Perrigo Company PLC (PRGO) 2015 Q3 法說會逐字稿

Good morning. My name is Rachel and I will be your conference operator today. At this time I would like to welcome everyone to the Perrigo calendar 2015 third-quarter earnings results conference call.

(Operator Instructions )

Thank you. Mr. Art Shannon, VP of Investor Relations, you may begin your conference.

Thank you, Rachel, and welcome to Perrigo's third-quarter earnings call. In light of all the news and to give an additional time for Q&A, I would like to note that this call will be extended to 90 minutes.

A copy of the earnings release and our release announcing a number of actions to accelerate shareholder value, which we issued earlier this morning, are available on our website at perrigo.com. Also on the website is a slide presentation for this call.

Before we proceed I would like to remind everyone that during the process of this call Management will make certain forward-looking statements. Please refer to the important information for investors and shareholders and Safe Harbor language regarding these statements in our press releases issued earlier this morning.

In addition, this presentation contains non-GAAP measures. The reconciliation of those measures to the most comparable GAAP measures is included at the end of the slide presentation, a copy of which is available on our website at perrigo.com.

This communication does not constitute an offer to buy or a solicitation of an offer to sell any securities. In response to the exchange offer commenced by Mylan, Perrigo has filed a solicitation recommendation statement on schedule 14D-9 with the Securities and Exchange Commission.

Security holders are urged to read this solicitation recommendation statement and other relevant materials if and when they become available, because they will contain important information. The solicitation recommendation statement and other SEC filings made by Perrigo may be obtained when available without charge at the SEC's website at SEC.gov and at the investor relations sections of the Perrigo website at perrigoinvestorroom.com. And now I'd like to turn the call over to Perrigo's Chairman and CEO Joe Papa.

Thank you, Art, and welcome everyone to today's call. Joining me today is Judy Brown, Perrigo's Executive Vice President and Chief Financial Officer. We are here today to tell you why we are excited, very excited about Perrigo's future in the near term, the medium term, and the long term.

Many of you have been asking about our 2016 guidance for quite a time. As you are well aware, we are an Irish company under the jurisdiction of the Irish takeover law and any profit forecast we make must be expertized.

And now with 2016 on the horizon, I'm excited to provide you with that guidance and explain the components of value underscored by once again strong quarterly earnings due to Perrigo's teams' relentless focus in the pursuit of excellence. This all leads me to today's agenda.

First I will provide a few overall comments, next Judy will go through the additional details on the quarter, then I will walk through the actions that we are taking to optimize our platform to create enhanced value for our shareholders and our new 2016 earnings guidance. We will also contrast Mylan's substandard offer with Perrigo's excellent exciting future.

Finally you have an opportunity for Q&A. Before we dive into the agenda, however, I want to start by thanking Perrigo employees for their diligence and focus.

Our dedicated employees have delivered on our business goals once again, achieving adjusted net income growth of 38%. Even with all the noise over the past six months, our unrivaled team delivered on our Base Plus Plus Plus strategy.

I am truly grateful for the excellent work of our team and I say thank you to the team. Now let's go to the results: the recently concluded quarter. You can see that this was a great quarter, highlighted by record third-quarter net sales of more than $1.3 billion.

Turning to slide 5, on a constant currency basis over the last year this represents 44% growth in consolidated net sales, organic consolidated net sales growth of 10%, consumer health care segment net sales growth was 8%, and Rx segment grew by an impressive 34%. This quarter's performance clearly speaks to our business model's ability to deliver strong organic growth.

Even more important, we grew our top line in an increasingly profitable way while investing in our future. Adjusted gross profit margin expanded 460 basis points to a third-quarter record from a combination of our consumer health cares teams' leading market position and our supply chains teams' continuing high quality efficient operations.

We also invested 13% more in research and development versus last year, further enabling our organic growth profile for the future. In total adjusted operating income grew 45% versus last year, which is highlighted by a nearly 600 basis point adjusted operating margin expansion in consumer healthcare.

This quarter provides yet again evidence of our unique catch/pay business model, the strength of our global platform, and the unrivaled position of our consumer healthcare business. Judy will now walk you through the quarter.

Thanks, Joe. Good morning, everyone. Yet again our unique business model delivered another exciting record third quarter.

On a constant currency basis we generated double-digit organic top line growth. I think it's critically important to remind you, again, that nearly all of our revenues are insulated from the current pricing drama you see playing out in the pharmaceutical industry today.

Yet again our world-class team and highly efficient operations delivered expanding margins. Yet again the team delivered on our bottom-line guidance, growing adjusted net income an impressive 38%.

Yet again we believe that we will be on track to deliver on full-year record adjusted earnings per share as stated in April. Now let's dive right into the results for the business segments, beginning with a review of our results in consumer healthcare on slide 7.

The CHC team posted a great quarter, as net sales of $675 million were more than 5% higher year over year, or 8% on a constant currency basis, driven by strong new product launches and 7% growth in US OTC, double the growth of US store brand total OTC according to IRI MULO data.

Contributions from store brand versions of Prilosec and Mucinex 600 milligram ER propelled the OTC performance, while the impressive high single-digit net sales growth within the infant nutrition category was driven by strong consumer demand for store brand versions of easily digestible formulas. While net sales within the animal health category experienced some headwinds and were lower year over year, solid seasonal demands for the higher-margin flea and tick products in the portfolio offset any impact to operating margins within the category in the quarter.

Net sales within the VMS category were more than 5% higher year over year, driven by new product launches. The category's solid growth over the last few quarters positions it well to continue growing and thriving under different ownership.

CHC delivered an all-time record adjusted gross profit margin in the quarter of 36.2%. This is an increase of 440 basis points over last year due to product mix and higher year-over-year production efficiencies and volumes in conjunction with favorable commodities pricing. Adjusted operating margin benefited from lower operating expenses year over year.

On slide 8 you can see that net sales in our branded consumer healthcare segment were $302 million, as the top 20 brands grew 6% year over year. Additionally, we closed the acquisitions of Naturval and the GSK product portfolio, which contributed an additional $13 million in net sales during the quarter. The distribution business within this segment was down sequentially and compared to the prior year due primarily to timing of inventory sell-through at our wholesale partners as well as some channel dynamics associated with the Mylan situation.

Certain contracts in this business contained change of control provisions. Given this fact, market concentration by country, and timing of sell through at our partners, the distribution business experienced significantly lower volumes which are expected to continue until the Mylan situation is behind us.

Turning to slide 9. You can see the continued strength of our Rx business, which posted 34% net sales growth driven by an increase in existing products and strong new product launches. Adjusted margins were unchanged due to continued investment in R&D and in our specialty pharma sales forces.

