Viatris Inc. (VTRS) Q3 2012 Earnings Report, Transcript and Summary

Kris King Heather Bresch - Chief Executive Officer, Director and Member of Science & Technology Committee John D. Sheehan - Chief Financial Officer and Executive Vice President Rajiv Malik - President

Marc Goodman - UBS Investment Bank, Research Division Jami Rubin - Goldman Sachs Group Inc., Research Division Shibani Malhotra - RBC Capital Markets, LLC, Research Division Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division David Risinger - Morgan Stanley, Research Division Gregory B. Gilbert - BofA Merrill Lynch, Research Division Elliot Wilbur - Needham & Company, LLC, Research Division Christopher Schott - JP Morgan Chase & Co, Research Division Gary Nachman - Susquehanna Financial Group, LLLP, Research Division Michael Faerm - Crédit Suisse AG, Research Division Ken Cacciatore - Cowen and Company, LLC, Research Division David G. Buck - The Buckingham Research Group Incorporated Michael Kallai Tong - Wells Fargo Securities, LLC, Research Division Randall Stanicky - Canaccord Genuity, Research Division

Welcome to Mylan's Third Quarter Earnings Conference Call and Webcast. Hosting the call today from Mylan is Ms. Kris King, Vice President, Global Investor Relations. Today's call is being recorded and will be available for replay beginning at 1 p.m., Eastern Time. The dial-in number is (800) 585-8367 or (404) 537-3406 for international callers, with pin number 36921750. [Operator Instructions] It is now my pleasure to turn the floor over to Kris King. You may begin.

Thank you, Maria. Good morning, everyone. Welcome to Mylan's Third Quarter 2012 Earnings Call. Joining me for today's call are Mylan's Chief Executive Officer, Heather Bresch; President, Rajiv Malik; Chief Operating Officer, Hal Korman; and Executive Vice President and Chief Financial Officer, John Sheehan. During today's call, including the Q&A, we will be making numerous forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often may be identified by the use of words such as may, will, could, should, would, project, believe, anticipate, expect, plan, estimate, guidance, trends, forecasts, potential, intend, continue and variations of these words or comparable words. Our forward-looking statements may today, including, among others, statements relating to anticipated business levels; trends in some European countries; planned launches of and anticipated exclusivity periods for new products; our ability to achieve forecasted full year results while absorbing the impact of negative pricing pressures; expectations for capital expenditures; expectations for R&D, SG&A and other spending; our guidance range, future earnings, planned activities, anticipated growth and other expectations and targets for future periods, including our expectations regarding the fourth quarter and for 2012 overall. Because these statements are forward looking, they inherently involve risks and uncertainties, and, accordingly, our actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the factors set forth under Forward-looking Statements in our recent earnings press release dated October 25, 2012, as well as the risk factors set forth in our report on Form 10-Q for the period ended June 30, 2012, and our other SEC filings. You can access our Form 10-Q and other SEC filings, including our earnings press release, which we filed on Form 8-K, through the SEC website at www.sec.gov, and we strongly encourage you to do so. In addition, during this call, we will be referring to certain actual and projected financial metrics of Mylan on an adjusted basis, which are non-GAAP financial measures. It should be noted that non-GAAP measures, such as adjusted revenue, adjusted gross margin and adjusted diluted EPS, should be used only as a supplement to, not as a substitute for, or as a superior measure to measures of financial performance prepared in accordance with Generally Accepted Accounting Principles or GAAP. Please refer to today's earnings press release, which is available on our website as well as on the SEC website, as it contains detailed reconciliations of the non-GAAP financial measures we use to our third quarter results prepared in accordance with GAAP. Before I turn the call over to Heather, let me also remind you that the material in the call, with the exception of the participant questions, is the property of Mylan and cannot be recorded or rebroadcast without Mylan's expressed written permission. With that, I'll now turn the call over to Heather.

