Q1 2022 Viatris Inc Earnings Call

Good morning, My name is Britney and I will be your conference operator today at this time I would like to welcome everyone to the Beatrice.

So the Beatrice 2022 first quarter earnings call and webcast all participant lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question at that time. Please press star one on your telephone keypad. If you need to ask further questions you may reenter the queue.

Good morning, My name is Britney and I will be your conference operator today at this time I would like to welcome everyone to the Beatrice.

To the Beatrice 2022 first quarter earnings call and webcast all participant lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If he would like to ask a question at that time. Please press star one on your telephone keypad. If you need to ask further questions you may reenter the queue.

Lastly, if you should require operator assistance. Please press star zero. Thank you I would now like to turn the call over to Bill took Kluski head of global capital markets. Please go ahead.

Thank you and good morning, everyone welcome to our first quarter 2022 earnings call.

Lastly, if you should require operator assistance. Please press star zero. Thank you I would now like to turn the call over to Bill <unk> head of global capital markets. Please go ahead.

Joining me today is Michael Gahler, Chief Executive Officer, Rajiv Malik President and Sanjeev Aggarwal, our Chief Financial Officer.

Thank you and good morning, everyone welcome to our first quarter 2022 earnings call. Joining me today is Michael <unk>, Chief Executive Officer, Rajiv Malik President and Sanjeev <unk>, our Chief Financial Officer.

During today's discussion, we will be making forward looking statements on a number of matters, including our financial guidance for 2022 very strategic initiatives.

These forward looking statements are subject to risks and uncertainties that could cause future results or events to <unk>.

During today's discussion, we will be making forward looking statements on a number of matters, including our financial guidance for 2022.

Differ materially from today's projections.

Please refer to the press release that we furnished to the SEC on form 8-K earlier today for an explanation of those risks and uncertainties.

Various strategic initiatives.

These forward looking statements are subject to risks and uncertainties that could cause future results or events.

And that's applicable to forward looking statements.

Differ materially from today's projections.

We will be referring to certain actual and projected financial metrics of Beatrice on an adjusted basis.

Please refer to the press release that we furnished to the SEC.

On form 8-K earlier today for an explanation of those risks and uncertainties.

Which are non-GAAP financial measures.

We will refer to these measures as adjusted and present them to supplement your understanding and assessment of our financial performance.

And the limits applicable to forward looking statements.

We will be referring to certain actual and projected financial metrics of the interest appointed an adjusted basis.

non-GAAP measures should not be considered as a substitute for or superior to financial measures calculated in accordance with GAAP.

Which are non-GAAP financial measures.

We will refer to these measures as adjusted and present them to supplement your understanding and assessment of our financial performance.

The most direct comparable GAAP measures as well as reconciliations of non-GAAP measures to those GAAP measures are.

non-GAAP measures should not be considered as a substitute for or superior to.

Are available on our website at Investor <unk> Beatrice Dot com.

The financial measures calculated in accordance with GAAP.

In the appendix of today's slide presentation.

The most direct comparable GAAP measures as well as reconciliations of non-GAAP measures to those GAAP measures are available on our website at investor <unk> Dot com and.

The information discussed during the presentation, except for the participant questions is the property of Beatrice and cannot be recorded or rebroadcast without the interest expressed written consent and permission.

And in the appendix of today's slide presentation.

Copy of today's presentation is available on our website at Investor <unk> Beatrice Dot com.

The information discussed during the presentation, except for the participant questions is the property of the interests and cannot be recorded or rebroadcast without <unk> expressed written consent and permission.

Archived replay of the webcast will be available on our website. Following the conclusion of today's event.

With that I'd like to hand, the call over to Michael <unk>, Our Chief Executive Officer.

A copy of today's presentation is available on our website at Investor <unk> Dot com.

Thank you Bill and good morning.

An archived replay of the webcast will be available on our website. Following the conclusion of today's event.

Thank you all for joining us for our first quarter 2022 earnings call.

I'm pleased to say that we're off to a good start to the year with strong first quarter results in line with our expectations across all key financial metrics delivering on our financial commitments.

With that now I'd like to hand, the call over to Michael <unk>, Our Chief Executive Officer.

Thank you Bill and good morning.

Thank you all for joining us for our first quarter 2022 earnings call.

And making good progress on the reshaping initiatives, we announced in February .

I am pleased to say that we're off to a good start to the year with strong first quarter results in line with our expectations across all key financial metrics delivering on our financial commitments.

For the full year, we remain confident in our 2022 financial guidance on operational basis.

Continuing to monitor the current headwinds brought on by foreign exchange rates.

And making good progress on the reshaping initiatives, we announced in February .

Now here are some highlights from the quarter.

For the full year, we remain confident in our 2022 financial guidance on an operational basis.

In the first quarter, we reported total revenue of 4.19 billion U S dollars.

And we're continuing to monitor the current headwinds brought on by foreign exchange rates.

Adjusted EBITDA of 1.59 billion U S dollars and free cash flow of $1.07 billion at 34% increase over last year.

Now here are some highlights from the quarter.

In the first quarter, we reported total revenue of $4 $1 9 billion U S dollars adjusted.

This strong performance has enabled us to continue to deliver on our financial commitments for debt repayment, while continuing to return capital to shareholders through the payment of a dividend.

Adjusted EBITDA of $1 $5 9 billion U S dollars and free cash flow of 1.07 billion.

At 34% increase over last year.

We're continuing our successful integration, capturing synergies and simplifying our processes and organization.

This strong performance has enabled us to continue to deliver on our financial commitments for debt repayment, while continuing to return capital to shareholders through the payment of a dividend.

Our development engine continues to deliver our key pipeline milestones and highlights for this quarter include the launch of generic Restasis and generic revlimid and the full FDA approval of generic Symbicort.

We're continuing our successful integration, capturing synergies and simplifying our processes and organization.

Our development engine continues to deliver key pipeline milestones and highlights for this quarter include the launch of generic Restasis and generic revlimid and the full FDA approval of generic Symbicort.

Overall, we generated approximately $120 million of new product revenue in the first quarter and we're on track for $600 million in new product revenues for the full year.

Now allow me to switch gears to our future.

Overall, we generated approximately $120 million in new product revenue in the first quarter and we're on track for $600 million in new product revenues for the full year.

In February we announced a significant logo reshaping initiative to unlock trapped value and build a simpler stronger and more focused company that is well positioned to live a more access to patients and more value to shareholders.

Now allow me to switch gears to our future.

In February we announced a significant global reshaping initiative to unlock trapped value and build a simpler stronger and more focused company, which is well positioned to deliver more access to patients and more value to shareholders.

Since February we've engaged in conversations and meetings with numerous shareholders.

Listened carefully to your feedback.

And we recognize there is a desire for more clarity more certainty about our strategic plans and the steps, we're taking to get there.

In February we are engaged in conversations and meetings with numerous shareholders.

We fully understand the importance of remaining engaged with you and we'll update you on our progress as we go along.

Listened carefully to your feedback.

And we recognize there is a desire for more clarity more certainty about our strategic plans and the steps, we're taking to get there.

So let me give you an update on what was achieved in the first quarter.

I'm pleased to say, we made good progress during the quarter on the Biosimilar transaction with our partner Biochem biologics.

We fully understand the importance of remaining engaged with you and we'll update you on our progress as we go along.

And we believe we are on track to close the transaction in the second half of 2022 Rajeev later I will give you more details on our activities to date.

So let me give you an update on what was achieved in the first quarter.

I am pleased to say, we made good progress during the quarter on the Biosimilar transaction with our partner <unk> biologics.

We're also making good progress on the previously announced divestiture of the portfolio. After the other select non core assets, which we identified.

We believe we are on track to close the transaction in the second half of 2022 Rajeev later will give you more details on our activities to date.

We remain confident that we execute against all of these plans by the end of 2023.

We're also making good progress on the previously announced divestiture of the portfolio. After the other select non core assets, which we identified.

We strongly believe that our company's equity securities continue to be significantly undervalued.

We remain confident that we execute against all of these plans by the end of 2023.

And as we continue to generate strong operating cash flows from all business.

And realize the proceeds from our efforts to unlock value.

We strongly believe that our company's equity securities continue to be significantly undervalued.

We're focused on maintaining our quarterly dividend paying.

Paying down debt future share buybacks and other actions all of which will enhance shareholder value over the short medium and long term.

And as we continue to generate strong operating cash flows from our business.

And realize the proceeds from our efforts to unlock value.

