Good afternoon. My name is Deidre, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mylan Fourth Quarter and Full Year 2018 Earnings Conference Call and Webcast. All participant lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Melissa Trombetta, Head of Global Investor Relations. Please go ahead.

Thank you, Deidre. Good evening, everyone. Welcome to Mylan’s Fourth Quarter 2018 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 guidance for 2019. These forward-looking statements are subject to risks and uncertainties that could cause further 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 today, as well as our supplemental earnings slides, all of which are posted on our website at investor.mylan.com for a further explanation of those risks and uncertainties and the limits applicable to forward-looking statements. Mylan routinely posts information that may be important to investors on this website and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure Reg FD. 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 fourth quarter earnings release and supplemental earnings slides, as well as on our website. Let me also remind you that the information discussed during the call, except for 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.

Thank you, Melissa. Good afternoon everyone and thank you for joining our call. First and foremost I’d like to thank my colleagues around the globe. Mylan has made tremendous strides in 2018 in delivering on our mission to provide the world's 7 billion people access to high-quality medicine and all the credit goes to our hard-working and dedicated employees. Together we have launched biosimilar in key markets, progressed several scientific programs, overcome regulatory hurdles and continue to advocate for policies that breakdown barriers to access just to name a few. We’ve also said many times before that Mylan's business model is built on diversification across our commercial, operational and scientific platform, making us resilient but not immune to macro industry dynamics and changes within healthcare systems around the globe. Realizing this we have focused on our investment and strategic execution, which had yielded a diverse and differentiated business platform. We believe with this diverse platform we’ll be able to continue to deliver superior returns over the long run. Today 64% of our total revenues come from outside the United States and as far as our product mix U.S. generics make up less than one-third of our portfolio. With that said, even in light of the current industry environment and conditions our results in 2018 were strong. Our 4% decline in total revenues and flat year-over-year adjusted EPS reflects solid execution for Europe and rest of world segment helping to offset the volatility in our North America segment where net sales were down 18% year-over-year impacted largely by three factors. First, we experienced slower than expected uptake of our generic Copaxone even after reducing the price by more than 60%, which perfectly illustrates the current distorted financial incentives within the specialty pharmacy marketplace. That said, we adapted and recalibrated and are…

Thank you, Heather. To begin I would like to provide an overview of our 2018 business results by region. In Europe, net sales totaled approximately $4.2 billion representing mid single-digit growth from prior year. The increase was a result of strong performance of our brands including Creon, DYMISTA and Influvac each with double-digit growth, new product sales and a favorable impact of foreign currency translation. In the Rest of World segment, net sales totaled approximately $3 billion, an increase of 7% from the prior year including headwinds in the foreign currency translation. This increase was primarily the result of new product sales across the region, strong performance of our ARV Franchise, whereas Japan, Australia and China also showed strength on higher volumes of existing products. Our business in North America had net sales of $4.1 billion, a decrease of 18% from the prior year. This was primarily impacted due to the lower than anticipated update of generic Copaxone and delayed approval of generic Advair. As part of our Morgantown remediation and restructuring activity and accelerated commoditization of oral solids, we discontinued almost 250 SKUs of highly commoditized oral solid products. North America benefited from some exciting launches of Fulphila, DAPTOMYCIN and exclusive 180 days of Tadalafil and full year impact of generic Copaxone. I will address Morgantown plant. After the April 2018 inspection and receipt of a 483 form the company took a comprehensive restructuring and remediation of the Morgantown plant to address the issues that had been identified. Notwithstanding these efforts, the company received a warning letter related to the previously disclosed observations in the fourth quarter. The issues raised in the warming letter are being comprehensively addressed. The Morgantown plant continues to supply products for the U.S. market, while we execute on and assess the restructuring and remediation…