Thank you, Kris, and good morning, everyone, and thank you for joining us today. I'm pleased to announce that Mylan has once again delivered an outstanding quarterly performance marked by double-digit growth on both the top and bottom lines. Our third quarter constant currency revenues rose 20% year-over-year to $1.8 billion, and our adjusted diluted earnings per share grew 51% to $0.83. I'd like to note that we did more this quarter than we did in all of 2008 with essentially the same assets. This only further highlights the power of our organic growth capabilities. Of course, these milestones could only have been achieved through the hard work, dedication and commitment of all of our employees. On behalf of the Board of Directors and our entire management team, I would like to thank all of them. Now with 3 very successful quarters behind us this year, we are raising our 2012 adjusted EPS guidance range to $2.50 to $2.60 per share. We also are reaffirming our 2013 target of $2.75 per share and our longer-term target of at least $6 per share in 2018. We expect to provide detailed guidance for 2013 in February when we release our fourth quarter and year-end results. We will discuss our longer-term outlook in July during our Investor Day event, which we will host in New York. Our ability to deliver consistently strong results, take swift advantage of opportunities and become ever more efficient, all while mitigating risk and absorbing economic headwinds and price cuts, give Mylan a unique profile in this industry. With that said, our expectation of continued growth will come from a combination of things: first, from the continued organic growth of our very strong and powerful existing platform; second, from executing against the strategic growth drivers we outlined during our…

Thank you, Heather, and good morning, everyone. This morning, I'm going to be referring to financial metrics that have been prepared on an adjusted basis. These are non-GAAP financial measures. I refer you back to Kris' comments at the beginning of today's call regarding our use of adjusted measures. Let me start by saying by any measure, the third quarter of 2012 was an exceptional quarter for Mylan. I would like to highlight upfront some of our financial accomplishments. Quarterly revenue of $1.8 billion, the highest amount of revenue in any quarter in our company's history, and revenue grew on a constant currency basis in every region of the world including Europe. Adjusted diluted earnings per share of $0.83, more than we earned in all of 2008 and were achieved while continuing to invest in new product development and sales and marketing initiatives. Adjusted operating cash flow of $469 million, the most ever for our company in one quarter, and free cash flow of $424 million, which allowed us to repay borrowings during the quarter of $459 million. And to the end of the quarter -- and to end the quarter with a gross leverage ratio of 2.7:1, or 2.6:1 when you consider an additional $100 million of borrowings, which we repaid in early October. On the heels of this strong quarter, we are once again increasing our range of EPS guidance for the full year 2012. We're now projecting adjusted diluted EPS of between $2.50 and $2.60 per share, increased from our previous range of $2.45 to $2.55 per share. We are also revising upward our free cash flow expectations for 2012. We now expect adjusted operating cash flow to be approximately $1 billion in 2012, which is at the very upper end of our 2012 operating cash flow…

[Operator Instructions] Our first question comes from the line of Marc Goodman of UBS.

Yes, hi, a couple of questions. First, on the U.S. business, which obviously had a fantastic quarter, there were just a lot of launches. And given Diovan and Actos, I actually would have thought revenues would have been even a little higher. So maybe you can just comment on some of the launches there and just the absolute amount of the way we should be thinking about that. Second, Europe, obviously great news there. Can we talk about profitability and how that has changed throughout the year and what you're doing there to increase profitability? And then third, can you just talk about the Institutional business a little bit more? How many new products should we be expecting to launch out of that? And how big a business are you looking to build there?

Sure. So Marc, I'll start with the U.S. So I guess I'd like to first start off by saying against our estimates, our U.S. business performed right in line with where we thought it would be. So while we absolutely had a significant amount of launches that we forecasted and projected at the beginning of the year, that '12 would be a great year for our U.S. Generics business. I think that if you look at the timing of the launches throughout the quarters, and some of that pull-through even from launches we had earlier in the year, so all I can tell you is that absolutely performed in line with where we thought it would. We think it still is showing strength in the base business as well as our continued launches that we have for the remainder of the year. So from our perspective, U.S. business, hitting on all cylinders. Europe profitability, I think as we have talked about in the past that we constantly, through this entire macroeconomic situation throughout Europe, have balanced our top and bottom line growth. You've heard me quarter after quarter coming and saying we weren't going to chase the bottom, that there's been irrational behavior and that we would continue to hold steady and control what we can control. So in this period of time, we've done just that. We've continued to increase the profitability around our cost of goods by continuing to vertically integrate and be 100% responsible for our global supply chain. We've continued to make sure that we're structured in the right way with some of the evolving businesses and as they are continuing to change in the different countries. And I think most importantly, and why I wanted to point out in my script, that in all the countries we're doing business, we see an increase in generic conversion. And I think that should be the brightest spot of all because what it shows is that governments very much are beginning to recognize the long-term sustainability that generic utilization brings versus a onetime price cut. So we've seen additional initiatives in Italy, we've seen additional initiatives in France that are bringing those back up. So from my perspective, we certainly have always maintained the need to balance profitable and revenues. I think that our results this quarter are paying off from how we're operating our business in Europe. And lastly, on the Institutional side, in February, we showed our Institutional business being an important strategic growth driver for us. We are continuing to invest in that business. We have numerous launches. We're continuing to very much accelerate our own internal R&D pipeline around this businesses globally. So all I can say is that we certainly are continuing to invest and continue to see this as a very important growth driver for us in the future.

