Q4 2021 Teva Pharmaceutical Industries Ltd Earnings Call

Speaker 1: A non-GAAP-valued EPS came in at $2.58, again in the middle of our guidance.

It just came in at $2 58 came.

Again in the middle of our guidance free cash flow of $2 2 billion also within our guidance and the debt reduction continues and the net debt is now reduced down to 29 billion. So it won't be long before we get below 20, which is nice if.

Speaker 1: cash flow at 2.2 billion also within our guidance and the debt reduction continues and the net debt is now reduced down to 20.9 billion so it won't be long before we get below 20.

Speaker 1: If we look at the business highlights, then of course we had to handle the COVID-19 pandemic, which continued. We were hoping at the beginning of the year that it would be over, but as we all know, it wasn't. It continued. And we did see, of course, a lot of challenges which we overcame operationally. So our whole operations worked out really, really well. I'd like to thank all our employees for a fantastic job all throughout the years.

If we look at the business highlights then of course, we had to handle the COVID-19 pandemic, which continued we were hoping at the beginning of the year that it would be over but as we all know it wasn't it continued and we did see of course, a lot of challenges, which we overcame operationally so our whole operation scoped out.

Really really well I'd like to thank all our employees for fences tastic job all throughout the years.

Then we did do a refinancing which I'll comment on we saw nice growth of a steady nice growth of Adobe and we are excited about launching risperdal. <unk> later this year and I'll comment on all of those in the following slides so with regard to the next slide please.

Speaker 1: Then we did do a refinancing, which I'll comment on. We saw a nice growth of Esteto, a nice growth of Joey, and we are excited about launching Respiradon LAI later this year, and I'll comment on all of those in the following slides.

Speaker 1: The number one question I always get from analysts and investors is of course on the litigation side. As you all know we have legacy opioid litigation dating back to somewhere between 2000-2010 and there is a lot of this. More than 3500 different cases are pending.

The number one question I always get from analysts and this is of course on the litigation side and as you. All know we had legacy opioid litigation dating back to somewhere between 2000 2010.

And there's a lot of this more than 3900 feet.

500 different.

Cases are pending.

Speaker 1: Now we've been making some progress recently and if I start with the court decisions, then to be very brief about it, we had a court decision which was a bench trial in Orange County, California, where it basically was stated that if you do everything correct and the prescriptions are correct, the products are in compliance with FDA regulations and DEA regulations, then there's no basis for claiming public nuisance liability. So that was a clear win for us.

Now we've been making some progress recently and if I start with the court decisions then to be very brief about it we had a court decision, which was a bench trial in Orange County, California.

Basically it was stated that.

If you do everything correct and the prescriptions are correct the products on compliance with FDA regulations.

<unk> regulations, and there is no basis for claiming public nuisance liability. So that was a clear win for us than J&J had a verdict in the Oklahoma Supreme Court, which was again a clear win again seeing that you cannot use public nuisance. When you have products that are completely in compliance with all the rules and regs.

Speaker 1: Then J&J had a verdict in the Oklahoma Supreme Court, which was again a clear win, again saying that you cannot use public nuisance when you have products that are completely in compliance.

Relations and then there was a jury trial in New York, where we lost and we were found to be viable. So it was actually the state of New York as well so that was an interesting verdict.

Speaker 1: And then there was a jury trial in New York where we lost and we were found to be viable. So was actually the state of New York as well. So that was an interesting verdict. There's a mistrial.

Ms trial.

Motion pending due to arguments from the 80 at the end of the.

Speaker 1: motion pending due to arguments from the AT at the end of the trial which were not.

The trial, which was not correct.

Speaker 1: So if we then switch to the settlement front then you all know we had a settlement in Louisiana some time ago and now we've had a settlement in Texas. Both these settlements combine a cash compensation and providing products in the case of Texas.

So if we then switch to the settlement front. When you all know we had a settlement in Louisiana, Some time ago and now we've had a settlement in Texas. Both these settlements combined.

Cash compensation.

And providing products in the case of.

Texas, it's generic Narcan spray and that's a product you use when you have an overdose situation. So we are very happy about the settlement and we think it's a good way forward. It makes sense for it takes us to get some resources to take care of people suffering from substance abuse and it makes sense to get the generic narcan spray.

Speaker 1: generic Narcan spray and that's a product you use when you have an overdose situation. So we're very happy about this settlement. We think it's a good way forward. It makes sense for Texas to get some resources.

Speaker 1: care people suffering from substance abuse and it makes sense to get a generic Narcan spray which can help people in an overdose.

<unk>, which can help people.

Overdose situation so.

Speaker 1: So I'm always optimistic as you know. So I'm still optimistic that we can reach a nationwide settlement within the next 12 months. I've said that before. I'm still believing in that and I think that the Texas settlement will be a good starting point for those ongoing discussions. We move to the next.

I am always optimistic as you know so I'm still optimistic that we can reach a nationwide settlement within the next 12 months I've said that before im still believing in that and I think that the Texas settlement will be a good starting point for those ongoing discussions.

Move to the next slide.

Speaker 1: And here you can see our revenues from the year.

And here you can see our revenues throughout the year.

Speaker 1: And you'll see that we had a bigger revenue in Q420 than we had in Q421.

And Youll see that we had a bigger revenue in Q4 'twenty than we had in Q4 dollars 21, and the reason for that is really that we launched truvada in a triplet generic truvada in a triple X in Q4 'twenty.

Speaker 1: And the reason for that is really that we launched Truvada and a Tripler, generic Truvada and a Tripler back in Q420.

Speaker 1: and we didn't have the similar big launch in Q4 21. Other than that, you could say it's really very steady business.

And we didn't have the similar big launch in Q4 'twenty one other than that you could say, it's really a very steady business and you can see from the from the different components.

Speaker 1: And you can see from the different components, Europe , international markets and so on, that they are very steady and performing quite well.

<unk> international markets and so on that they are very sticky.

Holding quite well.

We go to the next slide.

Speaker 1: So in the US marketplace we have two main growth drivers and that's as Estadil and a Joe. We can, let's look at Estadil first. You can basically see that we continue to increase our script count per quarter, basically more and more people are getting on the therapy. And you can see that we also on an average basis.

So in the U S marketplace, we have two main growth drivers and Thats stable and agile we can let's look at a steady pace you can basically see that we continue to increase our script count for the quarter basically in more and more people are getting on the therapy and you can see that we also.

On an average basis.

Speaker 1: continue to increase revenues quarter by quarter. It's a little up and down as you can see, we have some swings here. And that's basically because you see some volatility sometimes with the wholesalers, we did see some, what you call the spec buying in the fourth quarter, that's basically in anticipation of a price increase.

<unk> to increase revenues quarter by quarter, it's a little up and down as you can see we have some swings here and thats basically because you see some volatility sometimes the wholesalers. We did see some what you call a spec buying in the fourth quarter that's basically.

In anticipation of a price increase which is traditionally taken at the beginning of the year. So early January .

Speaker 1: traditionally taken at the beginning of the year, so early January , wholesale are sometimes by-product, of course, to avoid the price increase, and we saw a bit of that, but on the line there's a very strong correlation between the nice growth in the scripts and patients and the nice growth in revenue, and we expect revenue, of course, to continue to grow throughout this year. Why can we expect that?

I'd say theyre subtypes byproduct.

Of course to avoid the price increase and we saw a bit of that but underlying that is a very strong correlation between the nice growth in scripts and patients and the nice growth in revenue and we expect revenue of course to continue to grow throughout this year.

Why can we expect that let's look at the next slide.

Basically because.

Speaker 1: Prostate is indicated for Huntington's disease, Korea and Huntington's, so involuntary movements in Huntington's, but it's also indicated for...

<unk> is indicated for.

Huntington's disease chorea in Huntington's, so involuntary movements in Huntington's, but is also indicated for tardive dyskinesia.

And Charles Dyskinesia or these are significant involuntary movements that are socially.

Speaker 1: The third part of this Kinesia are these significant involuntary movements that are socially debilitating and that can really be a big problem for the patient suffering from it.

Debilitating and that can really be a big problem for the patient suffering from this.

There is around 500000.

Speaker 1: patients or persons in US sovereign from China's skin issue. It's on the diagnosis and it's on the treated, how estimated is it less than...

Patients or persons in U S sovereign from tardive dyskinesia.

Under diagnosed and it's under treated our estimated at less than 6% is treated as we speak and of course, we are working to broaden that base, making sure that the benefit of the product will reach more patients. This will drive increased scripts and we will of course also drive increased revenues for sale.

Speaker 1: treated as we speak. And of course we are working to broaden that base, making sure that the benefit of the product will reach more patients. This will drive increased scripts and will of course also drive increased revenues for our state. So we are also, like I said before, optimistic that we will see increased patient numbers throughout the current year.

So we are also like I said before optimistic that we'll see increased <unk>.

<unk> numbers throughout the current year.

If we move to the next slide.

Speaker 1: Then we are looking at a JOE. As you know a JOE is preventive therapy for migraines.

Then we are looking at Joey as you know Adobe is preventive therapy for migraine.

Speaker 1: We are competing with two other products. We have the longest acting product profile.

We are competing with two other products we have.

Have the longest acting.

Product profile, which basically means that our product can be used both monthly and quarterly which is of course a benefit.

Speaker 1: basically means that our product can be used both monthly and quarterly.

Speaker 1: of course, a benefit that flexibility for patients and the long duration also means that you have a very steady clinical action profile. So good if you can see on the product. We continue to grow scripts in the US, as you can see. A lot of users in the US.

Its ability for patients and the long duration also means that you have a very steady clinical action profile. So good efficacy on the product.

We continue to grow scripts in the U S. As you can see a lot of users in the U S. And we continue also to grow our scripts in EU and also our market share and here you see that our market share. The last one we have four in November I believe is now around 28% and we have changed our ambition we started out with an <unk>.

Speaker 1: and we continue also to grow our scripts in EU and also our market share. And here you see that our market share, the last one we have for an Omen by Belief, is now around 28 to say.

Speaker 1: And we have changed our ambition. We started out with an ambition some years ago, because we launched this number three.

Some years ago, because we launched this number three of.

Speaker 1: of having more than 20% here than we moved it to 25. And now we have an ambition of a piece having a third of the market both in Europe .

Of having more than 20% share then we move to 225 and now we have an ambition of at least having a third of the market both in U S.

Europe .

Speaker 1: We also just launched in Japan with our partner, Tsukka, and we're very happy about the performance of a Jovi and confident that the product will keep on increasing revenues in the current year. We take a look at the results of the COVID-19 pandemic.

We also just launched in Japan, with our partner Otsuka, and we're very happy about the performance of a jewelry and confident that Prada.

Product will keep on increasing revenues in the current year.

If we take a look at our pipeline.