Thank you, Rajiv, and good evening. I would like to reiterate the confidence you heard from Heather and Rajiv, and the overall performance of our business in 2018. I am proud of the many achievements from the past year, including the scientific advancements you just heard about which have positioned us well for long-term growth. In 2019 you will see our projected revenue growth in the mid-single-digit with 64% of our total revenue coming from outside of the U.S. Driving this growth will be an acceleration of our global key brands across Europe and Rest of World complement by a number of critical complex and specialty launches in the U.S. As we examine the evolution of our business, and look ahead at what it will take to continue our success, we recognize the importance of valuing future potential. As such, we plan to incrementally increase our sales and marketing investments around our complex, specialty and global key brand products with the understanding that these products require added attention to achieve their full long-term potential. We are shifting our SG&A spend guidance to approximately 21% to 22% of sales with the ultimate goal of advancing access for patients while driving profitable long-term growth. I will now walk you through a few of the key drivers and efforts already underway starting with North America where we're expecting high single digit revenue growth in 2019. Earlier this month we launched Wixela Inhub our generic Advair Diskus at a price point of 70% below the brand wholesale acquisition cost to insure savings for patient, as well as payers and employers. With the sales force of 150 individuals, we have optimized our market share with our pharmacy partners and are pleased with the early conversion levels. In addition to providing a lower cost alternative, we…

Thank you Tony and good afternoon everyone. I will take a few minutes to provide a quick overview of our financial results for 2018. For the full year both total revenues and constant currency revenues of $11.4 billion were 4% lower than the prior year. On a constant currency basis, net sales in Europe which was up 1% and Rest of World which was up 10% help to partially mitigate an 18% decline in North America. Excluding approximately $258 million related to the Morgantown restructuring and remediation expenses combined regional segment profitability declined 7% versus the prior-year. Europe grew 1% while Rest of World grew 21%. These combined results help to partially offset a 16% decline in North America mostly due to lower volumes on existing products including EpiPen as well as pricing declines. On a full-year basis, we reported adjusted net earnings of $2.4 billion and adjusted EPS of $4.58 which is within our previously communicated guidance range. Adjusted EPS versus the prior year primarily reflects benefits from ongoing integration activities and lower share count following the completion of our $1 billion share repurchase program in the beginning of the year offset by the impact of the decline in our total revenues and increased sales and marketing investments. As a reminder, we did not achieve the targets of our Blue Team 6 incentive program and there was therefore no payout under that program. Adjusted free cash flow for the 12 months ended December 31, 2018 totaled $2.7 billion that's an increase of $86 million compared to the prior year and above the high-end of our initial guidance range for 2018. The year-over-year increase reflects ongoing improvement in working capital velocity, as well as lower capital expenditures. 2018 adjusted free cash flow conversion was healthy at approximately 115% of adjusted…

[Operator Instructions] We'll take our first question from the line of Elliott Wilbur with Raymond James.

Thanks. Good afternoon. Question for the team I guess with respect to the step up or elevations in SG&A investment expected relative to historical implies something on the order of $250 million to $350 million of additional investment in absolute dollars and outside of the color commentary you provided throughout the course of the – your prepared comments. Just wondering if you could go into a little bit more detail on what and where exactly these investments are and what do they enable for you to do that you're not doing currently and how do they enhance your long-term growth for profile? I mean, did it set you up to bring in more assets like YUPELRI and TOBI? Just not really sure how to kind of think about this in terms of sort of how it may change your strategy and some of the growth initiatives going forward?

Surely. And I'll start and then anyone on the team that would like to also chime in. I think it's important you kind of teed it up yourself in your question when you said our historical ranges. I think that if I go back several years and look at our historical product portfolio, they're primarily generics, a large number of which were U.S. generics and as you know we pointed out on the chart a large number of those generics were more of that commodity based products. So if you think about from an SG&A perspective we have trended on the lower end because those types of products that require the sales and marketing behind them and obviously that's kind of how the U.S. generics industry work especially around this commodity type products. I think that as our evolution from both the acquisitions from Abbott and Meda, which obviously especially from Europe and Rest of World perspective, gave us a much larger portfolio around key brands, as well as OTC products. Those require investment and ongoing investment. So, while there are certainly some that we're maintaining because we've had them on the market a while. There's others that we see a value and kind of reinvesting more in. Because some of these products and other companies hand weren't getting the same level of investment that we are now saying kind of fruitful returns from. And then I would say just our evolution in North America both from that commodity type product and to the specialty and complex, as you know, I think as Tony walked through the kind of services and everything that goes around these more complex products, certainly cost more. And then I think last but not least when you look at things like our YUPELRI launch and…

Thanks, Heather. And I just might add Elliott I think as Heather outlined whether it's YUPELRI in North America along with Biologics our global key brands in Biologics in Europe and Amitiza and Sebivo in Rest of World is about increasing our share of voice, capturing additional market growth and getting more opposition touch points. Really as we invest in these resources not just from a marketing perspective but a selling and resource perspective it’s getting more with more that's really the opportunity we see ahead of us.