Our next question comes from Jami Rubin of Goldman Sachs.

Heather, both you and John, I think, were the most clear about the company's increased appetite for pursuing an accretive deal given the increased financial flexibility of the balance sheet. I'm wondering if you can just -- am I reading that right? In previous conference calls, we've talked about options on the table to enhance shareholder value: share buybacks, bringing down debt, strategic deals. But what I'm hearing from you today is I think a more outspoken commitment or desire to pursue something strategic. And then secondly, I'm very intrigued with the partnership that you signed with Pfizer in Japan, and I'm wondering if you could put some numbers around that, what you see in terms of revenue potential over the next 5 years and what that means to your bottom line? And is this the type of partnership that you see could be replicated in other countries, such as emerging markets where, again, Pfizer doesn't have the AND capabilities that you have and you don't have the feet on the ground that Pfizer has?

Okay, sure. So look, I think to your first question, hopefully you see that as our continued commitment to be transparent. When I -- what I spoke of in my opening remarks was a combination, if you'll remember. I said of us continuing to execute on our existing platform, continuing to execute against the growth drivers we pointed out. And then obviously, the last point was to looking at ways that we're going to use our increased financial flexibility. And I think, as you have seen, that has been a combination, and I think it will continue to be. There's a lot of ways to increase shareholder value, and I think what you can rely on is that we're looking at all of them. And we certainly are looking at any and all compelling acquisitions that would allow us to continue to deliver or accelerate the trajectory that we're already on. I mean, when you look at what we have put out there with our own assets at this time, a 15% CAGR in 2018 is an impressive growth target out there. And I think that as -- this financial flexibility just gives us all that much more ability to accelerate not only that growth but, like I said, in many different ways. As far as Japan goes, look, I think it's an unprecedented deal in our industry. I think it truly does take the core competencies of both of our organizations, and we believe that 1 plus 1 will equal 3-plus. It's about really leveraging the scale and scope and the quality of what we both bring to the table. So while we don't get into putting numbers out there around individual countries, I think you certainly can expect that we believe that this is accretive to our current stand-alone Generics business as well as accretive to their stand-alone Generics business, and that's why the rationale of this deal made all the sense in the world. And I very much believe that it could be a model in other countries where the troops on the ground are important, the brand is important, but having the breadth and the quality of a pipeline is equally as important. And that's where this makes all the sense in the world and very much could make sense in other countries as we move forward.

Our next question comes from the line Shibani Malhotra of RBC Capital Markets.

Just going back to Jami's question on potential acquisitions and ways to enhance shareholder value, you did mention that you aren't going to do anything just for the sake of doing a deal. Can you talk about the kind of things you are looking for? And just expand on what you meant by that? Are you finding valuations too high? Or is it -- are you just not finding what you're looking for at the moment? And then second, a question on fenofibrate. You got the capsules approved a couple of days ago. Can you just give us your expectations around the launch of that product, including whether or not you had sufficient sort of quantities for the market?

Okay, sure. Thank you, Shibani. As far as acquisitions go, I think as we've laid out, certainly we don't do any acquisition just to do an acquisition and have not had a gun to our head to do an acquisition. I think what you hear us saying is that we continue to now generate significant free cash flows and have increased flexibility and are looking at all compelling acquisitions. And that could be anything that to be complementary to our current platform. So whether you look at the Specialty side, geographies, dosage form, therapeutic categories -- I mean, we have a voluminous number of different ways to continue to accelerate this growth trajectory and we're looking at all of them, as well as in combination to share repurchasing programs. I mean, I think that the great news is when you look at the kind of cash we have on hand, we have a lot of different ways to get at least to that $6 in 2018 and continuing to show that kind of growth year-over-year that we've, I think, now, hopefully, have shown that track record of producing year-over-year. So like I said, you're right, we're not just looking at a transaction for transaction's sake, but we certainly are in a position to be looking at all the compelling ones. And as far as your product question, yes, it was a good launch for us. But as you know, we're well beyond any single product launches, especially one of that size. I can tell you we executed on it. And it's just one of many that we've had this year and will have over the next several. Okay, thank you.

