition of the authorized generics was probably larger than most of us had originally anticipated. Again, maybe you could remind us of what the full year ’05 sales for Ivax were. But even considering that, it looks like the contribution was lighter than most people had modeled. I was just wondering if you guys could make some commentary on the relative level of wholesaler inventory, with respect to the acquired Ivax business vs. what you guys are normally accustomed to having in the channel; and if there’s any significant differences there. And I have a follow up question as well. Israel Mackoff. I would say that first we have to remember that the numbers are global numbers; it’s not just US numbers. And believe you me that you don’t know the wholesalers inventory in countries in South America or in countries outside of the US; we don’t get these numbers. I would say that in the US, both in the US and in Europe, the situation of Ivax was very similar to our situation. Both of us did not have any significant launch. When I say that we didn’t have any significant launch, we haven’t had any launch during this quarter of new products. And, therefore, I guess that the (inaudible) of the Ivax generics and the Teva generics in these two regions reflect the normal sales expansion on the one hand and the normal price erosion on the other hand. Elliott Wilbur. Okay. Thank you. Then I wanted to ask a question with respect o Copaxone as well.…

Okay. Thank you.

Our next question comes from Andrew Foreman with W.R. Hambrandt. Andrew Foreman. Good morning. On the $200 million in synergies, our rough estimate suggests that (inaudible) operating margin and 25% operating margins. First question, is that the case? two, drilling down on the Latin America integration, can you go over synergies and the duplication and what savings you can get? Give us some sense of the (inaudible)? We’re trying to understand what is the growth time? Give us a sense of the competitive landscape, Israel, vis-à-vis the US, in terms of the number of competitors, what the pricing dynamics are, etc. are prices eroding, as they are in the Us, or are they more stable? Thank you. George Barrett. There are a couple of questions in there and one was Latin America. Can we just go backward? Can you restate the US part one more time? Andrew Foreman. Well, I think there’s some confusion about international generics and the US. And I’m trying to understand from your perspective, having acquired Ivax, what have you learned about the competitive landscape in terms of pricing? How many competitors do you see and what are the synergies in terms of savings in Latin America and the context of the $200 million? The big picture question for Dan is, is a 25% operating margin the effective goal for 2007? Israel Mackoff. I would say that the competitive landscape is different in all the branded generic markets. What you see in the US is of course you have the upside of being the first to launch a product and then you have sometimes a very steep price erosion until the price is stable. In the (inaudible) markets, this is different and you don’t…the launch is normally, once you launch you don’t get all the major…

And I would appreciate if in the future everyone will refrain to one question, please.

The next question comes from Richard Silver with Lehman Brothers. Richard Silver. Can you elaborate a little bit on the Zocor exclusivity assumption that $250-$300 million revenue estimate? Is that probability weighted at all? It wouldn’t make sense that it would be because that, obviously, is the amount that you would assume if you have it. But can you give us some sense of what kind of assumptions you’re making on that number? And then just also related to Zocor, do you expect the FDA to comment on exclusivity before final approval or will you just expect the FDA to confirm the final approval and then you know whether you’ll have exclusivity?

Rich, it’s George. Let me let Bill Marth speak a little bit about the statin and then I’ll jump in on your second question.

Hey Rich, I just wanted to mention that, first of all, it’s a cautious assumption, number one. And the second part of that is to make sure you understand that it was incremental, when Israel mentioned the $250-$300 to what was in the base. We had always assumed we would be a pretty good player in Zimstaten. As it relates to the FDA commenting, it’s not clear. We have precedent where they have commented as to whether or not they will or will not appeal. I’m not sure that necessarily obligates them to do so again. So, at this point we’re just doing what you’re doing, staying tuned, preparing. But we cannot be assured that they will in fact make a public comment on this.

And I assume that you’re not having dialog with them? It’s just sitting and waiting for them?

Yeah. We’re waiting.

Okay. And just Bill, I’m sorry but when you say cautious, if you get the exclusivity, what’s part of the cautiousness there? Just pricing?

There’s a lot of dynamics there that we can’t really speak to at this point, Rich. Growth would be one of them. So we need to, again, we remain very cautious at this point in time.

Our next question comes from David Woodburne with Prudential Equity Group.