And Elliott I'll just add and maybe this is last comment on this. But you've heard us talk not just on this call but the last couple of calls about you identifying value creation assets, identifying those things that we want to do slightly differently with them. You can be assured that as we’re looking at this incremental investment to support growth in certain products that we’re putting very, very strong financial analysis around this. And that has been part of what's coming through this business transformation process as looking at not just what a product contributes that may be a gross margin level, but what is it takes for us to support that product whether it be in the launch phase or the life of the product. So to add on to what Heather and Tony both said is, you can be assured that we are putting financial disciplines around looking at returns on these investments whether it be in the area people or marketing. So we know what we're getting for the money that we do put out there.

And your next question comes from Ronny Gal from Bernstein.

Good evening. Thank you for taking the questions. So just starting with tax, is that fair that the new tax level you are describing is probably the go forward tax level we should expect from Mylan going forward. And then just want to ask a little bit about the strategic view when I look at some of the struggles we had with the financial markets over time some of that probably is resolvable with – like a private company. I mean I'm sure you consider the possibility how do you think about it and I'll stop there? Thank you.

So, Ronny, I'll take the tax question look as I called out in the in the comments there were a couple of statutory changes that happened at the beginning of this year and as we’ve talked about the impact of 2017 Tax Reform Act in the United States. And said really what happened to us with all of that is we had a minor negative impact whereas a lot of companies who were in the U.S. had a bigger favorable impact moving their tax rate down. The minor negative impact that affected us was really due to the minimum tax calculation that didn't fully come into play in 2018 but does come into play in 2019. So to your question out is this the new rate for us, I think it's probably close to the new rate. We have a great tax payment a good group of people that are kind of always looking at opportunities to evaluate if we can do something slightly differently, but I think that tax rate is probably the right thing to think about for us today.

Yeah. And Ronny as far as the strategic committee is concerned, so as I have said previously the committee is looking at lots of things and everything and is you should expect as they put that note out there it was to look at anything and everything that could unlock value. And while I don't want to speak for the committee it is my understanding that I think they're nearing completion of the review.

And your next question comes from Chris Schott with J.P. Morgan.

Great. Thanks very much. Just two quick ones here. First, we’re seeing a wider range of earnings for the guidance then we see in the past. Can you just elaborate a little bit more on what's behind this and maybe talk through some of the bigger swing factors in this year's guidance. And the second one is, I just want to come back to the SG&A discussion. I guess my question here will you be able to evaluate this year of these investments rather than the impact you could expect or is this a longer-term process that you’ll be able to evaluate the spent. And the type of spent coming here is this spend that you kind of turn off and on quickly if you're seeing areas is this working or isn’t working or treating about the small but sales rep and headcount that may be a little bit harder to scale down if you're not seeing the return? Thank you.

Okay. Chris, I’ll start off and then I’ll Ken or Tony chime in. So I think -- the wider range I think is just reflective of the volatility that we've seen in the marketplace and I think we’re trying to be respectful of that volatility and take kind of everything in consideration. As I said in my opening remarks, while we believe our platform has certainly proven to be more resilient and it’s not immune as we pointed out our 2018 we were at the lower end of that range. And we consider that to be very strong result in light of the fact that we didn't get approval on Advair in the year and we had much lower uptake on Copaxone. I think if you look at these opportunities, look they’re significant new but they’ve got significant dollars attached to it. So I think we try to take a very balance and measured approach to how we are weighing all those things in the business to make sure we’re kind of putting that right range out there that gives that right flow. And I think that as we look at the business really I look at our year-over-year growth and continuing that revenue growth in all of our segments it really just came down to making sure we provided those wings for the opportunity. The opportunities and risks that are always associated with this business around the globe and make sure that we’re putting something in there we think accounts for the right level of the assumptions now that we do have Advair approved and how we’re thinking about that uptake. And like I said what we see happening now with Copaxone and may have taken longer than we wanted to but as Tony pointed out we’re starting to…

Yeah. Let me add that to your last point about switch on, switch off yes in small some of the smaller countries the emerging countries where we see there are limited period opportunities we have that ability to switch on, switch off some of those SG&A expenses just because of using some of the contracted sources in those countries.

