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Executives

Robert J. Coury - Executive Chairman and Chairman of Executive Committee

John D. Sheehan - Chief Financial Officer and Executive Vice President

Analysts

Jami Rubin - Goldman Sachs Group Inc., Research Division

Mylan Inc (MYL) Goldman Sachs 34th Annual Global Healthcare Conference June 12, 2013 1:00 PM ET

Jami Rubin - Goldman Sachs Group Inc., Research Division

Good morning, everyone. Delighted to have senior management of Mylan, Robert Coury, who everybody knows and real surprise to have this morning. Delighted to have you.

Robert J. Coury

Thank you.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Robert is the Executive Chairman of Mylan, and John Sheehan is the CFO of Mylan. And again, it's -- what an interesting year it's been so far for the spec [ph] pharma generic industry, and I know that -- what the key question on everyone's minds is, where does Mylan fit in? So I'm just going to launch right into it and -- oh, before I do that, before I launch right in, I'm obligated to read disclosures.

We are required to make certain disclosures in public appearances about Goldman Sachs' relationships with companies that we discuss. The disclosures relate to investment banking relationships, compensation received or 1% of our ownership. I'm prepared to read disclosures for any issuer now or at the end of this call if anyone would like me to. However, these disclosures are available on our most recent reports available to our clients on our form portal. All right, now that I got that...

Robert J. Coury

John.

John D. Sheehan

And also, just to add to that...

Jami Rubin - Goldman Sachs Group Inc., Research Division

Yes, John, I saw the look on your face and you said, "I think you've got disclosures to read." So you will...

John D. Sheehan

So you made yours, and then we'll obviously make ours, that we're going to be making forward-looking statements today. Those statements are covered under the Safe Harbor provisions of the SEC rules. We have on our website information with respect to -- further information with respect to both the statements we'll be making forward-looking statements and the SEC rules. We would encourage you to take a look at those.

And with that, we'll allow you, Jami, to take us to where you want to go.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Okay. Robert, the topic that's on everyone's mind: what's going on in your industry? And where do you see Mylan fitting in?

Robert J. Coury

I mean, I think this is probably one of the most exciting times because I think what we're seeing is a convergence. We've talked a long time, Jami, about consolidation, the need for consolidation. But I think what's different today than the past was a real appreciation for the combination of scale and consolidation. So when you have those 2 things working at the same time, it cannot be a better time in this industry. In terms of where Mylan is, I think that, again, Jami, I -- I mean, I -- call it being prejudiced and -- but from my opinion. From my opinion, I do think we are one of the best situated in the industry. And I think that when I look at the transactions that have been announced, I think it further differentiates Mylan in a lot of ways because we stuck to our knitting. Our transactions are very high-quality transactions, different than what I'm seeing out there today. What I'm seeing out there today is more short-term transactions, which you'll need to continue to feed that. And I see the market is in euphoria. I've often said that I think the market is actually in front of itself. I think we're actually dealing with funny money in terms of where I see the market at because they're valuing. You just say you're going to do something, and quickly, the market's out there in front valuing transactions and cost cutting -- transactions are cost cutting. At the end of the day, somebody has got to run the company, and somebody's got to deliver the results. What we have focused on is execution. We are focused on incubating. If you take a look at our transactions and you take a look at what we pay for those transactions, not all of them have been short-term in nature. If you take a look at Merck, there's views out there that we, say, overpay for a transaction, but now look what it's delivered. Take a look at Matrix. You could have said that we've overpaid for Matrix. Look [ph] has delivered. Take a look at Bioniche. Look at we -- and now take a look at Agila. What I can tell you is that the transactions that we focus on are really geared towards delivering long-term continual growth consistently so that our reliance on external activity becomes less and less. And if you take a look at the $6 target that we have out there, it's all predicated because of what we've done or what we've focused on. Therefore, what I'm saying is, we need nothing else externally. We've assembled all the necessary assets for what I consider your best play. The only best, strongest play is your standalone strategy. And if you don't have a strong standalone strategy, to me, you're all but owned by somebody else. So we put that in place. But that doesn't mean we're going to sit still. We're going to further enhance, add and even mitigate any potential risk to the $6 by how we deploy our cash flows from this point going forward. What you can expect and what Heather has been saying, what John's been saying, and we made it very clear, we continue to be very inquisitive. So step one is your standalone strategy, the pathway to $6 in terms of what we already have. Step two, deployment of capital. You can expect that we are very actively looking for additional add-ons that are going to fall within just simply 2 criteria, that's all you need to know: one, the deal has to be accretive; and two, we must and we will maintain our investment-grade status. We made a commitment to the rating agencies, and we fully expect to meet that commitment on a going-forward basis. So in terms of size, in terms of cover, again, all you need to know is that I don't think size is a limitation in terms of sticking to those 2 criteria because of those are external requirements. But what you should know is that this year, for the first time, we have absolutely -- we have internal requirements. Our entire compensation now is based on return on invested capital and on TSR. We've never had that before because frankly, the company is much more mature today than it was in the past. So we are prepared, so we have internal requirements. We now have our external requirements.