I think this is a relatively quick one. I know you’re not giving guidance for quarterly earnings throughout the year, but with two very large drugs going generic in the last two weeks and (inaudible) in there as well, should we think of Q3 and Q4 as being significantly larger than Q2? Or, how much can you shift in the last 2 weeks of June? And would Q2 actually be one of the bigger quarters of the year?

One of the (inaudible) is not going to be in Q2 because we are closing the quarter before the end of June, a few days before the end of June. So it’s going to be a Q3 launch and if we launch Simatapin in the last days of June just before the close of the month, then of course it’s going to effect Q2 and make Q2 a very good quarter. Otherwise, the Q2 and Q4 will be very, very good quarters and Q2, if we look at any of these two launches, will be just a normal quarter with very few launches. George Barrett. Just again to remind you this is totally timing sensitive. Because really you’re talking about a 3-4 day swing at the end of Q2. So, one or two days differential could mean the difference between it essentially shifting between Q2 and Q3. We’ll just have to see how the timing plays out and Israel, I think, captured most of it.

The next question comes from Randall Fenicki with Goldman Sachs.

Thanks for the question. Just on the synergy target. Can you just clarify is the $100 million in synergy, is that a full year or is that annualized by Q4? And has that forecast changed at all and maybe more broadly, now that you’ve had some time with Ivax, how has your view of the synergy opportunities changed from time when you initially announced the deal to where we are today? Thanks.

First of all, the $100 million is full year. And of course when you make your forecast before you acquire a company, you have to take the reservation to make a responsible estimate. The more we learned, the (inaudible) and of course we will learn even further during the next months and we see more opportunities and the forecast of the synergies and of course a larger part will come in 2007 because it takes time to realize the synergies. The run rate, at the end of this year, will be higher than $100 million.

Great. So it feels like you could have upside to the current targets right now as you move through the year?

Maybe. Look, in all our forecasts we will have an upside. I heard before the question about Simvastatin. We don’t even want to talk about the upside in Simvastatin because it’s huge. We don’t discuss it. There will be upsides but we are trying to give you what we call a realistic estimate, which are risk adjusted in every respect. Sometimes the adjustment is off and sometimes we have upside and that’s it.

Our next question comes from David Marrish with Banc of America Securities.

You mention the results don’t include any launches in the quarter, but we also had a few pretty big things that weren’t in the year ago quarter like Allegra and Zithromax and Oxycontin, so can you provide the sales of maybe Allegra and Zithromax. Then separate from that, it appears that you backed out API and Copaxone and Ivax, or actually just Ivax and Copaxone and that Teva generics aren’t growing. Is that the case? And what’s happening with the operating margins for that business? Probably the biggest question is, what’s going on in the generics business?

David, hi it’s George. The US generics business is actually doing very well, as was mentioned by Dan and Israel, where the comp, depending on launches and elimination of exclusivities and therefore the associated reduction in price…but our prescription growth looks good, our margins look good, we are certainly seeing, as we always remind you, very competitive characteristics in the market. That has not changed. It remains a robustly competitive market but we really feel good about where our US generics business is and we’re going to have these episodic periods where one quarter against another we’re going to look less exciting, because of the changes in exclusivity. But when you look at the underlying characteristics, prescription growth, positioning with key customers, generally the margin of the bulk of our products, we feel good about the business.

Nothing didn’t feel good. George, what’s the organic growth? Israel talked about doubling sales over four or five years. First, does that include acquisitions? And secondly, over that period of time, excluding some of the boldness of the exclusivity, what’s the organic growth rate, normalized, for the generics business?

David, I don’t understand what is zero percent. If this was normalized growth then Teva would have been about a $200 million business in US generics. This is was probably the sales of 10 years ago. We have continued to grow by new launches and it’s moderated by the launches. So if you take a quarter without new launches, what you have is only erosion. If you say you have zero sales of new launches, then only erosion and expansion of sales of the current products to new customers. And remember we are expanding the sales we are serving more customers, we’re increasing the volume. We have increased sales of TRX, we sold in the first quarter two or three times higher than our next competitor. So, the erosion is part of our life. Now the erosion of products which are going out of exclusivity is a very, very substantial in the first few weeks or first few days after exclusivity is going to expire and you know it.

Dave, again I just want to remind you that when you ask about the underlying business, Israel is right. The underlying business contains and is critical to our business model a flow of new products. It would be like saying let’s see what General Motors’ business is like if you just take out the car part.