And Chris look I think hopefully you hear as you’re listening to all of this talk about the confidence in the business that really what this comes down to as we brought these businesses together and we’re spending more and more time digging into what's going on in the business and what we have as far assets we're excited about the opportunities that we have. And so as we think about investing -- as we do anytime we invest we’re going to do it with discipline and thoughts and metrics and thinking about where the money is best, but we feel really good about the position that we have the assets to invest in.

And maybe just to close it out when you think about the SG&A investments we’re making very strategic from a headcount perspective but good portion of the selling and marketing incremental growth we’re seeing is going to be just ramping up the advertising promotion or somebody’s key assets globally that do have some nimbleness in terms of future spend once we get into a level. We feel like it is grown appropriately.

And your next question comes from Gary Nachman with BMO Capital Markets.

Hi. Good afternoon. So regarding the remediation of Morgantown, how far will that stretch into 2019? I want to understand what's still involved and how long it will persist? And then outside of the issues at Morgantown, have you seen stabilization in the U.S. generic market continue? So far into 2019, what sort of base decline there are you assuming in the guidance? Thanks.

I'll start with the stability in the market place. As I pointed out in my opening remarks, I think, it's very difficult to look at the U.S. generic market and paint it with one brush. I think we have said for a while that portfolios are very different and so each company's intersection with what's happened in the marketplace is going to be very different. There's no question that I think value has been extracted out of the U.S. market place and I think we see that -- we've seen that daily over the course of the last several months especially as you look at consolidation of what's happened with our customers, as well as the ramp up of approvals of that fifth, sixth, seventh, eighth generic for products that as we would characterize in that commodity bucket. So, for us we have continued to see this mid single-digit decline or erosion in the business and we believe that from our perspective that is holding pretty steady. We think a driver for that for us for Mylan is because as we look at the U.S. generics market, we believe there's three distinct buckets. There's the commodity bucket, specialty bucket and the complex bucket and each of those require a different level of investment, a different up take, as well as different competitiveness in the marketplace itself. So from our perspective that is -- that diversification in the U.S. business has allowed us to absorb a lot of that volatility and like I said not be immune to it and I think that as we look forward we're kind of still seeing that mid single-digit erosion. I think the biggest difference for us is having the product new launches be able to offset that erosion and that's really been historically what has meant success in this business if your new product launches could offset your volume and price that that's what's made this -- that's what has made this market and I don't think that's changed. It's just I think the hurdles for some of those approvals have become higher and they're obviously more significant launches. So I – that’s perhaps a long winded answer but I think it's important that we're not just trying to characterize the entire U.S. generic marketplace and all the players like I said with one brush.

And regarding Morgantown plant, Gary, as I stated earlier, we continue to execute and assess our restructuring and remediation activities at the site to this 2019 and of course we are focused on meeting our commitments to FDA and as well as our customers. Now, as for any negative financial impact on the business, I think, we don't see that anymore as we go into 2019. As I've mentioned, it's I think largely behind us. We continue to supply from Morgantown our key products. We continue, as we said there's no new big launches or no new launches budgeted in 2019 from Morgantown and also from the materiality point of view only five out of our top 50 North American products today come from Morgantown.

And your next question comes from Liav Abraham with Citi.

Good afternoon. Just a couple of questions on new product revenues. Can you provide the new product revenues in 2019 total and apologies if I don't understand this? But when you talk about $1 billion of new product launch revenues in 2019, is that a $1 billion in total or an incremental $1 billion over 2018? And then any additional color you could provide on the breakdown of new product launch contribution in 2019 would be helpful either on a product basis or geographic basis? Thank you.

Look, the $1 billion is the total incremental year-over-year benefit of new product launches and it comes from a couple of places and I'll give you kind of the geographic order of magnitude. We had products that we’re launched in 2018, but haven't seen their full 12 months cycle yet. So the carryover benefit of those products is a part of the billion dollars that is new product launches until they hit their one year mark. So that's great because those products are in the market and we have a feel for how they're doing. Besides that what I would tell you is that out of that $1 billion call it somewhere around three quarters of it is probably in North America and the rest of it is split kind of evenly between Europe and Rest of the World just to kind of give you order of magnitude pieces there. And then if you want to kind of understand a little bit about the North America piece it will have a portion of that carryover component, but it also as where we have Wixela obviously and that's a significant contributor to new product launches in North America, which once again approval behind us launch is underway and we feel really good about the uptake on that. As far as contributions from these products, we’ve consistently said we’re not going call out anyone individually but what we said is these products have intended to contribute even with our partner arrangements at or above the Mylan average overall.