Jami Rubin - Goldman Sachs Group Inc., Research Division

And I noticed those, so congratulations. That was a big topic last year there.

Robert J. Coury

Yes. Well, thank you. Then here comes number three, and it's real simple from evaluation metrics and why we're very comfortable. I mean, obviously, if we put a target out there at $6, internally, you know the company has a 3- to 5-year ruling activity that's been a constantly value on ourselves. So we -- and so if -- the way I look at it in terms of deployment of capital, we're very active in looking at whether it's share buyback, whether it's dividends, whether it's additional business activity or whether it's our tax rate. It doesn't matter. We are very active looking at our deployment of capital on all these fronts. And I would say number three. So one, standalone; two, additional inquisitiveness in terms of activities in terms within the primaries I've given you; and then the last thing is three. If number one, you're not successful on in executing or number two, you're not successful in executing, in terms of number three, you become a target yourself. It's just that simple. So all 3 of them, in terms of where Mylan stands, we're sitting in a very strong position today because, again, we've executed unlike some of the other, you have to wait for the execution to come.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Let me just not really push back, but just question something you said earlier. You said that the other deals that are happening, funny money and cost synergies is onetime in nature, not necessarily long term, which I agree with. But I guess the question is really related to the tax structure. Doesn't your high tax rate now put you at a significant disadvantage to Actavis and Valeant where deal activity is concerned? I mean, obviously, with their low tax rate, they can do more deals than you can accretively. So I don't really view that as funny money, but it gives them an advantage and this landscape that, with your 27% tax rate, you don't have. What do you...