Turning to slide 10. Specialty science net sales were $85 million in the quarter and were essentially flat on a constant currency basis, as there were 14 shipping weeks of product last year versus 13 in the US in the third quarter this year. Also, as many of you saw yesterday Biogen announced the results of its phase III clinical trial evaluating Tysabri for use in patients with secondary progressive multiple sclerosis, reporting that the trial did not achieve its primary and secondary endpoint. As we've always indicated, we have never modeled any contribution from SPMS into our current or future plans.

Turning to slide 11. We are confirming our adjusted EPS guidance around the same midpoint we have had outstanding since April, and narrowing the range to between $7.65 and $7.85 per share. Consistent with our strong performance year to date, we are raising our adjusted operating margin guidance 100 basis points from 27% to 28%.

As you can see on this slide, our revenue guidance is being updated to reflect the dynamics in branded consumer healthcare I have just reviewed. Please note this guidance excludes the impact of any of the actions outlined in our press release issued this morning, which details actions that we are taking to accelerate shareholder value into the future. Furthermore this guidance excludes any impact from the $2 billion share repurchase program also announced today.

Joe?

Thank you, Judy. As you know, we have a well-defined strategy to deliver top line growth: our Base Plus Plus Plus strategy.

Our 2016 revenue guidance, which you can see on slide number 13, exemplifies our confidence in our ability to deliver real results, turning that strategy into tangible growth. Our fundamental growth drivers for the near term position each of our segments to achieve their three-year CAGR expectations published in the February 2014 analyst day.

And now, including our brand new consumer healthcare segment, we have 5% to 10% for consumer facing business and 8% to 12% for our Rx business. These growth rates are inclusive of our previously announced $1 billion of net new product sales from 2015 to 2017.

Today we are announcing the seven actions that will build on that strategy, leverage the power of our global platform, and accelerate value creation for shareholders. What we are doing is amplifying the profit and cash flow profile of the business which will allow us to accelerate profit growth in 2016 and beyond.

For every dollar of revenue we are going to achieve more profitability. Our continued organic and inorganic growth will drive even stronger profit accretion. But let me be clear, these actions are readily achievable.

They are the natural progression of our global expansion and ongoing focus on operational efficiency, quality, innovation, and shareholder value. Our actions involved four main components.

Number one, consolidation of our global supply chain in Ireland. Number two, Organizational enhancements. Three for us is strategic portfolio refinement, and finally a share repurchase plan.

While I'll discuss all of these in more detail on the following slides, I'd like to quickly address the $2 billion share repurchase plan we announced this morning. This includes $500 million which we plan to complete by the end of 2015, and another $1.5 billion which we intend to use to repurchase shares over the subsequent 24 to 36 months.

We will fund these repurchases from the Company's available liquidity. The share repurchase plan will begin after the expiration of the Mylan tender offer.

This $500 million share repurchase will be executed in quarter four and is expected to add $0.15 adjusted earnings per share in 2016. To be clear, this packet is not reflected in the Company's current 2015 or 2016 guidance.

The adoption of this repurchase plan does not mean there will be any changes to the M&A component of our Base Plus Plus Plus strategy. We will continue to pursue financially and strategically compelling M&A opportunities that meet our ROI's deep threshold.

The share repurchase plan is reflective of our belief in the Company and its prospects for growth. Simply put, Perrigo is a great business and continues to be a great investment.

Since we received Mylan's unsolicited offer, we have considered a broad range of options. In filing a full review we believe that Perrigo represents the best investment for Perrigo shareholders at this time. The green boxes at the bottom of the slide provided a good snapshot of the value we are offering.

We expect these actions to achieve benefits of $175 million on a total run rate basis. Combined with our share repurchase plan, we feel this is remarkably compelling value proposition.

We'll get into the numbers later, but rest assured this is value well in excess of anything Mylan can offer to us. I'd like to talk about our supply chain actions in the broader context of the global platform that we built.

In late 2013 we acquired Elan Pharmaceuticals. The Elan transaction provided Perrigo with a gateway to global expansion.

Earlier this year, we built up the platform with the acquisition of Omega, which has enabled us to provide quality healthcare products to hundreds of millions more consumers globally. We are continuing to build on this platform, realizing even greater benefits than we initially expected.

As an example, our recently purchased portfolio of leading OTC brands from GSK and the adult nutrition products, we add 15 more products to the back of our European trucks delivering to all of our customers. Today is the next step in optimizing our global presence.

We are capitalizing on the potential of the colorful global platform we built and creating operational structure that will accelerate our earnings potential. To that end, we are taking immediate steps to consolidate our operations, supply chain, and procurement management activities to one global center of excellence in Ireland.

By eliminating redundancy and enhancing purchasing power we will further maximize value. On a full run rate basis these acts are expected to drive operational and tax benefits, reducing operating costs by an estimated $105 million.

Next, we are going to increase our organizational efficiency. I'm very excited to announce that John Hendrickson, formally Executive Vice President of Global Operating and Supply Chain, will be promoted to the role of President effective immediately.

With 26 years of experience at Perrigo, he has a deep understanding of our business, proven management skills, and a strong competitive drive to ensure Perrigo continues to deliver at the highest level in our industry in terms of quality, efficiency, and innovation. The shift will also allow me to personally focus even greater attention on Perrigo's overall strategy and particularly our M&A opportunities.

We've also announced initiatives to accelerate the realization of actions on the shared services model. We are already a lean organization, but we are always seeking continuous improvement. It is in our DNA.

We are thus taking steps to right-size the organization, eliminate redundant administrative functions, and generally streamline our organizational structure. Operator, there is a caller that is not muted. If you could please mute that call, please.

Okay.

Thank you. That said, these efforts to slim down don't mean we will lose our muscle. These plans will in no way compromise our relentless focus on quality and innovation. Quality and innovation are pillars of our business.

For example, our investment in R&D is slated to increase by approximately 20% next year. In all we anticipate these organizational enhancements will yield cost savings of $35 million at a full run rate.

The third action we announced today is comprised of initiatives to strategically enhance our portfolio. In keeping with our continuous attempts to improve our efficiency, we will be evaluating aspects of our business and divesting certain assets that do not meet our ROIC threshold.

For example, while our US VMS business delivers excellent products to our long-standing customers, we think that it will thrive more fully under new ownership. While we have recently improved this business, it's divestiture will enhance our revenue and operating margins, earnings, and ROIC.

We estimate that these actions to enhance our portfolio will deliver operational efficiencies at a cost savings of $35 million at a full run rate. As you can see here on slide 17, the cumulative headcount impact of this strategic portfolio enhancement and organizational enhancement initiatives I outlined on the preceding slide, will result in a total workforce reduction of 800 positions.

I would note that two-thirds of these reductions relate to assets planned for divestiture. I need to note that enhancement runs both ways.

We will continue executing on our strategy to make accretive M&A transactions; we will continue to pursue financial and strategically compelling transactions as part of our strategy to grow shareholder value. As we announced this morning, we anticipate these combined actions will deliver incremental benefits of $175 million once the full run rate is achieved. Including these savings, Perrigo expects to deliver a 2016 adjusted EPS of $9.30, an increase of 20% over our calendar 2015 EPS guidance midpoint of $7.75 per share.

