Good day, ladies and gentlemen, and welcome to the Q2 Teva Pharmaceutical Industries Ltd. Earnings Conference Call. My name is Ben, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And I would now like to hand the call over to Mr. Kevin Mannix, VP of Investor Relations. Please proceed, sir.

Thank you, operator. Good morning, and good afternoon, everyone. I'm joined today by our President and CEO, Mr. Jeremy Levin; our CFO, Eyal Desheh; Dr. Michael Hayden, President of Global R&D and Chief Scientific Officer; Bill Marth, President and CEO of Teva Americas; Dr. Maurice Chagnaud, Chief Commercial Officer of Teva Europe. Jeremy will begin by providing an overview of the quarter's highlights, followed by Eyal who will then provide additional details on our consolidated financial results. We'll then open the call for a question-and-answer period. Before we start, I’d like to remind you that our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. As a result of foreign currency, translation effects, macroeconomic trends, interruptions in our supply chain and other factors that could cause actual results to differ as discussed in Teva's report on form 20-F and Form 6-K. Also, we are presenting non-GAAP data, which excludes the amortization of purchased intangible assets, costs related to certain regulatory actions, inventory step-up, legal settlements and reserves and impairment and related tax effects. With that, I will now turn the call over to Jeremy. Jeremy, if you would, please?

Thank you, Kevin. Good morning, everyone, and thank you for joining the call today to discuss Teva's second quarter 2012 results. Before we get started, I'd like to take a moment to thank our Israeli shareholders and analysts for their understanding our need to implement a new communication schedule around our earnings announcement. The new time schedule allows us to accommodate a diverse group of Teva shareholders who chose a more effective way of communicating with all our stakeholders. Now let me start by saying that we are pleased with the results from our second quarter. The details of which I will address in a moment. Before I do so, however, I want to refer you to my previous statement in May regarding augmenting and strengthening the Teva management team. In this regard, I would like to say how pleased we are that Dr. Carlo De Notaristefani has joined Teva in a newly created role of President and Chief Executive Officer of Global Operations. Carlo is one of the most distinguished voices in our operations in our industry. During his tenure at Bristol-Myers Squibb, he built an exemplary team, led one of the most successful productivity transformations within the pharmaceutical industry and was instrumental in driving the company's success. As you know, manufacturing and product supply is key to our business and our commitment to our customers and patients. We're extremely pleased to have someone of Carlo' caliber and international expertise to lead Teva's ongoing commitment to bring together efficient, state-of-the-art supply chain techniques with a strong focus on meeting the highest standards across our worldwide operations. In addition, Carlo will continue the development of the superbly talented team that we have at Teva today. This team, that under Carlo's leadership, I am confident will set an example of excellence…

Thank you, Jeremy, and good morning, everyone. The second quarter of 2012 continues a positive trend for Teva. We are reporting today solid growth in key parameters. Compared to the second quarter of 2011, net revenues, non-GAAP operating income and non-GAAP earning per share were up 19%, 27% and 16%, respectively. The main drivers of this growth was the performance of our global branded business, whose sales grew by 37% benefiting from contribution from several medicines, as well as the growth of both Copaxone and Azilect that was coupled with the improvement of our U.S. generic business. Overall, our global generic business grew by a solid 9%. The U.S. generic business continued to improve, demonstrating solid growth compared to the second quarter of 2011. EMEA, Latin America and API also showed organic and profitable growth. Our European generic business declined slightly in local currency terms compared to last year and grew 14% compared to the sequential quarter despite the ongoing macroeconomic conditions in the region. Our other revenues, including OTC, grew by 12%. We also recorded solid cash flow from operation and free cash flow this quarter, which improved compared to Q1 this year. In spite of the negative impact of foreign currencies, our global balance business model, as well as tight expense control in our SG&A, produced successful financial results for the quarter. I would like to touch on 2 issues before I review the first quarter numbers. First, I would like to remind everyone that we are presenting GAAP and non-GAAP results. In our non-GAAP presentation, we have excluded the following items: Amortization of purchased intangible assets totaling $275 million, of which $267 million are included in cost of goods sold and the remaining $8 million in selling and marketing expenses; inventory step-up of $7 million in connection…