Speaker 1: Then we have a lot of exciting products here. It's a very big, by similar portfolio, which I'll comment on in just a moment. We have some exciting bio-fansuitical products in development.

Then we had a lot of exciting products here.

Very big Biosimilar portfolio, which I'll comment on in just a moment, we have some exciting biopharmaceutical products in development and then we have the Risperidone and AI, which has been filed with FDA and we're looking forward to getting an approval hopefully in the middle of this year.

Speaker 1: And then we have the respired on LAI, which has been filed with FDA, and we are looking forward to getting an approval, hopefully in the middle of this year. And then we just talk a little bit more in detail about respired on LAI. If we move to the next slide.

And let me just talk a little bit more in detail of Risperidone.

If we move to the next slide.

Speaker 1: Then the spirit on L.A.I. is for patients with schizophrenia. It's an anti-starchotic. And in the phase-week trial, it showed phenomenal effects.

Then the spirit on NII.

As for patients with schizophrenia, it's an antipsychotic.

And in the phase III trial, it shows phenomenal efficacy so you'll see here the risk of relapse was reduced by up to 80% versus placebo.

Speaker 1: So you see here the risk of relapses was reduced by up to 80% versus placebo. So that's one of the best results you can find for a long-acting anti-psychotic.

One of the best results you can spine for.

Long acting anti Psychotics, so I'd say, its a really really efficacious products and it's also the easiest product to use and what do I mean by that while many of the long acting anti psychotics in Portugal into muscular injection, which means you have a relatively long needle and you need to make a depot.

Speaker 1: So it's a really, really efficacious product and it's also the easiest product to use. And what do I mean by that? Well, many of the long acting and psychotics have what you call intermospular injection, which means you have a relatively long needle and you need to make a depot in the muscle tissue. That is relatively painful and complicated. So the administration of the products is not...

In the muscle tissue that is relatively painful and complicated so.

So the administration of the products is not that easy this product you inject subcutaneous with a very small short needle. It's a low volume of injection and you can inject in different places. So it's basically an easy way to get your therapy that is efficacious.

Speaker 1: This product you inject subcutaneous with a very small short needle. It's a low volume of injection and you can inject in different places. So it's basically an easy way to get your therapy that is as efficacious if not more.

Acacia is not more efficacious than anything else. So we expect to see a very good launch of this product once we get approval and we are very much looking at looking forward to this and bringing the benefits to the patients suffering from schizophrenia, who need stable therapy in order to avoid relapses, which can really hurt.

Speaker 1: than anything else. So we expect to see a very good launch of this product once we get approval and we're very much looking forward to this.

Speaker 1: patients suffering from schizophrenia, who need stable therapy in order to avoid relapses which can really hurt their cognitive function.

Cognitive function capability.

Speaker 1: So let's go to the next slide where I'll give you just a little of the heads up on our biosumilar portfolio. So we have 13 biosumilar developments about half of them are in house programs, half of them are programs that we have in life.

So let's go to the next slide where I'll give you just a little of the hits up on our Biosimilar portfolio. So we have 13 biosimilars in development about half of them are in house programs half of them.

<unk> that we have in licensed it is a very strong portfolio roughly we are addressing some 80% of the value that goes off patent in the coming years.

Speaker 1: a very strong portfolio. Roughly we are tracing some 80% of the value that goes off patent in the common years.

Speaker 1: And we believe we can grab a good share of that value. Of course, there are other competitors, but if you look at Proxima, which was the biosimilar, or which is the biosimilar of retoxin, or biosimilar, then right now we have a 28% volume market share, which we think is very good.

And we believe we can get a good share of that value of course, there are other competitors, but if you look at <unk>, which was.

The Biosimilar, which is the Biosimilar rituxan.

Rituxan Biosimilar and right now we have.

28% volume market share, which we think is very good and it's a nice product for us. It has shown stability in the marketplace also on the pricing. So so we're very optimistic about the commercial potential of our biosimilar.

Speaker 1: and it's a nice product for us. It has shown stability in the marketplace also.

Speaker 1: So we were optimistic about the potential of our biosimilar.

Speaker 1: And it will of course also add increased access for populations around the world just like generic products studies. So does bio-similar products ensure access to important medicines worldwide. Also in Europe we are launching products now and we'll have a listen to bio-similar that we launched during the process.

Portfolio and it will of course also at increased access for populations around the world just like generic products does so does biosimilar products ensure access to important medicines worldwide also in Europe . We are launching products now and we will have a lucentis biosimilar.

Launch during this year.

Speaker 1: Now we've also always been focused on our cross-martin and operating margin.

Now we've also always been focused on our gross margin and operating margin.

And I won't go into all the details yet but.

Speaker 1: But what I will tell you is it's not a coincidence when you see how much

But what I will tell you is it's not a coincidence when you see our margins improving it's a lot of work.

Speaker 1: There's a lot of work by thousands of people in our organization, in our manufacturing organization, in our procurement organization, basically optimizing all the classical elements of manufacturing. And you see some of the headlines here for procurement, network, operational excellence, end-to-end supply chain, agile operations.

The people in our organization and our manufacturing organization and our procurement organization basically optimizing all of the classical elements are manufacturing and Youll see some of the headlines year procurement network operational excellence end to end supply chain agile operations. So these are all.

Speaker 1: So these are all the classical things and if you're interested in manufacturing optimization

All the classical things and if you're interested in manufacturing optimization you can rest assured that we're doing all the things that you can do it takes time, it's not something that happens overnight, but we are well underway and we have hundreds of specific projects that will contribute to a continuation of margin expansion over the coming years.

Speaker 1: You can rest assured that we're doing all the things that you can do. It takes time, it's not something that happens overnight, but we are will on the way and we have hundreds of specific projects that will contribute to a continuation of margin expansion over the coming.

Speaker 1: Now one of the very simple ways to explain this is to look at the number of sites. So you take the next slide.

Now one of the very simple ways to explain this is to look at the number of sites. So you could take the next slide.

Speaker 1: Yeah, we're showing you how we have been integrating the company since I joined in 2007.

We are showing you how we have been integrating the company since I joined in 2017, you have to remember that Teva is a company is created by more than 20 acquisitions over more than 20 years.

Speaker 1: You have to remember that Tabar as a company is created by more than 20 acquisitions or more than 20.

Speaker 1: And that leaves a very complex footprint of offices, of manufacturing sites, of iron.

And that leaves a very complex footprint of offices of manufacturing sites R&D sites, but it also leaves a lot of capabilities. So the trick here is to keep all your capabilities keep all your operational strengths, but consolidate your sites. So then you get more efficient bigger sites fewer sites.

Speaker 1: But it also leaves a lot of capabilities. So the trick here is to keep all your capabilities, keep all your operational strengths, but consolidate your sights so they can get more efficient. Biger sights, fewer sights.

Speaker 1: And here you can see over the last five years, how we've gone from 80 manufacturing sites down to around 50. And we have plans to continue this. So the next couple of years, we will be divesting or decommissioning probably around another 10 sites. So this evolution will continue. The same thing will of course happen for our other sites and our R&D sites. So continue to optimization, more to come in the company.

And here you can see over the last five years, we've gone from 80 manufacturing sites down to around 50.

And we have plans to continue this over the next couple of years, we will be divesting or decommissioning probably around vanilla 10 sites. So this evolution will continue the same thing will of course happen for our office sites and our R&D sites. So continued optimization more to come in the coming years.

Speaker 1: Now if we take and look at an example here, our European...

Now if we take and look at an example here our European business.

Speaker 1: then you will notice here that the operating margin is...

You will notice here that the operating margin is improving.

Speaker 1: Now the operating margin basically improves for two reasons. One is the glass margin improvements that I just talked about. But the other one is, as you consolidate your commercial offices, as you consolidate your commercial operation and optimize that, then of course also you would say your commercial cost is per se enough sales also comes down. And those two factors.

The operating margin basically improves for two reasons. One is the gross margin improvements that I just talked about but the other one is as you consolidate your commercial offices as you consolidate your commercial operations and optimize that and of course also you would see your commercial costs as a percent of sales also comes down and though.

These two factors have been driving up the operating margin.

Speaker 1: have been driving off the operating margin. In Europe , you can see here from 25 to 31%, a very, very nice and strong development. And again, something that would continue to improve.

In Europe , you can see from 25% to 31%, a very very nice and strong development and again something that will continue to improve.

Speaker 1: Mainly now with the contribution from the brass mannequin, because we're getting closer to having optimised the commercial footprint in both Europe , US and Indonesia.

Mainly now with the contribution from the gross margin because we're getting closer to having optimized the commercial footprint in both Europe U S and international markets, but I've talked a lot about marketing system take a look at the operating margin here you can see here, how we had a bad run down.

Speaker 1: But I've talked a lot about Martin's sister to take a look at the operating Martin here.

Speaker 1: here how we had a bad run down from 28.8 in 17 down to 24.5 in 19 that is really driven by the significant drop in compaction revenues as a consequence of the patent expiry on compaction.

From $28 eight in 2017.

Down to 24, 5% and 19 that is really driven by a significant drop in copaxone revenues as a consequence of the patent expired on copaxone.

Speaker 1: Now, the corruption is now down as you know, this year will be less than a building in revenue. So it's not a major factor in our market anymore. And we've been working hard to improve the gross margin as I told you, and the operating margin. And we set a target five years ago, or actually four years ago, but for the end of the 2023, then it will be a five-year target from 18 to 23. And that target is 28.

<unk> is now down as you know this year it will be less than $1 billion in revenue. So it's not a major factor in our margin anymore and we've been working hard to improve the gross margin as I told you in the operating margin and we set a target five years ago.

Actually four years ago, but for the end of 2023, and then it will be a five year target from 18% to 23 and that target is 28% and as you can see.

Speaker 1: And as you can see, we are very well on our way to hit that. And I've always said that we won't bring out new targets until we hit our target. But it might just be that we get so close that in the later part of this year, we will actually share with you future targets so that you don't get the wrong impression that we'll be stopping at 28. We will continue to drive off of Rating Margin since that The

Very well on our way to hit that.

And I've always said that we won't bring out new targets until we hit our target, but it might just be that we get so close that.

In the later part of this year, we will actually share with you future targets. So that you don't get the.

The wrong impression that we will be starting at 2008, we will continue to drive operating margin since that's a key element of our strategy and why is it so important.

Speaker 1: key element of our strategy and why is it so important? Well, the next slide tells you something about why it's important. It's because we have a standing point with too much depth.

The next slide tells you something about why it's important is because we have a starting point with too much debt. So we need to drive down the debt and the only way to drive down the debt is to generate cash flow and allocate the cash to reducing debt and the way to generate the cash flow is of course to have a higher operating margin. So therefore, the whole thing of course.

Speaker 1: So we need to drive down the dead and the only way to drive down the dead is to generate cash flow and allocate the cash to reducing debt. And the way to generate the cash flow is of course to have a high operating margin. So therefore the whole thing of course fits together.