And with regard to timing for share buybacks, we hope to consider repurchases under the program already approved by the board of directors as soon after the close of Biochem biologics as possible.

We're focused on maintaining our quarterly dividend paying.

Paying down debt future share buybacks and other actions all of which will enhance shareholder value over the short medium and long term.

In summary.

And with regard to timing for share buybacks, we hope to consider repurchases under the program already approved by the board of directors as soon after the close of Biochem biologics as possible.

We had a very strong quarter and.

And we are excited about the future that we're building for the interest.

I can assure you that the entire company is focused on executing on these initiatives that we set forth for our business.

In summary.

We had a very strong quarter and.

Meeting or exceeding the operational goals that we set.

And we are excited about the future that we're building for the interest.

Generating significant free cash flow, which remains our financial North star.

I can assure you that the entire company is focused on executing on these initiatives that we set forth for our business.

And unlocking value, while reshaping our company for a stronger future.

Meeting or exceeding the operational goals that we set.

With that let me turn it over to Rajiv Rajiv.

Generating significant free cash flow, which remains our financial North star.

Thank you Michael and good morning.

I'm excited by our strong results this quarter reflect our focused business execution on all fronts, we manage the business maximize new launches delivered on our pipeline and continue to execute our integration and TSA exits.

And unlocking value, while reshaping our company for a stronger future.

With that let me turn it over to Rajiv Rajiv.

Thank you Michael and good morning.

I am excited by our strong results this quarter reflect our focus business execution on all fronts, we make the best business maximize new launches continued to execute our integration and TSA exits.

All while advancing our reshaping initiatives.

Let me start with an update on transaction with black on biologics.

We are progressing with all regulatory approvals and importantly have clearance from a U S antitrust perspective.

All while advancing our reshaping initiative.

Let me start with an update on transaction with black on biologics.

The remaining regulatory approvals unexpected in the coming months.

We are progressing with all regulatory approvals and importantly have clearance from the U S and data perspective.

<unk> is also on track with the coding its financial commitments.

This positive momentum we are well positioned to close this transaction in the second half of 'twenty two.

The remaining regulatory approvals are expected in the coming months.

<unk> is also on track with the coding its financial commitments with.

Now moving to our quarterly segment results, which begin on slide seven of our earnings slides posted on our website.

This positive momentum we are well positioned to close this transaction in the second half of 'twenty two.

As I walk you through the performance in each of our segments and product categories.

Now moving to our quarterly segment results, which begin on slide seven of our earnings slides posted on our website.

We'll be making certain comparison on an operational basis.

Yes, our plan that supported our guidance we communicated back in late February .

As I walk you through the performance in each of our segments and product categories.

Okay.

We'll be making certain comparison on an operational basis.

Our direct market segment continues to be a strong and resilient commercial business bank on a foundation of a very diversified portfolio of Brad genetics and complex products.

<unk> are planned that supported our guidance we communicated back in late February .

Our direct market segment continues to be a strong and resilient commercial business bank on a foundation of a very diversified portfolio.

It has allowed us to improve the predictability and sustainability in what continues to be a dynamic and challenging environment.

<unk> genetics and complex products, which has allowed us to improve the predictability and sustainability in what continues to be a dynamic and challenging environment.

In North America, we continue to demonstrate our focus and dedication to patients through the innovative solutions based on the strength of our proven development capabilities.

In North America, we continue to demonstrate our focus and dedication to patients through.

Our interchangeable Biosimilar secondly is off to a great start as a total prescription share approaches, 10%, which is in line with our expectations.

The innovative solutions based on the strength of our proven development capabilities.

Our interchangeable Biosimilar secondly is off to a great start as a total prescription share approaches, 10%, which is in line with our expectations.

Genetics.

Is another example of a first to market complex products and is also off to a strong stock.

Moving to our genetic Symbicort named brand now we are very excited to receive Fda's final approval in March.

Connecticut Sss is another example of a first to market complex product and is also off to a strong stock.

If milestone furthers our track record of successful for us in developing complex genetic medicines.

Moving to our genetic Symbicort named brand now we are very excited to receive FDA final approval in March.

Increased patient access.

Yes. It is a trial scheduled for May 19, and divest Virginia Federal Court and we continue to have the opportunity to launch this product in 2022 as upcoming proceedings.

If milestone further as our track record of successful for us in developing complex genetic medicine to help increase patient access.

David is a trial scheduled for May 19, and divest Virginia Federal Court and we continue to have the opportunity to launch this product in 2022 as upcoming proceedings develop.

Other key power ups like your battery and varicella.

In line with our expectations, while showing year over year double digit volume growth.

Other key products like <unk> and <unk> performed in line with our expectations, whilst showing year over year double digit volume growth.

Our European business is also off to a solid start and remains on track to grow mid single digits for the full year, what do you do it.

Italy, France, Spain, and Portugal performed strongly.

Our European business is.

Also off to a solid start and remains on track to grow mid single digits for the full year 'twenty two.

Further enhance our retail channel leadership in these countries.

We also saw stronger than expected performance across brands, such as Korea Lipitor at Mr. Lyrica and bluefin.

Ali, France, Spain, and Portugal performed strongly to further enhance our retail channel leadership in these countries.

Our <unk> portfolio continued to grow in line with our expectations.

We also saw stronger than expected performance across brands, such as Korea, <unk> have missed us lyrica and Brooklyn.

Hulio, our biosimilar to Humira, which adds roughly 20 plus percent market share of the Biosimilar market is another key contributor to our German and France businesses.

Our <unk> portfolio continued to grow in line with our expectations.

Hulio, our biosimilar to Humira, which adds roughly 20 plus percent market share of the Biosimilar market is another key contributor to our German and France businesses.

Our recently launched generic Revlimid is the Fuston Cds of key launches planned for Europe . This year.

Our emerging markets segment showed a strong quarterly performance.

Our recently launched generic Revlimid is the Fuston Cds of key launches planned for Europe . This year.

Our ARV franchise performed slightly better versus our expectations this quarter.

Key geographies, such as South Korea, Southeast Asia, Turkey drove higher volumes, while Brazil realize better pricing.

Our emerging markets segment showed a strong quarterly performance.

Our ARV franchise performed slightly better versus our expectations this quarter.

Lipitor and Erika, let our strong growth in this segment.

Key geographies, such as South Korea, Southeast Asia, Turkey drove higher volumes, while Brazil realize better pricing.

It helped the brand category performed better than expectations.

Moving to Jan.

<unk> and Erika, let our strong growth in this segment and helped the brand category performed better than expectations.

Headwinds on account of annual government and that's a price reductions in Japan are being partially offset by strong year over year volume growth off our authorized genetics.

Moving to Jan.

The headwinds on account of annual government and that's a price reduction in Japan are being partially offset by strong year over year volume growth of our authorized generic.

And brands like Sally Cox Amitiza and effects.

In addition, we saw sent in PR and Epipen anesthesia versus last year.

On Biosimilars, we are pleased that <unk> has achieved more than 50% market share in Japan.

And brands like Selikoff Amitiza and effects are.

In addition, we saw sent in PR and Epipen in the CVR versus last year.

We continue to believe that there is plenty of room for the overall humira biosimilar market to grow as it only stands at 10% today.

On Biosimilars, we are pleased that <unk> has achieved more than 50% market share in Japan.

However, we continue to believe that there is a plenty of room.

Lastly, an update on greater China.

Our strong and broad commercial infrastructure has helped us to deliver a strong performance, despite COVID-19 and COVID-19 related lockdowns.

The overall humira biosimilar market to grow as it only stands at 10% to date.

Lastly, an update on greater China.

Our retail channel performance, especially viagra was slightly impacted by Covid, which was more than offset by better than expected performance of the hospital channel primarily led by lipitor.

Our strong and broad commercial infrastructure has helped us to deliver a strong performance, despite COVID-19 and COVID-19 related lockdowns.

Our retail channel performance, especially viagra was slightly impacted by Covid, which was more than offset by better than expected performance of the hospital channel primarily led by <unk>.

Our manufacturing operations in China continued to perform well and at this time, we do not foresee any potential disruption to us.

China supply chain.

Given our solid start to the year and the strong customer service performance across all segments delivered by our global supply chain, we remain confident to deliver on our full year expectations across all segments on an operational basis.

Our manufacturing operations in China continued to perform well and at this time, we do not foresee any potential disruption to our China supply chain.

Given our solid start to the year and our strong customer service performance across all segments delivered by our global supply chain, we remain confident to deliver on our full year expectations across all segments on an operational basis.