[Operator Instructions] Our next question will come from the line of Ronny Gal of Sanford Bernstein. Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division: John, question on the CapEx. In the past, you talked about some leverage in the CapEx as we go from 2012 to 2014. Looking at the guidance for next year versus this year, still 7% to 8% growth in earnings at a minimum. How should we think about the CapEx? Should we grow linearly? Or should we have a step-up, a further step-up in the -- sorry, not the CapEx, in the cash -- in the free cash flow generation?

So Ronny, I think that this -- I think that what you saw happen or you saw the results in this quarter was the cash flow generation, the strength of this global platform to generate and throw off cash. And also, as you could see, we reduced our expectations for capital spending for the year from $350 million to $300 million, the combination of those 2 increasing the free cash flow by $100 million and allowing us to bring our leverage down to 2.6x after paying $100 million back in the first week of October. To be honest with you, I don't really want to give future expectations as to what 2013 or 2014 is going to be. That's not the purpose of the call today. But what I can tell you, and it's demonstrated by the working capital efficiency that we've had here in 2013, is that our global operating teams are intensely focused on generating cash and then for our ability to put that cash back to work in the business for the benefit of our shareholders. And I think that for today, I'll leave it there.

Okay, thank you.

Our next question comes of the line of David Risinger of Morgan Stanley.

John, I was hoping that you could just walk us through the financials associated with that partnership with Pfizer and just help us understand how that impacted the revenue in Asia Pacific in the quarter and how it will impact things going forward just so that we can tease out whether there was an incremental positive from that deal in the September quarter that is noticeable in the financials and whether that will continue or whether it's really not noticeable in the financials.

You don't -- you won't have to tease it out because although we announced the formation of the partnership, David, the partnership will actually be become -- begin operating here around the end of this year, early next year so that there was no impact of the partnership in our third quarter results. What you see in our Asia Pacific results represents the organic growth of our operations in Asia Pacific and will most likely be that way for Q4 2012 also.

Our next question comes from Greg Gilbert of Merrill Lynch.

Heather, with the third quarter in a row of improving growth rates in Europe, are you ready to predict positive growth for that segment going forward? It sounds like your qualitative comments are quite bullish, too. And then, is there any doubt that your WELLBUTRIN XL generic product is fine in light of Teva Impax's issues? I think this is obviously important for Mylan and the broader public trust in generics and the trade, et cetera.

Sure. Thanks, Greg. So look, I think as far as Europe is concerned, we have seen continued improvement, and we don't really foresee that stopping. I mean, quite honestly, I think that when you compare everything, as I said, conversion rates increasing, our leadership position in our most important countries, I think, where we see -- obviously still see competitive pressures -- but see that volume offsetting that. Those are all the kind of things that certainly, we, from our measurements and what we're looking for, is important. And we start to see all 3 of those things hitting, and, like I said, we do foresee that continuing. So that's kind of is as far as I'm willing to go with my crystal ball. But I can tell you we're excited about the direction Europe is moving and see that continuing. As far as WELLBUTRIN, look, I think that it's very important to understand that this is a one-off issue and it really does not speak to the generic industry. I will say it speaks to the pharmaceutical industry overall. As you know, from time to time, as FDA continues to gather data and look at data, there are times where they've taken brand products off the market as well as changing guidelines and changing specs. So this is something that's constantly going on within the FDA in looking and working with companies. I think in this particular instance, it was certainly related to patient safety. FDA made a judgment call years ago around the 300 milligram. And when -- the data today that they're looking at has caused them to get to a different place. Certainly, we don't see this impacting our product and believe this was certainly in relation to just one in particular formulation. So I would tell you that our industry is alive and well, and I don't really see this having any impact on that whatsoever. Thank you.

Our next question comes from Elliot Wilbur of Needham & Company. Elliot Wilbur - Needham & Company, LLC, Research Division: Question for you, Heather, around your pending application for generic version of Lidoderm. Endo management made some very pointed comments about their perceived or their perceptions around your ability to obtain approval for their product based on its nonaqueous nature and the possibility of some excipient and adhesion issues. I'm assuming that you don't agree with that, but maybe you can just sort of comment a little bit on sort of their observations. And then with Watson now having obtained approval, still some ambiguity around the issue of exclusivity. The FDA made it very clear in the approval letter that Watson did not obtain approval within 30 months but did not actually make a decision on exclusivity. You said previously that you still thought generic Lidoderm was a possibility in terms of your ability to launch in 2013, and I'm just wondering if you still believe that to be the case based on anything new that's happening at the FDA with regard to the application and then based on the Watson approval.