Which together and you see here, how we have been taking down debt since 2000 team with some roughly 13 billion in the same period. We've of course been paying interest rates about $1 billion a year. So you could say that we have.

Speaker 1: And you see how we've been taking down deaths in 17 with some roughly 13 billion. In the same period we've of course been paying interest rates about a billion a year. So you could say that we have paid 17 billion dollars to the bondholders over the last years. This will continue in the coming years.

Page $17 billion to the bondholders over last years. This will continue in the coming years and then of course, you can all calculate that there will be a nice time, when we don't need to allocate all.

Speaker 1: And then of course you can all calculate that there will be a nice time when we don't need to allocate all. Our excess liquidity and cash to bondholders, but we can at some point in time in the coming years, start allocating cash to the shareholders, which will of course be a big pleasure to reach that point.

Excess liquidity and cash to bondholders, but we can at some point in time in the coming years start allocating cash to the shareholders, which will of course.

Pleasure to reach that point.

Speaker 1: Now on the way to that, we of course need to manage our depth and what we call the depth stacks. That's really how much state you need to repay every year. You need channel good balance between your operational cash flow and the debt you are paying back every year.

Now on the way to that we of course need to manage our debt and our what we call. It stacks, that's really how much debt you need to repay every year and each had a good balance between year operational cash flow and the debt youre paying back every year.

Speaker 1: And last year we did a successful refinancing.

And last year, we did a six.

Kessel refinancing of the $5 billion, so basically we borrowed $5 billion by selling bonds, and we repaid debt by $5 billion by checking out existing bonds.

Speaker 1: of 5 billion dollars. So basically we borrowed 5 billion by selling bonds and we repaid that by 5 billion by checking out existing bonds from the mind. All with the purpose of getting a more flat repayment profile so that we are repaying for the next three years what matches our operating cash flow and that means that liquidity wise that's a good balance between the liquidity we generate.

The market all with the purpose of getting a more flat repayment profile. So that we are repaying for the next three years what matches, our operating cash flow and that means that liquidity wise. That's a good balance between the liquidity, we generate and repaying the bonds over the next three years.

Speaker 1: and repain the bonds over the next three years.

Speaker 1: Now we did this in a new fashion we issued what's called sustainability link bonds.

Now we did this in a new fashion, we issued let's call sustainability linked bonds.

Speaker 1: And that's a new thing which makes a lot of sense for us, because you know we are the world's leading generic farmer company. And what do we do? Well, we really supply medicines to hundreds of millions of people in high quality, so they can check care of their health.

And then that's a new thing, which it makes a lot of sense for us because you know we are the world's leading generic.

Pharma company and what do we do well, we really supply medicines to hundreds of millions of people and high quality. So they can take care of their health issues. How can we do things better for the world will basically by supplying more high quality medicines at a low cost to society is all over the world and if you look at the sort.

Speaker 1: How can we do things better for the world will basically by supplying more high quality medicines and a low cost to societies all over the world. And if you look at the sort of targets we set up for these sustainability link bombs.

The targets, we set up for the sustainability linked bond and the first target is a classical climate change targets. So it's a reduction in greenhouse gases.

Speaker 1: And then the first target is a classical climate change target. So it's a reduction in greenhouse gases by 2025. And we are well on our way to do that. And actually it's funny because the reduction in greenhouse gases goes hand in hand with improved of the gas margin. Because the best way to improve your climate footprint is to use less resources. So the more efficient you manufacture, the less resources you use in manufacturing, the better.

By 2025, and we are well on our way to do that and actually it's funny because the reduction in greenhouse gases goes hand in hand with improvement of the gross margin because the best way to improve your climate footprint is to use less resources. So the more efficient to manufacture this resource.

As you use in manufacturing the less burden you ought to the environment and the beta is your gross margin. So the financial targets go hand in hand, with the environmental targets on axis.

Speaker 1: burden you are to the environment and the better is your gross marketing. So the financial targets go hand in hand with the environmental targets. On axis.

Speaker 1: This is a thing we can do better than probably anybody else. We can manufacture the medicines that are on WHO's essential medicines list, really what society needs to have a basic health care system. We can ensure that these medicines get regulatory approval in low and middle income countries, and then we can ensure that actual volumes of the medicines are brought to the patients in these countries, all helping the health.

This is a thing we can do better than probably anybody else. We can manufacture the medicines that are own WH OS essential medicines list really what society needs to have a basic health care system. We can ensure that these medicines, it's regulatory approval in low and middle income countries and then we can ensure that.

The actual volumes on the medicines are brought to the patients in these countries all helping the health care systems. So that's what we're committed to doing and Thats what.

Speaker 1: So that's what we committed to doing and that's what we will be doing in the coming years and reporting on, of course, so that everybody can see that we meet the targets of these newborns.

What we will be doing in the coming years and reporting of course, so that everybody can see that we meet the targets of these new bonds now I talked about the debt maturity profile. Just a quick look here of what we did so we took out you.

Speaker 1: Now I talked about the dead maturity profile just a quick look here of what we did. So we took out, you would say bonds, matured in 22, 23, 24, and we pushed it into 29 and 30. And you can see basically taking the next three years down to around the two billion mark.

You would say bonds maturities in 'twenty, two 'twenty three 'twenty four and we pushed it into 2728, sorry, 2007, 2930, and you can see basically taking the next three years down to around the 2 billion Mark and you can also see here that we will need to do one last refinancing before we get too.

Speaker 1: And you can also see here that we will need to do one last refinancing before we get to 25, 26, 27, probably of around 3 to 4 billion. Again, taking those steps back to a level of around 2 by pushing something into 31, 32 and so on. And that will be the last time we need to do that. Then we'll have balance.

$25, 26, and 27% probably of around $3 4 billion again, taking those debt stacks to a level of around two by pushing something into you know 31 32 and so on.

And that will be the last time, we need to do that then we will have balance.

Speaker 1: for the rest of the time between the dead repayments, the maturities and our ovaries.

For the rest of the time between the debt repayments, the maturities and our operating cash flow.

Now that takes me to my last slide which is.

Speaker 1: Now, the Technit to My Last Slide, which is a nice, boring, good slide, which has been lessons in 2018. It just tells you that we're sticking to our long-term financial targets.

Nice Owen good slide which has been there since 2018. It just tells you that we're sticking to our long term financial targets operating income margin of talked about it already 28% has to earnings above 80 to secure we have the cash for the debt repayments and net debt of course coming below three times.

Speaker 1: Operating income market I talked about it already 28% has to earnings above 80 to secure We have the cash for the debt repayments and that debt of course coming below three times If it's that by the end of 23 and the all this is of course Predicated upon what you see here that we're committed to utilizing our cash to pay down debt and we don't plan to raise any equity We think our patient equity holders

The EBITDA by the end of 'twenty three and all of this is of course predicated upon what you see here that we are committed to utilizing our cash to pay down debt and we don't plan to raise any equity we think outpatient equity holders.

Speaker 1: to see the overhead litigation go away and the debt come down and get the full value benefits of that wind that happens. You mentioned it. And with that I'll hand over to

To see the opioid litigation go away and the debt come down and get the full value benefit of that when that happens eventually and with that I'll hand over to our CFO .

Speaker 2: Thank you, Court, and good morning, and afternoon to everyone. I'll begin my review of our 2021 financial results with my main focus being on the fourth quarter.

Thank you cord and good morning, and afternoon to everyone. I'll begin my review of our 2021 financial result, with a main focus being on the fourth quarter performance.

Speaker 2: This will be followed by an introduction of our 2022 non-Gap guidance and some of the important assumptions behind...

This will be followed by an introduction of our 2022 non-GAAP guidance and some of the important assumptions behind it.

Speaker 2: While most of the discussions around 2022 guidance will come at the end of my present

While most of the discussion around 2022 guidance will come at the end of my presentation in a few spots along the way I will touch upon our expectation regarding forward looking trends to assist you with your modeling.

Speaker 2: In a few spots along the way, I will touch upon our expectation regarding forward looking trend to assist you with your model names. Beginning on slide 23.

Beginning on slide 23.

I would like to start with our Q4 GAAP performance.

Revenue in the fourth quarter of 2021 were $4 1 billion a decrease of 8% in both the U S dollar and local currency terms compared to the fourth quarter of 2020.

Speaker 2: Revenue in the fourth quarter of 2021 were 4.1 billion, at a rate of 8% in both US dollars and local currency terms compared to the fourth quarter of 2020.

Speaker 2: This decrease was mainly due to a low revenue from generic products in North America and Capac Son Partially offset by high revenues from a settle energy

This decrease was mainly due to lower revenue from generic products in North America and Copaxone.

Offset by higher revenues from our federal and Adobe.

Speaker 2: As Cor mentioned earlier, our revenue continued to be affected by the ongoing impact of the COVID-19 pandemic on markets and on customers talking and purchasing products.

As Paul mentioned earlier, our revenue continued to be affected by the ongoing impact of the COVID-19 pandemic on market and on customer stocking and purchasing pattern.

Speaker 2: For the sake of a year-over-year comparison, I would like to note that Q4 2020 included a generic product sales in Japan totaling 73 million and approximately 240 million for the full year of 2020.

For the sake of year over year comparison, I would like to note that Q4 2020 included generic product sales in Japan totaling $73 million and approximately $240 million for the full year of 2020.

Speaker 2: as we have previously communicated. This product were divested as of February 1st, 2021, along with the manufacturing site in Japan.

We have previously communicated this products were divested as of February one 2021, along with a manufacturing site in Japan.

Speaker 2: as we have discussed in the past. The decrease we are seeing in our revenues from generic products in North America was mainly driven by the fewer generic products launches in 2021 compared to 2020.

As we have discussed in the past the decrease we are seeing in our revenues from generic product in North America was mainly driven by fewer generic product launches in 2021 compared to 2020.

Speaker 2: Foreign exchange rate movements during the fourth quarter of 2021 net-offhaging effects negatively impacted revenues by 19 million compared to the fourth quarter of 2020

Foreign exchange rate movements during the fourth quarter of 2021 net of hedging effects negatively impacted revenues by $19 million compared to the fourth quarter of 2020.

GAAP operating income was $78 million in Q4, 'twenty, one compared to $406 million in Q4 2020.

Speaker 2: Gap operating income was 78 million in Q421 compared to 406 million in Q42020.

Speaker 2: We had a net loss of 159 million Q421 compared to the net income of 150 million in Q4 2020.

We had a net loss of $159 million in Q4, 'twenty, one compared to the net income of $150 million in Q4 2020.

Turning to slide 24.

Speaker 2: You can see that the Nangat adjustment in the first quarter of 2021 were billion and twelve million.

You can see that the non-GAAP adjustment in the fourth quarter of 2021 $1.012 billion with approximately.