Thank you, Eyal, and I appreciate you going through the details. As I've said before, our company is driven by the mandate to answer the unmet needs of patients, exceed our customer expectations and return value to our shareholders. To encourage these values and to optimize the performance of the company, we have created an internal strategic initiative known as Project Spring. This initiative started on May 17, 2012, identifies areas for improvement, creates opportunities, solicits new ideas, implements practical steps and recommendations across all parts of the organization. During the period, we've laid the foundations of key elements of our strategic plans and have galvanized and fully engaged our organization for fruits of this effort will be laid out as a foundation to our strategy. Some of the steps central to our strategy have already been taken including globalizing certain functions, consolidating research and development and recruiting or promoting new management as we announced today. I fully expect that other core changes will occur throughout the remainder of 2012 and over the next several years. And of course, you will be notified of those changes as they occur. Before turning the call back over to the operator for questions, I am pleased to close by letting everybody know that our Investor Day is scheduled for December 11 in New York. At that time, we'll present the 2013 strategic plan for you, and you'll have the opportunity to meet many key executives from across the company. We thank you for joining us today, and we'd like to open the call up for questions.

[Operator Instructions] The first question comes from the line of Ken Cacciatore.

I was just wondering, as many of the calls -- Teva calls that we have, Copaxone was the main feature once again. So I was wondering, as you look at the franchise -- and I had more time to do your analysis, is there anything you believe we in the Street are missing either in terms of BG '12 impact more or less or better retention potentially for GALA and maybe less or more risk from the generic as we -- as September 2015 approaches?

First of all, Copaxone is a terrific medicine. I am pleased -- deeply impressed by what I've had -- what I've seen and [indiscernible] patients [indiscernible] are safety. We have seen tremendous uptick in retention of patients and in the benefit patients. So number one, there was news this quarter, and I believe it was the significant news which bolstered Teva's position as a leader in the field to treat and to sustain patients that have this devastating disease. So I think I can't speak for the entire Street, but clearly, the court victories were substantial. They make it very clear as to where things are going. And they allow us to build and continue to build our franchise in this area. I'll hand over to Bill now, and he will give you a perspective on how this is looking in the United States.

Good morning, Ken, and thanks for the question. I think that many of the things we should say about Copaxone were reflected in Jeremy's statement. Share growth was there, 40.8% of the market. That's great growth in an area -- in a time when people thought that Copaxone would be declining. And a lot of that has to do with some of the things we did early on. We knew competition from Gilenya would be tough early on this year. And we had about 200 reps in the field prior to this year. And so what we did was, in about 150 of them were -- 145 to 150 of them were constantly on Copaxone and the rest on Azilect. We repositioned our sales force this year to put all 200 on Copaxone, added some additional CNEs into the market as well. And that's really helped us. And our share of voice has picked up. We're just a bit behind Gilenya but we're doing very well in that market. As reflected in this quarter, almost 186,000 TRxs. It's huge. The biggest quarter we've ever had. So in this market, you see how we continue to grow with this product. And as Jeremy said, it goes to the years of safety and efficacy of this product that continues. And we have seen Gilenya's share peak back and hit an inflection point back in January, and we're doing very, very well in this market and that cannot be understated. And then I think the last part is we've got great news here with respect to the court decision as well, as well as GALA. We think that we could do very, very well with GALA pushing at a minimum 1/3 of our patients or more -- our research says it can be much higher than that, 2 to 3 times a week because we think it's a very convenient step for the patients. And last but not least, I would mention that not only do we have that date out there, now September of 2015, but you have the regulatory process there. And we still think there's a lot of challenge out there for any "generic competition.”

And just a follow-up, Jeremy, with this win, does it change your view of being more aggressive in terms of acquisitions now that there's more of a definitive protection?

Ken, I don't think the wins is one that one wants to link to any types of transaction. Bottom line is, first of all, let's state the facts. We have a terrific, I repeat, terrific MS franchise. We are very proud of it. We're going to focus on it. Number two, what this does for the corporation as a whole is it bolsters what was confidence and now we have significant confidence in our future. It allows us now to plan for something that we had intended to plan for, and we've planned, we'll execute on, which is a terrific plan to drive the company into the next 5, 6 years, and looking forward very much to that. Transactions, of course, play a role in it. As I've said before, previously, transactions are fully part of an overall strategy. And again, I'll come back to the fact that our MS in neurology franchise is something that we're extremely proud and will be focusing on.