Yeah.

Switching now to our pipeline.

For your benefit we have included current snapshot in our earnings materials, beginning on slide 30.

Hey, Don a few noteworthy pipeline updates.

Switching now to our pipeline.

For your benefit we have included current snapshot in our earnings materials, beginning on slide 13.

Our Eylea Biosimilar review is progressing well and we can confirm that we have no outstanding science issues.

Paid out a few noteworthy pipeline update.

We are currently waiting for the facility approval by FDA.

Our Eylea Biosimilar review is progressing well and we can confirm that we have no outstanding science issues.

As a reminder, this program is a part of black bond transaction.

Our biosimilar to botox fighting for USA FDA will be delayed.

We are currently waiting for the facility approval by FDA.

We remain committed to the successful development of this complex Biosimilar, we had to do math and to the earliest possible launch in the United States.

As a reminder, this program is a part of black bond transaction.

Our biosimilar to botox filing for USA FDA will be delayed we.

Our clinical trial for <unk>.

We remain committed to the successful development of this complex biosimilar with romance and to the earliest possible launch in the United States.

Once monthly has a number of patients who are located in Ukraine and are being impacted by ongoing situation there.

Our clinical trial for Ta once monthly has a number of patients who are located in Ukraine and are being impacted by ongoing situation there.

We are pushing back our FDA filing by one quarter, which is not scheduled for the first quarter of 'twenty three.

Yeah.

We recently received FDA approval of our Levothyroxine oral solution named at Missouri, and I'm looking forward to launching later this year.

As a result, we are pushing back our FDA filing by one quarter, which is not scheduled for the first quarter of 'twenty three.

Also we received a <unk> goal date of October 22 for our potentially first to file generic desktop.

We recently received FDA approval of our Levothyroxine oral solution named at MISA and are looking forward to launching later this year.

Lastly, we believe that we achieve first to file status for our genetic Abilify maintainer.

Also we received a <unk> goal date of October 22 for our potentially first to file generic bank desktop.

And reaching our first to market opportunities of complex Injectables, which now include Calipari don't see month after tight eliott, Phatic carboxy Marcos iron sucrose and semi tight.

Lastly, we believe that we achieve first to file status for our generic Abilify maintainer.

Further enriching our first to market opportunities of complex Injectables, which now include <unk> month after rotate LDR tragic carboxy molecules iron sucrose and Semegran tight.

And finally, an update on integration as you can see on slide 17, we remain on track to realize $500 million of cost synergies over the next two years, resulting in at least $1 billion cumulative cost synergies since becoming batches.

And finally, an update on integration.

As you can see on slide 17, we remain on track to realize $500 million of cost synergies over the next two years.

Our objective throughout this year is to complete our TSA exits from Pfizer, making we asses self reliant in terms of systems and processes and positioning the company to further accelerate the optimization of our infrastructure.

Resulting in at least $1 billion cumulative cost synergies since becoming b assets.

Our objective throughout this year is to complete our TSA exits from Pfizer, making we assess self aligned in terms of systems and processes and positioning the company to further accelerate the optimization of our infrastructure.

Before I conclude I would like to tack our colleagues for their hard work to deliver yet another excellent quarter and lay a solid foundation for the year.

I would like to tanker fleets.

With that let me now turn the call over to Cindy.

Their hard work to deliver yet another excellent quarter and lay a solid foundation for the year with that let me now turn the call over to Sandeep.

Thank you and good morning, everyone. Please turn to slide 18, as we discussed our first quarter 2022 financial highlights.

After a good start and saw strength across the business operation revenue was stable relative to prior year gross margin was strong SG&A benefited from realization of synergies and free cash flow improved significantly.

Thank you and good morning, everyone. Please turn to slide 18, as we discussed our first quarter 2022 financial highlights.

We are off to a good start and saw strength across the business operational revenue was stable relative to prior year gross margin was strong SG&A benefited from realization of synergies and free cash flow improved significantly.

This performance in total was solid and in line with our expectation.

Let me walk you through the key drivers that contributed to first quarter performance.

On slide 19, we have summarized our results versus prior year on a reported basis.

This performance in total was solid and in line with our expectation.

Let me walk you through the key drivers that contributed to first quarter performance.

Moving to slide 20.

Sales benefited from performance across our segments and several new product launches as a result.

On slide 19, we have summarized our results versus prior year on a reported basis.

Sales were in line with expectation on an operational basis down marginally versus prior year by approximately 1%.

Moving to slide 26.

Sales benefited from performance across our segments and several new product launches as a result.

Our global business is approximately 70% non U S dollar denominated.

Sales were in line with expectation on an operational basis down marginally versus prior year by approximately 1%.

As a result of dollar strengthening against major currencies foreign exchange had an unfavorable impact of approximately 4% versus first quarter 2021.

Our global business is approximately 70% non U S dollar denominated.

As a result of dollar strengthening against major currencies foreign exchange had an unfavorable impact of approximately 4% versus first quarter 2021.

Sales in developed markets were flat as a result of stability across brands and genetics, along with contribution of new product sales.

In North America sales of $1 1 billion when in line with expectations, we saw growth across products like <unk> and the benefit of new product sales, including interchangeable insulin <unk> gene and genetic testing.

Sales in developed markets were flat as a result of stability across brands.

<unk>, along with contribution of new product sales.

In North America sales of $1 1 billion when in line with expectations, we saw growth across products like <unk> and the benefit of new product sales, including interchangeable insulin <unk> and genetic dose doses.

In the quarter. These streams contributed to overall performance and offset the expected impact of competition on key products generic price erosion.

In Europe , we're off to a strong start in sales grew by 5% on an operational basis.

In the quarter. These streams contributed to overall performance and offset the expected impact of competition on key products generic price erosion.

This is a result of category diversity, which spans genetic brand products, such as Dymista Creon and <unk> business, we're seeing encouraging trends with recently launched generic revlimid.

In Europe , we're off to a strong start in sales grew by 5% on an operational basis.

This is a result of category diversity, which spans genetic brand products, such as Dymista and Creon and <unk> business, we're seeing encouraging trends with recently launched generic revlimid.

Moving on to emerging market overall operation sales were flat and benefited from growth in brands, including Lipitor analytical.

This offset pressure in genetics as a result of lower volumes.

Moving on to emerging markets overall operation sales were flat and benefited from growth in brands, including Lipitor analytical.

Our Gen segment was down 4% driven by government price reduction, which we'd anticipated in Japan and lower volume in Australia.

This offset pressure in genetics as a result of lower <unk> volumes.

Partially offsetting these trends is a continued uptick of authorized generic products.

Our Gen segment was down 4% driven by government price reduction, which we anticipated in Japan and lower volume in Australia.

Lastly, greater China segment was impacted by carryover of policy changes in China that were implemented in 2021 overall trends are stable across key brands such as lipitor in the hospital setting.

Partially offsetting these trends is a continued uptick of authorized generic products.

Lastly, greater China segment was impacted by carryover of policy changes in China that were implemented in 2021 overall trends are stable across key brands such as lipitor in the hospital setting the retail spending continues to be a priority area of growth given our focus on broadening the patient population.

The retail spending continues to be a priority area of growth given our focus on broadening the patient population.

On Slide 21, let me walk you through the P&L elements that led to EBITDA being essentially flat versus prior year.

Adjusted gross margin of 59% came in slightly ahead of expectations and were driven by favorable mix associated with brand performance and new product launches SG&A was down approximately 14% and benefited from synergies realized over the last year associated with integration and restructuring activities.

On Slide 21, let me walk you through the P&L elements that led to EBITDA being essentially flat versus prior year.

Our adjusted gross margin of 59% came in slightly ahead of expectations and were driven by favorable mix associated with brand performance and new product launches SG&A was down approximately 14% and benefited from synergies realized over the last year associated with integration and restructuring activities.

To slide 22, we had an excellent quarter free cash flow of more than $1 billion up 34% versus the prior year. This improvement in our cash flow conversion was driven by lower one time cash cost positive change in net working capital, which total approximately $300 million in the quarter.

Turning to slide 22, we had an excellent quarter free cash flow of more than $1 billion up 34% versus the prior year. This improvement in our cash flow conversion was driven by lower onetime cash costs positive change in net working capital, which total approximately $300 million in the quarter.

Improvement in flat free cash flow generation continues to be an organizational priority with confident that the cash optimization efforts will benefit cash flow throughout the rest of 2022.