Robert J. Coury

Well, let's put it in 3 buckets because I look at Valeant to a world on its own. One thing I give Michael credit for, he's very clear about his strategy, okay? And I don't even put Michael in the same category, say, it's an Actavis or a Mylan. I put Actavis in the middle, and I say that Mylan continues to be even further differentiated in a platform all to itself. I would say that because Valeant is competing for a different type of assets, I don't really see that as competition, and I do believe that Valeant has an absolute favorable tax rate, okay? And our Congress is either going to have to make a decision to either wake up or we're going to see a lot more of these inversions, and it's just going to be Mother Nature. In terms of Actavis, I think that, and I say this humbly in my opinion, I think that the tax rate is just so overblown right now because maybe going forward, I think that the tax rate, the new realized tax rate being in our own company, that's where you get the benefit. But you just don't go overnight from one tax rate to the other. You can begin to structure yourselves and set up your capital structure in a way to optimize, but it takes time to bring that tax rate down. So I don't really see a huge disadvantage, certainly, early on. From a Mylan perspective, I think that we have absolutely done everything that we could by our own capital structure, how we allocated our debt, where we allocated our debt, and we continue to look at this and continue to find ways to go down. Jami, what I will tell you is we're not going to look at doing a transaction for the sake of the tax rate. If we think that looking at our tax rate should be an ongoing process, with everything else that should be an ongoing process in terms of our allocation of capital and how we deploy it and looking at what our future is, so I think there will be other opportunities for us to further enhance. It may come through an acquisition activity. It may come through some other mechanism, but we're not going to stop in that front. What I mean by funny money is that to me, the only shareholders that are going to win at the end of the day are those who get up fast enough before it drops off of the face of the earth because if you take a look at Valeant's model, they have to keep continuing to do what they're doing. You can't do that forever and hold that up. You go back and take a look at even IVAX. Who's more powerful than Phil Frost, right? He was a smart guy. He did a lot of great transactions. But when he went to up to $70, $80 and when he ran out of transactions, it went down to $40. Teva tried to buy him forever. He was smart enough to know that the market was not going to give him that deal premium, any more his security, and that's when he'd said, "Okay, it's time." We've seen it in the Antares in the past. So look, I'm just telling you, what I'm saying is that's not our model. We are a different model. We first put in place the fundamentals to grow on our own, to stand alone and to meet our -- $6 is no -- that's a pretty important figure to us. And we put all of our stake in the ground on achieving that target. We have multitude of ways to get there. If, for example, if we would take our free cash flow and just simply buy our own security with our free cash, we'll hit the $6. We're not going to do that because we think that top line growth is as equally as important to us as simply just hitting that bottom line. And what you're going to see in the Agila transaction, when we have an opportunity to tell you more about it, I can only tell you that the top line growth potential of that asset is significant, high double-digit growth. And we're -- obviously, we're not going to close until October. We'll be limited what we can say in August, but to tell you a little bit what our vision is after we've had the chance to get in there, take a look at their pipeline and take a look at what we expect out of the commercial sales. Whatever we anticipate to get top line, I think, we're going to exceed.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Let me ask another question. I mean, clearly, part of the motivation behind these deals is, I mean, it's not just about tax rate. It's not just about synergies. But I do think that the industry is consolidating for a number of reasons, one of which is the generic industry itself is flowing. It's not as robust -- it's not growing as robustly as it used to. And I know you have a strong opinion about the future growth of generics, which we'll touch upon. But many of your competitors are moving more towards brand. Both Actavis and Teva are -- have, I think, a quarter, Teva more than a quarter. But a number of your competitors are becoming more hybrid. But Mylan continues to be described as one of the few remaining pure-play generics much like the Indian pharmas. Is that how you see yourself? And if not, what is Mylan's strategic objective? Do you think it's important to reduce your exposure to generics like Actavis and Teva? Or is there -- I mean, is your appetite changing at all for Grannis [ph]?

Robert J. Coury

So let me say it another way because I think your statement has -- the majority of what you said has accuracy, but let me say it another way. I think what you're seeing is that Mylan is the only company out there that continues to say, and I continue to repeat and we have delivered and we will continue to deliver, that in the generics play alone, there is substantial growth in the Mylan portfolio. Unlike any other company, which I don't run their companies, I think what you're hearing from them is they don't have that kind of growth prospects on generics alone. We do. We see even when we look at the food chain in front of us and we take a look at what our customers are doing. I love the idea a bit. Are shocked, but that Teva shifted gears. I think those kind of things [indiscernible] more to our favor, okay? I love the idea that people are focusing less on generics. Again, that [indiscernible] to our favor. When you look at what's happening with the Walgreens and the Alliance and the AmerisourceBergen, just take a look at the future and take a look as they -- as those big elephants become even bigger, their reliance on a pure play like us, as we continue to broaden our portfolio and deliver large scale, large volumes of high-quality supply, is a very powerful position to be in. Now do I -- am I going to say that -- I want to remind you that our brand division was larger than even Actavis' brand division prior to this acquisition. People keep -- they forget about what we've done with this brand division, how much we've grown it, and we think there's a lot more leverage. Do I think years out, years out that it'll be nice to enhance that brand? I think we made it clear that we were going to be looking for opportunities like that, but we don't have it. The beauty is, we don't have a gander at. We can take our time. We think there is a lot of nice little assets, nice little pockets of assets that if we just take our time, not out of necessity, but out of the right strategic move, we think we are very excited about building more robustness in our brand portfolio by expanding. And let's not forget the combo that we have. Let's not forget some of the opportunities that we already have. The -- I think that's the real big difference there, Jami.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I just want to -- I might miss any questions in the audience. Okay. Robert, I'm just going to keep going.

Robert J. Coury

Go.

Jami Rubin - Goldman Sachs Group Inc., Research Division

And when you talk about looking at opportunities, pockets of opportunities out there, can you be more specific. Where are there gaps in your business? Where are the gaps in terms of geographies and in therapeutics? Would you need to have to continue to be successful and competitive?