The next question comes from the line of Mr. Elliot Wilbur.

This question is with respect to your performance in your generic business, certainly encouraging to see some signs of improvement. Just hoping maybe just to drill down on the performance a little bit more, specifically I'm thinking about the 14% sequential growth in the business. I'm wondering, before we get ahead of ourselves here, maybe to what extent you think that could have been positively impacted by the inventory reduction measures that have been taking place across the continent, and whether or not that had equivalent impact in the second quarter versus the first or actually is it a positive or a negative?

Elliot, look, I think the way to look at this is that you should understand that across the board, the company is going through business changes. We have implemented a number of different things. It's not just what you have just described in inventory. But let me hand over to Bill to drill for down for you and perhaps, Maurice can do the same in Europe. So, Bill, first of all, you. How about that?

Yes, Elliot, thanks again for the question. But the growth in the U.S. market, of course, is always driven by approvals. And we had -- so far, we've had 12 approvals to date, and it's been a nice stream of approvals. Although the approvals in the second quarter weren't as large. But we do still have -- we still have lingering effects from [indiscernible] citalopram. Modafinil is still going strong. So we have a number -- anyway, on the number of the smaller ones that they are quite good. And even in launches such as Clopidogrel where we captured significant share, although price being very, very low. So the business is doing quite well on the launch side. We're looking for better performance as we move forward on our base business with respect to supply and service. And we're very optimistic there, things are returning to normal there and we're doing very well. So we see -- and a great -- a list of approvals in the back half of the year as many as 20 products worth of about $13 billion of innovator value. And I would just caution on that, we generally get a yield of about half of that. So if you think back to my earlier comments in the year, I talked about 24 products, and we -- for the first half of the year, and we've gotten 12 so far, so it's pretty close. So again, driven by approvals, driven by service level to our customers, so far, we're doing very well.

And Bill, could you just hit on the changes...

Yes, for Europe -- good morning, Elliot. The turmoil in the Eurozone are continuing. And as we mentioned in the previous earning calls, we continue to adopt our approach. Two points here. First, we decide to adjust our organization and go-to-market models in the country impacted by several economic measures as Poland, Hungary or Portugal. In this year where -- and this is a way to keep a healthy and competitive organization. This is a result of a reduction of 5% of our total European commercial workforce. On the other hand, we continue to have a truly pan-European platform with diversified model and we enjoy a strong generated loss for many of our older markets like Switzerland coming from the acquisition of Cephalon with [indiscernible], Sweden and London, also other smaller countries. On the second end, as we are generating [indiscernible] in Europe and other critical markets, we focus on profitable and sustainable growth. Focus on the performance of the launch and no competition at any price, some tender, for example, by registering complexity amortization of the portfolio of the different acquisition, Ratiopharm and [indiscernible] by simplifying our go-to-market model in some country, 3 -- or 2 brands -- there's 2 brands versus 3 or 1 brand versus 1, and also by a strong management of tight process. These are the first to see the profitability that would generate business nearly double. On the top of that, we have also a significant performance in Q2 versus Q1 in terms of launch, as was mentioned before, is a good performance in new launch of Lipitor, atorvastatin, Apothecon, Combisartan. We benefit of the cumulative state of the launch of Q1 and Q2, therefore some product without performance competition. For example in Germany, we regularly outperform competition in triptan on launch [indiscernible] and triptan. And atorvastatin, in France for example, is also a good example of the good launch when we are above our natural market share.

The next question comes from the line of Mr. Marc Goodman.

Just can we continue on Europe a little bit and just talk about some of the key markets there and how you're doing relative to the market and your expectations for any other major austerity measures by governments for the rest of the year?

I think we'll have Maurice handle it again?