Improvement in flat free cash flow generation continues to be an organizational priority. We're confident that the cash optimization efforts will benefit cash flow towards the rest of 2022.

In the quarter, we delivered on our capital allocation commitment, which included approximately $840 million of short term debt payment and increase our quarterly dividend by 9%.

Moving to slide 24, we're off to a strong start in 2022 and solid quarter supports the operational strength of business across total revenue adjusted EBITDA and free cash flow.

In the quarter, we delivered on our capital allocation commitments, which included approximately $840 million of short term debt payment and increased our quarterly dividend by 9%.

Moving to slide 24.

You will recall that the guidance you provided in February assumed a full year of Biosimilar business and FX impact of approximately 2% on total revenue and adjusted EBITDA versus the prior year.

We are off to a strong start in 2022 and solid quarter supports the operational strength of business across total revenue adjusted EBITDA and free cash flow.

You will recall that the guidance we provided in February assumed a full year of Biosimilar business and FX impact of approximately 2% on total revenue and adjusted EBITDA versus the prior year.

Given the dollar has strengthened against major currency, if the mid April spot rates hold toward the rest of the year there could be an additional impact on total revenue adjusted EBITDA and to a lesser extent free cash flow.

Given the dollar has strengthened against major currency, if the mid April spot rates hold toward the rest of the year there could be an additional impact on total revenue adjusted EBITDA and to a lesser extent free cash flow.

FX aside the momentum seen first quarter gives us confidence in the outlook for rest of the year.

Now let me cover the estimated phasing of our financial performance for the full year.

FX aside the momentum sustain first quarter gives us confidence in the outlook for rest of the year.

With respect to revenue phasing, we estimate 48% of revenue will come into first half and 52% in the second half.

Now let me cover the estimated phasing of our financial performance for the full year.

This is driven by ramp of new.

Thanks.

With respect to revenue phasing, we estimate 48% of revenue will come in the first half and 52% in the second half.

The U S launch of generic Revlimid in the third quarter and seasonality of influenza in developed market.

We expect sequential increase in SG&A and R&D throughout the year with approximately 52% of spend occurring in the second half.

This is driven by ramp of new products.

The U S launch of generic Revlimid, and the third quarter and seasonality of influenza in developed market.

For the full year, we expect gross margin SG&A and R&D to be within the guidance metrics. We provided earlier this year.

We expect sequential increase in SG&A and R&D to our deal with approximately 52% of spin.

As a result of previously announced legal settlement, which will occur in third quarter free cash flow will be more heavily weighted in the first half.

In the second half.

For the full year, we expect gross margin SG&A and R&D to be within the guidance metrics. We provided earlier this year.

So we expect one time cash cost and capital expenditure to be more significant in third and fourth quarters.

As a result of previously announced legal settlement, which will occur in third quarter free cash flow will be more heavily weighted in the first half also we expect one time cash cost and capital expenditure to be more significant in total fourth quarters.

We are firmly on track with our 2022 debt paydown target of approximately $2 billion and are committed to maintaining an investment grade rating.

Before I conclude I want I wanted to make a few comments on our reshaping initiatives.

We are firmly on track with our 2022 debt paydown target of approximately $2 billion and are committed to maintaining an investment grade rating.

We expect to buy a car transaction would generate $2 billion in gross proceeds or approximately $1 6 billion after tax.

Before I conclude I want I want to make a few comments on our reshaping initiatives.

The proceeds will be used for debt pay down and potentially for share buyback.

We expect to buy a car transaction would generate $2 billion in gross proceeds or approximately $1 6 billion. The proceeds will be used for debt paydown.

As Michael and Rajiv both mentioned, we're making good progress and expect other assets to be divested by the end of 2023.

Sound and potentially for share buyback.

This will bring in significant capital for further share buyback at potential tuck in BD opportunities.

As Michael and Rajiv both mentioned, we are making good progress and expect other assets to be divested by the end of 2023.

We are obviously pleased with the strong start in the first quarter and the momentum we see in the operations of the business positioning us well for the remainder of the year.

This will bring in significant capital for further share buyback at potential tuck in BD opportunities.

Now I would like to turn the call back to the operator to open the call for Q&A.

We are obviously pleased with the strong start in the first quarter. The momentum we see in the operations of the business position us well for the remainder of the year.

At this time, if you would like to ask a question. Please press star one on your telephone keypad, if you wish.

Now I would like to turn the call back to the operator to open the call for Q&A.

Sure move yourself from the queue. Please you may do so by pressing the pankey, we remind you to please pick up your handset and please limit yourself to one question.

At this time, if you would like to ask a question. Please press star one on your telephone keypad, if you wish to remove yourself from Mchugh. Please thank you.

You sell by pressing the pound key we remind you to please pickup your handset and please limit yourself to one question.

Thank you operator, let's go to the first question to adjacent Carberry. Please.

Okay.

Thank you operator, let's go to the first question to adjacent Carberry. Please.

Jason Please press star one if you would like to ask a question.

Yeah.

Yeah.

Okay, well sorry.

Jason Please press star one if you would like to ask a question.

Hi, Jason.

Hey, Hey, guys. Thanks for taking my question. This is Bob Patel on for Jason There Barry.

My first question's on Restasis can you talk about your supply capacity for this product.

Okay, well sorry.

Jason.

Hey, guys. Thanks for taking my question. This is Bob Patel on for Jason Here Barry.

And your guidance assumption for this project.

To remain semi exclusive.

My first question's on Restasis can you talk about your supply capacity for this product.

And then secondly can you speak to your second half 'twenty two capital deployment priorities, how will you balance buybacks at current price versus acquiring new assets.

And your guidance assumption for this product.

To remain semi exclusive.

And then secondly can you speak to your second half 'twenty two capital deployment priorities.

Yes. Thanks.

Good morning, everybody I guess, the first question to Rajiv and Sanjeev. If you can comment on the second half capital deployment.

<unk> balanced buybacks at current price versus acquiring new assets.

Thanks, a lot Michael.

I'll start by saying that clearly pleased to have again received the first FDA approval for <unk>.

Yes.

Good morning, everybody I guess, the first question to Rajiv and Sanjeev. If you can comment on the second half capital deployment.

Tessa.

This reinforces our ongoing commitment to.

Thanks, a lot Michael.

This is mark again.

I'll start by saying that clearly pleased to have again received.

Alright.

I would say that.

Mark.

He is not a constraint.

Yes.

Which reinforces our ongoing commitment.

The market continues to evolve we exited three player plus brand market at this point of time as the peak and we have been very happy we have been very happy with how we have performed so far.

To this market.

Perfect.

I would say that.

<unk> is not a constraint.

The market continues to evolve we exited three player plus brand market at this point of time as the peak and we have been very happy we haven't been very happy with how we have performed.

And we remain confident about that.

Yes forecast.

Yes.

And on the.

Capital allocation.

As Michael said than I have in my opening comments.

And we remain confident about the forecast.

We're pretty clear about.

Yes.

Our priorities.

On the.

Alrighty, just continue to de lever.

Capital allocation.

As we demonstrate that lost last year by paying down $2 billion.

As Michael said, then I said in my opening comments.

We're pretty clear about.

And then on plan to pay down another $2 billion this year.

Our priorities.

<unk> is continuing to delever.

And overall paid down $6 5 billion.

As we'd amongst that lost last year by paying down $2 billion.

And.

And maintain an investment grade rating. So that's on the debt side and we've also been clear about paying in maintaining and growing dividends, which we demonstrated by by increasing our dividend by 9% of our priorities are pretty clear and we have sufficient cash flow from the organic business to be able to support our capital allocation.

And then on plan to pay down another $2 billion this year and overall paid on $6 5 billion.

And.

And maintain an investment grade rating.

On the debt side.

And we've also been clear about paying in maintaining and growing dividends, which we demonstrated by by increasing our dividend by 9% of our priorities are pretty clear and we have sufficient cash flow from the organic business to be able to support our capital allocation priorities.

Brian Please.

And then ask the proceeds coming from the Bayou Corne transaction I think.

We said very clearly before that.

Obviously, the tax implications of that their applications on maintaining leverage neutral or paying down some additional debt, but then there will be additional funds available.

And then.

The proceeds coming from the <unk> transaction I think we said very clearly before that.

Clearly, we hope to consider buybacks at that time share buybacks.

Lee the tax implications of that their applications on maintaining leverage neutral or paying down some additional debt, but then there will be additional funds available and clearly we hope to consider buybacks at that time share buybacks, especially at the current share price and nowhere so undervalued that clearly share buybacks on the case to beat for us.

