Greetings ladies and gentlemen. And welcome to the Teva Pharmaceutical Industries Limited Second Quarter 2007 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Kevin Mannix. Thank you, you may begin.

Thank you Diego. Good morning and good afternoon everyone. Welcome to Teva second quarter 2007 earnings conference call. We hope you’ve 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.tevapharm.com. Additionally, we're conducting a live webcast of this call that is also available on the website. Today we are joined by Shlomo Yanai, President and Chief Executive Officer; Dan Suesskind, Chief Financial Officer; George Barrett, Corporate Executive Vice President of Global Pharmaceutical Markets and President and CEO of Teva North America; Bill Marth President and CEO of Teva U.S.A. and Moshe Manor, Group Vice President of Global Innovative Resources. Shlomo, George and Dan will begin by providing an overview of our results. We'll then open up the call for question-and-answer period. Before we proceed with the call I would like to remind everyone that the Safe Harbor language contained in stoday's press release also pertains to this conference call and webcast. I'd now like to turn the call to over Teva's President and Chief Executive Officer, Shlomo Yanai. Shlomo?

Thank you, Kevin. Welcome everyone and thank you for joining us today as we review Teva's results for second quarter of 2007. I'm delighted to announce that Q2, 07 was an excellent quarter across the board with record breaking sales amounting to approximately $2.4 billion. As I noted last quarter, the company's unprecedented growth in 2006 made it clear that 2007 would be a challenge by comparison. I'm very pleased to say that Teva took on this challenge and met it with great success. Just as I did in the first quarter, sales in the second quarter actually grew, although the comparable quarter of 2006. A significant accomplishment considering the Q2, the Q2, '06 included the launch of Simvastatin and Pravastatin two of the largest launches in the history of U.S. generics. Although, we had forecast single digit growth for 2007, our performance this quarter brings us closer to achieving a double-digit growth rate for the year. Our operating profit in Q2, reached $637 million with net profit of $515 million. And all of this ultimately brings us to EPS of $0.63. These results were driven by excellent performances across each of our business units in key geographies. In U.S. generics, we nearly matched our sales from the extraordinary second quarter of 2006, a major accomplishment. In Western Europe sales grew nearly 13% and international sales were up more than 25%. And we had record-breaking end-market sales of Copaxone, which experienced a 23% increase in global sales. Our results in Q2 demonstrate, once again, the robustness of our unique balanced business model, as contributions for many business units enabled us to surpass our expectations for this quarter. We also saw in Q2, the strengths of global supply system and the capabilities of our R&D operations, legal, and marketing divisions, which…

Thanks Shlomo, and good morning everyone. I'd like to take a few moments to provide a bit more detail on our performance in Q2. As Shlomo mentioned, our Q2 was stronger than we had anticipated, and we got excellent contributions from all markets. Teva U.S.A. our U.S. generic business showed real strength in Q2. Posting numbers, which were very comparable with last year's Q2 results. Considering that last year's Q2 included the exclusive launches of Simvastatin and Pravastatin and finasteride is quite and extraordinary accomplishment. And speaks to the health and resourcefulness of this business and our people, as well as, to the strength and replenishment capabilities of our pipeline. Teva U.S.A. launched 19 products in the first half of 2007. And our pipeline of products waiting at the approval includes the 153 products representing $90 billion in annual sales. 80 of those applications are paragraph four’s and a full 50% of those paragraph four’s are products where we believe that we are first to file, and the brand value of those files is about $37 billion. Our prescription base is expanding with annual growth of over 40 million prescriptions when compared to the comparable prior 12 month period. Price erosion on our U.S. generic base business appears to be stable with erosion rates comparable to rates we’ve seen in most recent quarters at below 10%. On the product side, the largest contribution came from our exclusive launch of generic Lotrel, which we launched somewhat early than anticipated. This has been a very successful launch with generic penetration at over 80% and our market share in excess of 90%. In addition, we continue to get strong contribution from Oxycodone, which benefited from the exit of several players to the market, and some effects of Phenadine, which has been void by…