Yes. I can speak a little bit more about Germany and Spain. In Germany, market generic sale grew slightly versus the same quarter last year, while our net generic sales were impacted by ongoing destocking activity in the channel. We see some wholesaler are moving to 20 to 10 day of inventory. We expect this traction to command end in Q2. The quarter in Germany was dominated by excellent launch of generics, as I mentioned before, and we outperformed competition. [indiscernible] position with the brand of Ratiopharm and our brand sales increased primarily due to increase in the Cephalon and the absorption of the marketing responsibility for Copaxone and Azilect back from Rumbeck [ph]. In Spain, it's also one of our major country. Both the generics and the brand products sale in Spain grew compared to the second quarter of 2011. Markets for generic pharmaceutical in Spain keep growing, but that's a lower rate than the previous quarter. The impact of the royal decree in November 2011. The Spanish market is heavily influenced by governmental measures aimed to reduce health care spending. And the last amendment of the Spanish legislation was implemented in May 2012, allowing compensation for only the lowest-priced products within certain products group. [indiscernible] is adapting in a faster cure to keep a healthy and competitive organization as well in Spain. We have maintained our position in the Spanish direct market. And on the brand side, it's very important also to mention we launched ZOELY, our new oral contraceptive pill in June after to have launched this product in France, Italy and Belgium during Q1 and Q2. And we've, by the way, a very strong result of the launch of ZOELY in France and Italy. Newer measures are in place also in some country like in France. For example, it's a measure I can call that ready for generics. Now everywhere in France, if a patient who refuse the generics products, you have to pay in advance versus the originator. And since this measure is very interesting because we see an increase of the volume in the last months of the quarter in June.

Next question comes from the line of Randall Stanicky from Canaccord Genuity.

Just a question on Project Spring, I'm not going to ask you specifics, but most people are looking at your strategy update and they're looking at cost rationalization, they're looking at business mix. The one thing that maybe people haven't talked as much about is a potential change in pricing strategy as you think about some of the businesses worldwide. How important is that in your view? And is that something that you think could be an opportunity?

Randall, first of all, let me say Project Spring is exactly as you described. And thank you for not sort of pressing on it, but I will be happy to give you some color. Some of the speculation is absolutely appropriate in the sense that it's talking about the kinds of things that any company should be looking at, which essentially is looking at it -- or structurally looking at our manufacturing footprint, understanding the opportunities, the growth opportunities in the R&D pipeline. And in addition to that, asking ourselves the question, where are other opportunities geographically. With -- and then as you've seen over the last couple of months, seizing the opportunity to change some of our business practices. So all of those were really integral in this. Underpinned, I would say, in a very firm attempt to engage the entire organization in development of something that I believe will excite not only them but also the entire world in all aspect of it. With regard to pricing, it's not -- it's something as part of the business. I just want to point out that we view this as something that we look at not just as a standard. And it's part of the entire process of looking at generics and our branded and understanding how we can satisfy what other markets, and how those markets look at our products. So pricing is not delinked from the other business aspects, it's certainly embedded in all of our thinking.

And just the follow-up for that. As we think about the update -- and having that date is helpful, December 11, because as we think about getting the update on what you plan to implement, how long is it going to take you to fully implement the changes that you're going to describe to us on that day?

Well, first of all, some of these things are already rolling out and have already been implemented. Some of these things are -- these are the gradual, progressive approach we're laying out and articulating what effectively we're doing. So an example of that is -- I know that did doesn't necessarily immediately strike as being crucial to some of the shareholders, but it is central to shareholder value and that's compliance. We have [indiscernible] [Audio Gap] worldwide. Now what does that [indiscernible] [Audio Gap] That's already implemented. There are, in addition, several other items that are already being implemented. Changes for example, which may not be necessarily visible to you but affect the underlying business structure that we have in the bleacher efficiencies. So for example, I think one item would be our IT systems significantly committing to invest and enhance those, that big programs that make a heck of a lot of sense on business perspective. So all of these are rolling out step by step by step and they are being implemented and will -- some of these will, by the time we get to the end of the year, you'll see them. Some of them you're already seeing the impact on our cost structure and profitability. And so I would look at this as an incremental roll out of pieces that all link together and that we'll be able to show you the picture at the end of the year.

The next question comes from the line of Ronny Gal from Bernstein.