Actually at the current share price. We're so undervalued that clearly share buybacks are the case to beat for us for the additional capital that's coming in.

Next question please.

Thank you Michael operator, if would go to to Elliot Wilbur Please.

Yeah.

Okay.

The additional capital that's coming in.

Yeah.

Next question please.

Thanks, Good morning, My life.

Thank you Michael operator, but go to Elliot Wilbur please.

Yes.

Okay. Thanks, good morning, everyone.

Okay.

Just wanted to ask about the EBIT impact of competitive product events.

Okay.

Thanks, Good morning, My life.

Sure.

Okay. Thanks, good morning, everyone.

In the first quarter, referring specifically to the breaking slides on.

Just wanted to ask about the.

The EBITDA impact of competitive product events.

Pages, 20, and 21 of the deck. So just looking at the EBITDA impact of.

In the first quarter, referring specifically to the bridging slides on paint.

Keep our on key products I mean, it looks like it was effectively.

Pages, 20, and 21 of the deck. So just looking at the EBITDA impact of.

100% margin and I think thats relatively consistent with what you outlined at year end, but the EBITDA impact.

Keep our on key products I mean, it looks like it was effectively.

On other base business assets.

100% margin and I think thats relatively consistent with what you outlined at year end, but the EBITDA impact on other base business.

At least in terms of the margin profile of those products was quite a bit higher I think it's about 85% in the quarter. If you look at the EBITDA impact of <unk>.

Assets.

Negative revenue trends on other.

At least in terms of the margin profile of those products was quite a bit higher I think it's about 85 EBITDA impact of.

Based products base generics, so I just wanted to get some insight in terms of what.

Negative revenue trends on other.

Particular products that may have been impacted within that bucket in the first quarter.

Based products space generics. So I just wanted to get some insight in terms of what particular products that.

Why was the impact quite a bit higher than what you're expecting for the full year.

And in fact your guidance still relatively consistent with what you would expect in terms of the EBITDA impact on base business products for the balance of the year. Thanks.

May have been impacted within that bucket in the first quarter.

Why was the impact quite a bit higher than what youre expecting for the full year and is in fact your guidance still relatively consistent with what you would expect in terms of the EBITDA impact on base business products for the balance of the year.

Thanks, Andy on the subject can you start again.

So Elliot you're.

You're absolutely right. If you look at kind of like the two pieces, if I could step back first as the competition.

Thanks, Andy.

On key U S products.

Yes.

Sure.

The revenue and EBITDA impacts are consistent with what we've been outlining these two products, which is Mike Carlson and performance.

So Elliot you would absolutely like safe look kind of like the two pieces, if I could step back positively competition.

A very high gross margin above 90% as was evident as you can see.

On key U S products.

The revenue and EBITDA impacts are consistent with what we've been outlining these two products, which is my confidence performance.

On the revenue impact and the flow through to EBITDA. So thats consistent that's those are the two products.

A very high gross margin above 90% as was evident as you can see.

The other base business erosion as you saw we talked about the <unk>.

On the revenue impact and the any flow through to EBITDA. So thats consistent that's those are the two products.

Quarter, that's again in line with what we have seen quarter to quarter. There is a variation.

On the other base business erosion as you saw.

This quarter, particularly we had the pricing impact, but as Rajiv pointed out in his opening comments.

We talked about the <unk>.

<unk>.

Again in line with what we have seen quarter to quarter. There is a variation.

NHI in Japan.

This is the annual price reduction that we experienced that and Thats all.

This quarter, particularly we had the pricing impact, but as Rajiv pointed out in his opening comment from NHI in Japan.

<unk> anticipated that flows to the bottom line a bit on a couple of brands.

In the U S that have a pricing impact competitive price of impact that again has a higher impact.

This is the annual price reduction that we exceeded all.

Ill.

Schedule and anticipated that flows to the bottom line there are a couple of brands.

On the on the EBITDA, so overall I'd say.

The impact on both.

That have a pricing impact competitive Brexit impact that again at a high impact.

The competition and on the base business erosion is in line now the other important thing to note again as you pointed out is the offset if you look at the new product sales.

On the <unk> overall I'd say.

The impact on both.

Taylor.

The competition and on the base business erosion is in line now the other important thing to note again Rajiv pointed out is the offset if you look at the new product sales.

<unk> for the quarter and the gross margin on those.

So fairly significant that we were able to offset part of the impact on on the base business erosion.

Sure.

It was impressive for the quarter and the gross margin on those.

Okay.

Thank you operator.

Also are fairly significant that we were able to offset part of the impact on the on the base business erosion.

This shop lease.

Your line is open.

Great. Thanks, so much.

Okay.

Couple of questions from me I, just coming back to this issue of capital redeployment. So I guess once you address the debt reduction and kind of the the targets you've put out there.

Our next question. Thank you.

Thank you Chris Schott please.

Your line is open.

Hi, great. Thanks, so much.

A couple questions for me just coming back to this issue of capital redeployment. So I guess once you address the debt reduction and kind of the <unk>.

Should we think about most of the capital that youre going to be getting from whether it's the bio com deal or additional asset divestitures going to repo assuming your stock prices and this is really kind of like $10 level and that the deals you are considering would be more smaller in size.

<unk> targets, you've put out there.

Should we think about most of the capital that youre going to be getting from whether it's the biochem deal or additional asset divestitures going to repo assuming your stock prices and this is really kind of like $10 level and that the deals you are considering would be more smaller in size I'm trying get a sense I think that's been one of the debates is just how do we think about.

I think that's been one of the debates is just how do we think about you know what what Beatrice looks like going forward and it has only been on the messaging here is that repo is going to be a pretty high.

A high hurdle to overcome as we think about that versus deals I mean, that's kind of the first question just to clarify a bit more there and the second one from me as well.

Beatrice looks like going forward and it has only been from the messaging here is that repo is going to be a pretty high.

Touching on a little bit, but just on gross margin progression and trends for the year. It seems like the <unk> results were well ahead of your annual targets that you said they were slightly ahead of your own internal targets help me understand a little bit of of how we can kind of bridge from the <unk> results to the rest of the year like what drives that step down in gross margins going forward.

High hurdle to overcome as we think about that versus deals I mean, that's kind of the first question just to clarify a bit more there and the second one for me is that which I think you touched on a little bit, but just on gross margin progression and trends for the year. It seems like the <unk> results were well ahead of your annual targets that you said they were slightly ahead of your own internal targets help me understand a little bit of a hole.

We think about the implications for that in the kind of the go forward business into 'twenty three thanks, so much.

You kind of bridge from the <unk> results to the rest of the year like what drives that step down in gross margins going forward as we think about the.

Thank you, Chris look on capital allocation and the tradeoff between in our <unk>.

Share repurchases in BD I think we've been very very consistent we got our phase one commitments that we were committed to that's the $6 $5 billion Paydown.

Implications for that in the kind of the go forward business into 'twenty three thanks, so much.

Alright, Thank you Chris.

On capital allocation and the tradeoff between share repurchases and BD I think we've been very very consistent.

Targeting the leverage target that we put out there paying the dividend and as Sanjay mentioned earlier in all of that is supported by our strong organic free cash flow right. We don't need the cash from divestitures to achieve those targets. Our commitment is unchanged. That's what we're aiming for then was the divestitures, we have additional capital coming in and starting with the $2 billion.

Got all phase one commitments that we were committed to that's the $6 $5 billion Paydown.

Targeting the leverage target that we put out there paying the dividend and as Sanjay mentioned earlier in all of that is supported by our strong organic free cash flow right. We don't need the cash from divestitures to achieve those targets. Our commitment is unchanged. That's what we're aiming for then was the divestitures, we have additional capital coming in and starting with the $2 billion.

From <unk>.

Again, taking Texas or account that look at the net proceeds.

We are planning to use some of that to be leverage neutral, but then the remaining clearly, especially with a share price that we have right now as we said share buybacks are the case to be it doesn't mean, we're going to be completely inactive on the BD side.

From Biocrime.

Again, taking tax to account and look at the net proceeds.

We are planning to use some of that to be leverage neutral, but then the remaining clearly, especially with a share price that we have right now as we said share buybacks are the case to be it doesn't mean, we're going to be completely inactive on the BD side.

We're very active looking at opportunities there and we have our target areas that we laid out.

But clearly share buybacks are the case to beat and we hope to consider starting that as soon as.

We're very active looking at opportunities there we have our target areas that we laid out.