Speaker 2: Approximately the 63 million Q4 20- 20.

$630 million Q4 2020.

Speaker 2: NANGA's net income and NANGA's earning per share for the fourth quarter of 2021 were adjusted to exclude the side of the...

non-GAAP net income and non-GAAP earnings per share for the fourth quarter of 2021 were adjusted to exclude these items.

Speaker 2: In Q4 2021, the near ability related to the opiification was increased by approximately 600

In Q4, 2021, then the ability related to the August litigation was increased by approximately $600 million.

Speaker 2: Additional notable NAND gap adjustments include a mortization of purchased, intangible assets totaling 188 million, the majority of which is included in cost of goods toll, and in terms of long-lived assets totaling 183 million. Moving to slide 25.???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Additional notable non-GAAP adjustments include amortization of purchased intangible assets totaling $188 million. The majority of which is included in cost of goods sold and impairment of long lived assets totaling $183 million.

Moving to slide 25.

For a review of our non-GAAP performance.

Speaker 2: I have already discussed our fourth-floor revenue, which does not have a proclivity 4.1.

I've already discussed our fourth quarter revenue.

Still total approximately $4 1 billion.

Speaker 2: I know revenues worth 15.9 billion at a climb of 5% compared to 20.

Revenues were $15 9 billion, a decline of 5% compared to 2020.

Now, let's move down the P&L and look on the margin yeah.

Speaker 2: Now let's move down the P&L and look on the margin.

Speaker 2: year over year, total non-gas cross-profit margin improves to 54.2%, compared to 52.4% in 2020.

Year over year total non-GAAP gross profit margin improved to 54, 2% compared to 52, 4% in 2020.

Speaker 2: Our Q421 Nan-Gap-RUS profit margin improved to 56.1% compared to 52.3% in Q420.20.

Our Q4, 'twenty, one non-GAAP gross profit margin improved to 56, 1% compared to 52, 3% in Q4 2020, the increase in non-GAAP gross profit margin both for the quarter and the year to date was mainly driven by improved profitability from the change in our generic product portfolio mix mainly in.

Speaker 2: The increasing non-GAP growth profit margin, both for the quarter and the year to date, was mainly driven by improved profitability from the change in our generic portfolio mix, mainly in our North America segment, higher sales of Estero and the Joby, as well as higher profitability in Europe and international markets, partially offset by low revenue from THIS

Our North America segment, higher sales of etcetera, and Adobe as well higher profitability in Europe , and international market, partially offset by lower revenue from just the generic competition.

Speaker 2: The increase in our non-gap gross profit margin was also driven by improved profitability due to our ongoing efforts to optimize our cost of goods.

The increase in our non-GAAP gross profit margin was also driven by improved profitability due to our ongoing efforts to optimize our cost of goods sold.

Speaker 2: Our non-gap operating margin was 30.4% versus 25.6% if you 422.

Our non-GAAP operating margin was 34% versus 25, 6% in Q4 2020 distinct.

Speaker 2: was driven mainly by higher growth profit. Margin mentioned above.

This increase was driven mainly by higher gross profit margin mentioned above.

Speaker 2: 2021 NANGA POPORATING Margin was 27.7% versus 26.3% in 2020.

2021, non-GAAP operating margin was 27, 7% versus 26, 3% in 2020.

Speaker 2: Our non-gas financial expenses in 2021 were mainly comprised from interest expenses. We're 930 million.

Our non-GAAP financial expenses in 2021 were mainly comprised from interest expenses were 930 million looking ahead to 2022. Following the recent refinancing we expect our finance expenses increased marginally to an annual run rate approximately $1 billion.

Speaker 2: Looking ahead to 2022, following our recent refinancing, we expect our finance expenses to increase marginally to an annual run rate approximately one billion.

We ended the quarter with a non-GAAP , earning per share of <unk> 77.

Speaker 2: We enter the quarter with a non-gas earning per share of 77 cents compared to 68 cents in Q4 2020 mostly view to a lower spend base.

Compared to 68 million in Q4, 2020, mostly due to a lower spend base.

Turning to slide 26.

We see that our quarterly spend base declined by approximately 14% looking at the year to date comparison, our spend base declined $794 million or $971 million net effective.

Speaker 2: We see that our quarterly spend base declined by approximately 14...

Speaker 2: Looking at the year-to-date comparison, our spend-based decline, 794 million, or 971 million net-of-fifth.

Speaker 2: Most of the annual decrease was due to a lower cost of boost sold partially related to a lower annual still as well as our ongoing efforts to transform our global operational net.

Most of the annual decrease was due to a lower cost of goods sold partially related to a lower annual sales as well as our ongoing efforts to transform our global operational network.

Speaker 2: The lower operating expenses also contributes to the decline in our spend base, mainly due to the ongoing active management of such expenses.

Lower operating expenses also contributed to the decline in our spend base, mainly due to the ongoing active management of such expenses.

Speaker 2: Looking ahead to 2022, we expect the overall spend base to be remained below 12 billion. As we continue to focus on our efforts on reducing our cost of good souls through procurement cost of excellence, network optimization and restructuring, operational and quality excellence, and to ensure supply chain integration and an agile operating model in

Looking ahead to 2022, we expect the overall spend rate to remain below $12 million as we continued to focus on our efforts on reducing our cost of goods sold through procurement cost of excellence network optimization and restructuring operational and quality excellence end to end supply chain integration and an agile operating model.

The organization.

Speaker 2: ongoing efforts will lead to stabilizing the operating margin above the level of 27% in

Ongoing effort will lead to stabilizing the operating margin above the level of 37% in 2022 with the ultimate goal being 28% operating margin by end of mandatory.

Speaker 2: with the ultimate goal being 28% operating margin by end of 23.

Turning to free cash flow on slide 27.

Speaker 2: Our fee cash flow in the fourth quarter of 2021 was 760 minutes.

Our free cash flow in the fourth quarter of 2021 was 716 million extending the sequential rebound we saw in Q2 and Q3 versus Q1.

Speaker 2: extending this equitual rebound we saw in Q2, in Q3 versus Q1.

Speaker 2: The full year 2021 pay cash flow was 2.2 billion, compared to 2.1 billion in 2020.

The full year 2021 free cash flow was $2 2 billion compared to $2 1 billion in 2020.

Speaker 2: The increase in 2021 resulted mainly from higher-catch generated from the investors and of business and other assets, partially offset by lower profit in North America's segment during 2021.

The increase in 2021 resulted mainly from higher cash generated from the lessor and of visits and other assets, partially offset by lower profit in North America segment during 2021.

Turning to slide 28.

Speaker 2: Our cash to earnings for full year 2021 was 77% versus 75% for full year 2020.

Our cash to earnings for full year, 2021 was 77% versus 75% of our full year 2020.

Speaker 2: The increase was mainly driven by higher frequency thresholds or actually offset by higher net income. Turning to slide 29.

The increase was mainly driven by higher free cash flow, partially offset by higher net income.

Turning to slide 29.

As <unk> shared before our debt continued to decrease our net debt at the end of Q4 2021 was $20 9 billion compared to $23 7 billion at the end of 2020. The decrease in the gross debt was mainly due to the debt repayment as well as exchange rate fluctuation.

Speaker 2: or net that at the end of Q4 2021 was 20.9 billion compared to 23.7 billion at the end of 2020.

Speaker 2: The christian across that was mainly due to the death refaimment as well as exchange rate fluctuation.

Speaker 2: The input in our net that was mainly due to our free cash flow generation during the

The increase in our net debt was mainly due to our free cash flow generation during the year.

Speaker 2: Upcoming machuities include 1.4 billion in 2020.

Upcoming maturities include $1 4 billion in 2020.

Speaker 2: Our net debt to EBDA continues to decline, coming in at 4.25 times for Q421. As we continue to make progress towards our 23 targets to be under three times by end of that year.

Okay.

Our net debt to EBITDA continued to decline coming in at 425 times for Q4 'twenty one as we continued to make progress towards our 'twenty three targets will be under three times by the end of that year.

Speaker 2: We are very pleased with the successful refinancing that took place in November 21. We completed five billion sustainability links bond offering and four billion tender off.

We're very pleased with the successful refinancing that took place in November 21, we completed 5 billion sustainability linked bond offering and 4 billion tender offer as part of our F&B offering we have set ambitious API to measure our contribution to social and environmental metrics.

Speaker 2: part of our SLB offering, we have set ambitious KPIs to measure our contribution to social and environmental.

Speaker 2: Our intention is to establish a dark link between our corporate responsibility commitments and our funding strategies.

Our intention is to establish a direct link between our corporate responsibility commitment and our funding strategy differ.

Speaker 2: It was a dead neutral transaction that has been very clear and could...

This was a debt neutral transaction as there has been very clear and consistent with its long term financial strategy, which include a commitment to continue deliberating as core explained earlier looking ahead. We are pleased with our maturity profile for 'twenty, two 'twenty three and 'twenty four.

Speaker 2: long-term financial strategy, which includes the commitment to continue deliberating. As Corridged spend earlier, looking ahead, we are pleased with our maturity profile for 22, 23, and 20...

Speaker 2: as it's aligned with our liquidity strategy and help us focus on our long-term financial

It's aligned with our liquidity strategy and help us focus on our long term financial targets.

Speaker 2: Now let's turn our attention to our 2022 NAND GAP Outlook, which we are introducing for the first time.

Now, let's turn our attention to our 2022 non-GAAP outlook, which we are introducing for the first time today.

Here on Slide 30, you will find the five main components of our outlook.

Speaker 2: Here on Flight 30, you will find the five main components of our outlook. Revenue, operating income, EBDA, earnings per share and free cash flow, as well as additional components including expected revenue range for key products.

Revenue operating income EBITDA earnings per share and free cash flow as well as additional components, including expected revenue range for key products.

Speaker 2: Our company worked hard through 2021, navigating the ongoing impact of the pandemic. While we cannot predict the exact magnitude of COVID-19 in 2029, we expected to continue to face some volatile environment with regards to the purchasing part of our larger global.

Our company worked hard through 2021 navigating the ongoing impact of the pandemic, while we cannot predict the exact magnitude of COVID-19 in 2029, we're expected to continue to face somewhat volatile environment with regard to the purchasing patterns of our larger global customers.

Speaker 2: In conclusion, a..!

Overall utilization by patients generic product launches and foreign exchange effects.

Speaker 2: With this in mind, we begin 2022 Tothor revenue, which we expected to be between 16.6 billion and 16.2 billion.

With this in mind, we begin 2022 total revenue, which we expected to be between $15 6 billion and $16 2 billion.

Speaker 2: This reduction in revenue guidance compared to 2021 includes the impact of foreign exchange and specifically the impact of the stronger US dollars on our results. Since approximately 60% of our revenue came from sales denominated in a non-US dollar current.