I have 2 high level ones. The first one, Jeremy, as one of the big debates in the industry is around the ability of Teva and some of the, let's call, developed world-based companies to compete profitably at the low end of the cost spectrum in generics, as mentioned, the $3 per thousand-type of product. And of course, as you kind of think about Teva going forward over the next 5 years, is this a strategic area you want to be in? And second, I'm not sure if Michael Hayden is on the phone, but if you guys are going through some of the strategic review of the key products you currently have in the pipeline, I was wondering if you can comment about where you are in terms of your thinking, specifically about things like DiaPep277, the oncology portfolio and perhaps Laquinimod now that it's being submitted in Europe?

Ronny, terrific, good questions. So first of all, let's talk about the low cost. So really talking about United States, Canada and Great Britain, and the ability to deliver the full portfolio at that -- you used the word $3 a thousand. I've heard figures $4, I've heard of figures $5. But the fact of the matter is this is a core business for us. So the challenge that we face and must deliver on is the ability to deliver at that pricing structure, a comprehensive high quality, high service commitment to our customers. And we will do that. That's our goal. That's what we're intending to do. We believe that this is an important arena to be in for a couple of reasons. First of all, we have synergies with parts of our manufacturing organization. This is terribly important. We have a footprint which is second to none. We have 74 manufacturing facilities worldwide, 8 of them in Israel, 17 in North America, 26 in Europe and others in Asia and South America. Some of these are devoted specifically to the types of products that you've talked about. And we have now, because we are in -- as you've seen that we're bringing on board Carlo, with the intent to really focus on the ability to deliver some superb cost position and drive and ensure that we make a profitable array of products that we can sell in these markets. And looking to the future, I would anticipate some other markets might go the same way. So we have to be well-prepared for this and we are , and we -- that's embedded in our thinking. I'll flip -- Michael is here, and let me just flip to him for a moment and have him address the second half of your question, if I have answered your first one.

You did, I guess, Jeremy. Follow-on is does that affect [indiscernible] low cost cutbacks, should we expect that it would continue to build large facilities in low-cost location, just the direction of the organization going that way?

I'll let Carlo lay that all out a little later on. He's on board, and he will have his manufacturing strategy as part of our update. You'll see that in its fullness, and I'll allow him to do that. But philosophically, I think I have stated where the company stands.

Well, thank you, Ronny, for that question. We are currently undergoing a very detailed review of every project that's part of the R&D portfolio. DiaPep is part of that, and we will be reporting on the outcome of all of this during our Investor Day in December. But let me just talk about one of the drugs you mentioned in the pipeline, which has been a wonderful and a very pleasant surprise for me is the drug, Laquinimod. As you know, showed very significant results in terms of its ability to reduce disability progression and also brain volume loss. In fact, what's really quite remarkable about this unique asset is that many of its mode of actions and its ability to prevent inflammatory changes are already potentially extrapolateable to some of the more common and more serious disorders for which there really are no therapies. These include some of the neurodegenerative disorders. And so I would say as part of this review, of course, we are very interested at the potential utilization of drugs in our portfolio for other indications which would match the mechanism of action, which then would very suitably match the cores and the pathways perturb in some of these other diseases. So we're looking at this. And I'd say Laquinimod is one of those that has been a wonderful surprise in terms of understanding more deeply as to mechanisms of actions and its potential utility in other diseases.

The next question comes from the line of Jami Rubin.

And, Jeremy, congratulations on the appointment of Carlo. And I'm not to even going to try to pronounce his last name. And I don't know if he's on the call or not. But clearly, a significant opportunity for Teva is to consolidate some of your 74 plants that are spread out all over the world. Can you talk about Carlo's experience at Bristol-Myers, what his experience brings to the table? And give us a sense for the feasibility of bringing that 74 number down substantially and sort of generally, how long it would take? And I recognized that I'm sure you're still early in your planning process, but I view this as a significant higher, maybe you can just give us sort of a little bit more color on what you see Carlo doing.

