Good day, ladies and gentlemen, and welcome to the Mylan second quarter 2017 financial results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Melissa Trombetta, Head of Investor Relations. You may begin.

Thank you, Terence. Good morning, everyone. Welcome to Mylan's second quarter 2017 earnings conference call. Joining me for today's call are Mylan's Chief Executive Officer, Heather Bresch; President Rajiv Malik; Chief Commercial Officer Tony Mauro; and Chief Financial Officer Ken Parks. During today's call, we will be making forward-looking statements on a number of matters, including our financial outlook and 2017 guidance. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections. Please refer to the earnings release we furnished to the SEC on Form 8-K earlier this morning as well as our supplemental earnings slides, both of which are also posted on our website at investor.mylan.com, for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. In addition, we will be referring to certain actual and projected financial metrics of Mylan on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of our financial performance. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP. The most directly comparable GAAP measures as well as reconciliations of the non-GAAP measures to those GAAP measures are available in our second quarter earnings release. Let me also remind you that the information discussed during this call with the exception of the participants' questions is the property of Mylan and cannot be recorded or rebroadcast without Mylan's express written permission. An archived copy of today's call will be available on our website and will remain available for a limited time. With that, I'd like to turn the call over to Heather.

Thanks, Melissa, and good morning, everyone, and thank you for joining our call. To say that times are changing would be an understatement. However, as history shows, it's during times like these that industries and companies transform themselves. The generic as well as the entire healthcare industry is now at an inflection point, and every company's intersection with this point is unique. Our transformation from a domestic company started a decade ago when we committed to a strategy of globalization, diversification, and scale. As important as developing our strategy is how we have consistently executed against it and further derisked our platform. We have been very purposeful on the types of acquisitions we do, and we are very disciplined about integrating them. We undertook this strategy because of the volatility inherent in any geographic or product-centric model. Since 2007, this strategy has allowed us to overcome periods of intense competition, consolidation, unpredictable regulatory environments, and geographic economic fluctuations around the world. At times, this may have seemed like the road less traveled. But given the industry environment today, I believe the path we chose and our patience and commitment to deliver over the long term is paying off, given our guidance and especially our outlook in the face of the significant headwinds in the US market. In fact, there has never been a better time to recognize how unique our intersection with the industry is. We have built a global pharmaceutical company that is a leader in each of our geographical regions and which no longer resembles the companies that are focused solely on running just generic and/or specialty pharmaceutical businesses. This is precisely why we introduced new geographical reporting segments at the end of last year. In doing so, we're providing investors with visibility into how we are running…

Thank you, Heather, and good morning, everyone. Before I begin, I too would like to thank our employees around the world for their hard work and continued unwavering focus on our mission and business objectives despite the challenges that come our way. Let's turn to the second quarter results. I'll provide an overview of our top line performance, and Ken will get into the segment profitability. Overall, we delivered nearly $3 billion US in total revenues for the quarter, an increase of 16% compared to the prior year. As Heather noted, this performance is a result of the breadth, diversity, and resilience of our global integrated platform, which has given us the strength to manage the headwinds and ensure long-term sustainability. This quarter, the headwinds came primarily from the US, where challenging market dynamics accelerated. However, our performance in our Europe and ROW segments delivered on our expectations. I'm especially pleased with the performance of our Meda and Topicals business acquisitions, which continue to meet and exceed our expectations in their contributions. Let me provide some more detail on the challenging environment in North America, especially in the US, which resulted in third-party net sales declining by 9% to about $1.3 billion. I note that the region would have seen an increase of 4% if not for higher than anticipated negative impact from EpiPen Auto-Injector. During the quarter, we saw increased competition resulting from FDA's focus on accelerating the approvals of third, fourth, or fifth generics. Unfortunately, we have not seen the same for the first generics nor for more complex and niche products, which we believe have been impacted by the recent ongoing reorganization within FDA. However, while the timing of realizing some of these opportunities may be delayed, our confidence in our ability to bring these products to…