Sure. So I'll start with Endo's comments. I guess what I would say, not only do I not agree with them, I have to believe that their credibility should be extremely tarnished at this point. I mean, they said all the exact same things about Watson -- Watson was never going to be able to get their approval. They had all kinds of issues. And certainly, Endo was proven to be wrong. I think when you look at Endo trying to stress that based on their experience and expertise in this development, this is not their product. They have end-licensed it. So I think to talk about what kind of science is out there and who has the capability, I can assure you we are manufacturing and developing our own product, and I believe we do have the expertise and the track record with FDA to know and to be able to guide you guys, as we have been, about what we're capable of doing. So I -- that's what I would say about Endo's comments. And we absolutely continue to see this as a possible opportunity in the second half of the year. As you know, FDA historically doesn't make exclusivity decisions until they have to. And so we maintain our ability to get this product approved in 2013 and be able to manufacture the quantities needed. And like I said, we still absolutely believe we have the potential for this to be upside second half of '13. So thank you.

Our next question comes from Chris Schott of JPMorgan. Christopher Schott - JP Morgan Chase & Co, Research Division: Just 2 quick ones here. The first was coming back to some of the earlier business development comments. I guess does the financial flexibility you're talking about here open up transactions that you might not have been able to pursue in the past, i.e. larger transactions? I was just trying to understand here if the scope of what you're looking at has changed or if this is just kind of coming back to some of the assets that you've considered before? The second question was on your Europe. It seems like we're finally seeing encouraging macro trends. Can you talk a little bit more about the competitive dynamics you're seeing in the market? I think Teva last quarter discussed a bit of a shift, focusing more on profitability versus share in Europe, and I'm just wondering if you're -- how you're seeing the overall competitive environment kind of shaking out.

So look, quickly on the acquisition, here's what I would say. I mean, Chris, obviously, we came out to a commitment with the Street over the last several years that we were going to be deleveraging and executing on the assets that we had. And I think that, that's what I think this quarter culminates in that activity, one showing what this platform can produce while at the same time accelerating our deleveraging capability. So certainly, what we're in a position now to do is definitely of size and scope. And as I said, I'll just revert back to saying a very compelling -- there's a lot of compelling opportunities out there, and we're looking at all of them. And just quickly on the environment in Europe. I guess what I would say is we've always stressed the profitability as well as market share, as well as revenue growth and balanced all of that. I can't speak to other companies perhaps being as balanced as in their commentary around Europe, but that's why I wanted to stress that I think that has definitely paid off for us not only to maintain leadership position but be able to execute and control what we can. And we see that now, especially for our business in Europe, turning that corner.

Our next question comes from the line of Gary Nachman of Susquehanna Financial Group.

Heather, on EPIPEN, anything you're doing differently to prepare for Sanofi's launch of Auvi-Q next month? And do you have a sense of what the pricing dynamics will look like with them in the market? And just what type of growth are you seeing in the market overall, if you could quantify that?

Sure. So first, I'd like to say that they -- that Sanofi has said they're not launching until 2013. But anyway, as far as it relates to -- look, I think when you have got a leadership position, like we do, at 98% of the market, our ability to build on that brand equity and make sure that we're continuing to stress the tried and true nature of EPIPEN, being around for over 20 years, delivering over 40 million scripts, and that's what -- that is our position in the marketplace. And as we've said before, another competitor coming to market in a sense then is just shared voice and increasing that awareness. I think that when you look at the -- what we have been doing to increase that awareness, as I said in my remarks, it's been paying off. We've now gone from where 7% of the people at-risk to now 10% of the people at-risk with an EPIPEN. So obviously, we still see tremendous growth and opportunity for this franchise and the disease state overall. So look, we're excited about EPIPEN, still have a lot that we're executing on and will be continuing to do so. Thank you.

Our next question comes from Michael Faerm of Credit Suisse. Michael Faerm - Crédit Suisse AG, Research Division: Two quick questions, one on the respiratory pipeline. Can you just provide an update on the status of the COPD candidate, if and when we might see Phase II data? And then a general question on the North American Generics business. What are some of the key drivers that will propel growth next year as you move into a year with fewer launches than you've had this year?