I would remind you that both of these numbers are expertized. Additionally, we just [faced] the calendar year 2015 portion of our share buyback plan, encompassing $500 million, will add approximately $0.15 to our 2016 EPS number.

When you at the $0.38 of value from our optimization actions announced today, the full pro forma run rate with today's actions would bring us to $9.83 of adjusted EPS. In short, we are delivering significant growth over last year and have the momentum and strategy necessary to continue to drive that growth over both the short and long-term.

These are clear and readily achievable actions that we are announcing today. Many are already being completed, and we believe that they are going to create tremendous shareholder value.

While we have been hard at work on returning these great results and action plans you have seen today, Mylan continues its attempts to distort the facts and deceive shareholders in order to steal our Company. They did so again in their most recent presentation on October 13.

From the beginning of this process we've been committed to providing transparent information to shareholders. Judy is going to walk through a few of these facts.

On October 13 you heard from the Mylan Management team and Board of Directors. They outlined four key claims which have little basis in reality.

On slide 22 you can see Mylan's distortion of the facts versus the reality we are going to remind you of today. One, this offer represents a discount to our superior, multiple, and a sub-substandard premium.

Two, this is not an accretive transaction. In fact it is dilutive to Mylan EPS until at least year four. Three, there is virtually no alignment between our businesses that would serve as the basis for generating at least $800 million in synergies.

Four, Mylan would ultimately destroy value that belongs to Perrigo shareholders across every metric, yielding a lower trading multiple and a lower growth rate. I'm going to take a few minutes to talk you through each of these elements now in greater detail.

As we've noted before, Mylan claims they are offering a robust multiple. But you can see on slide 23 that previous transactions involving comparable companies in the industry have provided significant premium valuations to shareholders.

But Mylan doesn't just fall short [of the comps], it implies no premium to Perrigo's durable trading multiple, a multiple that Perrigo has earned through its superior track record. In their presentation Mylan attempts to discredit Perrigo's valuation.

The reality, as you can see on slide 24, is that we trade like our consumer peers and have done so consistently over time. When you compare this to Mylan and its peers the difference is stark.

Our consumer facing business puts us at a sustainable competitive advantage to Mylan and its generics peers, and positions us well, as I said earlier, to conform to recent pharmaceutical industry volatility.

Slide 25 further underscores the gap in valuation of our two companies, which has been a consistent one over time. Recently Mylan has fallen well below its peers, down over 25% since they chased Tempo away, a change that can't just be explained away by market volatility and noise. We aren't the only ones who have noticed that Mylan may be the only company in S&P 500 without a realistic expectation of a takeover premium.

Corporate governance is not just a sound bite. It has real value ramifications and boils down to a simple fact.

We have historically traded at a premium to Mylan; we deserve to trade at a premium to Mylan; and we will continue to do so in the future. Why would we want to expose our shareholders to a stock that is trading, and justifiably so, at a nine times multiple?

Mylan claims this transaction would be quote, meaningfully accretive to shareholders, unquote. They do so by inventing yet another creative interpretation of well understood terms.

As you can see on slide 26, no matter what words they attempt to put around it, they simply can't hide that this is a dilutive transaction for Mylan shareholders. If you tender, this is the stock you will receive.

As ISS rightfully points out, why would shareholders take on the risk of a Management team that does not offer accretion until at least year four? Mylan claims that they are well positioned to capture the benefits of the proposed transaction.

On slide 27 you can see the limited opportunities for synergies, as well as a significant integration and execution risk. Our consumer facing businesses represent approximately 75% of our operating expenses in net sales.

Mylan has virtually no presence in the consumer facing space, which makes vertical integration and streamlining a completely unrealistic way of attaining synergies. Of all Mylan's API they have only six that would support production of the 4,900 OTC products we make.

They don't make ibuprofen, they don't make guaifenesins, they don't make acetaminophen. Meanwhile, Robert Coury and the Mylan team have tried to indicate that they are well-positioned to capture cost of goods sold synergies through vertical integration.

This is simply not the case and it demonstrates the truth. They don't understand this business.

As a shareholder you need to ask yourself do you really think Mylan, without any experience in the space, can run Perrigo's world-class OTC supply chain and operations better and more profitably than we can? In their presentation Mylan indicates that their fourth tenant is quote, immediate value for Perrigo shareholders, unquote.

As we and other third parties see it, this is a bad deal. We have a consumer facing business at a time when questions have been raised about prescription prices.

We want nothing more than to have the Mylan offer lapse and to be able to deliver leading shareholder returns without being tied to Mylan's anemic prospects. Our shareholders can do better than have their fortune tied to Mylan.

Ultimately, our respective historical long-term returns speak for themselves. Again I have to ask, why would you trade our stock for theirs?

On slide 30 you can see that the guidance we put forth earlier today for 2015 and 2016 is underscored by the consistency of our track record in delivering earnings growth. Historically we've delivered an EPS compound annual growth rate of 19%, and every year we have done so on an increasingly bigger base.

This is a leading growth rate that distinguishes us in the marketplace. And you can see on slide 31 that we are confident this trend will continue.

Further, we are committed to leveraging our earnings growth to return value through initiatives, like the share repurchase plan we announced today. And this is even before we include the additional upside from future strategic M&A.

I would like to walk through the building blocks on slide 32 to give you greater clarity on the financial truth. Perrigo today offers you greater value than the Mylan offer on the table. Let me explain.

Mylan has reported $800 million in synergies by year four. Using basic math if you assume 25% synergy achievement in 2016, the first year, and a Perrigo shareholder ownership of 40%, this is $65 million in after-tax net income benefit in 2016 to Perrigo shareholders.

In contrast, the optimization actions we announced today at an effective tax rate of between 14% and 15%, would generate $94 million in after-tax benefit flowing directly to Perrigo shareholders in 2016. So to keep it very simple.

Just by executing on our existing plans, Perrigo beats Mylan's numbers. And Perrigo shareholders retain control of the Company that has driven superior multiples year after year.

Perrigo shareholders come out ahead in net income impact, even before you consider capitalization. The stark difference in capitalization of our two companies only amplifies this difference. Why seek control of the Company with standalone Perrigo can provide you more value?

In their presentation Mylan relied heavily on an invention concept, a hypothetical unaffected share premium, or HUSP, which is entirely self-created and self-serving. As you saw in the last slide you can see again on slide 33, our shareholders should not be interested in a made up HUSP.

They, like us, are looking at the very real math. No matter how you run the numbers, our implied value ranges from $190 to $202. But don't just take our word for it.

This aligns with street estimates, which come in at an average price of $203. All of these numbers represent a significant premium to what Mylan is offering, which, as a black night, stands at approximately $169 per share. Plus you retain full ownership and control without the transaction or execution risk associated with Mylan's bad deal. With that, I will turn it back to Joe.