Thank you, George. And good day to all our friends through on the world. We appreciate you taking your time to share with us our pride in reporting this excellent quarter. George gave an overview of our various business, activities. And I'll describe how these are translated into figures. Before I describe the quarter's results in detail, I would like to point out that my comparisons to '06 will be based on the as adjusted figures of '06. In other words on our results for 2006 after factoring our charges relating mainly to the IVAX acquisition and impairment of assets. One more general comment before we delve into the figures, in this quarter as well as in the next quarter we are going to be making comparisons against very strong quarters, usually characterized as tough comparisons. And now to the financial highlights of the second quarter. Second quarter of '07 net sales were up 10% to $2.4 billion compared to the second quarter of '06. Net income was $515 million and adjusted EPS was $0.63. We again generated very significant cash flow operations amounting to $437 million for the quarter with free cash flow amounting to $256 million in the quarter. In the first half of '07, we generated more than $0.5 billion of free cash flow increasing our cash and other liquid assets to an all time high of $3.1 billion. Our as adjusted numbers for the second quarter of '06 were higher than our GAAP results by $31 million on the gross profit level due to the step-up of IVAX inventory. This step-up, together with some other identified items, had a $52 million impact on bottom line resulting in a $0.07 higher EPS than reported GAAP figures in the second quarter of '06. This is a quarter in…

Thank you, Don. As we had entered the second half of the year, I remain confident and optimistic about our prospect as all key aspects of our business are on track and performing well. As you had heard today, we had originally envisioned a slower start to 2007 with momentum building over the course of the year. But what we actually experienced in the second quarter were overall very strong results. Based on our strong first half and the opportunities, we see in the second half of the year we now feel even more confident that our full year EPS will reach the higher end of the new guidance of 220 to 230 that we announced in May. Thank you all and we will now be very happy to take care of your questions.

(Operator Instructions) Our first question comes from David Buck with Buckingham Research Group. Please state your question.

Yes. Thanks. Just a couple on U.S. generics business for George, can you talk about how the pricing outlook maybe changing? You mentioned the base business declines were sort of inline, but can you talk a little bit about how consolidation and some of the discounting generic programs like the Wal-Mart and Kmart might be affecting pricing. And can you talk a little bit about the outlook for Oxycodone ER, whether or not you're expecting any ability to stay on the market beyond this year and maybe the outlook for generic Fosamax flexibility into next year? Thanks.

Hi, David, yeah. Well I think as I mentioned, the base erosion rate has been relatively stable now, probably for nine months, 12 months. We're not seeing any particular sign at the moment that that will change. You mentioned some of the market forces that have been occurring with some of the big moves in the retail trade. That is again, part of our normal day-to-day life and we're certainly always working very tightly with those large market makers. But at this point, I don't think I show you to any change in direction. It's always difficult for us to predict pricing and we try generally to away from it. But the pattern that see right now is one that relatively stable. As it relates to the Oxycodone, I think we had said, and I don't think I'd change it at this point, that we expect to be in the market at least to January. At this point there's no other data that would make me change that.

And then on Fosamax, any update there just in terms of expectations?

I'm sorry in terms of what?

In terms of generic Fosamax are you still expecting to have accessivity, shared accessivity on both strengths?

Yes, we do.

Okay. Thank you.

Our next question comes from Rich Silver with Lehman Brothers. Please state your question.

Couple questions, first for Dan on the SG&A outlook, can you give some sense of the base that we should be using? I understand that the third party payments were certainly some part of the number and what we should expect going forward, and I have a couple other questions.

I think we should use that number this quarter as a starting point, but from there, descending gradually and creating some efficient, more efficiencies, although those extraordinary numbers if you can call them, which are actually not the ordinary SG&A may disturb this curve. But generally speaking, we should be sent from this level, certainly not to the 15, 16% we have seen in the past before we acquired Ivax, because of different business mix, but certainly getting lower than that.