If you take out the acquisition part, what is the sales growth expectation with acquisition?

We’re growing organically as a generics business in the US and we would have done so without and acquisition. 2006 was going to look like a wonderful year under any circumstances and it will look particularly wonderful this year with the addition of Ivax.

David, I would like to say something about acquisition. In the last 10 years, Teva acquired one company on the average every year. And this is part of our business. We are living in an industry which is going through consolidation and we are leaders in this consolidation. And, if you look at the result of these acquisitions, our compounded growth in the last 10 years on the topline was 23%. And our compounded growth on the bottom line in the last 10 years was 29%. That means that not only did we make an acquisition every year and each acquisition is a burden on your financials, always an immediate burden on your financials, we were able to generate and to grow the profit line past the topline. So acquisition is part of our business model.

Thank you.

Our next question comes from Michael Tong with Wachovia Securities.

Hi, good morning. Just following along the lines of cost synergy, do you have right now enough visibility to tell us where the cost synergy is coming from? Have you allocated a cost of goods, R&D and SG&A?

Actually it’s divided under all these three items. We expect that if you look at let’s say the end of 2007, you will see that approximately, you will see that the larger part of the synergies are coming through the cost of goods, this means efficiencies in sourcing, etc. and you will see that the order of magnitude of savings both in R&D and SG&A are very comparable.

Thank you.

We’ll take two more questions.

The next question comes Rich Watson with William Blair and Company.

Good morning, thanks. Real quick, can Dan just confirm the full year tax rate for us and also, now that you’re a few months into the Ivax acquisition, just kind of thinking back over Teva’s history, it seems like your acquisitions have fallen into broadly one of two buckets. Broken companies that you maybe pay less than a premium price for and then fix and extract synergies and all that sort of thing, vis-à-vis premium prices paid for premium organizations such as Seecor. Where does Ivax, three months into the acquisition, fall on that continuum? Thanks.

I would say that Ivax falls in the category of all our other acquisitions. I can tell you that for each acquisition, we paid a premium. If it was a broken company, we paid the premium of a broken company. You always when you buy, pay a premium. We said always that we will allow dilution only for the first year; and this is a rule of ours that we don’t buy companies that cannot get the acquisition results in the second year. Ivax falls in the better category, which gives us actually (inaudible) during the first year.

Thank you.

Our final question comes from Robert Vante with (inaudible).

Hi it’s Robert Vante. Question 1a, could you give us a sense please on Latin America and just what sort of growth we can be looking for in a couple of years as you feed Teva’s products through Latin America. And question 1b, as I look at your 20F from last year and your currency hedging book, roughly half of your hedges outstanding are Hungarian forint. Now Hungarian forint weakened significantly against other currencies at the end of the first quarter and I would have thought, given that you have a lot of costs in Hungarian forint that you would have incurred a hedging loss. And I was wondering…you mentioned before that you had a hedging gain in the quarter.

Ultimately, our hedging is not only confined to forint, Robert. We are not discussing now the growth rate in each of the countries. We don’t give the growth rate in the US or the growth rate in Europe. We are talking about the company as a whole and we don’t break it into regions and hedgings, etiher. We are doing hedgings partially against the euro, partially against the forint. We also do hedgings on the (inaudible). Altogether, actually it worked out that we made quite a nice gain during Q1. it also depends when you do what. If (inaudible) what that will be. And also, the question is how do you hedge? If you hedge in the right direction. So even if the forint is devalued, maybe the values that you are maintaining make money. Also in which way you went. If you do options or if you do cylinders. So, it’s very, I appreciate that from the outside it is very difficult to calculate for us what the hedging result was, even retrospectively.

Okay. Thank you very much.

Thank you. I would like to turn the floor back over to management for closing comments.

Thanks a lot operator. We’d like to thank everyone for joining us today. As always, we’ll be happy to take additional question offline if you have any. We also hope you’ll join us in person at our luncheon today or listen into the webcast. Operator, if you could please provide the replay information, I’d greatly appreciate it. Thank you.

A replay of this conference will be available until May 17th, 2006. to access the replay dial 877-660-6853. for international dialers, please dial 201-612-7415. use account number 3055 and conference id number 201219. This concludes today’s conference, thank you all for your participation.