Jamie, nice to chat with you, and thank you. Let me just, first of all, give you a quick -- some stats on the Bristol-Myers. This is public knowledge, and I'm not referring to anything that is not really well-known. But effectively, for those of you who are not familiar, Carlo's experience in this was to take 28 plants down to 12 and effectively increase capacity significantly in that while not reducing quality, but indeed, enhancing quality. So I view that as a -- as part of the skills that he brings, certainly, it's understanding that. Of course, generics, some portions of our plants are country-specific. Carlo will be looking there to integrate the best practices within those organizations and bring his experience, which is many, many years and many nations of experience, many different cultures, many different networks together, so he can basically handle a significant change in the way that we, as an organization, operate. But you -- so first of all, number one, there's the experience of reducing the numbers of plants and making them more efficient. Number two, he's actually invested significantly in France, and I'm sure many of you know of the work that -- some of you may know the work that he did in biologics up in Devons. Then, I would add to you also that in a company such ours, you have a tremendous talent pool, and the talent pool often is focused on individual plants as -- or regional networks. And in that capacity, Carlo now has the opportunity to really raise the game for all of those. So I would also think about that, not just in a pure manufacturing concepts, but also -- and managerial concepts, also business practice. Carlo ran global procurement, and we currently have procurement which is within this organization, and again, it will be in his organization. So he brings -- remember, I mentioned the concept of globalizing some of our activities. Once you globalize global procurement, which we will do, and it is part of our strategic initiatives, it will end up having a significant impact on the gross margins. So this is part of a holistic look of how a bringing in a senior manager can help, not just growing the people, getting greater efficiency out of the plants but also introducing business practices, which have a direct impact on the profitability of the company.

Next question comes from the line of Mr. Jason Gerberry.

First question is for Bill. Given this quarter, the updates on the Concerta Citizen’s Petition and the Adderall XR competitive front. I just want to get your feel for the sufficiency of the Teva ANDAs to meet the regulatory requirements that are out there.

Yes, Jason, I appreciate the question. Obviously, the approval is there for Watson and the Citizen’s Petition has been answered and we know exactly what the requirements are. I'm not really going to comment too much on our file at this point in time, but we anticipate being in the market one way or the other.

Okay. And maybe if I could just follow up with one other question. Just on the Advair front, I know, in the past, you targeted a 2014 U.S. filing date. I haven't seen any updates in clinical trials that go, but just curious if you feel like that filing date is still achievable, and when we can expect an update on Advair?

Jason, on the Advair, are you referring to our branded program? Or are you referring to a generic strategy because...

My understanding was there was an Advair similar that would be branded.

Okay. Yes. Yes, we are -- probably be better off letting Dr. Hayden address the -- our Advair-like product. But we are getting ready -- we are in Phase II. We're getting ready to -- we wouldn't be entering any Phase IIIs until 2014. And it's the last look that I saw that I don't know if there's any update to that. And I'm going to save a minute here because Dr. Hayden is shaking his head saying, "No." So there's no update beyond that.

Next question comes from the line of Mr. Michael Faerm.

On the European performance, you were down in generics just 1% this quarter. Can you break that out in terms of volume, pricing and inventory destocking contributions?

Yes, thanks, Michael for the question. Effectively, we have a really little decrease in terms of market share and in terms of price. As we have see all over the last year, we have every year a decrease around 4% to 6% in Europe. This year, we saw a difference in some country, like for example, a price decrease in Spain around 10%, but an increase of the volume for example, as I mentioned before in Spain, and also in Italy. So by the way, every year, volume and the new launch compensate the impact of the price. And fortunately for us, we have a very strong performance in Q2 in terms of launch and these additional volumes compensate the price reduction.

And just one other question on expenses. On R&D, are you still tracking towards a 6.8 to 7.2 percentage of sales for the year? And if so, what will drive the significant increase in the second half versus the roughly 6% that you're at this quarter?

Yes, this is Eyal. The answer to your question is yes. As we mentioned earlier on the opening comments, we do plan to ramp up R&D expenses in the second half of the year, as some of our development program will approach milestones and expenses will be accelerated. So, yes, we're very committed to the R&D program, and the costs will go up in the second half.

Next question comes from the line of David Risinger.