This reduction in revenue guidance compared to 2021 includes the impact of foreign exchange and specifically the impact of the stronger U S. Dollar on our results since approximately 50% of our revenue came from third denominated in non U S dollar currency.

Speaker 2: We have factored into our guidance the continued erosion of global tax on revenue, which we expect to decline during 2022 by approximately 150 million to approximately 850 million. The majority of the decline is expected in the US.

We have factored into our guidance. The continued erosion of global Copaxone revenue, which we expect to decline during 2022 restaurants currently $150 million first approximately $850 million. The majority of the decline is expected in the U S.

Speaker 2: The expected ongoing growth of a stado and a joby should be greater than the offsetting effect by the decline in the passenger. We expect continued momentum of a stado with a total annual revenue to grow to approximately 4 of 3 change penalties and heat recovery.

<unk> ongoing growth of <unk> should be greater than the offsetting effect by the decline in Copaxone sales.

We expect continued momentum of our setup with a total annual revenue to grow to approximately $1 billion in 2022.

Speaker 2: Furthermore, a Joby is expected to benefit from continuing patient growth in the US, Europe , and international market. Global sales of a Joby are expected to be approximately 400 million in 20 years.

Furthermore, Adobe is expected to benefit from continued patient growth in the U S Europe and international markets Global sales of our jewelry are expected to be approximately $400 million in 2022.

Speaker 2: With a modest decline expected in our spend base, our NAND gap operating income is expected to be between 4.2 billion to 4.5 billion. And our NAND gap EBDA is expected to be between 4.7 billion to 5 billion. Using a shared count of approximately 1.1 billion shares, we expected earning per share to be in the range of $2.40 to $2.20.

With a modest decline expected in our spend base. Our non-GAAP operating income is expected to be between $4 2 billion to $4 5 million and our non-GAAP EBITDA is expected to be between $4 7 billion to 5 billion using a share count of approximately one 1 billion shares we expected earnings per share to be in the <unk>.

Inge of $2 40 to $2.

Speaker 2: As you know, we do not provide quarterly guidance, but I thought it will be helpful to share with you how we are thinking about the progression of both sales and earnings throughout the...

As you know, we do not provide quarterly guidance, but I thought it will be helpful to share with you. How we are thinking about the progression of both sales and earnings throughout the year.

Speaker 2: Based on our expectation today, we expected that the first quarter will be the lord of the four quarters or thousand earnings. With the gradual six

Based on our reputation to date, we expected that the first quarter will be the lowest of the four quarter for.

Earnings with a gradual pickup in the second quarter overall, we expect that approximately 45% of our 2022 revenue to be generated in the first half of the year and approximately 55% in the second half I hope this color will assist you with your modeling.

Speaker 2: Overall, we expected that approximately 45% of our 2022 revenue to be generated in the first half of the year and approximately 55% in the 6th

Speaker 2: I hope this color will assist you with your modeling. 2022 pre-cash flow is expected to be in the range of 1.9 billion to 2.2 billion.

2022 free cash flow is expected to be in the range of $1 9 billion to 2 billion similar to 2021, we expect about one third of the annual free cash flow to be generated in the first half of 2022.

Speaker 2: Similar to 2021, we expect about one-third of the annual fee cash load to be generated in the first half of 2022 and two-thirds to be generated...

And two thirds to be generated in the second half of 2022.

Speaker 2: Lastly, looking at the tech, in 2021, our NANDGAP tech was 16.4%, which was below the 17-18 range we originally guys.

Lastly, looking attacks in 2021, our non-GAAP tax was 16, 4%, which was below the 17% to 18 range. We originated guide too.

Speaker 2: As we look ahead to 2022, where expected our tax will be in the range of 18 to 9...

As we look ahead to 2022, we expected our tax rate to be in the range of 18% to 19%. This increase is mainly driven by the mix of products year over year as will other items, which carry higher than average tax rate.

Speaker 2: This increases many driven by the mix of polypheora here as well as the right end which carries higher than average.

Speaker 2: This concludes my review of several results for the first water and fiscal year 2021. We will now open the call for questions and answers. Operator, will you please open?

This concludes my review of our results for the fourth quarter and fiscal year 2021, We will now open the call for questions and answers operator would you. Please open the call for questions.

Speaker 3: Thank you ladies and gentlemen. As a reminder, to ask a question, you will need to press star and one on your telephone. To withdraw your question, please press the hush key.

Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press star one on your telephone.

To withdraw your question please press the husky.

Speaker 3: To allow everyone opportunity to ask a question, please limit yourself to one question per person with the minimum of one follow-up question.

To allow everyone an opportunity to ask a question. Please limit yourself to one question per person with some minimum offer one follow up question.

Speaker 3: And the first question comes from the line of Umar Affaak from Evercore. Please ask your question. Your line is now open. Hi guys. Thanks so much for taking my question.

And the first question comes from the line of will Margasak from Evercore. Please ask your question. Your line is now open.

Hi, guys. Thanks, so much for taking my question.

Speaker 4: I guess I'm a little confused about the OSTEDO number reported. It's a 4% in volume, quarter of a quarter, but sales are up 40%. And it looks like the dollars per RX are up almost 35% versus Q3. Is there something unique that happened as it relates to inventory and or a favorable growth in that change or reconciliation? That would be very helpful. Also, perhaps on the opioid theme, I noticed the headline you put at the Texas is 225 million.

I guess I'm, a little confused about the aceto number reported.

It is up 4% in volume quarter over quarter, but sales are up 40% and it looks like the dollars per Rx are up almost 35% versus Q3.

Is there something unique that happened as it relates to inventory and or a favorable gross to net change. Your reconciliation that'd be very helpful. Also perhaps on the opioid theme I noticed the headline you put out the Texas is $225 million.

Speaker 4: which is really interesting because jane j's headline for the global settlement to tap to texas with two hundred ninety million meaning you're not so far off versus the headline jane j was able to successfully negotiate if you really tracking as close as you are to the headline numbers versus jane j um...

What is really interesting because J&J is headline for the global settlement to tap to Texas with 290 million, meaning youre not so far off first of all the headline J&J was able to successfully negotiate so if you're really tracking as close as you are to the headline numbers versus J&J.

Presumably that should form the basis for a lot more interest nationwide, especially considering your financial status and probably appreciate it's why arent, we seeing more traction on a potential nationwide settlement and just finally, just a quick one I noticed fibromyalgia for <unk> that trial not work because I know it wasn't even until that crude at yet.

Speaker 4: presumably that should form the basis for a lot more interest nationwide especially considering your financial status and they probably appreciate it to why aren't we seeing more traction on a potential nationwide settlement and just finally just a quick one I noticed fibromyalgia for CGRP that trial not work because I know it wasn't even fully recruited yet

Speaker 1: Thank you, Uma, for those three questions. I'll start from the last one and take the two last ones, and then I'll let Sven answer the one about our status. So on fibromyalgia, it's correct that we have had what we call it a futility analysis done.

Thank you for those three questions I'll start.

From the last one and ill take the two last ones and then our net.

And so the one about Australia. So on fibromyalgia, it's correct that we have had a.

We call it a futility analysis done and the conclusion of that by the experts who look into it was that it would be futile to continue the trial. So we will not be continuing looking into fibromyalgia, yet so thats absolutely correct observed on the opioid piece you could.

Speaker 1: and the conclusion of that by the experts who look into it was that it would be a few trials to continue the trial. So we will not be continuing looking into part of my out yet. So that's absolutely correct observed. On the opioids P

Speaker 1: We say that we are still optimistic, as I said, that we can reach a nationwide settlement in the coming 12 months. We have been, of course, in constant dialogue over the last couple of years. And you, of course, remember the initial framework, which was less cash and more product. It was 250 million nationwide in cash and 23 billion in product.

Say that we are still optimistic as I said that we can reach a nationwide settlement in the coming 12 months, we have been of course in constant dialogue over the last couple of years and you of course remember the initial frameworks, which was less.

Cash and more product it was 250 million nationwide in cash and $23 billion in product and that didn't really fly and I think it's fair to say the reason why it didnt really fly was.

Speaker 1: And that rig didn't really fly and I think it's fair to say the reason why I didn't really fly was mainly because the

Mainly because the.

Speaker 1: The Plain of Lawyers basically did not see any fees coming in from the product part. And that meant that it was not attracted to them. Whereas the new balance we have in Texas.

The plaintiff lawyers.

We did not see any fees coming in from.

The product part and that is of course not attractive for them, whereas the new balance we have in Texas, where you could say we have a third in products $75 million of Narcan generic knockin spray, which is a very good thing for treatment of opioid overdoses and then the other two thirds.

Speaker 1: where you would say we have a third in products, 75 million of generic Narkens spray, which is a very good thing for treatment of opioid overdoses, and then the other 250 million in cash over a period of years.

$150 million in cash over a period of years I think thats a more appealing.

Speaker 1: I think that's a more appealing setup. So I would agree with you that, is the North doing this? That's probably now a higher probability that we can reach a nationwide nationwide.

So I would agree with you that based on US doing this that's probably now a higher probability that we can reach a nationwide.

As wide settlement.

Speaker 1: and Engine demo of ALLEMpex, so now we will add the

And al and then pass on to spin on answering the state your question. Thanks.

Speaker 1: Thanks, Scott. So, um, in the second half of 2021, we had a 63 percent...

Thanks Scott.

In the second half of 2021 we added a 63% higher script count for a steadier than in the first half of 2021. So we had a very good trajectory.

Speaker 1: Higher script count for a stado then in the first half of 2021. So we had a very good trajectory. Actually December was our stormest month in the year and it also saw the storm is step up.

Trajectory actually December was our strongest month in the year and that also saw the strongest step up so in.

Speaker 1: So in context of that, we also know that the Q4 quarter is always the strongest one for Estadol. We have a spec buying by the wholesaler that's called a little too earlier due to the pricing increase that we took for January 2022.

Text of that we also know that the Q4 quarter is always the strongest one for federal.

Spec buying by the wholesaler that causes it to earlier due to the price increase that we took for January 2022.

Speaker 1: And that was one factor. The second one, as I explained, was the script count. And we saw a slight improvement in dating those patients with also a contributor to a storm quarter, for in large...

And that was one factor the second one as I explained both the script cone and we saw a slight improvement in daily dose for patients with also contributed to a strong quarter four in the last year.

Thank you.

Speaker 3: Thank you. And the next question comes from the line of Ronnie Garl from Bernstein. Please ask your question. Your line is now open.

Thank you and the next question comes from the line of Arnie.

From Bernstein. Please ask your question. Your line is now open.

Speaker 5: Good morning everybody, thank you for taking my questions. Okay, if I don't mind quick three ones. One, we spared on LAI, do you own the story? What is there some stream that comes out of that? Second, can you give us a feel for the bifurcum of margins in your partnerships, given that those are becoming a bigger product? Is this a deludive or a creative to your gross margin? And third.