Thank you, Rajiv, and good morning, everyone. I would like to reiterate the confidence you heard from Heather and Rajiv in the underlying strength of our businesses around the world, our proven ability to overcome adversity in our business environment, and the many opportunities we have for continued commercial leadership and sustainable growth. I would now like to provide a framework for the management and commercial execution around our business from a geographic segment perspective, selling our broad portfolio across all channels in a holistic manner as One Mylan as we focus on being a partner of choice to our customers. We will start with our strong performance in Europe, which demonstrates what we've been able to build in this region over the past several years through continued and consistent execution and effective integration of the entire Mylan platform, most recently the Meda acquisition. As a result of the focus on execution, Europe now makes up more than 30% of our total revenues. We have been able to successfully maintain and expand upon our leadership positions in countries like France, Italy, and Portugal, while capitalizing on meaningful growth opportunities in the UK, Germany, and Spain. Our European business is also diversified across channels, with strong positions across brands, generics, and now OTC, where we have an established presence from the Meda acquisition. We are encouraged by the growth potential of our brands in the region, such as Dymista, Creon, Influvac, Brufen, and Betadine, and we are also excited about our strong future pipeline. Our Rest of World segment continues to show double-digit revenue growth and now makes up more than 20% of our total revenues. While our ARV business continues to perform strongly, we are very pleased that the integrated platform we have built in key geographic markets is also…

Thanks, Tony, and good morning, everyone. Turning to our financial results and summary, in Q2 we delivered total revenues of approximately $3 billion. That's an increase of 16% over the same period last year. This increase included growth in third-party net sales in both our European and Rest of World segments, which were up 59% and 29% respectively. The growth in both segments was largely driven by contributions from our acquisitions last year of Meda and the Renaissance Topicals business. Acquisitions also contributed to our North America segment more than $150 million, which helped to mitigate some of the impact associated with the decline in our EpiPen business along with mid-single-digit generic price erosion that Tony just spoke about. As a result of these headwinds, our North American segment third-party net sales declined 9% year over year. And excluding the decline in EpiPen, North America was up 4%, demonstrating the strength of our portfolio and our ability to absorb the ongoing challenging dynamics in the US. On a consolidated basis, we reported adjusted gross margins of approximately 54% in the current quarter compared to approximately 56% in the same period last year. The decline is the result of lower gross profit from the sales of existing products in North America, including EpiPen, partially mitigated by contributions from last year's acquisitions. Moving on to our operating expenses, on an adjusted basis, R&D was approximately 6% of total revenues or $171 million, which was in line with the prior year, including the incremental impact from acquisitions. Adjusted SG&A increased to $583 million, primarily due to integrating the acquired businesses. However, I'll point out that adjusted SG&A as a percentage of total revenues declined 150 basis points to less than 20%, driven by increased revenues from the acquired businesses along with benefits of…

Thank you. And our first question comes from Jami Rubin from Goldman Sachs. Your line is open. Jami Rubin - Goldman Sachs & Co. LLC: Thank you. Just, Heather, maybe you and others on the phone can comment on just overall operating margin. Clearly, we're all in a new environment. It's a tough environment for all of these companies, but this is also an industry that has maintained roughly 30% operating margins over a long period of time with improvements year on year. Now we're entering in a period where we're seeing margin degradation. Where are we in the cycle of things? In other words, how much lower can margins go? And on the other hand, can they get back to where they were before? It seems to me that it's all entirely dependent on new product launches. But assuming product launches don't occur, how much lower can those margins go? And if I could just stick in another one, and it's related, Heather, can you just talk about how your scale gives you leverage over the consolidated customers? It seems that Teva has said that scale really hasn't helped them. And based on the new guidance for this year for Mylan, it would appear that scale may not be helping you either. So if you could address those two topics, I'd appreciate it. Thanks very much.

Sure. Thanks, Jami. So yes, I'll start off, and then anyone else who wants to jump in can. So I guess here's what I would say. I think this goes back fundamentally when you talk about the margins and what does this business look like going forward. I think again, if we just stick within the United States, the diversity of your product portfolio I think is incredibly important. And I think that as you hear us continue to talk about not only that diversification from institutional to retail to continuing to build upon our OTC footprint, that kind of diversity within a segment absolutely helps maintain the margins that you've been used to, and I think importantly to your comment, new product launches, when you think about complex new market formation and as we enter the biosimilar arena. So I do believe that those are going to be able to maintain the levels that you've been used to. Now with that being said, I think we're at a moment in time with the FDA that it's those launches that have continued to have some delay in timing, but they will come. And I think it's companies who have been able to invest, and we continue to maintain that investment in R&D and bring those important products to market, is what will continue to differentiate companies that are able to maintain I think those margins that this industry has been used to for some time. But I don't think – as always, one size doesn't fit all, and I don't think everybody is going to be able to maintain that. And I think having the levers to manage and maintain your portfolio to account for that is going to be very important. I think as far as scale goes, again,…