Robert J. Coury

Well, as I've been saying, we've assembled all the necessary required assets, high-quality assets to deliver on, I think, a very robust CAGR from this point going forward. But being that we're not going to stop, I had a question this morning about, on a one-to-one, about deployment of capital. Are looking for big, small? And then how do you think about that? And I though the best way to answer that was I would look at small more as tuck-ins, more those therapeutic categories just like we did with the injectable. We started out in baby steps with Bioniche. We realized that critical mass was going to be the next thing we did. We took our time, and we struck. Now we have that in place. There are other little tuck-ins I see. So I think you should think of small for more tuck-ins. I think large, large transactions, you should look at other potential therapeutic categories that we're not in or that we have an opportunity. Then I think large -- you should also think about large allocation should be more of the same. So large for more of the same.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Kind of like Actavis? I mean, because -- let's continue on that. Do you see industry-wide consolidation? Is there a benefit to be bigger in scale with respect to generics?

Robert J. Coury

Absolutely. And I think that when -- since we've done Merck, I think the entire industry sees through this. I'll give Teva this: they were ahead of the game. I give Phil Frost this: I thought he did a great job, too, in terms of you got to give what credit's due. I think when we did Merck, though, it changed the entire view of the American investor looking at a global generics play. And I think you're seeing a lot of people follow, and I was very happy to see Paul [ph] expand globally and talk about scale because it does make a difference when you think about the food chain in front of you. So I think when I say we have a convergence of probably one of the best things that's happened in our industry, appreciation of scale and contraction through consolidation. So when you take supply out but yet those who are left with scale, I think it does make a difference. And it's going to be harder and harder for the smaller players to be able to compete.

Jami Rubin - Goldman Sachs Group Inc., Research Division

What geography do you feel you should be bigger in or you're not?

Robert J. Coury

I have to tell you, I love Brazil. I -- we have a foothold now with Agila. I'm very excited to expand upon that, but I've been looking at that for a long time. I'm not real crazy about the other South American countries. I think Mexico is another real opportunity. And I think right now, those are the 2 that I feel very strongly about. I've often told you China. We've been getting ready for China. I think that China, what you can expect that we're doing in terms of getting ready for China is just a mass of the appropriate portfolio so that we have value to bring to the table because the way we'll enter China is through a joint venture through a local domestic. But you have to have something that you offer to bring to the table. And so what we're taking the time to do in advance through the sleep time that we have because we're still 3, 4 years away, I say it's really making that difference because 2 things are happening in China. So one, you can expect that the work that we're going to be doing.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Oh.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Oh, your [indiscernible]

Robert J. Coury

I hope that wasn't my heartbeat.

John D. Sheehan

Yes. There you go.

Robert J. Coury

Thank you. So I think what we're doing in lead time to marry up to the core competency what we find in China is one thing, but there's something else happening in China. If 5,000 generic pharmaceutical companies and you have this other pharmaceutical market in China, the natural, right?

Jami Rubin - Goldman Sachs Group Inc., Research Division

Traditional.

Robert J. Coury

Yes, and that's still fairly big market, believe it or not. But what's happening is the government, I'm telling, is stepping up. I've met with a lot of government officials over there, and I really believe they're doing the right thing, and they're doing it now through the SFDA by lifting the standards. They feel they have way too many companies over there, and they have to separate now the haves and have-nots. And the way they're doing it, which I love, is through lifting their regulatory standards, and that, they feel, itself will flush out a lot of the have and have-nots. So we're monitoring and observing that kind of activity, and we're going to pick our right entry point to -- and where we think could play a material role over there.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I mean, Paul just said that he would stay away from China and India because they're too expensive, and no one's made any money. It's the branded, the local...

Robert J. Coury

Well, when you rely on third-party suppliers like Paul and the rest of the generic pharmaceutical market does, I can understand why people say that. But when you built a powerhouse like we built in Europe, more vertically integrated than anybody else in the industry, and you're in control of your own destiny, then you may have a different position.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Let me ask a question on the Agila deal, which was announced earlier this year and looking forward to learning more about it and its financial impact to the company at your August analyst meeting. My impression is that investors were excited and understood and adopt the strategic merits to the deal but I think question the richness of the price paid. Can you help us to better understand what the opportunity is?