Over the last six months I said it countless times, the Perrigo Board of Directors is committed to creating value for our shareholders. That means value in the near term, medium term, and the long term.

You have two options in front of you: Mylan's offer, which destroys value with a meager premium, low future multiple, limited prospect for future growth, and a Board and Management team that have shown a blatant disregard in their actions for shareholders' interest. And then there is value represented by Perrigo's durable business.

We earned our strong multiple, one that we are poised to continue delivery on into the future. We have delivered consistent double-digit bottom line growth time and time again, and this as an outstanding quarter is no different.

We've committed to access today that combined with our share buyback program and our existing strong organic growth, will generate an expected $9.83 in EPS value for shareholders over the future. And there is further drive however to use towards inorganic growth as we continue to execute under M&A strategy as a natural acquirer with a premium multiple.

When you look at the side-by-side it is painfully clear that Mylan is trying to steal this Company. It bears repeating, we are strong a Company delivering value well above Mylan's offer today.

All this leads me to reiterate our conclusion that the Perrigo Board of Directors has reiterated its strong recommendations that you protect your investment in Perrigo and not tenure your shares into Mylan's inadequate offer. Our future is bright in the near term, the mid-term and the long term, and we are excited to have you along with us as we move forward.

Operator, I would now like to open up for questions.

(Operator Instructions )

Marc Goodman, UBS.

I guess first of all the branded consumer looked a little light this quarter. Could you specifically address that? And then on the $35 million of savings from the VMS business divestiture, I was a little confused by where the savings actually come from. Thank you.

I will start with the branded consumer. And you are correct. There is some -- that number is a little bit behind.

One of the things that Marc, that you actually pointed out in a video you did, is that our branded consumer business does have some distribution of products, for generic products, and as a result of this Mylan offer we are having some difficulty, or what I would refer to a negative synergy, in shipping some of our products from the Omega Company into our distributor. This is one of the absolutely negative synergies that we pointed out in the past, and we're seeing the realization of that as the current distributor is actually putting off the acceptance of any additional product until we get this offer behind us.

And that we hope, as I said, on November 13 this will be behind us and we will then go back into a situation where we will have a better situation there. The branded consumer business I think Judy mentioned, I would simply mention as a result of some of the distribution product sales that have not occurred during the current quarter. Judy, you want to take the second part of that question?

Absolutely. Hi, Marc. The $35 million is referenced specifically on page 17 of the materials where we discuss strategic portfolio refinement.

VMS has been a business that we've talked about possibly looking at strategic alternatives for some time. Group's business is performing well now and we believe it is well-positioned today to be driving under new ownership.

But don't be confused that this page does not represent exclusively activities that relate to VMS. There are other portfolio refinement that are also embedded within this expertized number, and they are part of our 2015 and 2016 plans.

We're specifically referencing VMS today because we are going to kick that process off soon. But suffice it to say there are other things within that comprise to $35 million of run rate benefit on a go-forward basis, we are just not specifying those today in detail as we kick off those processes later.

But suffice it to say again, those numbers have been reviewed in detail with our auditors who have gone through this process with us to give both our Board and you confidence of our ability to deliver on those savings into the run rate beyond 2017.

Operator, next question.

Randall Stanicky, RBC Capital Markets.

Does this announcement mean that you are now not evaluating alternative transactions to the Mylan offer? And maybe just talk about your appetite for M&A in general and how that may or may not change after tomorrow. And then I have one quick follow up.

Yes. I think, Randall, the way I would say it is that we believe that the Mylan offer is a bad deal. We have said that on numerous occasions.

I would say that because they have put a bad deal on the table we don't want to enter into a second bad deal. I think Judy said it very well, people that want a deal badly do bad deals.

We want to be smart and think through our situation in front of us. Having said that though, it is clear that -- you know us very well. We've done 27 transactions over the last nine years, we've done four transactions since the initiation of this on April 8th.

So we are going to continue to look at transactions to be clear, but as we've said to you today we think the best investment we can make right now, given some of the market uncertainty, it's in our own shares. We think that is obviously something that, at least as you look at what the marketplace is, worth doing right now.

We believe there is a wonderful opportunity to repurchase shares now based on where we think we are going to be in the future, especially with these programs and activities that we've laid out today in terms of our actions. So clearly we think this is the right way to go.

And just to add color to that. With the share repurchase program we've announced today, we also want to give you confidence that we plan to fund that through ongoing cash flows and to the extent that there is an important M&A transaction that is in front of us that would in any way hinder our ability to maintain investment grade, we may suspend the program for a period of time.

But the intention here is to keep rebuying our shares through our operating cash flows. And we believe we can continue to execute on a very healthy M&A strategy while maintaining our very healthy balance sheet into the future, and continue to add incremental organic growth on a go-forward basis.

To be clear, you could still announce whether it will be a small deal or a large deal. You could still announce transactions up and to the November 13 tender deadline, is that correct?

I would say the following, we are subject to the Irish takeover rules and we follow those very closely. We can introduce new information until the 23.

If we believe that there is a significant opportunity, we would seek the ability to do that with the Irish takeover panel. Obviously we would have more time, assuming they would grant us that ability to do that.

I think the answer is right now we believe this is the best action we can take as a Company, and this is why we're coming out with these actions that we've talked about today. If something did come up, I think we have some alternatives, but we'd have to work with the Irish takeover panel for that.

Got it. And Judy, you talked about limited to API overlapping, and you're talking about $175 million in cost synergies today. Mylan is talking about $800 million, again with limited API opportunity. What is the disconnect?

Is there more opportunity from your perspective for you or are we talking about cost synergy targets that would take too much out of the business? Can you talk about what the delta between those two numbers is?

Let me start and then Judy, I will turn it to you. On the APIs, one of the obvious question is -- because that is a question that Mylan has asserted, that they have opportunities for vertical integration. So I went through every single API they make.

They make over 176 APIs. Of that there are less than half a dozen that have any application, any products that we manufacture at the Perrigo Company.

Right now they do not make acetaminophen. They don't make guaifenesin; they don't make ibuprofen.

When you think about what an OTC company utilizes, they just don't make it. So the reality for them to suggest that there is significant vertical integration is a joke, with all due respect. It's just not going to happen because they don't have those products in their portfolio.

If they were to start with an API manufacturing and generating a DMF it would take three, four, five years to get that product to the marketplace. For them to suggest that vertical integration is -- look at the data.

I'd invite all of you to look at the Mylan API page and what products they make. They make HIV drugs.

I don't believe those drugs are going over-the-counter as an example. Those are the things that I think people have got to look into the facts. Judy?