After the close of the Micron transaction.

And on the gross margin side, yes sure.

But clearly share buybacks are the case to beat and we hope to consider starting that as soon as.

So sure Chris you're right.

We came in slightly ahead of our internal expectation.

After the close of the <unk> transaction.

The gross margin of 59, 5% for the quarter, but I think there are a couple of things going on just to kind of put this in context with what's happening. So we had a strong brand performance as Rajiv pointed out that's obviously has.

And on the gross margin side, yes sure.

So sure Chris you're right.

We came in slightly ahead of our internal expectation.

The gross margin of 59, 5% for the quarter and I think there are a couple of things going on just to kind of put this in context with what's happening so.

Impact on the gross margin.

We also had new product launches.

<unk>.

Rich this is clearly a high gross margin product has an impact on that and then we also had some timing.

We had a strong brand performance as Rajiv pointed out that's obviously has.

The impact on the gross margin.

We also had new product launches.

Timing of emerging market tenders.

Eric.

And in case of.

Rich. This is clearly high gross margin product has an impact on that and then we also had some timing.

Acceleration in the first quarter that has an impact on the gross margin. So we came in ahead.

Timing of it.

I expect the gross margin to step down a little bit in the second second quarter because of the product mix and then what we talked about but on a full year basis. We are still on track with the the metrics that we provided.

Emerging market tenders.

In case of.

Acceleration in the first quarter that has an impact on the gross margin. So we came in slightly ahead I expect the gross margin to step down a little bit in the second second quarter because of the product mix and then what we've talked about still on track with the metrics that we provided.

On 57, 5% to $58 five.

Yeah.

Thanks for the question next we'll go to Omar.

Please.

On 57, 5% to $58 five.

Yes.

Hi, guys, thanks for taking them.

Well. Thank you guys. Thanks for taking my question. So I guess, maybe more specifically is it reasonable to assume on capital allocation that perhaps the magnitude of up to a couple of billion dollars' worth of repurchases as possible.

Thanks for the question next we'll go to <unk>.

<unk> please.

Okay.

Hi, guys. Thanks for that.

Well. Thank you guys. Thanks for taking my question.

So I guess, maybe more specifically is it reasonable to assume on capital allocation that perhaps the magnitude of a couple of billion dollars' worth of repurchases as possible and also on full year guidance.

And then also on full year guidance can.

Can you clarify if there is a impact of excess purchases in China ahead of Lockdowns that was helping the first quarter and if that's appropriately baked into the back half of the year. I know you guys did mention a 2% impact to EBITDA from FX.

Can you clarify if there is.

The impact of excess purchases in China ahead of Lockdowns that was helping the first quarter and if thats appropriately baked into the back half of the year. I know you guys did mentioned a 2% impact to EBITDA from FX just wanted to go through that as well.

Wanted to go through that as well.

Hey, Rajeev you start with the China question, and then essentially if you can talk about the potential share buybacks.

I think Omar.

Hey, Rajeev you start with the China question.

China.

Gain is it.

Then if you can talk about the potential share buybacks.

Up.

Long and expensive Washington for our sector, but more importantly, our team has adapted to the new environment.

I think Omar.

China.

This gain is it.

That has helped us deliver strong this borrower.

And expensive Washington for our sector, but more importantly, our team has adapted to the new environment and that has helped us to lower our strongest borrower.

Performance, despite COVID-19 and Covid related lockdowns.

We continue to see.

Although the sentiment around China, not being at its peak due to the lockdown, but at this point in time, we believe we can meet.

Performance, despite COVID-19 and Covid related lockdowns.

We continue to see.

Although the sentiment around China, and not being at its peak due to the lockdown, but at this point in time, we believe we can meet.

Yes.

Confident about that so I don't see any.

Doug, Florida out of China.

Because of the Covid.

Yes.

Okay.

Confident about that so I don't see any.

Okay.

Two parts about.

Adult, Florida, China business.

Share buybacks upon the immune check.

Because of the Covid.

You can step back kind of Michael.

Meanwhile.

Two parts about.

In his opening comments if you look at the.

Share buybacks under the indenture.

Total net proceeds of Viacom another asset that we talked about that.

No.

Step back kind of Michael.

In his opening comments if you look at the.

<unk>.

Total net proceeds.

And just for the potential tax impact and pay down debt to keep us leverage neutral you're talking about approximately $4 billion of net proceeds that we could generate.

We talked about back.

Okay.

And just for the potential tax to keep us leverage neutral.

Conceptually hypothetically if you think about.

But approximately $4 billion of net proceeds that we could jump.

Wade.

Security prices, we could be deploying all of that for share buyback, but clearly as possible, but obviously that decision will be taken as.

Now concerning.

Secondly, hypothetically if you think about.

Where are we couldnt be deploying all of that.

As we start closing the <unk> transaction and.

That decision will be taken.

Getting proceeds from the other.

Other perspective, but clearly.

As we start closing the background.

The reshaping.

And unlocking the trapped value gives us lot more flexibility in terms of accelerating and expanding.

The transaction.

And getting proceeds from the <unk>.

Reshaping.

Capital allocation priorities.

And unlocking the trapped value gives us lot more flexibility.

And I think just just as an overlay.

In terms of accelerating and expanding our capital allocation.

So as you've said, we'll make a decision at the time when it comes but we believe the company is significantly undervalued at the current levels I think theres no doubt about that.

I think just just as an overlay.

Obviously, yes, so as you said, we'll make a decision.

Confident in the strategy that we have to unlock trapped value.

At the time when it comes.

We believe the company is significantly out about that with confidence.

Our decisions will be guided and are always guided by by our <unk>, our model and our commitment to return value to shareholders and very importantly, we're confident in the outlook of our core business and continue to be a highly diversified and that that gives us that confidence so I think thats backgrounds.

And the strategy that we have to unlock trapped value.

Our decisions will be guided and always got a commitment to return value to shareholders and very importantly, we are confident.

Should help you.

Next question.

The outlook of our core business and continue to be a highly diversified and that that gives us that confidence. So I think that's our backgrounds.

Thanks, Michael Operator, if we could go to Greg Frasier. Please.

Your line is helpful.

Thanks for taking the questions.

Should help you.

Next question.

Were there any notable drivers behind the stronger than expected brand performance in the quarter that could prove durable and just following up on the guidance approach in light of FX trends why not update the range is based on the current exchange rates I guess, what's the bar a trigger for update the guidance based on FX. Thank you.

Thanks, Michael Operator, if we could go to Greg Frasier. Please.

Your line is open.

Thanks for taking the questions.

Were there any notable drivers behind the stronger than expected brand performance in the quarter that could prove durable and just following up on the guidance approach in light of FX trends why not update the range is based on the current exchange rate I guess, what's the bar a trigger for update the guidance based on FX. Thank you.

Okay, Rajiv do you want to take the <unk> question.

I think thats it.

Nothing has surprised you exactly plan the business and this is how we have executed China lipitor and Norvasc drove the brand performance in Japan.

Okay. Richard do you want to take the branch question, Yes, I think thats it.

Nothing is a surprise we exactly plan the business and this is how we have executed the China lipitor and Norvasc drove.

<unk> performance for Amitiza effects FX saw celecoxib that drove it.

U S, Japan and gain even performance, although we have a competition I think we did better than expected in the U S and euro.

Brand performance, Japan strong performance for Amitiza effects FX saw selikoff that drove it.

It's been a steady Eddie for last couple of years.

<unk>.

U S was Japan and Dunkin' even performance, although we have a competition I think we did better than expected in the U S and Europe has been a steady Eddie for last couple of years, whether it's beyond our promoted portfolio.

Our <unk> portfolio.

So I think every thing, which we have planned.

It has been executed and we remain confident for the year.

Yes on the on the guidance question.

So I think every thing, which we have planned.

But just want to start with first of all I think as you can see we had a very strong quarter operationally.

Has been executed and we remain confident for the year.

Yes on the <unk>.

And.

The guidance question.

The momentum we see the end of the.

Just want to start with first of all I think as you can see we had a very strong quarter operationally.

Where we are today and the outlook for the rest of the.

We feel very confident.

And the.

The outlook for the year in terms of operationally.

The momentum we see the end of the.

How are we going to be performing now clearly FX is a headwind as I mentioned that in my opening remarks, and if you take the mid April .

Where we are today and the outlook for artists.

We feel very confident.

The outlook for the year in terms of operationally.

FX rate if they were to hold there is going to be a headwind on the overall.