Robert J. Coury

Yes. Well, first, on the richness. Go back to Merck and look at the richness and look at we've now shown we can deliver. Go back to Matrix. People claim the richness of that deal when I did it. Look at what we delivered. Go back to Bioniche, right? Nobody really knew because we bought on private equity. But people question that multiple computer [ph] and now look at we've delivered over and above. You should look at Agila as exactly the same type of thing. What is richness? We're not buying short-term, medium-term numbers. If we're clinging to a certain multiple, it's because the multiple that we see is internal operators, right? The multiple we see is much more contracted because of the growth that we see than what you may see from the outside looking in. So is it a fair statement for somebody to make that from the outside? Absolutely. The only thing that we have now to offer rather than this show-me story we used to be, given our 5, 6 years now of delivering on everything we said we're going to do execution-wise, you should look at Agila, no different than anyone of these other assets. What I'm excited about Agila more than anything is this top line growth because it's so large that I think it's going to be able to pull our top line growth for the entire company. It's a very important area for us, and it's an area that I believe that -- I believe we have a real chance to become #1 in this area. And look, I've tried with Aspira. I've tried -- I'll -- I study debt platform and their problems and their issues. And just my humble opinion, my humble, humble opinion, right? This all my opinion, my opinion. You can't have a brand person run a generic company. That's just my humble opinion. Because it's a different animal. And if you understand the speed at which generics need to focus and function, then you'll know because it's not really -- it's -- like I said, all these transactions I see going on and where I give Michael Pearson credit, he doesn't want to be in manufacturing. He doesn't want to be, and he says it clearly. My problem is those who have to be in this, somebody at the end of the day has to run the company, operate, deliver and execute on what they say. All that's being credited out there is some promise. With that one shovel being lifted, you're going to need to wait a few quarters, and I think time will tell. Time is going to be a very interesting, very interesting thing.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Well, I'm looking forward to learning more about it because it's still kind of a black hole for me...

Robert J. Coury

And please remember, in August, we don't close until October, and so we have to be careful with the regulators in terms of what we can and cannot.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I'm just curious to know why you weren't able to provide more visibility into these financial implications...

John D. Sheehan

Well, I think that Robert described it that if you look at where Agila standalone has performed, that's not what Mylan going to do with that asset.

Robert J. Coury

That's not what we bought.

John D. Sheehan

Right.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Remind me the number of ANDAs that Agila has pending in the U.S. and where is...

John D. Sheehan

Over 60 and 180 different products. And so that is, as Robert was indicating, that's the opportunity for us to take the Agila platform of products, making them available to our commercial workforce not just in the United States but around the world.

Robert J. Coury

Right. If I can may -- if I may, John, if I can add this, I would not look even at the numbers. I think there's a lot of companies that pump a lot of applications into the FDA. We're not used to work high quality. It's not about what you put in. It's about what comes out on the other side. And Agila, for the last couple of years, have been #1 in terms of product approvals. So when I study the speed at which they were able to put applications in, the speed that the applications were accepted and the speed of the approvals, you can see that the quality of their applications speaks for itself in terms of what comes out on the other side. That's what we monitor. That's what we could see. Not just the number that somebody has in the pipeline. And then the last thing I monitor is when the product is out commercially, are there any issues when there's a product out commercially? Because what good is putting the product out? Yes, you fill the pail up and you're saying, "I want to knock it over." So their track record speaks for itself. And I will give Pfizer credit. I got to give Pfizer credit just like I do with generics out there. They've done a fantastic job and their due diligence in terms of they look at every single injectable company you could imagine and ended up there, and I certainly now know why did they have.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Speaking of Pfizer, what's happening with your generic business in Japan? How is that partnertship going?