And our next question comes from Ronny Gal from Bernstein. Your line is open. Aharon Gal - Sanford C. Bernstein & Co. LLC: Good morning and thank you for taking my questions. I'll try to sneak two if I could. They are factual, so it's going to be easy. First, I completely hear you about delaying the large launches to 2018. But are there still response points from the FDA on both Copaxone and Neulasta this year? Your partner suggested there are. I just want to see where they are and why. And second, thank you for breaking down the revenue by region. Can you give us a feel for the profitability division by region? If you look at your US business in terms of gross profits or operating profit, what percentage of the business is it today, just to give us a feel? Thanks.

Okay, Ronny, I'll take your question on Copaxone. And as I talked about, having met all the possible – in this case we have specific product guidance out which we have delivered from the sameness perspective. And I've cited out administrative delays, and it's truly there's no science we are dealing with anymore. There are not any pending studies which FDA has asked from us or something like that. So it's perplexing because somewhere this whole reorganization within FDA that's coming into play, and we see this playing on complex and niche products, which are in this bracket. Having said that, as I told you, we remain very confident. We see no issue of bringing it to market, and it's a timing issue and that's what we are trying to adjust. On Neulasta, we continue to work with the FDA. We continue to work on the science as well as on the GMP front. And as you know, we have not factored in any revenues even in 2018 in any meaningful way from biosimilars. But if there is one upside which I can see from biosimilars and where how the competitive landscape is lining up between other different players who are ahead of us, Neulasta might be the one. But we'll give you more visibility as we go along. Aharon Gal - Sanford C. Bernstein & Co. LLC: Thanks, Rajiv.

And, Ronny, on segment profitability, one of the things that we have included and put out on our web as we released the press release this morning are a few additional earnings and financial-related slides, and one of those slides will break those numbers out for you. We actually show segment not only sales, but profitability. But just to highlight the numbers, the North America segment is continuing to run at about 50% segment profitability level, while the expansion in profitability in both the European and Rest of World segments shows that Europe is running now north of 25% profitability, and you know the numbers a few years ago were significantly lower than that. And in Rest of World for the quarter, it was about 33% segment profitability, so expansion in that segment nicely as well. But that data is out there available for you if you just click on the website and download those slides.

Thank you.

And our next question comes from Elliot Wilbur from Raymond James. Your line is open. Elliot Wilbur - Raymond James & Associates, Inc.: Thanks, good morning. I have a simple straightforward question, but probably not really a simple straightforward set of answers to it. For Heather and the team, I guess if we think about the adjustment to your profitability expectations this year, just simply EPS, could you just maybe give us a little bit of insight or just rank order? Of all the factors that we've talked about, accelerating pricing pressure and the ongoing impact of the evolution of the consortiums and the rebidding process or the push-out in new product launch expectations, is there any one factor that stands out much more than the others in terms of leading to the revision in your expectation? I'm just trying to figure out where the team was probably most surprised with respect to those dynamics, because I certainly think pushing out $500 million in product sales is quite a bit different in terms of the implications than suggesting there has been a $500 million permanent impairment on the base. So I was just hoping to get a little bit more insight into the different dynamics there. Thanks.

Thank you, Elliot, and I think your observations are correct. I would say first and foremost, it's launches. When you look at on both fronts the continued delay on new complex key market or key product launches, and as we've said and I can't underscore this enough, we honestly see the administrative as the barrier and not the science. And I think we are, I can assure you, working diligently to daily be in contact with the FDA and work through these issues. And I'm highly optimistic that given even the new commissioner's recent commentary that this is a very important area, they recognize that getting these products to market are important. But if you say the delay of those launches as well, if you look over the last two months, I think the acceleration is almost near double of approvals in these already commoditized generic products. So when you're bringing number three, four, five, six to the market, and approvals I think jumped up last month to over 90 approvals, all falling in that bucket, which is why we acknowledged that increased competition on the existing products and recognized and called out this high single-digit in North America or US generics. I think both of those really were the primary driver. And to your point, the first one is the most important because this isn't a permanent hit, it's a deferred one. And that's why we did what we thought was the most prudent thing to do of pushing those into 2018. But I can tell you we're fighting every day to have them come as soon as they possibly can. So after that, I think things like EpiPen, when you think of all of the different compounding factors that have culminated right now, I think that's finding its…

And our next question comes from Chris Schott from JPMorgan. Your line is open.