Good morning, everybody. Thank you for taking my questions.

Okay. If I don't mind quick three ones, one risperidone les ideal own this royalty free or is there some stream that comes out of that.

Can you give us a feel for the Biosimilar margins in your partnerships given those are becoming a bigger product is this dilutive or accretive to your gross margin.

Can you talk a little bit about your sensitivity to interest rates.

Speaker 5: Can you talk a little bit about your sensitivity to interest rates? Essentially, there's a 1% increase in interest rates in 2022. How much will that impact your earnings if we think about 2023 and beyond? Just to give us a feel for the sensitivity sale. Thank you.

Essentially it is a 1% increase in interest rates in 2022.

Much will that impact your earnings if we think about 2023 and beyond just to give us a feel for the sensitivity there. Thank you.

Speaker 1: Umm, what is your feature that you are referring to...

No very much Ronnie I think I need to just two.

Repeat.

The first question about Risperidone.

What is the specific question.

Dion royalty on this are the only royalties correct.

Speaker 1: Okay, so this product is developed by us based on in-licence technology from Benzell. They have a prolongation technology that we're using for this product and we also have well-answered team LAI and development using the same technology. And we are paying a small royalty on the product.

Okay. So this product is developed by US based on in licensed technology from <unk> sale.

They have a prolongation technology that reducing for this product and we also have olanzapine NII in development using the same technology.

We are paying.

A small royalty on the product, it's not dilutive to our margins when we launched Risperidone.

Speaker 1: not diluted to our margins when we launch respiraton LAI, in the part of respect to all margin of respiraton LAI to be good and healthy. So we are very optimistic about the fact that we can grab a reasonable volume share and also market share in value of the long-acting segment, simply by offering a more convenient and better dosing with unbeaten

We expect the overall margin of Risperidone NII should be good in <unk>.

Healthy. So so we are very optimistic about the fact that we can grab a reasonable volume share and also market share in value of the long acting segment simplify offering a more convenient and data dosing with unbeaten efficacy.

Speaker 1: So I guess that covers the first two questions because that was also the question about the margin. And please correct me if I'm wrong, they're running. Then I'll just... The second question was around the by a similar partnership margin. Is this clearly with deluded to your growth margin?

So I guess that covers the first two questions because that was also the question about the margin.

Please please correct me if I'm wrong there Ronny.

The second question was around the Biosimilar partnership margins is dilutive to gross margin.

Speaker 1: so no they're not it's basically so that

So no they're not.

Basically so that.

Speaker 1: say biosimilus of course have higher development costs but the actually what you get into the actual market even with a split with a partner it's a margin that can compete with traditional generics so it's not diluting it's of course not the same margin as a specialty padded products such as compacts and brings

You could say Biosimilars of course have higher development cost, but the AG once you get into the actual market, even with a split with a partner.

Martin that can compete with traditional generics. So it is not diluting is of course, not the same margin as a specialty patented products such as Copaxone for instance, but if you look at our overall margins than our biosimilar in licensed products can match the overall margins.

Speaker 1: But if you look at our overall margins, then our similar in license products can match the overall margins we have.

<unk>.

Speaker 1: Then the last question on the interest rate, first I'll just note that all our debt is based on bonds that have been sold in the marketplace. So they are not really in any way into inspired any moves and interest.

Then the last question on the interest rate.

First I'll just note that all our debt is spaced on bonds that have been sold in the marketplace. So they are not really in any way influenced by any moves in interest rates. So.

Speaker 1: So the simple question is that all the, you know, 20 building dollars of debt we have, the interest they've read is long.

So the simple question is that all of the $20 billion of debt. We have the interest of greatest locked. So there's no effect of interest rates going up and down over the coming years, which means we can predict our finance costs extremely precise the only swing factor. This in a way the exchange rate between.

Speaker 1: So there's no effect of interest rates going up and down over the coming years, which means we can predict our finance costs.

Speaker 1: extremely precise, the only swing factors in a way the exchange rate between dollars and euros because some of the debt is in the euros and of course there's a conversion there into dollars which can affect the both the size of the net debt whether the euro goes up and down versus the dollar and also a little bit the size of the yearly interest rate payments. But other than that is very very predictable due to the fact that it's all locked in and we don't have any variable interest rate on any of our debt.

Dollars and euros or some of the data is in euros and of course, that's a conversion to enter to Alex which can affect both the size of the.

Net debt, whether the euro goes up and down versus the dollar and also a little bit the size of the yearly interest rate payments, but other than that it's very very predictable due to the fact that it's all locked in and we don't have any variable interest rate on any of our debt. Thank you for the questions.

Speaker 3: Thank you and the next question comes from the line of Elliott Wilber from Raymond James. Please ask your question. Your line is now open.

Thank you and the next question comes from the line of Elliot Wilbur from Raymond James. Please ask your question. Your line is now open.

Thanks.

Speaker 6: Good morning, good afternoon. First question perhaps for Ellie. In light of the strong growth margin performance and

Good morning, and good afternoon.

First question, perhaps for early in light of the strong gross margin performance and the roughly 180 basis point year over year improvement.

Speaker 6: the roughly 180 basis point year of a year improvement. Could you just provide us with some...

Could you just provide us some color or insight into expected gross margin trends in 2022, just trying to get a little bit better sense of the ongoing benefit from manufacturing rationalization versus the <unk>.

Speaker 6: color or insight into expected gross margin trends in 2022. Just trying to get a little bit better sense of the ongoing benefit from manufacturing refactoring rationalization versus...

Speaker 6: the lighter top line outlook and probably what is going to be a more favorable mix impact.

<unk> top line outlook, and probably what it's going to be a more favorable.

Mix impact and then a follow up question for core on a steady trends. Obviously this is going to be the key growth driver within the branded segment for the next several years. The TD population remains very underpenetrated under captured I know you guys have initiated some patient act.

Speaker 6: Then I follow up question for a core on Esteto trends. Obviously this is going to be the key growth driver within the branded segment for the next several years. The TD population remains very underpentated under captured. I know you guys have initiated some patient activation efforts to capture more of that market. We're starting to see some incremental gains there, but perhaps slower than expected.

<unk> efforts to capture more of that market and we're starting to see some incremental gains there, but perhaps slower than expected question really is if you look at external expectations. The market does not really see that product growing much over the next five to seven years and you guys really haven't said anything about peak expectations.

Speaker 6: Question really is, if you look at external expectations, you know, the market does not really see that product growing much over the next five to seven years, and you guys really haven't said anything about peak expectations for the product. So if there's any color, you could provide in terms of sort of where you think this product can be in five to seven years versus the roughly 1.3 billion that external estimates project.

For the for the product so if theres any color you can provide in terms of sort of where you think this product can be in five years to seven years versus the roughly $1 3 billion that external estimates project. Thanks.

Speaker 2: So, ELEE, you first with the margin. Yeah, thanks, ELEE, for the question. And so, you know, just back a bit to the preparing mark. So, of course, you saw how we're getting reduced, mostly our manufacturing site. And as Cor mentioned, we still on top of the 50 that were able to be that position, we have more planned around that one, which means that the core manufacturing cost is going to reduce as well in 2012.

So.

First with the margin yes, thanks for the question.

So just back to the prepared remarks of core <unk>.

So how we're getting reduced mostly our manufacturing site in aforementioned we've seen on top of the 50 that were able to be in a position. We have more planned around that one which mean that the core manufacturing cost is going to reduce his learning in 2022. So when we are doing are kind.

Speaker 2: So when we are doing our kind of modeling, we are not really heavily considering on getting a benefit on a mix of products, which means that in 2022, we most likely going to talk between 50 to 100 additional basis points on our worst margin.

For modeling, we're not really heavily at considering.

On getting a benefit on the mix of products, which means that in 2022, we most likely going to toggle between 50 to 100 additional basis points on our gross margin.

Thank you.

Speaker 1: Thank you. Yeah, we keep on pushing and you should expect also longer term that we'll keep on pushing the cross margin up by classical consolidation, optimization, rationalization. Now, onto a status five to seven years out. As you probably know, I never get peak sales on any product because there's so many assumptions. People always forget the assumptions and just think about the number. But I love to discuss what we think will happen with a status overcoming years.

We keep on pushing and you should expect also longer term that will keep on pushing the gross margin up by.

Classical consolidation optimization rationalization now onto <unk>.

Seven years out as you probably know I navigate peak sales on any product.

Because there's so many assumptions that people always forget the assumptions and just think about the number but I love to discuss what we think will happen with Australia over the coming years.

Speaker 1: And we think that Ostero will keep on growing nicely, basically due to the clinical benefits of the product and the large on medical needs that you look to yourself that I also showed on a slide.

And we think that will stay that will keep on growing nicely Jay basically due to the clinical benefits of the product and the large unmet medical need that you alluded to yourself that I also showed on slide if you want to think about it conceptually then we.

Speaker 1: If you want to think about it conceptually, then we will probably get more patience.

We will probably get more patients and there is also a chance we will keep them longer and they will be titrated fast, but so.

Speaker 1: and that's also a chance we'll keep them longer and they'll be titrated faster. So we will see growth which this year we are estimating that it will be growing 200 million.

So we will see growth, which this year, we are estimating that it will be growing 200 million I don't see any reason why that absolute growth should slow down over the coming years and then you can do your math and see what peak sales you get to five to seven years out, but I do agree with you that that number.

Speaker 1: I don't see any reason why that absolute growth should slow down over the coming years. And then you can do your own math and see what peak sales you get to five to seven years out. But I do agree with you that that number is higher than 1.3 billion for sure. But maybe you can just comment on what are we seeing in terms of plans to optimize both titration and product presentation and so on or on a scale. I think we I see that.

It's higher than $1 3 billion for sure, but maybe you can just comment on what are we seeing in terms of our plans to optimize of titration and product.

Presentation, and so on a stove, yes, I think we.

I see there are three.

Speaker 1: sources for growth for us. One is of course the patient's number. We need to activate more patients and improve the diagnosis rate for times of dyskinesia with our position group, that's number one. That's what we are already doing with our field force and with our precisely launched TV campaign.

Sources for growth for US one is of course, the patient number we need to activate more patients and.

Improve the diagnosis rate for tardive dyskinesia with our patient physician group that is number one and that's what we're already doing with our field force and with our recently launched television campaign. The second element for growth as fast as working better with the patients to reach an optimal titration of dose per day.

Speaker 1: The second element for growth is working better with the patient.

Speaker 1: to reach an optimal saturation for those per day level because that's directly correlated with the clinical benefit.

Level.

Directly correlated with the clinical benefits.

Speaker 1: of this drug and there we see when you look at the current treatment rates and where the long-term data for this product stands.

Of this drug.