So, to give sense of the magnitude of those payments without explicitly telling us what they are, can we assume that they should come down commensurate with the sales of those generic products where you do have, third party payments?

Yeah, they should, but they maybe replaced by others.

Okay. And then, maybe George, if you can give us some details on, in terms of Germany and you mentioned that the next tender is coming up and can you give us some sense of the magnitude of that relative to what has already been accomplished on the tender side?

Yeah, Hi Rich. What I can tell you about the tender, and again, we're expecting at any day, it may come in today in fact, is a group of molecules, 83 is the plan. That is a larger group. This is an expanding program. Now I would, certainly should add, we don't have every one of those 83 products in our product line. So, we'll participate in some segment of that opportunity, but I think the opportunity is expanding. We’ve done well in our work in the first stages of this program. And we're feeling very good that this is a unique opportunity for us to expand our presence in Germany and look forward to getting that data and then we'll participate at that time that comes in.

And just on the respiratory business, global number, would you say that the U.S. number is at this point, still north of 60 or 70% of that total number?

Yeah.

Okay, thanks very much.

Okay.

Our next question comes from Cory Davis with Natexis Bleichroeder. Please state your question.

Thanks very much. I think following on Shlomo's last comments there, given the strong Q2 and your comments about the upper end of the range of guidance for this year and in the context year ongoing strategic review, to give you more or less comfort in the numbers you've thrown out before for 2008 and 2009?

Well, we are not changing any of what we said I think last February. The number we provided at that time is still valid.

And I guess, I don't know who's best to answer this one, but it seems like a lot of the paragraph 4 litigation cases are now going beyond the 30 month stays and would you say that's working in your favor by forcing the brand companies to request more preliminary injunction and perhaps give your more settlement negotiation leverage and I'm thinking mostly about the imminent protonics decision?

Yes. Corey, again, without divulging too much about our legal strategies, couple of things are worth noting. You certainly are seeing as companies approach as end of 30-month stays you're seeing some examples of the panholder moving forward with the preliminary injunction. We've seen that in that recently. We’ve seen that was Lotral and so, what you're describing is in fact something of a pattern that we're seeing. There is often some tremendous value in our getting a chance to engage in this litigation process and get good insights from the court in how they see the case. I think you’re describing a phenomenon on that, that certainly I think is an ongoing part of our system.

George, well I got you last question at the risk of asking give a forward-looking projection, do you think your share of the HFA Albudrol market is going to go upwards and more function of just continuing to gain more from the remaining CFC Albudrol?

There are a couple moving parts here Corey. One thing that we’ve done, that I think will help us, is that we have expanded our productive capacities. I think we have a little more wiggle room on the share side. Having said that, other players are seeing opportunity as well and so I think that we'll begin to see some shifting in the marketplace as other players begin to look to grab a portion of that business that's moving away from CFC. So I think there's several dynamics at work. One is that, we've been seeing some CFC reentering the market during this past few months. We'll probably see again, some intermittent participation of the CFC product, but I think over the long-haul, even the midterm, I think we'll see that disappear. We'll get our significant share there, that we’re better positioned in terms of capacity to do so, but I fully expect that there are some other players that will enter. As I said you before the likelihood that we’ll retain this exact share out phase relatively low, there'll probably be some moderation of share as we go forward.

Great, thanks very much.

Our next question comes from Elliot Wilbur with CIBC World Markets. Please state your question.

Thank you. Good morning or good afternoon. George, I was wondering if you could perhaps provide a little bit more color on a couple of the key based products, specifically Lotrel and Oxycodone. I guess, given some of the incumbencies that are out there on these particular products. I mean, how should we think about those progressing over the balance of the year relative to the run rate that we're at today, especially Lotrel. I mean, do you think, the recent or ex-volumes that we see are sustainable through year-end? Should we expect those to drift downward? And on Oxy, I mean, it sounds like you can stay in the market till the end of ’07 or perhaps early ’08. But how do we think about the volume trends as we sort of approach that date? Are we going to be effectively at zero when we hit that date or is there some sort of transition period at which you just basically stop shipping inventory and then it bleeds out after those dates?