I want to make sure that we're not comparing apples and oranges. Our discussions on pages 15, 16, and 17 that outline the value creation of the announced benefits stem from our own initiatives that have been underway for some time, as Joe referenced, to fully leverage and utilize the platforms that we have in place. As you may recall we closed the Omega transaction a mere seven days before Irish takeover laws fell over us with the announcement of Mylan's intention to make an offer for us.

In that period of time, in that quiet period, we were already continuing the work of planning the leverage of this platform that we had in place posted Elan, post Omega. And the supply chain benefits we're talking about today relate to our consolidation of profits and one center of excellence, about the focus of a core single global team focusing on driving value to that combined truly global platform now, and expanding the value creation that will be possible all the way through the P&L, both in 2016 and well into the future with other consolidation activities within our supply chain and operations that are outlined in the following pages.

We are not trying to mix discussion here on vertical integration. We are focusing on the value creation potential of the model that we have with this Management team at our superior multiple, and able to capture quickly incremental enhanced value shareholders immediately.

Thanks, guys.

Louise Chen, Guggenheim.

Thanks for taking my questions. I had a few here. First question here is just curious if somebody else could still approach Perrigo as an acquisition target between now and November 13? I don't know if that falls under the Irish laws.

Secondly, how should we think about organic growth in the fourth quarter of 2015? We got some questions on that.

And then last think is I know you have a number of potential new product launches in 2016; Nasacort, Flonase, the Mucinex family. I was wondering if you could talk -- what's including your guidance there and how do you think about those opportunities?

Let me take them. There's three different parts. Can someone else approach us through November 13? Irish law doesn't really have a specific rule on this. They can't prevent anyone from approaching us. We would take the actions that would need to be taken working with the Irish panel should that occur.

I think there are clearly some opportunities there, but I don't want to get into any specifics because I want to go back to we believe after an assessment of all the facts in front of us that the best action we take is the action that we have in front of us today. Especially given some of the market volatility that we've all seen in the marketplace over the last three to four weeks.

On the question of organic and the rest of 2016, I think we would stick with the comments that Judy made, and Judy may want to add a few more things. I just want to talk a little bit about 2016 and you can perhaps address 2015, Judy.

Sure. The fourth quarter, as we've said, the main driver of the small shift in the revenue guidance for the full year is primarily in the branded consumer healthcare business. If you are working your models, which I'm sure you are, based on the beginning of the year brought assumptions around the total consumer pool growth year over year and the RX growth year over year.

You will see that your model will say that consumer -- sorry, pardon me, fourth-quarter revenue growth will be slightly slower. That's how to get the model to work. But that's also knowing that we are modeling into slower year-over-year basis versus the third quarter growth rates.

But suffice it to say that that is also us forecasting into the middle of the cough, cold, flu season. So we have put our model together on the basis again of a normal December 31 cut off the cough, cold, flu season. And there's always the dynamism that can happen as the season kicks off in the December month.

And this last part of your question, Louise, you asked about the 2016. What I would say there is we go back to what we've previously said; that we expect to launch a $1 billion of new products over the next three years.

That is approximately $330 million a year. What that really comes out to is, as you pointed out some of the important ones.

The Flonase opportunity we believe we have early in the 2016 timeframe. We have the remaining portions of the Mucinex family of products, and we sit with our RX portfolio with the best portfolio we've ever had in terms of R&D projects and products that will be approved.

I would say that really those will be the primary things that we will talk about. Obviously as we talk more about 2016 at the beginning of the year have other things we'll add to it, but those are really the big products, that Mucinex family, the Flonase, and the total of somewhere in the $330 million new product swell.

Can I just add one other thing about 2015 to make sure that everyone is crystal clear, because there may be some confusion. The guidance chart that is in the material and that references the full-year numbers for 2015 and the tightening of the EPS range to $7.65, $7.85 does not include anything for the announced share repurchase program that would commence in the second half of November and run through December. Any value from that would be incremental to that guidance.

Thank you for the clarification, Judy.

Elliot Wilbur, Raymond James.

I just want to go back to some of the financial metrics, particularly on the consumer healthcare side. And I think I asked the same question last quarter, but I think it's important to call out again in terms of just the strong margin expansion performance over the last two quarters.

And that certainly is driven primarily at the gross margin level. But you're talking about improvements versus longer term averages of 400 to 500 basis points in a pretty short period of time.

And certainly [thebes suggested] there's been a structural uptick in the margin profile of that business. And again wanted you to walk through some of the key drivers of that because I do think it's a very important change.

Sure. I'll start and Judy you can add some things. As Judy said during the call, one of the things that we are doing incredibly well, we have a tremendous focus in the organization.

The organization understands the focus that needs to be brought to this question. And that focus has brought with it just an incredible efficiency in our manufacturing supply chain procurement and also what we've been able to accomplish just by working with our vendors.

We are the largest consumer procurer of the APIs for these products, so therefore we think we get the best prices in the world. Once again I think that we're just showing the leverage we have in our business as we have been relentlessly focusing on this operational efficiency. Judy, do you have anything to add to that?

Joe, you hit it spot on. It's product mix. We had favorable product mix.

The operations team is operating on all cylinders, and what is great is that the team continued to make investments in the business in consumer healthcare. So there was not a sacrifice of investment in the future or appropriate promotional spend to support product launches. And they still obviously, as you can see did a terrific job with the operating margin expansion in the quarter both sequentially and year over year.

If I could ask a second question as well it would be appreciated. Specifically with respect to performance trends in the RX generic business.

Historically, of course, that's been one of the stronger contributors in terms of year-over-year operating profit growth. And over the last couple of quarters sales have stalled out at the $250 million, $260 million level on average.

And I guess sort of backing into revision to four-year top line guidance and then what you talked about in terms of the percentage contribution from that business last quarter would suggest a fourth quarter number somewhere around the $300 million mark. And I don't know if it's still realistic to expect to step up there.

But Joe maybe can just hit on some of the key performance metrics there and whether or not we should be expecting sequential growth of that magnitude. And then maybe more importantly, obviously financial markets have become very concerned about the price inflation component of growth, both on the generic and brand side going forward.

And certainly the generic topical business has been one of the few segments of generic history that has really benefited from a strong overall pricing dynamic. And thinking about 8% to 10% growth next year, how much do you think that is going to be driven by price?

Or do you think we've kind of hit an inflection point maybe where growth metrics can be far less dependent on price, and maybe we are actually looking at potential negative impact on price going forward in that segment. Thanks.

I think, Elliot, you had about three or four things I want to comment on. Number one on the performance of the business. I would repeat I guess my comment from the session.

We did see 34% improvement in the RX pharmaceutical segment. So it's a very significant growth rate at 34%. I understand your comment about expectations, but I would simply say that we enter into this fourth quarter in 2016 with the best pipeline that we've ever had in our RX product category. We feel very optimistic about where we're going to go for the rest of the quarter and then obviously 2016 based on these new products flow.