And your next question comes from Jason Gerberry with Bank of America.

Hi. Good evening. Thanks for taking my questions. I guess, the first question on biosimilars so has the strategy and a product like Fulphila in the U.S. fundamentally changed from last year or initially you may be the expectation was the GPOs would have driven the pull-through on a product like this and now the view was it to need a sales force much like the strategy of the Pfizer’s and Novartis of the world. And then also can you comment just how think about the generic Advair launch. Can you supply and have we tapped the market do you expect pharmacies to really drive direct switch and would you have unlimited Part D access? Thanks.

So maybe just Jason I think well first of all we had a very focused sales force on that product since launch we’re going to expand it because we see additional opportunities not just with this particular product on oncology but a whole breadth of products that we have today and in the future in oncology. So I don't that the strategy is changed tremendously from that product perspective we’re seeing over 15% market share growth to that pre-filled syringe business, we've been very selective on the customer's who went after and I think we feel very, very good about our performance of that launch and how it’s going to flow into 2019 and you had asked additionally about Advair.

Yeah. And regarding Advair we have a state of art dedicated facility, which is up and running and producing and shipping the product today and if opportunity comes we have enough capacity to supply the market.

And maybe just commenting on your Med D comment we know 50% of Advair usages is in the Med D space. I can tell you from products like Glatiramer we launched, initially we’re being block out at the Med D program with Wixela out of the top 10 Med D plans we have full parity and access on eight or 10 them at this moment two weeks of launch. So we feel very good about the initial ramp. We feel very confident about our capabilities from a supply and our pharmacy mix that we got from a customer perspective And we have high hopes moving forward.

And your last question comes from Umer Raffat with Evercore ISI.

Hi. Thanks so much for taking my question. I had one for Ken and one for Heather if I may. Ken there is a lot of feedback from Mylan investors on the low end of EBITDA guidance, especially also from the debt investors. So my question to you is this in 2019 the low end of revenue guidance is actually just about the same as 2018 actual revenues. So in that context why is the low end of EBITDA guidance so much lower than the actual 2018 EBITDA, especially considering SG&A should potentially be not as much if the revenues are not tracking towards the type of growth they should put up? And Heather was just curious if you could add some color on a couple of recent departures on the Chief Legal Officer and the Head of Europe side? Thank you very much.

So look I'll start with the modeling question around SG&A and revenues and EBITDA but look its right now what we're targeting as we go into this year is SG&A at a rate of 20% to 21% -- 21% to 22%, I am sorry. And as we do that that clearly is a level of investment on even the low end revenues where you said they were the same at the low end as what we have this year but it is an increased step up investment. So that drives EBITDA bit lower and it's very simply that. So now to your point around, as we move through the year we'll certainly watch these investments and ensure we're getting back from them what we're expecting to get and we may pull back a little bit on some of that investment, we may reallocate it somewhere else where we see it taking hold even stronger. But effectively I'd say it's pretty straight forward map, the same revenues with a slightly higher SG&A at either point on the range gives you lower EBITDA.

And as far as departures, I guess I'll just start with saying I think as having I'll say the longest which would I think fairly be accurate; the longest tenure management team here in continuity as you know, that's important to us and we think it's absolutely been one of the important aspects of Mylan's success and executing on our strategy and quite honestly what we have in front of us. As you know, yeah, we've had a couple departures starting with our Chief Legal Officer. I think not only is he just going back to private practice in D.C., but as we noted we're going to continue having a relationship in advisory capacity. So that's just kind of in the normal course. And as far as others throughout the organization, I mean, as you can imagine we've got over 30,000 employees and we have a lot of people coming and going. I think, certainly, like I said when you look at the top level of this executive management, we've been the longest tenured out there and that's very important and we've built a lot of great bench strength under us. So the exciting news is there continues to be great opportunities for current employees, as well as we're always looking at balancing that with bringing in new talent and new perspective. So I couldn't be more excited about the team we have and the opportunities to bring some new hires in. So, thank you. Thank you for asking that.

This does conclude today's Mylan fourth quarter 2018 earnings call and webcast. Please disconnect your lines at this time and have a wonderful day.