Okay, Elliot, let me do this. I think probably, Bill Marth is here. So let Bill speak to both the Lotrel and Oxy story and I will turn it over to Bill.

Yes, Elliot just a couple of things. On the Lotrel right now, we have approximately 85% of the Lotrel market has been converted to the generic Effexor and Albuteral. And we currently have about 92% of that market. Now that's a, that's a really, really large percentage of the market and, obviously Sandoz (ph) will be pushing more into that market over the coming months. So we expected to sort out a little bit we still think we’ll hold a very good share, but we expect Sandoz we’ll do will be effective as they move into the market some. And the second question with respect to Oxycodone, Oxycodone has been an interesting story as you’d see our share has been pushing up now to about 70% of the market, as the pipeline drains from those products that were left over from Watson and also from Endo and a little bit from the impact flash Dava. We should be -- we have the ability to stay in the market through January and I might add that there are some other triggering events within our structure of our settlement that may allow us to even be in the market beyond that. But at this point in time we don’t expect that. We'll be selling product till approximately January. But you will likely see product and TRX is showing up in the market beyond that period, as you’ll see today that Watson and Dava and Endos prescription still showing up.

Okay. I guess the message be always that in terms of that we look at your access, we wouldn't see the decline until after your determination date?

That would be correct depending on the triggers that we hit.

Okay fair and just -- I just have one follow-up question for Shlomo as well. If you mentioned just doing a commentary I apologize I missed it but in sort of looking at your endorsement of the high end of the EPS guidance for your 230, and thinking about the second half of the year would suggest, roughly an even split between the two quarters. And I'm just wondering if that’s how we should be thinking about how the balance of the year is going to shake out in terms of the distribution earnings roughly even between the third and fourth quarter?

Well. as for the time being, we maintain our guidance exactly as I said it. As you all know, even that if we are confident and optimistic, there are still six months to go, and there are some moving parts, as well as, opportunities. So, I believe that what you should, consider right now as the guidance for the rest of the year, and definitely we will have a break through, we will update you. But it is not our regular practice to, update every quarter our guidance.

Our next question comes from Mark Goodman with Credit Suisse. Please state your question.

I would appreciate if every participate would limit themselves to one question please.

Okay. Well I guess, importantly for Oxycodone, do you have enough TEA quota to sell into this market appropriately, given what the prescription share are warranting here.

Mark again, I'll let Bill touch on that.

Yeah Mark, we feel very good about the quota we have at this point in time. And we have petitioned for a little bit more and we don't have any expectation that we'll have any issues of receiving that quota.

And the pricing of that market, is it stable, going up?

It's stable at this point in time.

And just quickly on HFA capacity, are you increasing that as well, so you'll have enough to warrant with the prescriptions you are going to get?

Yeah Mark, we’ve done a good job our office people have done a good job in expanding our productivity capacity. So, we feel like we're well positioned there to handle any HFA opportunities.

Our next question is from Ken Cacciatore with Cowen & Company. Please state your question.

My question is on Lotrel. It's doing well this quarter. Can you discuss the sustainability of this product. I may be wrong but I believe Novardis in our call talked about capturing may be 30% share. Can you discuss the pricing environment, and maybe when your expectations are for additional competition?

Let me tell you -- address that..

Yes sir go ahead

Yeah this is going let me address that in sequence. You're right, as I’ve mentioned our share right now is about 92%, and its 85% of the total market. So, we feel good about that, Ken. And then the second piece of that is, what will Sandoz do? Well, I don’t think that we should speculate particularly here on Sandoz other than the fact that they are good competitor. And we feel that they're certainly going to want to get more share. We see price very stable at this point in time, and we'll just react as they enter the market. With respect to competition, we know that, there's a bolus of those dates, that 30 month dates for other competitors that are out in 2009. Although there may be one that’s in late 2008. But again, we can't always know everyone's 30 month date. I think you're best to ask them.