On the question on pricing, certainly we see that out in the marketplace, but I would remind the audience today that what we've always said about pricing is that our pricing across our total book of business is up flat to up slightly. While there may be a product that we do raise the price on, there are other products we're taking price down.

Our total strategy for pricing, as I have said I think on numerous calls, is to keep pricing flat to up slightly. Which means that yes, some parts we may attempt to raise prices there, but in other products we're bringing the price down. So think about us as keeping pricing flat to up slightly as really the way we're going to look at our total portfolio.

Whether we are talking about any specific product or any specific category or any segment of our business, the overall comment is flat to up slightly for our pricing. And I think that's really the best place for the long, sustainable consistent approach to pricing that we've had in the past; we will in the future.

Annabel Samimy, Stifel.

This is Andrew in for Annabel. I just had a couple of questions. Do you see any other opportunities internationally in the near term to further leverage the Omega platform?

Are you looking to expand anywhere there? And second is what is your timeline for the sale of your VMS business? Thank you.

Yes. Number one, do I see any opportunities for adding additional products to our Omega business? The answer is absolutely yes.

What I would describe to you is that we believe Omega is exactly in the same place that our consumer healthcare US business was eight years ago, nine years ago. A great business Omega has today, but we do believe there's opportunities to bolt on additional products and additional geographies to sell more products to our existing customers.

We've got a great network of sales representatives and pharmacies that we do business with today. We believe that by adding -- bolting on additional products to that category we can drive significantly the leverage in our Omega capabilities.

Obviously couple that with our ability to reduce the cost of goods sold for Omega by bringing more products into our distribution -- I'm sorry, into our manufacturing plants. We think that will drive tremendous bottom line for Omega.

On the question of the timeline for VMS, I think we will stick with our comment that we initiated the process for sale based on the ability for the Company to turn around the performance of that business over the last couple of years. We now think the business is well-positioned for the sale of the asset, and we will be initiating that process. I don't want to make any specific comments about when that will be concluded, but we have and will move forward with the initiation of that sales process for the BMS business.

Great, thank you.

Gregg Gilbert with DB.

Judy, first could you provide cash flow from ops in the quarter?

And secondly for Joe, in the past you've suggested that if Perrigo were for sale there would be interested parties. Is that still the case and has that theme been fully explored? Thanks.

Gregg on the question of cash flow, suffice it to say we accelerated our process and closed to announce today earlier than our normal process. We are far enough along that I can say that we are in line with our full-year operating cash flow guidance provided earlier.

We are not done, done, done on operating cash flow, but it was a good cash flow quarter. And we will be putting all of the financial statements, including the balance sheet and cash flow, out with the 10-Q which will be filed no later than November 6.

On the second part of your question are there other interested parties? Gregg, I think I will go back to my previous statement that I made in April. When this deal was first announced I did receive several inbound phone calls.

Those inbound phone calls were interested in the Perrigo Company. I think I'm going to stand with that comment relative to where I'll go with that.

I think the more important comment is that as a company, Perrigo has been very active in M&A as you know. Just because we have a bad deal in front of us from Mylan, I don't think I want to put ourselves on the shot clock to say okay, now is the time to sell this business.

You obviously see what the markets look like right now. We think that this is not the right time to sell our Company.

If though there is an offer that comes on the table the Perrigo Board of Directors, as we've said previously, is not against deals. We just don't want to do a bad deal.

I think we would continue to evaluate any other deal that comes forward, but we're not on a shot clock to say let's try to sell the business right now. Because I really do think the line that Judy mentioned and we heard from one of our investors is absolutely true.

If you want a deal very badly you're going to get a bad deal. And I really don't think that's the way we should approach this given what we believe is a very strong future for the Perrigo Company, both in the near, the mid-, and the long-term part of this business. I think we will leave it at that.

Thank you.

Jason Gerberry, Leerink.

I just wanted to follow up first on Marc Goodman's question about the Omega business. Can you quantify the revenue impact of this distributor issue as relates to the brand business?

And then my second question on the OpEx front, can you just talk us through the step up in 4Q in spend based on your full-year guidance metrics? And how much of that is having conservative discretionary spend in the event that this consumer brand business comes up light again in 4Q? Thanks.

I'm going to start with that, the first part of the question, and I'll probably just stick with the comment there. In terms of the total distribution business that we have, it's over $100 million on an annual basis. I will just leave it at that.

Relative to what happened in the quarter though, I think the issue is really the question of a negative synergy that we pointed out to you before. This is just a real-life example of it happening.

As the -- there is a change of control in this contract. That change of control in this contract would be executed should the transaction go forward.

I just think this is a real-life example we are already seeing of a situation that I pointed out to you before that if there is a change of control, there will be negative synergies. Here is the first example that you are seeing there.

Suffice to say it's over $100 million of run rate for this business on an annual basis. And I think I'm just going to leave it at that part of the question. Judy, do you want to take the additional comment or question relative to the fourth quarter?

I just wanted to make the comment, I think the question was directed towards operating expenses and the variable spend or what Management can and won't spend and anyone quarter. If I look at just our core consumer business spend on the SG&A front as well as R&D, they continue to spend in the quarter.

They continue to make investments and still grew operating margin. So yes, there is variable spend in each of our business units with an operating expense, but those were not compromised in any way in this quarter and we continue to plan to make investments in Q4. The results you are seeing, the operating margin expansion was with continuing to make those investments as opposed to, I just want to clarify, it is not as if these great margin results in the quarter are the result of pulling back on those variable expenses and those variable investments.

Probably best to look at the numbers that Judy talked about for the gross margin expansion that really accentuates what Judy just said. That is really where you are seeing the significant improvements in gross margin as the result of the efficiency of our operations and supply chain.

David Steinberg, Jefferies.

First question is if Mylan indeed was to lose the vote could Perrigo then provide some longer-term guidance like FY17 or even beyond to give investors a better perspective of what your long-term gross profile might look like?

David, I'll just grab this first and I'm sure Joe is going to want to elaborate. Just to point out, I can find the page in the material. In my vernacular, with expertization support behind us knowing that there is a lot of sensitivity on quote, long-term guidance, I believe that page 18 represents a way to start visualizing long-term growth.

What do I mean? We've talked in the past about on April 21 confirming our long-term promise or goal setting in terms of top line, 5% to 10%, and we've also provided on page 18 a way to start viewing calendar 2016, layering on the value of a reduced denominator.

So fewer shares outstanding at the end of 12/31/15 which will provide incremental value through 2016 through the share repo. We expect the share repo to continue throughout 2016 which will provide additional incremental gearing onto EPS.

We expect run rate synergies to continue as we exit 2016 and roll into 2017, and we have had expertization work done to quantify and expertize the benefit of that activity that goes into 2017. As you are modeling you are already putting into the organic growth rate on 5% to 10%, and our goal on always driving EPS, excluding all these other share repurchase pieces and excluding these benefit pieces, of growth in excess of that top line growth.