Great, thanks very much, just a question on the challenges facing the North American market right now. What do you think we need to see for a more stable pricing environment? It seems like you're highlighting these accelerated FDA approval rates as destabilizing price. It doesn't seem like that's going to subside anytime soon. So should we be thinking about a high single-digit price erosion as something that's likely to continue for the foreseeable future? And second quick question, which is on generic Advair, I believe you commented that you're going to be responding to the CRL over the next few weeks. I guess given that near-term refiling, can we assume that there weren't any issues as you reanalyzed your device studies against the FDA draft guidance I think was one of the requests that you talked about from FDA on last quarter's call? Thank you.

Thank you, Chris. I'll start off, and then I'll let Rajiv go into generic Advair. And just to follow up again, I missed this part on Elliot's last part of his question on consolidation and how that's factoring in. I think that we see this high single-digits as probably here for the foreseeable future, and we've accounted for that in everything that we've put out there both for this year and next year. I would say that the consolidation, obviously, you continue to see, I think we're down really now to about three buying consortiums here in the United States. I do think importantly, we'll point out that they're also not just buying for the US. These are global now buyers coming together, and from our perspective, that being able to supply globally as well as having these important products come to market. So while they're deferred, it doesn't take away their importance, speaking of generic Advair, which I think we still feel confident that even though deferred, we're going to be that first to bring this product to market. So I think that our ability to partner and leverage our global scale with these global buying consortiums, that we're best positioned to take our entire product portfolio across the globe and be one of the best partners out there.

Heather, I'll just add one line to what you said. It's one thing to have global scale, Chris, and it's managing the global scale. Our global integrated platform and our segments allow us to run this and manage this business globally. Now coming back to Advair, I think I would like to take this opportunity to clarify and explain one of the remarks I made about how reorganization with FDA can impact it. Take Advair, generic Advair. It's been a nine-year long journey, and we had an intense collaboration with FDA till the submission of this ANDA. It saw many face-to-face meetings and agreement on several protocols. As the FDA transformed over the last two, three years and the emergence of OPQ [Office of Pharmaceutical Quality], and between OGD [Office of Generic Drugs] and OPQ, many new players have come in and many new drug guidance [ph] resources (55:05), even this year in the beginning of this year, which was on devices. So there can be different opinions which can come at a point, and that's what led to this extensive CRL which we received. We took this opportunity – FDA took about four months to give us this meeting, but this was one good meeting to put everything on the table and come to a good spot and agree with the FDA that whatever we have provided them as per the product-specific guidance is good enough. We don't need any more data. We don't need any more clinical study or device-related studies. And that's what I meant from how sometimes reorganization of this transformation can impact some such, especially the complex and the first approvals. Having said that, we are in the process of consolidating this response, and this response will be out on its way to FDA within the next couple of days (56:04). And we continue to work with FDA for this high-priority product.

And our next question comes from Marc Goodman from UBS. Your line is open.

Yes, on Copaxone, I just want to make sure I understand. You had two dates back in June. After you missed the first date, there was still commentary that you thought you would get approval by the end of June for that one, and that didn't come, the second one didn't come. So I just want to try to understand. Are there new times now that we're waiting for that you could point us to? Are the issues for both dosages the same? You just expanded on Advair a little bit. Maybe you could expand on Copaxone. And then secondly, can you talk about the ARV franchise? What was the growth rate in the quarter? What's the growth rate that you're going to see for the year? Just give us a sense of how big this franchise has been for you now. Thanks.

Yeah, on Copaxone, you are right about the target action date. But first of all, let me say that issues or questions, both 20-milligram and 40-milligram are the same. There is no different issue between 20-milligram and 40-milligram. Second, why we didn't do – when I talked about the lack of predictability, yes, we have still a target action date, one target action date with us for mid- (57:20). And I didn't put it out there because we just need to get to a place with the FDA and have a better understanding rather than give you another date. And that's why, just through an abundance of caution, we have moved it and said okay, let's just move it and defer it to 2018. Now on generic Advair – sorry, on ARVs, our growth YTD is about single-mid-digit growth on ARV franchise, and we continue, especially this launch of – first approval and launch of TLE400 and now getting the first approval for TLD, that's where the whole market is shifting – gives us again – these are the two things, the product portfolio, leading product portfolio, the scale and ability to serve this market have – what has given us this leading position in this. And we continue to strengthen these three parameters.