And Ken, just to follow-up, as the 30 month date could be -- could be affected in the event of ruling of invalidity. So, that's just always want to keep in mind.

Our next question comes from Randall from Stanicky with Goldman Sachs. Please state your question.

Just a question for Dan, with now north of $3 billion in cash, limited buyback activity in the latest quarter, and with Merck KGA and now behind us. Can you just talk about uses of cash particularly as you look at M&A environment and maybe how you're thinking about adding assets to your current base? Thanks.

So far, so far we are keeping these reserves for possible going forward M&A. And we'll see how that develops.

Has your view of interest in assets in terms of geography or deal size changed at all as you look where you want to add in, types of acquisitions?

I think that geographically-wise we widen the spectrum and we're looking in more geographies, I guess that's it.

Okay, thank you.

Our next question comes from Adam Green with J.P. Morgan. Please state your question.

Thanks, Good morning. Question for George on Wellbutrin XL. Could you comment on what you're seeing in the marketplace, some of the others players fully entered the market, I believe Watson only came in a few weeks ago and still not fully out there? And also if you could comment on the pricing environment pricing for that product as well?

Adam, I'll let Bill comment on that.

Okay. Thanks.

Yeah, Adam, we've seen Watson enter the market and we've seen and China enter the market. It's been an orderly transition. It's been a good orderly transition. It's hard to say much more than that.

Our next question comes from Ricky Goldwasser with UBS. Please state your question.

Good morning. One follow-up an one question, regarding to guidance, Dan with eight months into the year, the trends that you are seeing, are you guys expecting EPS for the third and fourth quarter to be, down or flat sequentially, compared to the second quarter results that you reported today? And then on, on the market share, I know at last quarter you talked a lot about how you've seen your overall market share trending up. On average, what is the market share that you are seeing now for the key products?

I will let our U.S. colleagues to answer on market share regarding the EPS as, Shlomo indicated before. We limit our sales to a, more refined guidance for this year as we have mentioned and we are not breaking it down between the quarters. One of the reasons is that, we have so many moving thoughts, which we don't, which we can't locate exactly by quarters, so we'd rather limit it to the second half of the year.

And Ricky, as it relates to the market share, of course we have got many markets. It's hard to know what you're referring to. I'll give you a couple of quick points of reference. In the U.S., our generic business today is about 11.7% of the total U.S. market in Scripps, which is up sequentially. That's roughly between 19%, high 19% and 20% of the generic market. I would say in the product in which we compete, again, we don't compete on every product we're significantly above 30%. Obviously in other markets, we, vary tremendously. We got strong market share and particularly in places like the U.K. and Netherlands and Venezuela and smaller market share in places like Germany. But in general, I'd say our market share is increasing and in important markets like France where we've had increasing share and Hungary, we've got an increasing share. So I'd say science in terms of overall market share throughout the global business are pretty strong.

And if you focus on the U.S. market kind of in terms of this market share as offsetting some of the price reductions, what are the trends you're seeing there?

Well, as I mentioned, the price erosion at this point is pretty calculatable, we're getting good growth on our base of products. I think our production issues around the globe come out of a pretty tough year in 06. I think our prospects were increased growth or base of products look good. We really do believe that this is an important part of what we do that having a significant presence with all of the major market makers is very much part of our value proposition and we're very committed to growing our share.

Our next question comes from Tim Chang with FTN Midwest Securities. Please state your question.

Thanks. I had a question about the HFA beclomethasone product. When do you plan on launching this product in Europe? What sort of potential market are you going after here?

Tim, we're actually selling that product. The dynamic is quite different. You're really looking at a product of CFC converting to the very same product on an HFA formulation. In Europe the dynamic is much more complex, on its beclomethasone because you have got movement not just from have CFC products, HFA, but across the steroid market. It's a little bit more of a complex story, but we are selling today. But the distribution of where those switches are going is quite different.

Is there any chance that you'd bring that over to the U.S., as well?

That particular product in the U.S. is not likely to be sold here, but we are certainly expanding our pipeline of products for the U.S., and inhaled cortocosteroids market is one that's targeted.