Without giving you a number or a three-year EPS number, we are already, I believe creating a picture of an illustrative EPS [clutch] share repo that goes into the future, and we will certainly be in a position to provide you color on those drivers and better clarity around the components that are going to give us confidence in out years. But in my vernacular, we have expertized groundwork already laid to look at that number going up and to the right into the future.

I think Judy stated it very well. The only thing I was going to add to your comment is it's not if, it's when the Mylan tender offer fails. That's what I would add to the comment. And I'd say a year from now we will be a stronger, better, more valuable company as we get to the future. Just want to more importantly just correct the word, I think it's when not if. Thank you.

Tim Chiang, BTIG.

My question is really just on your RX pharmaceutical business. You know you've given some organic net sales targets for growth, 8% to 12%, and that's fine but it does seem like that type of growth is a lot less than what type of growth you're experiencing today.

And I noticed that you announced the stock buyback program. Should I look at that and sort of view it as you've looked at other potential acquisitions, but at this point your best option is to buy back stock. Is that how I should look at why you are doing the stock buyback right now?

I'm going to start with the first one about our RX pharmaceutical business, and then I think, Judy, you can make some comments specifically about the share repurchase program. On the RX pharmaceuticals business, you are correct. We have stated an 8% to 12% growth rate for 2016.

That is absolutely correct. That is below what we have done historically, but the fact that we are doing a couple things with that business. Number one, still growing 8% to 12% think is very important.

Number two, I think we've got our best pipeline ever with that product category of RX. So we still feel very optimistic about the future. And then number three, we also feel very good about the -- both the gross margin and the operating margins in that business.

Could we do slightly better? Perhaps, but I think right now we feel the right answer is to put forth a number, that 8% to 12% growth, we believe that's the right number.

It will be based on the new product introductions we have in the business as really being the major driver for where we are going with that business. And I do think that's a very strong business, both in terms of the top line growth and also the very strong operating margins and gross margins we have in the business. Judy, do you want to handle the second part of the question?

I have to comment in addition to what Joe just said about the RX growth. Suffice it to say at a time when the growth rates that we provided were larger percentages, the business was half the size.

We have a business that is over $1 billion. We're talking about growing that business 8% to 12% into the future off $1 billion base and continuing to add new products into the portfolio on a go-forward as well.

And with industry-leading operating margins that have continued to be stable for full-year run rate basis. So I think about that in a very, very positive light, and I'm in no way, shape, or form looking back on that 8% to 12% negatively. I think it's a phenomenal number given a $1 billion base.

On top of that I don't in any way, shape, or form see the share repurchase that we're announcing today to be an indication of either the pipeline of corporate development getting smaller or running out of ideas. In fact there are many great ideas out there. M&A takes time.

People who do want to do feel badly do bad deals. We do the right deals at the right time at the right price to deliver the right shareholder value that we can feel confident bringing to our Board and bringing to you. At this time we are collecting cash.

We are a cash generative machine, and the position of our Company today is such that we believe we can capture what is anomaly in the stock price right now with the market volatility and the overhang that has been created by this situation with Mylan to capture that. It's a good investment for you for us to do this right now in an accelerated style of buying before the end of the calendar year.

To keep that on deck into 2016 and 2017, if the right deals come forward we will absolutely seize those and keep our balance sheet credentials firm and intact. That is who we are and what we stand for, but we need to capture anomalies that are obviously evident in this market today. And it does not waiver on our confidence and growth that we've quoted today in many different places in this material as well as our ability to continue to generate cash and find great deals.

Thank you, Judy, good comments. Operator, next question.

Sumant Kulkarni, Bank of America.

This might be beating a dead horse, but could you characterize the types of M&A opportunities that are out there? And how would that change if October 23 was not around as a potential deadline?

And second, could you also talk about your Omeprazole franchise, because it seems like there has been a recent Paragraph IV challenge in that. And how is the Company thinking about additional competition there?

On the M&A side you are correct, as we are in the midst of the October 23 timing, we though just to be clear, I want to probably say this one more time. Irish law is not designed to limit the alternative to shareholders. Irish law is designed to get the best for shareholders. There are things that we will continue to look at and do and obviously we will need to be very in close contact with the takeover panel, but clearly we will do what we think is right for our shareholders.

On the question of M&A, beyond that in terms of what we are looking at, it's all those things that we've talked about in the past. We have during this time period since April looked at a number of transactions.

We have completed four transactions; we've looked at even more than that. In looking at those transactions we've looked for deals that are strategic, accretive to our earnings, and meet our return on invested capital hurdles.

Those are the kind of deals we're going to come back to you on. As I've said in the past, there are things that we are interested in. We are interested in opthalmics, we're interested in adult nutrition, we're interested in the diabetic area, we're interested in pet care.

Those continue to be the areas that we have interest in. Beyond that we do think we have a very strong RX business. That makes sense to us to continue to look in the RX category, albeit though I'm not going to try to be the largest player in RX.

I want to try to continue to find products that have barriers to entry. Our portfolio is predominantly products are extended topicals or dermatology, respiratory, nasal, ophthalmic.

We'll continue to look at those types of product or other products that have a significant barriers sentry, like hormonal products or control drugs, narcotics for example or anything that isn't in a sustained release category. But those will be the ones we predominantly will look at.

Final comment I want to make is relative to geography. We think that the pipeline of opportunities that we have with Omega is very significant in terms of finding additional products, additional categories that we can bolt on to the Omega business.

The second part of your question I think was Omeprazole and the franchise. We clearly are aware of them, some additional Paragraph IV filings on Omeprazole. We are aware of it; we are working very closely with our partner Drexel.

We think we've got a very strong position. You probably have seen some additional products that we've gotten approved in the Omeprazole franchise; everything from the wild berry to the Omeprazole magnesium.

We are very comfortable. We have an understanding of what is happening there and what we will be looking out for the future in that category.

Douglas Tsao, Barclays.

Operator, let's come back to that question if there is another question.

Linda Bolton Weiser, B. Riley.

I know you spoke about a couple of the new product opportunities for 2016, but can you just remind us all in terms of the timing of the store brand Nexium product that you could potentially bring to market when that would potentially be? And then secondly, sorry if you said this already, but in terms of these operational cost savings and actions that you are taking, were these things that you had planned anyways?

Like that was kind of something you had been thinking about and you just accelerated the action to do it? And if there was anything that you incrementally came up with I guess as part of this process. Maybe you could just explain kind of the background of how that -- your thinking on that side of it? Thanks.

Sure. I will start with the Nexium comment and talk a little bit about our approach here in general. Then Judy may want to make some additional comments on the operational cost savings.

Number one; the store brand Nexium opportunity is a 2017 event. That is the expiration of -- the three years of expiration of market exclusivity. So we will launch that in 2017. As to just a general comment on the operational savings that we've looked at and what we've done on cost, yes, it's something we've had in our minds for some time.