How we're going to be performing but clearly FX is a headwind as I mentioned that in my opening remarks, and if you take the mid April .

Revenue and adjusted EBITDA and to a lesser extent the free cash flow now we're not in the business of predicting.

If they were to hoard that is going to be a headwind on the overall on the on the revenue and adjusted EBITDA and to a lesser extent than the free cash flow now we're not in the business of predicting foreign exchange Foreign exchange has been changing every day.

Foreign exchange Foreign exchange has been changing every day.

What we are expecting to do is at the second quarter call, we will take into consideration the prevailing FX rates at that time.

And update guidance as necessary and by the way.

We are expecting to do is at the second quarter call, we will take into consideration the prevailing FX rates at that time.

Keep in mind that we also have we're expecting they buy a car transaction to close in the second half and depending upon the timing of the close of that would be an impact on our full year guidance, which then we will take into account and reflect that in the guidance.

And and update guidance as necessary and by the way.

Keep in mind that we also have we are expecting the <unk> transaction to close in the second half and depending upon the timing of the close of that would be an impact.

The last part I want to say irrespective of the FX rate, we feel very good about the cash flow generation in the company.

Our full year guidance, which then we will take into account and reflect that in the guidance.

And are on track to pay down $2 billion of debt and then and then continuing to maintain and grow the dividend as we talked about.

The last part I want to say irrespective of the FX rate, we feel very good about the cash flow generation.

The company and are on track to pay down $2 billion of debt.

Thanks, Sanjeev operator, if we go to Nate rich from Goldman Please.

And then and then continuing to maintain and grow the dividend as we talked about that.

Hi, good morning. Thanks.

Thanks for the questions maybe two quick clarifications on guidance and then a higher level question.

Thanks, Sanjeev operator can we go to Nate rich from Goldman Please.

Just following up on the last question actually was first quarter ahead of your expectations and should we think of that outperformance being offset a little bit by FX or has the expectations for the year not really change on a core basis Youre just highlighting this additional FX risk.

Hi, good morning.

Thanks for the questions maybe two.

Quick clarifications on guidance and then a higher level question.

Just following up on the last question actually.

First quarter ahead of your expectations and should we think of that outperformance being offset a little bit by FX or has the expectations for the year not really change on a core basis Youre just highlighting this additional FX risk if current exchange rates hold and then are you able to give us the contribution from.

Current exchange rates hold and then are you able to give us the contribution from biosimilars in the quarter to overall growth. So just so we can get a better view of sort of underlying performance once that divestiture takes place.

Then at a higher level, and then I'll stop there, but at a higher level.

<unk> in the quarter to overall growth. So just so we can get a better view of sort of underlying performance once that divestiture. It takes place.

When could we hear more progress on additional divestitures and has your view or scope of the potential assets to be divested changed at all just given the volatility we've seen in the markets and how some of the public assets are being valued thank you.

And then at a higher level and then I'll stop there, but at a higher level.

When could we hear more progress on additional divestitures and has your view or scope of the potential assets to be divested changed at all just given the volatility we've seen in the markets and how some of the public assets are being valued thank you.

So if you want to start with Q1, yeah, Yeah, Nathan So Q1.

We had a slight FX headwind.

Because if you go back and you saw the.

So if you want to start with Q1, yeah, Yeah, Nathan So Q1.

The dollar started strengthening in the month of March we had a slight headwind, but we were able to absorb within our operational results.

We had a slight FX headwind.

Because if you go back and you saw the.

And that impact obviously get bigger because the dollar has continued to strengthen so thats kind of why I'm highlighting.

The dollar started strengthening in the month of March we had a slight headwind, but we were able to absorb within our operational results.

But on a full year basically the expected headwinds. So Q1 did come out slightly ahead of the expectation.

And that impact obviously get bigger because the dollar has continued to strengthen so thats kind of why I'm highlighting.

But we were able to offset that were to be able to offset by by the way.

But on a full year basically expected headwind. So Q1 did come out slightly ahead of the expectation.

We're able to offset the FX impact because of that on.

On the Biosimilar question.

Yeah flat similar.

But we were able to offset that were to be able to offset by by the way.

For the full year as we said it's about $850 million is the total revenue for the full year is that the blurton fourth quarter release of about 175, a quarter 175.

We're able to offset the FX impact because of that on.

On the Biosimilar question.

Yeah flat similar.

$170 million approximately.

For the full year as we said it's about $850 million is the total revenue for the full year is that the blurton fourth quarter release about 175, a quarter one on unemployment.

And on the on the larger question you had Nate on the other divestitures look nothing really has changed we identified these other select assets that we consider non core to the future of the address and as we continue to move up the value chain looking for more durable complex product, but these are quality assets at a quality asset.

$70 million approximately.

And on the on the larger question you had Nate on the other divestitures look nothing really has changed we identified these other select assets that we consider non core to the future of the address.

Our attractive maybe more attractive to somebody outside of <unk> that inside of yet tourism helps us to unlock value and to simplify our business.

And as we continue to move up the value chain and looking for more durable and complex product, but these are quality assets at a quality asset that we think are attractive maybe more attractive to somebody outside of the <unk> that inside of yet tourism helps us to unlock value and to simplify our business.

We're not disclosing the assets at this point to maintain the integrity of the process, but as we said, we're making good progress on them, we're confident in the timeline.

We're not disclosing the assets at this point is to maintain the integrity of the process, but as we said, we're making good progress on them. We are confident in the timeline that we laid out to have all of those wrapped up by the end of 2000 and phase III and obviously, we achieved the street and the shareholders update it as we go along.

Laid out to have all of those wrapped up by the end of 2003, and obviously, we achieved the street and the shareholders update it as we go along.

Next question please.

Michael Operator next question from David Amazon. Please.

Yes.

Yeah.

Just.

Just a couple of quick ones. So first.

Next question, yes. Thank you. Thank you Michael Operator next question from David Amazon. Please.

Just remind us and I apologize if I missed this what you are assuming for.

Yes.

Thanks, just.

Just a couple of quick ones. So first.

Pricing erosion for both.

Just remind us.

Generics business, particularly developed markets.

Apologize if I missed this what you are assuming for.

Broadly speaking and also just how you're thinking about pricing erosion.

Pricing erosion for both.

Broadly that's ex China, because I know, that's a bit of a different case, but how youre thinking about pricing erosion for.

<unk> business, particularly developed markets.

Broadly speaking and also just how you're thinking about pricing erosion.

Established brands.

Yes about the guide this year and more just longer term and how you're thinking about overall trajectory there and then.

Broadly ex China, because I know, that's a bit of a different case, but how youre thinking about pricing erosion for.

In terms of just you know the repositioning of the business.

Stablish brands.

Less about the guide this year and more just longer term and how you're thinking about overall trajectory there and then.

You talked about.

Do you believe that the a.

Then.

Shares are undervalued and that there is value to be unlocked.

In terms of just the.

The repositioning of the business.

You mentioned that a number of times on this call. So with all respect I was just trying to understand what do you think the market isn't getting or what do you think could be or should be unlocked in your view. Thank you.

You talked about.

Do you believe that the.

Shares are undervalued.

There's value to be unlocked you.

You mentioned that a number of times on this call. So with all respect I was just trying to understand.

I want to start with the price erosion Rajeev, yes.

What do you think the market isn't getting or what do you think could be or should be unlocked in your view. Thank you.

Yeah.

Diversity of our business.

And then our product portfolio, our commercial infrastructure our footprint.

I'm going to start with the price erosion Rajiv yeah.

Has given us has provided us the predictability and sustainability and I believe.

And I think the.

Yes.

For our business.

Within our product portfolio, our commercial infrastructure around our footprint.

And yes, it's used broadly at the industry level, but it's very specific when it comes to the genetics is to your own sort of portfolio.

Given us has provided us the predictability and sustainability and I believe.

If you recall, we have been moving slowly and steadily from commodities to the high value complex niche Hot <unk> products. So we are moving making we've been making a deliberate move from the volume play to the value play and as I've always said the Jedi pricing environment.

Pricing, yes, its use broadly at the industry level, but it's very specific when it comes to genetics is to your own.

Portfolio by design, if you recall, we have been moving slowly and steadily from commodities to the high value complex niche Hot Permian products. So we are moving making we've been making a deliberate move from the volume play to the value play and as I've always said that journey.

Has been stable at.

Given the best fit for example, up this quarter. It was Mark Gibson for farmers VIX tailor. These are the three key drivers if I take the top.

Pricing environment has been stable at AC.