Robert J. Coury

Well, I tell you, I couldn't be more pleased in terms of where we are, and I think the best measurable for all of us. Certainly, a measurement I'm going to use internally about this relationship because it really is the prima facie combination between 2 individual companies bringing each of their core competencies and having 1 plus 1 equal 3 plus-plus. I think the best measurement in Japan, because it's a different market, it's a different animal, would be to study our growth from this point with this relationship. And from now, say, to 3, 4 years from now and then look sideways to a standalone generic company and look at the growth as a standalone generic company. My expectations is that our growth rate will be greater than a standalone generic company, and here's why. When you understand the market in Japan, the hospital, the doc, the pharmacist and the patient, they are very quality oriented. And the name Pfizer, the market -- the name itself has so much meaning there that it's a standalone generic company. Remember, I was that. You have to work 20 times as hard to make that impact about your quality. So we've always been known about our quality and our manufacturing quality of our products. Pfizer has always been a household name of quality in Japan. We got the highest-quality platform in manufacturing, right, in our products with the highest-quality name out there. You put the 2 together, and so my expectations are fairly high.

Jami Rubin - Goldman Sachs Group Inc., Research Division

And when are we going to start to see this in your P&L?

Robert J. Coury

It -- look, it takes time for this all to roll out. As I said, the way I'm going to internally measure our success, and I just laid it out for you, will be our growth rates compared to a standalone generic company. And I certainly expect a greater growth rate in what you would see as a standalone.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I'm surprised that you haven't announced additional partnerships with Pfizer and other markets.

Robert J. Coury

Well, who says we're not doing anymore?

Jami Rubin - Goldman Sachs Group Inc., Research Division

Well, I mean, do you agree that replicating this partnership in other countries like China, that requires...

Robert J. Coury

I think it was huge opportunity. But when you're as large as Pfizer -- and forgive me because I love Ian Read. When you're as large as Pfizer, they build as slow as molasses, okay? So that's what I said, never have a brand person run a generic company.

Jami Rubin - Goldman Sachs Group Inc., Research Division

So what do you think they're going to do to your established products business unit?

Robert J. Coury

I think what he is doing is brilliant. I think he's making -- I think him separating and finally making the tough decisions is exactly what needs to be done. I think when that happens, because I think that's going to take a couple of years all by itself, I think, naturally, a voluminous amount of options for him are going to open up. One of the biggest overhang -- I don't care how many options are at the table for him at that asset. One of the biggest overhang is that it's so mumbo-jumbo to connect it, nobody ever took the time to separate it. Opportunities will open up naturally once he is in that -- well into that process of separating the 2 businesses. I do think he's going to need a strong engine to run that business.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I mean, as Mylan [indiscernible], can you...

Robert J. Coury

I would love to have the opportunity. Love to have the opportunity. Love to have the opportunity.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Are there any assets there that you find intriguing? These are all old patent drugs.

Robert J. Coury

Look, we got -- you saw what we did with Generic Advair there. You see we're doing. I'm sure there's going to be opportunities that will be presented at the appropriate time, and I certainly hope to have a seat at the table to explore them.

Jami Rubin - Goldman Sachs Group Inc., Research Division

The issue of your $6 number by 2018, yes, you're right, not one really believes you. And I think that's because not that you haven't executed well. You've executed extremely well, but I think that the issue is that there are a couple big high-risk, high-return opportunities that like Generic Advair, for example, that I think are still seen as kind of nebulous opportunities. What do you think are -- I mean, John, you look at everybody's models. I'm not anywhere near that $6 number. I can't physically get there without slugging another Generic Advair. What are we missing?

John D. Sheehan

Well, yes. I'll tell you what you're missing and forgive me when I say this, okay, because every other company, every other company, right, there's nothing guaranteed from today going forward except death and taxes and change. Now I want you to listen. All this if, if. I've been dealing with if, if for the last 10 years and certainly over the last 5. Have I taken that if and created factual, all right? Have we delivered? Okay. If, if, and don't take this the wrong way.

Jami Rubin - Goldman Sachs Group Inc., Research Division

I'm a big girl. I can handle it.