One of the things that when the offer came in from Mylan and put us into an offer period, that offer period means that you need to get the things that you have done expertized. That is what we have done, but it's very difficult to get things expertized over 12 months.

So we were not at a point where we could really talk about it until we just got here today, I think as Judy mentioned and I mentioned in my comments. I think we felt today was the day that we are almost essentially in 2016; now is the day to really start talking about it.

Talking in vague qualitative strokes about initiatives underway without putting dollars on them and attaching them to a guidance number or some framework that you can use in your modeling would we believe certainly have perceived as wishy-washy. The initiative is underway, post Elan, establishment of a European global base, the acquisition of Omega.

We talked at length at the time of the acquisition of Omega about our using that as our next ex-US global geographic expansion base, leveraging our global supply chain, utilizing our Irish headquarters to pull our operations together and create a base. We have been talking about these items for some time, we just haven't quantified them.

And as Joe just said, as we are now 10 weeks out from the end of the calendar year we are now in a position to be able to both expertize our calendar 2016 and quantify for you to give you a solid framework of understanding our confidence in that year-over-year strong growth rate, why you should feel good about the 2016 numbers and the underlying initiatives that buttress this plan.

And I think the only thing I'd add to what Judy said, I think as Judy went through the numbers I think it is very clear that if you start with the $9.30, you add the share repurchase of approximately $0.15, you get to $9.45. And if you think about the run rate of what we've said will be around the $9.83.

The fundamental question I think for the shareholders is where would you rather see that? Would you rather see that in a Perrigo PE multiple of a ballpark 20 times, or would you rather see it in a Mylan PE multiple of approximately 10 times. I think the answer to that is very clear, that the Perrigo situation is a much better value creation for our shareholders.

Jami Rubin, Goldman Sachs.

This is Ariel Herman on for Jami. Can you explain how you are thinking about the competitive landscape in multiple sclerosis related to your Tysabri royalty? And specifically in light of competition from Roche's new drug.

And then with the generics business, so this year you had a benefit from generic Androgel, so how should we think about 2016? I know that you have a settlement for ProAir in the end of December, but are there any other bulkier items that we should think for 2016?

And then just lastly quickly, is there any seasonality in the branded business or the Omega business that we should be aware of? Thank you.

Sure. Let me start with the MS one, then get to the RX portfolio, and then we'll get to branded. On the question of MS, we think we are in a great spot with Tysabri.

We think Tysabri as a product is a very important -- in a very important position for the patients with MS and it is in the highly effective category. I believe that as additional products coming with highly effective, what the reality is is that patients will migrate more frequently, more quickly to the highly effective products over time.

I think we'll wait and see how the marketplace develops, but we do think that there is some important advances with these highly effective products versus the what I would say the category of the product that patients usually start on today. So we do think the highly effective products will take a bigger position as a general rule in the treatment of MS. And clearly we are delighted to be working with Biogen, who we think is a great partner for us.

On the question of the RX portfolio, I'm not going to go into all the specific products, but just suffice to say what my comment from before, we think we have our best pipeline ever of new products. We will talk more about individual products as we get closer into January and February timeframe, but the reality is it's the portfolio we've ever had and we look forward to some additional new product launches.

You are correct that 2016 was favorably impacted by the equivalent of testosterone, 1% Androgel. We've got a number of other new products that we'll be launching and gives us the confidence to talk about that 8% to 12% growth in our RX category.

On the final point on the branded business, there is some seasonality to that business. It is effectively on the calendar quarter, it is the quarter that is April, May, and June is a stronger quarter. And also the quarter that is I would refer to it as October, November, December would be the two stronger quarters as we get ready for either the summer season or the cough, cold, flu season. I think I answered all three of your questions.

Summer season just being, just to clarify, there are several products in the portfolio in Europe that are focused on weight loss and slimming. So think about it in terms of people getting ready for the summer beach season, just to kind of put a quip on it.

Great, thank you.

Operator, we have time for maybe one more question.

Douglas Tsao, Barclays.

Just if you could, Judy obviously ran through some of the numbers in terms of the lack of overlap, true overlap with Mylan. I just thought it would be maybe helpful for you to walk through some of the capabilities on the consumer health business that are distinct from Mylan's traditional behind the counter pharmacy first? Prescription, generic business and some of the skill sets and things that are not necessarily very easily integrated.

I will start with that and Judy please jump in. On the question of -- I think this gets to a very fundamental question, which management team do you think can run the store brand business better? Perrigo or Mylan?

Perrigo has a 128-year history with this, so I think that by definition answers the question. Having said that though let's talk about the differences.

The first comment is that our products have to be mass customized. You have to make sure the right tablet, right bottle, right label, right carton goes to the right customer. That's something that we do and we do very well.

No one has the capabilities in this business to do that like Perrigo does. I've had a chance to be in this business 32 years, I can tell you that I've had a chance to see a lot of pharmaceutical buildings, a lot of places, packaging, and labeling. No one has the capabilities that Perrigo has as evidenced by the fact that that's why we have the market share we have.

I think the second part of this is that we are the largest procurer of raw materials for the over-the-counter products. We buy acetaminophen we believe better than anyone in the world. We buy aspirin better than anyone in the world; we buy ibuprofen better than anyone in the world.

To suggest that you because a company can do vertical integration they're going to be able to make our raw materials at a better price point is not credible in the sense that they don't make those raw materials. They don't make guaifenesin, they don't make ibuprofen, they don't make acetaminophen.

For that reason clearly we think we have a much preferred position because we know how to run it, we know how to do mass customization, we make raw materials and/or procure raw materials for the best prices in the business relative to the -- because of the size of our business. For those reasons we think we are the better team to run this business.

Just to add the illustration, and I know many people on the call have seen our presentation dozens if not hundreds of times. We frequently talk about our business, our unique proposition as a three-legged stool. A three-legged stool cannot stand on one leg.

We are pharmaceutical meets complex supply chain meets fast-moving consumer goods. The fast-moving consumer goods mass customization consumer promotional know-how falls away as an overlap.

And the supply chain, while certainly Mylan has a supply chain, they are not mass customized to fit the specific requirements that Joe was just discussing. To be able to do different packages, different size, different end cap all customized and vendor managed on behalf of our customers is dramatically different than the classic pharmaceutical model. So I come back to a three-legged stool with one and one-quarter legs cannot stand.

Thank you, Judy, for those comments. Thank you again everyone for joining us and taking the time today to listen to our comments. We are very excited about the future, and I think we've laid out a program that we believe gives us a very bright future both in the near term, the mid-term and the long term, and we are excited to have a chance to share it with you today.

We'll look forward to if you have other additional questions please get in touch with us. We'll be happy to try to continue to be out there and share with you our excitement for the future of the Perrigo Company. Thank you and have a great day.

This concludes today's conference. You may now disconnect.