So growth for the year you're expecting to be in the single digits as well?

Yes.

And our next question comes from Andrew Finkelstein from SFG. Your line is open.

Hi, good morning and thanks for taking the question. I was hoping you could just clarify a little bit with the original guidance approach versus the new approach. You talked about the assumptions for the timing of the launches, but you made a comment about adjusting the expectations for them. So if you could confirm how and in what form those are factored into the $5.40 for next year and the role of capital deployment. And then, in terms of FDA and what you talked about, administrative issues, can you talk at all about the difference administratively from some of these subsequent approvals versus first approvals? And is the scheme for prioritization of ANDAs being implemented as intended in your view? Thanks.

All right, thank you, Andrew. Here's what I would say. As we defer those key launches to next year, we don't call out product by product. As you know, we've got just here in the US alone over 630 products, and we have had a historical approach of really risk- basing as we put products in and key products into our assumptions. I think that's why we called out we were taking a prudent step to put them into 2018. And we've also not just deferred everything as it all looks the same being deferred for a year. So as my commentary noted that not only were we deferring US key launches, we were taking into account their contribution. And so again, it's looking at this whole portfolio and risk-adjusting for that, but we've taken that same approach, and then like I said, prudent as we think about their contribution in 2018. As for the FDA and the prioritizing of ANDAs, look, is it where we would like it to be? No, if it was where we'd like it to be, we would be seeing I think approvals of important products that have no generic competition into the marketplace. But I'm hopeful that we continue, that FDA is focusing on their processes and prioritizing. We're certainly doing our part working with them, and I believe we will get there. It's just again sometimes when you're in this transformation, FDA themselves is in a transformation. And continuing that performance while you transform is sometimes difficult, but I'm truly hopeful that we get to where ANDAs are prioritized in the backlog and getting important first-to-market products to the market are at the top.

And our next question comes from Gregg Gilbert from Deutsche Bank. Your line is open.

Thanks, good morning. First, Ken, can you give us a sense for how much launch revenue you have in the 2017 outlook and confirm whether there is any BD or not in the 2018 outlook that you revised? And for Heather, I was hoping I could ask you a bigger picture question about the industry structure. Paul Lazzaro commented earlier that the FTC may have missed something in allowing three generic buyers to become as powerful as they are. Needless to say, manufacturers might need to find a distribution channel aside from those. I'm curious on your thoughts on those comments. Thanks.

Sure, Ken?

So, Gregg, on the new product launch revenues, when we were with you at Investor Day, we outlined that we had about $850 million of new product launch revenues globally in our roadmap and initial guidance for 2017. Clearly, with the revision that we just made reducing key product launches, including generic Copaxone and generic Advair, that number comes down relatively significantly. We haven't sized it specifically, but you know that those are relatively large pieces of the launch revenue. As far as 2018, we will continue to utilize capital to continue to invest in the business. Clearly, we are immediately and primarily focused on continuing to deleverage and bring our leverage ratio down. So we will maintain our discipline with that, continue to focus on our investment-grade credit rating and maintaining that. But with that said, with generating good solid consistent free cash flows, we'll have the ability to continue to look at things to roll into our portfolio of products.

And as far as the larger industry question, what I would say is that I do believe as you look at the landscape and the entire supply chain, from the manufacturer to the product getting into the patients' hands, one of the things that we continue to try to be vocal about and work with policymakers on is that, while nobody wants a more effective and efficient market with the FDA and the manufacturers getting approval out of the FDA than I do, I continue to caution that you can put as much competition in that generic marketplace as you want. But as you look to the right of the supply chain, the lack of competition, everything to the right of the manufacturer has continued to constrict. So not only are you down to just three buying groups, you're down to every single step along the way until it reaches the patients' hands has become a very constricted and less competitive marketplace. So I agree that I believe that as FTC and other looked at that landscape, there could be unintended consequences to letting that entire supply chain become very less competitive, meaning at the end of the day I think that this country's got to continue to find a solution for is ultimately the product getting in the patients' hands and doing it as competitively and market-driven as possible.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.