There we see.

When you look at the current treatment rates are where the long term data for this product stands, but theres still an ability to optimize the treatment rate.

Speaker 1: there's still an ability to optimize the treatment rate. And the third element is something that we learned, of course, also with our co-parks on franchise is that here in here is a key element for chronic disease, especially for this patient population. And that's, I think, the third element for growth for us. Thanks, Sven.

The third element is something that we learned of course also.

With our.

Copaxone franchise is adherence here is a key element for a chronic disease, especially for this patient population and Thats I think the third.

Third element for growth for us.

Thank you. Thank you for the questions.

Thank you and the next question comes from the line of Navan Pie from Citi. Please ask your question. Your line is now open.

Speaker 3: Thank you and the next question comes from the line of Navantai from city. Please ask your question. Your line is now open.

Hi, good morning.

Speaker 3: Hi, good morning. What are your COVID assumptions behind the 2022 guidance so do you assume a lingering impact on the genetics?

What are your Colgate assumption behind the 2022 guidance do you assume a lingering impact on the generics business and then my second question is on cost. So the midpoint 2022 would be down margin will be lower so can you comment on your SG&A.

Speaker 3: And then my second question is on cost. So the midpoint 2022 will be damaging. It will be slightly lower. So can you comment on your SGA and R&D assumption for 2022? And then just a quick one on opioids. The access settlement, was it in line with your expectation? Was it driven back?

Assumption for 2022, and then just a quick one on opioids.

The Texas settlement was it in line with your expectation was it driven by market.

Speaker 3: David, market share in the state, especially if we compare versus your peer endo. Thank you.

Market share in the state.

So if we compare versus your peer Andrew Thank you.

Thank you for those three questions I will handle the first and the last and then Andy will comment on the SG&A piece, so our assumptions for Covid this year.

Speaker 1: Thank you for those three questions. I will handle the first and the last and then, Aile will comment on the SGN8 piece. So our assumptions of COVID this year is relatively optimistic assumption, you could say, in the sense, but also the cautious on the...

Relatively optimistic assumption that you could say.

In the sense, but also.

A cautious on.

Speaker 1: guidance range that you would say the lower end of the guidance will only happen if we see a continued negative effect from COVID and we are optimistic that we are seeing now openings of society in the U.S. in Europe and in general a high level of economic activity and we see.

Guidance range that you would say the lower end of the guidance will only happen. If we see a continued negative effects from COVID-19 and we are optimistic that we are seeing now openings in our society in U S in Europe and in general a high level of economic activity.

Sure.

And we see prescription labels in Europe , getting close to what they were in 2019 still a little bit below but we are optimistic that we will get back to the 19 level and above in terms of the total volumes in the marketplace not specifically for us, but just in general so that is really.

Speaker 1: in Europe getting close to what they were in 2019. Still a little bit below, but we optimistic that we will get back to the 19 level and above in terms of the total volumes in the marketplace, not specifically for us, but just in general. So that is really our assumption, but you will see also that we have like any, in order to widen the range on our revenues.

Our assumption, but you will see also that we have like.

Alluded to we have widened the range on our revenues because there is of course, the risk that we will see.

Speaker 1: because there's of course the risk that we will see some kind of continued new lockdown or whatever and we have to be able to manage that within our guidance.

Some kind of continued new lockdowns or whatever and we have to be able to manage that within our guidance extend happens. So thats on the Covid piece, then I'll handle the opioid piece. The way you should think about it when we think about the possibilities of a nationwide settlement is really we are thinking along the lines.

Speaker 1: So that's on the crowed piece, then I'll handle the opioids piece. The way you should think about it when we think about the possibilities of a nationwide settlement is really we are thinking along the lines.

Speaker 1: of the way it was done by J&J and the three big distributors. And that is really a formula where you say that it's mainly population phase.

<unk> of the way it was done by J&J and the three big distributors and that is really a formula where you say that it's mainly population phase, but it's skewed a little bit.

Speaker 1: But it's skewed a little bit so that the smaller population states get a slightly higher percentage than the straight out population calculation. What does that mean? It basically means that if you do a straight out population calculation, then you would say that with a population in Texas, a nationwide settlement would be 12 times the Texas settlement. If you do the percentage that went into the...

Smaller populations states get a slightly higher percentage than the straight out.

Population calculation, what does that mean it basically means that if you do a straight out population calculations. When you would say that with the population in Texas and nationwide settlement would be 12 times, the Texas settlement. If you do the percentage that went into that.

Speaker 1: nationwide settlements of J&J, then you would roughly have to multiply by 16. But it's really population-based. It's not related to anything specific about individual products or anything like that. That's the principle that we expect if we are successful with a nationwide settlement. That's the principle that we expect will be used there. And then the last question about S-GNA, Ellie.

Nationwide settlements of J&J, then you would roughly have to multiply by 16, but its really population based it is not related to anything specific about individual products or anything like that that's the principle that we expect if we are successful with nationwide settlement. That's the principle that we expect will be used.

There and then the last question about SG&A.

Speaker 2: Yeah, so thanks for your question. You asked Bolton on R&D and SGNA.

Yes. So thanks for your question you asked both on R&D and SG&A.

Speaker 2: So I think that you know, overall if you look on the first half of 21 versus the first, the second half of 21.

I think that overall, if you look on the first half of 'twenty one versus the first the second half of 'twenty one.

Speaker 2: It's more or less the same in terms of dollars. There are some verbal elements in between Q4 that were able actually to manage in terms of priorities. Overall, our off-ex went down to 26.5%.

More or less the same in terms of dollars.

Some variable elements and between Q4 that we were able actually to manage in terms of priorities overall, our opex went down to 26, 5% and same for the R&D, It's only volt urbanization of projects so nothing there.

Speaker 2: And same for the R&D, it's only about the realization of a project or nothing there is specific.

Specific.

Thank you for the questions.

Speaker 3: Thank you and the next question comes from Ryan of Chris shop from JP Morgan. Please ask your question. Your line is now open

Thank you and the next question comes from the line of Chris Schott from Jpmorgan. Please ask your question. Your line is now open.

Speaker 7: great thanks so much just to just to for me first I just wanted to confirm I think you mentioned that the first half sales would be forty five percent of total for the year and it's a bit more skewed kind of first half versus second half than we've typically seen and is trying to elaborate maybe a bit more of what's driving that swing and the second one is maybe a bigger picture question on North America generic

Great. Thanks, So much just just two from me first I just wanted to confirm I think you mentioned that the first half sales would be 45% of total for the year I think it's a bit more skewed kind of first half versus second half than we've typically seen I'm just trying to elaborate maybe a bit more of whats driving that swing and the second one is maybe a bigger picture question on North America generics.

Speaker 7: i think the past you talked about kind of a four billion dollar run rate is your target here if you've been below that for the past few quarters talk a little bit about what needs to happen to get back to that type of level and that reasonable to think about as we go through twenty twenty two as you think about

In the past you've talked about kind of a $4 billion run rate as your target here <unk> been below that for the past few quarters can you talk a little bit about what needs to happen to get back to that type of level and is that something reasonable to think about as we go through 2022 as you think about.

Speaker 7: whatever launches you have, accept as we go through the year. Thanks so much.

Whatever launches you have et cetera, as we go through the year. Thanks, so much. Thanks.

Speaker 1: Thanks for the questions Chris. I'll comment on the first one and then Swenton will comment on the second North American question. So it's correct that it is probably a bit more of a skewed than what we've seen in other years. But it's very sensitive to when we have learned.

Thanks for the questions, Chris I will comment on the first one and then Swinton who will comment on this.

Second North American question. So it's correct that it is probably a bit more skewed than what we've seen in other years, but it's very sensitive to when we have launches and.

Speaker 1: And what we're estimating this year and Sven can comment on some of the North American ones, we are estimating that we will see more launches.

What we're estimating this year and spent can comment on some of the North American ones. We are estimating that we will see more launches that will affect the second half than we will see the first half. So we're not really carrying like we carried savada in a triplet into the first quarter of 2021, if you look at our U S. G.

Speaker 1: that will affect the second half and we will see effect the first half. So we're not really carrying like we carried Tsubata and the tripler into the first quarter of 2021. If you look at our US generic sales.

And Eric sales, we still had some of that.

Speaker 1: We still have some of that, you know, tail in the first quarter of last year. We don't have a big launch that we did, we would say fourth quarter of 21, that we're carrying into the first quarter of 22. We do have launches coming up, Respiratone LAI, several generic launch.

Sales in the first quarter of last year, we don't have a big launch that we did you say fourth quarter of 'twenty. One that we are carrying into the first quarter of 'twenty. Two we do have launches coming up risperidone he'll EI civil generic launches. So those will mainly affect the second half.

Speaker 1: Those will mainly affect the second half. And then we do have the basic seasonality that we've had always, that most farmer companies have, that we have the donut hole, and those various things on rebate schemes and so on. That takes down the first quarter, and you typically have the reverse thing happening in the fourth quarter. So...

And then we do have the basics seasonality that we've had always that most pharma companies have that we have the donut hole in those various.

Things on rebate schemes and so on that takes down the first quarter.

And you typically have the reverse thing happening in the fourth quarter. So.

Speaker 1: It's maybe slightly more smooth than normal, but there's nothing really extraordinary behind it other than our operational plan.

It's maybe slightly more skewed the normal, but theres nothing really extraordinary behind it other than our operational plans and maybe spend you can comment on the full billion run rate for us.

Speaker 1: and maybe say you can comment on the fulfilling run rate for US. Yeah, you're rather North American. We should just make sure we always make it clear that we're talking about North America, so it's really US and Canada, but what's you saying? Yes, the North American generics sales are reported in three segments, biosimilus, have a Canada and the US generics business. So in 2020,

So Ron North American we should just make sure we always make it clear that we're talking about North America. So it's really the U S and Canada would you say if the North American generics sales are reported in three segments Biosimilars.

Have a Canada and the U S generics business. So in 2020, we were above the $4 billion.

Speaker 1: The $4 billion target in 2021, we will reload the $4 billion target. And I think the two years I tell you how it goes.

Targets into 2021, we were below the $4 billion target.

Thank the two years I'll tell you how it goes.

Speaker 1: Because in 2020 we had quite a strong bio-similar business and an excellent launch of generics with Trovada and Attrica and that was absent from 2021. And that gives you an idea how we think about the 4 billion.

2020, we had quite a strong biosimilar business and an excellent.

Launch of generics with Truvada, and tripped up and that was excellent.

2021 and that gives you an idea of how we think about the 4 billion.

Speaker 1: Is it basically in the year where you have a good generic launch in context generics with a large originator value to address or you have a biosimilar launch we're quite confident that we get to the $4 billion sales. Thank you.

Basically in a year, where you have a good generics launched in complex generics with larger originator value to address all you have a biosimilar launch we're quite confident that we get to the $4 billion sales.