First of all, I just wanted to better understand the numbers. So I guess these are really questions for Eyal. In terms of constant currency growth, you've provided that by region, but I was hoping that you could tell us what the constant currency organic growth is in EMEA and Rest of World. I know that for the total company, it was up 7% if you exclude Provigil generics, but I was hoping for that breakdown in EMEA and Rest of World. And then, with respect to the inventory reductions, I was hoping that you could just review and explain the figures in the first quarter. So what were the channel inventory reductions again in the first quarter by geography? And what were inventory reductions in the second quarter, so that we can better understand and calculate the true demand growth?

All right, let me -- thanks for the question. Let me try to take them one by one. There's a lot of details behind it. First on the organic growth and growth with currency impact in the Rest of the World, we don't break EMEA separately. Rest of the World markets include EMEA, Latin America, but also Canada, Israel and Asia, including Japan. But our organic growth for that -- for this region, the real organic growth, bringing into account both the acquisitions at the base of the calculation and foreign exchange, the entire organic growth for this region was 15%, which we believe it was nice. It was driven primarily by EMEA, by Eastern Europe, Russia, Ukraine and the Eastern European regions; by Latin America, which demonstrated very nice goals and very real terms in local currencies; and also Japan. Japan gave us very strong, phenomenal growth because we added Taiyo this quarter as compared to last year. But even if we put Taiyo at the base of the calculation, Japan demonstrated very nice organic growth. So the entire Rest of the World is doing very well. When we only -- look only at the generic part of that, we see that the real growth of the generic part was 9%. But you can assume that the branded part grew faster, especially Copaxone in Eastern Europe and Latin America. Now regarding the majority -- but Bill, you want to comment on that?

Yes, David. Europe -- I really thank you for the question. because I think you're driving at something that maybe people in general are missing. So let's talk about the U.S. for instance. Now on the generic side, we've taken about $100 million worth of inventory out of the channel. And as we talked about that last quarter, that's a significant move that was taken out just last quarter. If you think about the impact of the DSAs on a brand business, at some -- when you look at the numbers, it's somewhat confusing the fact that we have strong organic growth in all of our branded products. And I think I was concerned myself that people would miss this. Copaxone and with 186,000 TRxs and share moved up to 48.8 -- 40.8%, really growing in MS. And we're down about 20 days in the market. We took about 20 days out of the market, and that's a little bit higher than the 30 days we'd like to normally keep there, but there was some data there that we couldn't get from ABC when we were negotiating the DSAs, and so that's why we're a little bit more inventory trailed out there. But that's a significant amount that we took out of the market and we're driving patient growth, and that's really what matters. Treanda is up 10% from prior year and the NSP data shows we're tracking at 21% growth, excellent. Azilect up 15% in units shipped and 11.5% in TRxs. ProAir increased TRxs with 7.7% over the prior year in the SABA market. In the IGS market, Qvar, the TRx growth went from 21.9% to 25.1%. So our TRx volume's up 14.6% versus the prior year. Nuvigil we talked about that, their share is now in the wake market, 48.3%, and the volume increase is 17%. Even though we did have significant price increase there, but the volume increases have -- is 17%. And the total increase of 54% for the year. So when you look at the brands in the U.S., you've got strong organic growth. Even something like Amrix where we finally -- settled -- or we won the patent case back in April 16. We're looking to return that to promotion in the fourth quarter. So we look to reestablish that market. So very strong growth in the brands and generics in the U.S. market.

Next question comes from the line of Greg Gilbert.

A couple for Bill and then a philosophical one for Jeremy. Bill, how big is generic pulmicort in the U.S. either specifically or generally? And when have you factored in a hit from additional competition. And can you confirm that the Neutravel action date is the end of this month? And how is that progressing from a review standpoint?

Well, we don't have any update on Neutravel. The Neutravel date is a -- the response to PDUFA date is in 2012. Here, it's coming up I think -- but I'm not sure if it's exactly in one month, but it's coming up. So it's moving forward, and we won't know until we get a response of course from the agency on Neutravel, okay? The second part of your question with respect to budesonide that is a significant product for us in excess of $400 million. We have not factored any competition into our current guidance, and we can't really say. We don't know what will happen with the court case with respect to Watson. When we find out what's going to happen, when we understand that, we'll be able to factor that into our numbers. So at this point in time, there's very little for us to know other than they'll probably go through the TRO and PI process --

Okay. And, Jeremy, philosophically, are you on board with continuing to raise dividends significantly each year as was the case before you joined? And secondly, are you adding layers of management or streamlining? I realized we probably only seen a fraction of what you've done or are thinking about doing. But I want to understand your philosophy on management complexity and structure as you look out.