Let me -- I'll quickly take the North America question. Look, I think that what we've continued to stress is that we're not about any 1 country, 1 product. It is about literally being able to optimize and leverage the -- our global scale and platform in every country we do business in, the United States not being any different. We have tremendous opportunities from our existing base business, the launches we did have this year, coupled with the launches we have next year. I mean over the last 5 years, we've not had the same number of launches every year, but we certainly have been able to show a trajectory and, like I said, we see that continuing. As for our respiratory business, Rajiv, do you want to...

Yes. So regarding respiratory products, I think one is our COMBO, which is on the nebulization stage, which remains on track, and we will kick off our Phase III somewhere in the early next year, early 2013. And the second product, which is Advair, is also -- remains on track for '15, '16 global launches.

Our next question comes from Ken Cacciatore of Cowen and Company.

Just wanted to go back to potential future acquisitions or strategic developments. Is it usually by asset that is available, either brand or generic? Or do you have a -- do you have something in mind and you focus on that? Or is it kind of what is available to you at that moment in time?

Ken, what I would say is as I -- hopefully, everyone has heard me now loud and clear on this call is that we certainly believe that there are many compelling opportunities out there and we're looking at all of them. And just believe that we've got a lot of ability to bring in a lot of different complementary assets to this business in this existing platform that we have. And I'd say that's what I have to say.

And it may or may not be on the market.

Yes.

Yes.

I mean, we're looking -- we're -- you should know we're not standing still and we're looking at everything. All right, Operator, thank you. Any more questions?

Our next question comes from David Buck of Buckingham Research.

First one is on the Specialty business. Can you talk a little bit about what pricing was during the quarter? And then just on the settlement with Teva, can you talk about what your ability is to continue to pursue, if needed, the citizen [ph] petition route to make your case with the FDA on approval? And then just maybe for John, can you just talk about in terms of what you're looking at in terms of deals? Is there a commitment to not use any type of equity financing or convertible equity financing?

Okay. So quickly, listen. On EPI, we certainly had some pricing increases. We had 2 over the year. But, I mean, we certainly see, as I mentioned, volume increasing even more so than the price. As far as Teva and our settlement, we settled, just to be clear, on the IP litigation. We continue to believe they have significant hurdles to get an AB-rated product, and I can assure you we're continuing -- not only are we continuing to pursue that, but believe that there are, like I said, many hurdles and challenges for them to get an AB-rated product. John?

And in terms of your question about M&A and currency that we would use in any transaction, I think it would be safe to assume that our focus is on use of cash for a transaction, as I pointed that out, in terms of the amount that we had available up to a ceiling of $4 billion or more. And so I think that use of a currency other than cash is not something we're currently focused on.

Our next question comes from Michael Tong of Wells Fargo Securities.

Just one question, going back to business development. And as you look at how you evaluate different transactions, do you use any internal bar that -- or internal hurdles that you would compare a potential transaction like the type of accretion you would get from further deleveraging or share repurchases? Any color like that would be appreciated.

Well, Michael, I can assure you, we look at many, many, many parameters when looking at the sources and use of capital. And I can tell you that we have been doing that, and certainly, for any acquisitions, we'll be doing that going forward. Depending on what part of whether the platform, what kind of a transaction it is, what that contribution means, both near, medium and long term, I mean, all these things are taken into consideration as we compare them with other uses of capital. So I would say I would rest assured that we look at many, many different parameters and have many different things internally that we take into consideration.

Our final question comes from the line of Randall Stanicky of Canaccord Genuity.

I have a fairly straightforward one. It can be Heather or John. Can you just identify specifically some of the public U.S. generic opportunities in the next year? So obviously, Lidoderm is one of those. And then, Heather, as you look at your U.S. generic base, obviously you have an expansive pipeline. What technologies don't you currently have that you would have an interest in potentially acquiring or developing?

Thanks, Randall. As far as for detailed opportunities in 2013, I think, as we mentioned earlier, we'll be coming to you with that in February. I mean, I think, obviously, there are some very -- there's already a lot of public news out there around the opportunities that we have in 2013. But we certainly will be highlighting those more in February. And what was...

The technology.

Oh, the -- here's what I would say. When you look at where our strengths lie -- solid oral dosage, extended release, patch technology -- I think we can continue to see an injectable space, that, that would be an area that we can continue to further increase therapeutic categories that we're in and so forth. Topicals, dermatologics, that's an area that we certainly could look and, obviously, where we've already investing in the respiratory. So I would think it's not even so much a matter of areas that we're not in at all but areas, again, that we can look to accelerate those positions and our positions within the U.S. marketplace. All right, well, thank you, everybody, for the call, and we look forward to talking to you in February.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.