Thank you. Thank you for the questions.

Speaker 3: Thank you. And the next question comes from the line of Gauri Nachman from BIM Capital Markets. Please ask your question. Your line is now open.

Thank you and the next question comes from the line of Gary Nachman from BMO capital markets. Please ask your question. Your line is now open.

Speaker 4: CORE, we were previously talking about 2021 as a trough here. Are you confident now that 22 should be a trough here in terms of revenue and EPS, especially if COVID normalizes? That's first.

Core we were previously talking about 2021 at the trough here are you confident now that 'twenty two should be a trough year in terms of revenue and EPS, especially if COVID-19 normalizes.

First <unk>.

Speaker 4: Second, on the opioid litigation, if the nationwide settlement ends up being, I guess, one third product, one third cash, is that something that you can actually absorb with your balance sheet, that type of mix, it seems like you're sort of going down that path.

On the opioid litigation if the nationwide settlement ends up being.

I guess, one third product one third cash is that something that you can actually absorb with your balance sheet that type of mix. It seems like you're sort of going down that path.

Speaker 4: And then with Respiratoan LAI, just curious, do you have the Salesforce in place to launch this product? Talk about maybe some pre-launch activities that you're doing, and if there'll be any real incremental spend on this in the back half of the year. Thank you.

And then with Risperidone.

Just curious do you have the sales force in place to launch this product talk about maybe some prelaunch activities that you're doing and if there'll be any real incremental spend on that for the back half of the year. Thank you.

Speaker 1: Thanks for those three questions. I'll address the first two ones, and then Sven will address the respired-on question. So...

Thanks for those three questions I'll address the first two ones and then <unk> will address Risperidone question. So.

Speaker 1: I can confirm that I am expecting that 2022 will be the 12 year sort of speak or the combination of 21 and 22, you would say unfortunately will be the two 12 years. And the reason being that is of course that I'm expecting that we will see an normalization of the volumes in Europe and US. And what we're talking about is probably that volumes in 21 were let's say...

I can confirm that I am expecting that to enter into will be the trough year, so to speak or the combination of 'twenty. One 'twenty. Two you could say unfortunately will be the two trough years and the reason being that is of course that I am expecting that we will see a normalization of the volumes in Europe and U S.

And what we're talking about is probably that volumes in 'twenty, one, where let's say, 4% something like that 45% below what we would have expected. If we have seen zero effect of COVID-19 on the volume of Doctor visits hospital visits and so on.

Speaker 1: 4% something like that 4% or 5% but though what we would have expected if we had seen zero effect of COVID on the volume of Dr. Bessett's hospital visits and so on for diseases not related to COVID-19. And you combine that with the

D. C is just not related to COVID-19.

And you combine that with the dynamics of <unk>.

Speaker 1: Now, the packs are now coming down to around below a building this year. It will keep going down, but of course the absolute amount is less than this. And the growth number on a stato and the joy is...

<unk> now having come down to around.

Below a 1 billion this year and it will keep going down but of course, the absolute amount is less and less and the growth number on a state O&M, Joe is is getting higher and higher so.

Speaker 1: getting higher and higher. So, I'm confident that that's the case, also because we have a good grip on the margins, as you can see, and that means that if we just get a marginal increase on revenues, then we will also see an increase in EPS. So that's with regard to the Trump year, with regard to the opioids and the balance sheet. Then,

Im confident that Thats. The case also because we have a good grip on the margins as you can see and that means that if we just get a marginal increase on revenues. Then we will also see an increase in EPS. So that's with regard to the trough year with regard to the opioids and the balance sheet than what you have.

Speaker 1: What you have seen in Texas is a payment schedule over 15 years.

Being in Texas as a payment schedule over 15 years for the cash component, which is two thirds of the settlement value and then.

Speaker 1: for the cache component, which is two thirds of the settlement value, and then a

<unk> provides.

Speaker 1: We provide products over 10 years.

We provide products over 10 years and Thats, a third of the settlement and I could say spreading it over many years, we're basically able to manage this within our balance sheet structure. If we were to pay it all.

Speaker 1: And that's a third of the settlement. And by, you could say, spreading it over many years, we're basically able to manage this within our balance sheet structure. If we were to pay it all tomorrow, that would, of course, not be possible giving the debt we have. So it's a way of finding a way to get a settlement that benefits everybody, including the American people, the people suffering from substance abuse, and actually by adding the component.

Tomorrow that would of course not be possible given the data we have so it's a way of finding a way to get a settlement that benefits everybody, including the American people the people suffering from substance abuse and actually by adding the product component in there.

Speaker 1: you get the benefit directly to people suffering from substance abuse and having an overdose situation. And you actually have a nice twist to this.

We'll get the benefit directly to people suffering from substance abuse, and having an overdose situation and you actually have a nice twist to this because the generic narcan spray product is actually manufactured in the U S. On a dedicated manufacturing setup that we've created in Salt Lake City and one of our many.

Speaker 1: The generic and arcane spray product is actually manufactured in the US.

Speaker 1: On a dedicated manufacturing set up that we've created in Salt Lake City.

Speaker 1: one of our manufacturing plants there. So it's also good for US manufacturing that you have here, something that helps the US population being manufactured in the US. So I think it's a very good settlement. I hope it can inspire everybody to reach a nationwide settlement and we will be able to manage that within our balance sheet. Now, the last question on respiration, I don't know what you're saying.

Factoring clients there. So it's also good for U S manufacturing that you have here something that helps the U S population being manufactured in the U S. So I think it's a very good settlement I hope it can inspire.

Everybody to reach a nationwide settlement and we will be able to manage that within our our balance sheet now the last question on risperidone over to Houston if.

Speaker 1: Yes, so the commercial organization is in place, including the Salesforce and the Binance is by relocating resources within our budget.

So the commercial organization is in place, including the sales force and we financed this by reallocating resources within our budget and yes, you would see a step up in the SG&A spend than when we launched the product.

Speaker 1: And yes, you will see a step up in the SGNA spent and when we launch the product. Thank you very much.

Thank you very much for the questions.

Speaker 3: Thank you and there is one more question from Jason Garvey from Bank of America. Please ask your question. Your line is now open.

Thank you and there is one more question from Jason <unk> from Bank of America. Please ask your question. Your line is now open.

Speaker 5: Hey guys, thanks for squeezing me in. Just one other follow up on the opioid front. I think there's a February 25 deadline for final implementation for the...

Hey, guys. Thanks for squeezing me in.

Just one other follow up on the opioid front I think there is a February 25th deadline for final implementation for the J&J distributor side of the equation. So is that too little time for Kevin and negotiated its way into the deal or with participation in the global deal have to happen subsequently I'd imagine.

Speaker 5: Jan J. Distributor side of the equation. So is that too little time for Kevin and negotiate its way into the deal or would participation in a global deal have to happen subsequently? I'd imagine your counter parties would love a much bigger top line to announce to its constituents. So I'm just curious if we're too late in the game there.

Your counterparties with a much bigger topline to announce two its constituent so I'm just curious if we're too late in the game there.

Speaker 5: And then ultimately, how do you leverage the existing framework? And then ultimately, when we look at the final often later this month, how much residual litigation burden after this settlement would be unsatisfactory versus what, how would you characterize true global peace in a global settlement? Thanks.

And then ultimately how do you leverage the existing framework and then ultimately when we look at the final opt in later this month, how much residual litigation burden after the settlement.

It would be.

Factory versus what how would you characterize <unk> global peace and a global settlement. Thanks.

Speaker 1: The aiming, of course, had reached a nationwide everyone within the next 12 months.

Amy.

Of course at reaching and nationwide.

Within the next 12 months.

It's not.

Speaker 1: It's not our aim to join into communication around the settlements that G&J and the British distributors have been reaching. We see that as our settlement will most likely be communicated separately. And it's also different in that we have a product component which nobody else has. So that's how we see that. In terms of...

Our aim to join into the communication around the settlements that J&J and the three distributors have been reaching.

We see that as al said, when we will most likely be communicated separately and it's also different in that we have the product component, which nobody else has so.

That's how we see that in terms of.

Speaker 1: How do you get peace so speak? How to get a comprehensive holistic settlement? It's really all about the subdivisions. So if you look at what we did in Louisiana and what we didn't Texas, it basically includes all the subdivisions.

How do you get piece so to speak how to get a comprehensive holistic settlement, it's really all about the subdivisions. So if you look at what we what we did in Louisiana and what we did in Texas. It basically includes all the sub divisions.

Speaker 1: So if you think about nationwide settlement, you have the same situation for us, as you've seen for G&J and the distributors, you need to get into the 90s in terms of how many subdivisions go along with it, because otherwise you will just have too much of a tail of litigation out there.

So.

You speak about nationwide settlement you had the same situation for us as you've seen for J&J and the distributors you need to get into the into the 90 is in terms of how many subdivisions go along with it because otherwise you will just have too much of a tail of litigation out there.

Speaker 1: What I've been seeing and I'm not sort of, I don't have any insights or what's publicly available is of course, then we're seeing increasing participation rates for the change in the distributors settlements from this.

I have been seeing and im not I don't have any insights over and above what's publicly available is of course, then we are seeing increasing participation rates for the J&J and the distributors.

Settlements from the subdivisions and from what I've been reading we are in the nine years.

Speaker 1: And from what I've been reading, we are in the 90s, and we're really seeing majority of states and majority of South Division.

Really seeing majority of states and majority of subdivisions going along with this and I think that it just makes sense because it makes sense for the population. It makes sense for the states. It makes sense of obtaining lawyers.

Speaker 1: And I think that it just makes sense because it makes sense for the population, it makes sense for the states, it makes sense for the cleaning lawyers, it makes sense for the companies. And I don't see a lot of subdivisions eventually actually trying to go to trial and going up against their state.

And I don't see a lot of subdivisions eventually actually trying to go to trial and growing up against their states as a whole vehicle switched to this which I won't get into but it's problematic for a county or city to really pursue this once the state has settled.

Speaker 1: As a whole legal twist to this, which I won't get into, but it's problematic for a county or a city to really pursue this once the state has settled. And I don't think we'll see much of that. I hope that answers the question. Thank you. No, it did. Thank you so much.

And I don't think we will see much of that.

That answers the question.

Thank you.

Thank you so much.

Thank you. Please continue with your closing remarks.

So thank you everyone for joining the call. It was pleasure, taking the questions and talking to you and I wish you all a nice and safety.

Speaker 1: So thank you everyone for joining the call. It was pleasure taking the questions and talking to you. And I wish you all a nice and safe day. Bye bye.

Sure.

Thank you that does conclude our conference for today. Thank you for participating you may all in.

Speaker 3: Thank you. That does conclude our conference for today. Thank you for participating. You may all know this connection.

Now disconnect.

[music].

Yeah.