Two questions. First of all, I think -- and I'd like to ask you to repeat the second half. But the first half was really about dividend. That's a board decision. I'm going to let the board make that decision if they observe our business performance. With regard -- could you repeat your second question? I want to be clear that I answer it specifically.

Yes, I mean -- sure. I mean the couple of publicly disclosed management announcements there, I believe new layers or new appointments as opposed to swap outs. So I want to understand your philosophy on whether you think Teva needs to be bulked up from a management standpoint in terms of complexity and numbers of management level people or is it the reverse?

No, it's neither. It's really a blend and it depends on which part of the company you're looking at. But at the end of the day, there's only one item that I think the outside world should be looking at and asking the question, "Are we building a first-class management team?" That's all. There are superb managers in the company, and there are superb people that will -- who will change positions and we'll bring in from the outside. We're looking for excellence right across the board. This is a very important company, and it deserves a world-class management team. In different parts of the company will be treated differently subject to their performance and the talent that's present within them.

The next question comes from the line of Mr. David Buck from Buckingham Research.

Just a couple of follow-ups. On the profitability focus in Europe, talk a little bit about the I believe the 5% workforce reduction. Can you talk about whether that was in excess of the Cephalon synergies? And also maybe for Eyal, just to give an overall synergy assessment with Cephalon. And then the housekeeping, what was the order of magnitude of the Copaxone tender in Rest of the World?

Yes. On your first part of the question is around -- maybe for Eyal. We have a different model of generic business in Europe. We know how to manage branded generics business, we know how to manage substitution driver more by debuffering the pharmacists and we know how to manage our source of tender business. What we are looking for is to anticipate the change, to anticipate the different major takes by the authority and to prevent -- and for that, we are more working on a more flexible model in terms of go-to-market model, adapting our organization. And so that, as I mentioned before, we have some change in terms of organization in some country were the very strong measure was taken by the authority. For example in Portugal, in Poland, in Hungary, moving for the branded generic market for a more substitution market. We know exactly what we have to do, what is the key factor of success in the substitution market. And we are going to anticipate in other countries in terms of measure, like for example in Spain. And we are totally on track or so for the integration of the Cephalon acquisition in France. And this helps us to move our profitability up. And the first result is, as I mentioned before, 5% of the reduction of our commercial people in the workforce.

All right. A few you -- David, it's Eyal. A few more clarification to your question. First, impact of foreign exchange on profitability. It's important. We had an $8 million negative impact on our operating profit coming from foreign exchange compared to $236 million impact to the top line. So we do have a natural hedge within the structure of our currencies. But it is moving, and there are a lot of moving parts. They're hard to predict. It could have an impact in the future, but definitely the bottom line in fact is less than top. You asked about Copaxone tenders. We do participate in tenders in many of the small countries outside of Europe and U.S.. Russia is the main one, which we won in tenders. These are -- we're talking about tens of millions, not very huge numbers.

And just a follow-up, maybe for Eyal. The Cephalon synergies, where do we stand there? And the European 5% reduction in commercial workforce, was that exclusive of, separate from the Cephalon?

Historically speaking, the 5% is without including the Cephalon acquisition. It is just a link of our new model in some go-to-market model where we anticipate, as mentioned before, branded generics business moving to the more substitution business.

Ladies and gentlemen, that is all the time we have for questions. I would now like to hand the call over to Dr. Jeremy Levin for closing remarks.

Well, thank you very much for joining us today and having the opportunity to review our results with us. I hope you take away from this the enthusiasm that the organization has embedded in itself. We have grouped the company, we are moving forward and we are very pleased by what we're seeing. We look forward to the second half and our strategy day, of course, later in the year. And certainly, we'll be updating you between now and then with the progressive changes that we're implementing, and look forward to seeing you then. Take care. Bye-bye now.

Thank you very much, Dr. Levin. Thank you for your participation in today's conference. Ladies and gentlemen, this concludes the presentation. You may now disconnect. Goodbye.