Okay, great. Thanks.

Our next question comes from Dave Steinberg with Deutsche Bank. Please state your question.

Thanks. With regards to your albuterol HFA, it showed colors in discounting initially. As your conversion crosses over 50%, will there be more or less discounting going forward? And I think you mentioned there, maybe you wanted two more entrance, how many entrance do you expect going forward?

Yeah, David. Today, we compete, of course, alongside of Shearing and with GSK and with Sepracor on HFA-based albuterol products in the SABA Short-acting beta agonist market. There are -- in the CFC, we have, again Shearing to work which appears to be winding down and the Armstrong business. So, those are the, sort of, major players in the SABA market. I would say today the pricing is relatively stable. Again, always difficult to predict there's an opportunity that players are looking at and the question is what will be the most effective mechanism of competition in going to that market, the combination of promotional and pricing, and it's hard to predict that. But today, I would say that the pricing environment is relatively stable, but we still have time ahead of us.

Okay. And George, just a quick follow-up. Your A&D has been on file for quite some time, any light at the end of the tunnel, any thoughts on FDA action in the next year or so?

David, I wish I could give you some very specific point of reference here, but I can't. I don't know that there's anything new to update. We're still waiting for the FDA to draw conclusions about how it wants us to move forward in this product.

Thanks.

As we are approaching 9:30, we will take two more questions.

Our next question comes from Gregory Gilbert with Merrill Lynch. Please state your question.

Thanks. George, to clarify that last answer to the question. You don't expect any other HFA players in the foreseeable future, do you in Albuterol? You had mentioned additional entrance earlier.

Yes, Greg. Again, I was talking specifically about our entrance of CFC product, CFC materials. Of course, it is possible that there would be an additional entrant at some point in the HFA category. That's not something that we see right now in front of us, but I certainly wouldn't preclude that possibility.

Great. And my question is for Shlomo. Has the company become any more focused on business development on the brand side since your arrival or would you say that the approach has not changed since your arrival, and that it remains an important component, but of similar size relative to generic and geographic efforts? Thanks.

Well, I don't think that we are changing our approach or our strategy, so to speak. I think that -- thinking on a global expansion, which is part of our growth strategy anyway, will take us more to countries where you see more branded generics. But having said so, bear in mind that some of these countries are right now in transformation of switching to a more close to the U.S. model of generics, even though that they are not yet there. So, you should see this kind as a generic with varieties of business models, which basically are following the same notion of providing lower price, affordable medicine. This is the key issue here and that's why we believe that we can grow in a more rapid pace in those parts of the world based on our experience in generics.

Thank you. Our final question comes from Louis Chen with Morgan Stanley. Please state your question.

Hi. My question is with respect to the KSR ruling, have you re-evaluated any of your patent challenges in light of that, and if so, what are some that might benefit?

Well, Louis, I don't think I would go through specific cases with you, but I think very clearly the KSR ruling has a bearing on the entire patent world, for sure and clearly in Food and Drugs, there's no question that it will have some impact, particularly as it relates to the assessment of obviousness in patent challenges. So, we have been looking very carefully at the case, we've been looking at the case carefully in the context of particular products that we have and filings that we have and pieces of litigations, and there's no question that this is a noteworthy ruling.

Thank you. I will now turn the conference back over to Mr. Kevin Mannix.

Thanks, Diego. On behalf of the Teva team, I'd like to thank everyone for joining us today for our quarterly conference call. As always, if you have any additional questions, we're happy to take them offline. Thanks again. Diego, could you please provide the callback information?

Yes. Thank you. To access a replay of this conference, dialers in the U.S. can dial 877-660-6853. Once again, for U.S. dialers, 877-660-6853. For international dialers, you can dial 201-612-7415. Once again, international dialers, you can access the replay by dialing 201-612-7415. You can use account number 3055 and conference ID number 248467. Once again, account number 3055, conference ID number 248467. This concludes today's conference. Thank you all for your participation. All parties may disconnect now.