John D. Sheehan

Okay. I get a little bit tired of the if, and I get a little bit tired. But where we settled, we're comfortable because our actions and performance speak for itself. I mean, honestly, this if, if you're aunt had balls, she should be your uncle, right? I'm just telling you if, if. But listen, Jami, all of these if, if, if these, if that, then this, then that. Okay. Tell me, any other platform that is being invested in today, what is the guarantee of whatever is out there? We have the guts to say here is the money we spent. Here are the assets we accumulated. We feel we owe it to the investing -- investment public as management to be held accountable to say, here is where we think we can deliver with these assets. We put out a CAGR rate that I have yet to see anybody put out. We mean nothing else on the outside. We're very comfortable with all the opportunities that we've banked, and the investors are going to have to make their own decision. Important thing of Mylan is we know who we are. We know what our valuation is. We do our own MPVs. We are -- that's why we will continue to buy our stock at these levels all day long, okay? And if that's what we have to do, then that's what we will do. So I can't jump into trying to make all these what ifs happy. What we have to do is stay focused internally and execute on we say we're going to do.

Jami Rubin - Goldman Sachs Group Inc., Research Division

You can be happy with your share price today.

Robert J. Coury

That's why I keep buying it. That's why I keep buying it. So I would love the opportunity. Let me take down another 50 million shares. Let me take down another. Look, we have a high-class problem, Jami. Nobody is as liquid as we are in the market. Well, we have close to 400 plain shares outstanding. That's almost -- all right? Forget Teva. Put Teva aside. But that's how we work, 2.5, 3x what, say, an Actavis has. So we have people that can come in, in large volumes and come out in large volumes. So you have a different kind of a trading mechanism that goes on in our security, and some people forget to take that into consideration.

Jami Rubin - Goldman Sachs Group Inc., Research Division

John, let's talk about your financial flexibility. I mean, you've used up -- you've taken on some debts because of the Agila transaction. But walk us through your thoughts about valuation for potential acquisition targets.

John D. Sheehan

So we talked about -- at the time that we were upgraded prior to investment grade back in November, we talked about having $4 billion of financial flexibility. The rating agencies even talked about it in their own releases upgrading us. And since that time, we made the Agila acquisition at about $2 billion. We talked about in our first quarter earnings call an additional $2 billion of financial flexibility that we looked at all transactions, large and small. Robert referred earlier in his conversation to our external criteria that we're absolutely committed to any transaction having to be accretive to earnings and to investment grade. So from a pure cash financial flexibility perspective, it would be that we have $2 billion of financial flexibility.

Robert J. Coury

Well, I would not limit it to $2 billion. I'm just telling you, size does not matter. It's the criteria that matters. And as our security continues to creep up and our security continues to get the benefit of our execution, don't think for a second that we won't hesitate to use a combination. But as long as we meet the criteria, the deal needs to be accretive, and we must stay in investment grade. We put external and internal parameters in place to ensure that that's going to be the case.

Jami Rubin - Goldman Sachs Group Inc., Research Division

So you would use equity? I mean, Actavis used all equity to acquire 1 or 2 [indiscernible].

Robert J. Coury

I hope that. Maybe their capital structure allowed for it, but I would -- I -- look, we're very, very sensitive about, again, the accretion and our maintaining of investment grade. Just one thing a shareholder does not need to worry about is us doing a dilutive transaction. We're just not going to do it.

Jami Rubin - Goldman Sachs Group Inc., Research Division

So I guess what you're saying is you're going to put that capital to work this year potentially, whether it's acquiring assets or buying back your stock.

Robert J. Coury

Well, I think what we told you is step 1, 2 and 3. Step one is to maintain and deliver on what we already put in place. We have a target out there. We have assets already in place. It's to execute. Two, we're not going to sit back and ride the boogie board into the beach, right? We're going -- two, we're going to keep going. We're very active and very inquisitive. We gave you the priorities and how we're going to deploy our cash flow. And three, if you fell on one, you fell on two, then you become a target yourself. It's just that simple. So you're right. So if you believe that our security is undervalued, then that -- to me, I'll look at that as an opportunity.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Do feel pressure just given the move that Valeant...

Robert J. Coury

Not that. Not, not -- yes, I do. Do think I'd play follow the leader? Okay, I mean, it's just not in the cards. I mean, you're right. Remember, I said your best strategy, your only best strategy will always be your standalone strategy. And if you don't have a strong standalone strategy, to me, you're all but owned by somebody else.

Jami Rubin - Goldman Sachs Group Inc., Research Division

Okay. With that, thank you very much. We just ran out of time.

Robert J. Coury

Thank you.

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