Core business and the generics for us was pretty stable it's a.

Given that last week for example, up this quarter. It was Mark Gibson performers VIX tailor. These were the three key drivers if I picked it all.

A stable pricing environment.

Now from globally, if I have to say, if we had always forecasted about mix.

Core business and the generics for us was pretty stable it's a.

Mid single digit something around that person at the price of oil yet and if you look into this quarter.

A stable pricing environment.

No problem globally, if I have to say, if we had always forecasted about mixed.

With overall overall for example, big just North America.

Mid single digit something around that person at the price of oil yet and if you look into this quarter.

Flat.

<unk> were down 3% complex made a pretty complex.

Yes.

Biosimilars made up 18%, while Steve over there and <unk> minus the overall net net it was flat. So that's what I was talking about.

Overall overall for example, big just North America flat.

<unk> were down 3% complex made up for the complex.

This diversified portfolio has given us that sorry.

Biosimilars made up 18% positive over there and <unk> minus the overall net net it was flat. So that's what I was talking about.

Sorry ill draw deep sorrow portfolio, now, which can withstand this.

Volatility and give us more predictability.

This diversified portfolio has given us that.

Yes, yes.

Sure Ralph.

David on the repositioning of the company and what the market is we believe not getting them and you need to look no further than the Biosimilar business and I look at the projection for that.

Deep for a port.

Portfolio, now, which can withstand this.

Volatility and give us more predictability.

Yes, yes.

The value of <unk>.

David on the repositioning of the company and what the market is we believe not getting them and you need to look no further than the Biosimilar business and I look at the projection for that.

Hardware simplicity value inside of the interest in the past.

Value, we're getting by unlocking it often implied multiple of $16 five we think that applies to other.

The value it has.

Africa as well so at the end after we're done with the reshaping what are you going to be left with is a company that's very well positioned to have a broad portfolio of generic medicines that reaches across in our global commercial network addresses patient need for high quality affordable medicines that will always be a core of us complex products Injectables are off.

Our hardware simplicity valued inside of your trust and then.

The value, we're getting by unlocking it often implied multiple of $16 five we think that applies to other <unk>.

Patrick as well so at the end after we're done with the reshaping what are you going to be left with is a company that is very well positioned to have a broad portfolio of generic medicines that reaches across in our global commercial network addresses patient need for high quality affordable medicines that will always be a core Argos complex products injectables.

Hello E brands, including some of the iconic brands that came in from legacy Upjohn and then we want to add to that moving further up the value chain. Some some additional products.

Off patent brands, including some of the iconic brands that came in from legacy Upjohn and then we want to add to that moving further up the value chain. Some some additional products that product portfolios with I believe very very strong.

That product that portfolios with I believe very very strong.

It's got to be a high value global by value oriented global diversified business of diversity will stay with us.

<unk>.

I believe in time the street will come to appreciate that both our financial profile that we have as well as the strategic profile and Michael if I can just add to that is that that that.

It's going to be a high value global by value oriented global diversified business of diversity will stay with us.

<unk>.

I believe in time the street will come to appreciate that both our financial profile that we have as well as the strategic profile and Michael if I can just add to that is that that debt.

<unk> profile that Michael talked about we will continue to generate sustainable cash flow.

And that we believe is the strength has been demonstrated and will continue to be.

A profile that Michael talked about we will continue to generate sustainable cash flow.

Our positive momentum as we go forward for the company. Thank you so much.

And that we believe is the strength has been demonstrated and will continue to be.

Thanks for the question operator can we go to Gary please.

Yeah.

Our positive momentum as we go forward for the company.

Your line.

Yeah.

Thank you Tony.

Alright, great.

Thanks for the question operator.

So the SG&A was much lighter than we expected in <unk> was that a timing issue or quicker realization of synergies just talk to the run rate on that through the rest of the year.

Operator can we go to Gary please.

Your line Hey morning.

Alright, great.

So the SG&A was much lighter than we expected in <unk> is that a timing issue or quicker realization of synergies just talk to the run rate on that through the rest of the year.

And then how much of the $600 million of new product revenue is from current.

Market products versus new launches.

And how much is biosimilars that will be divested to bio con.

And then how much of the $600 million of new product revenue is from current.

And then just lastly, just you mentioned about the Botox Biosimilar filing is delayed so can you just explain that a little bit more what's causing that.

Market products versus new launches.

And how much is biosimilars that will be divested to <unk>.

How long of a delay do you think that'll be thanks.

And then just lastly, just you mentioned about the Botox Biosimilar filing is delayed so can you just explain that a little bit more what's causing that and how long of a delay you think that'll be.

So let's take them the same sequence, maybe SG&A timing first.

Sure sure.

So first quarter SG&A came in.

So let's take them the same sequence, maybe SG&A timing first.

Lower than.

Kind of in total.

Tracking it's essentially timing.

Sure.

And we expect to catch that up and I said that in my opening comments, we expect SG&A and R&D to ramp up 52% of our yearly.

So first quarter SG&A came in.

Lower than.

Kind of in total.

And tracking it's essentially timing.

And we expect to catch that up and I said that my opening comments.

Yearly spend is going to happen in the second half of the year, but it is important to note again in our guidance is built into the synergy realization that Rajiv mentioned that.

We expect SG&A and R&D to ramp up 52% of our.

Yearly spend is going to happen in the second half of the.

In his comment and that's why we see year on year first quarter at CN is down double digits and on a full year basis, our SG&A was down as well.

But it's important to note again in our guidance is built into the synergy realization that Rajiv mentioned that.

Okay.

In his comment and that's why we see year on year first quarter SG&A is down double digits and on a full year basis, our SG&A is down as well.

From the new launch perspective, I think important fact is that almost 95% of the products, which we are supposed to launch in this year have either been approved already launched.

Okay.

From the new launch perspective, I think important fact is that almost 95% of the products, which we are supposed to launch in this year have either been approved already launched.

Other than a couple of for us, which we had factored in our plan, which is S block and invest in most of those who was out in the back end. We compete we are on a very much track will deliver $600 million as we have planned and on flat similar to that will give you on an annual basis almost one third of this.

Other than a couple of products, which we had factored in our plan, which is S block and invest in most of those approvals out in the back end. We compete we are on a very much track will deliver $600 million as we have planned and on flat similar to that will give you on an annual basis almost one third of this.

The new launch revenue is coming this year this year from the Biosimilars.

Thanks, Okay. The Botox Biosimilar also.

The new launch revenue is coming this year this year from the Biosimilars.

While the filing affiliate.

Yeah on a botox look.

Let me start with this that we remain committed to the program and we are making some good headway with the science along with FDA.

Thanks, Okay.

Biosimilar.

While the filing affiliate.

Yeah on a botox look.

Delta being I would say an FDA approval in 2006 and launched it. After there are several moving pieces with our program with revised including their in their plan to qualify and incorporate that new working setbacks that this is going to that's one reason floor.

Let me start with this that we remain committed to the program and we are making some good headway with the science along with FDA we have.

And FDA approval in 2006 and launched it after there are several.

Moving pieces with our program with revised including.

Along with various other pieces, that's one reason for us pushing back this quietly.

They're in.

The plan to qualify and incorporate that new working setbacks that this is going to that's one reason.

Thanks I appreciate it.

And thank you guys for the questions, we're going to I don't see any other folks in the queue. So I'm going to hand over to Michael to close the call. Yes. Thanks, everybody for joining US. This morning look in summary, let me just say.

Along with videos other pieces.

Thanks.

I appreciate it.

Thank you guys for the questions, we're going to I don't see any other folks in the queue. So I'm going to hand, it over to Michael to close the call. Yeah. Thanks, everybody for joining US. This morning look in summary, let me just say.

We obviously had a strong quarter on track operationally to meet our full year 2022 guidance.

We made good progress on executing on our reshaping initiatives that we laid out in February and we're going to continue to engage with you when it comes to engage with investors as we go along so thank you for joining US this morning and that concludes the call. Thank you.

We obviously had a strong quarter on track operationally to meet our full year 2022 guidance.

We made good progress on executing on our reshaping initiatives that we laid out in February and we're going to continue to engage with you and to engage with investors as we go along so thank you for joining US this morning and that concludes the call. Thank you.

This does conclude today's the Paris 2022 first quarter earnings call and webcast. Please disconnect. Your line at this time and have a wonderful day.

This does conclude today's <unk>.

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2021st quarter earnings call and webcast. Please disconnect. Your line at this time and have a wonderful day.

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