AGN
#Yes, so let's talk about generics first, and this will just give me the ability to just make a quick comment before I turn it over to <UNK> <UNK> about the generic performance.
Given the disruption and the pre-integration period with Teva, and the complication, the divestiture of the business is a lot harder than integrating an acquisition.
Our folks just continue to have impressive performance despite all of the additional work they've had to do regarding the Teva pre-integration process.
So something that I just have been very proud of that team for, and maybe <UNK>, you can talk about the environment.
I think <UNK> <UNK> is on as well, so maybe he will chime in as well.
<UNK>, it's <UNK> here.
So with respect to the pricing environment, I don't see a lot of change between what we saw in 2015 versus 2016.
There's no question about it, with the purchasing consolidation and the buying now and fewer hands, there's no doubt that there's challenges to that remaining status quo going forward.
But I think what you're seeing now in the way the companies are reporting, some are reporting higher price erosion versus others, and I think that's largely due to the strategies that they are employing.
Some companies are really trying to fill their capacity and they're chasing share.
And usually when you're chasing share, you're basically discounting your products in order to be able to get that volume benefit.
So that wasn't our strategy, nor was that the same strategy from others.
And from what we've been focusing on over the years is making sure that we've got the right capacity, and differentiating ourselves with the portfolio.
And those companies that have differentiated portfolios that are harder to manufacture, less competition in products generally see price erosion on the lower end of the range.
And so what I see in our business, and <UNK> alluded to the fact that our business has performed very well, despite obviously going through this integration, what we're seeing is that price erosion consistent with 2015, which we saw that in more the mid single digits, and I see that continuing in 2016, as well.
<UNK>, anything you want to add.
Only thing I would add too, is I think the FDA, again I haven't tracked the numbers, but the FDA I think, has really stepped up the approval process, so a lot of the backlog is clearing, and that's creating for some more competition, and for others with more innovative first-to-file portfolios like we have, it could create a better dynamic as well.
With respect to R&D increase, as <UNK> mentioned in her comments, it was all the project or program related, which is where you'd like to see the increase, particularly when it's late-stage programs.
And so, just by way of example, some of the big programs that we have kicking off in 2016 are the Repastinel Phase III, the oral CGRP Phase III, as well as a lot of work in Esmya Phase III, and a few others.
So it really is late stage program related for the vast majority.
Sure, so with respect to the SG&A, in essence, stability plus cost of launches, which make a slight increase.
It really is related to not being able to execute the restructuring that we had essentially worked very hard to plan, and we're ready to pull the trigger on when the Pfizer deal came around, and so we put that on the shelf.
I don't think it's fair to treat people through ---+ to put people through the stress of a reorganization, while they are also doing a pre-integration of the size and scale of the Pfizer one, and so we have in essence put that on the shelf or cancelled it, due to the pending Pfizer deal close, and obviously all of the work that's on everybody's plate, given the pre-integration work.
I think with respect to the synergy numbers, Pfizer was aware we were going to do that, and when we built our model that was contemplated.
The M&A environment, I think, remains of high interest to us.
I think when you look at the volatility or the weakness in the marketplace, I think it does a couple things.
One is, as it sustains itself, right, it has to stay in this environment.
I think we're seeing some high fliers now become more fairly valued, and I think we're also seeing opportunities.
As you know, <UNK>, you can't strike on these opportunities, because everybody is going to look at various lengths of average price to figure out premiums, so whether it be a 30, 60, 90 days VWAP, you have to let these things settle out before there's really any actionability around them.
But I think we're going to continue both as a standalone Allergan, and as a combined Pfizer, look for things that expand our intellectual property and our therapeutic areas, to complement our discovery and own pipeline capabilities inside of Pfizer.
I think we're going to look for opportunities to expand our therapeutic area leadership and our key therapeutic areas, much like standalone Allergan has been doing today.
So I think the thing you won't probably see, both for standalone Allergan and likely for combined Pfizer, is large transformational M&A in the short-term.
I think we'll be looking more for intellectual property, tuck-in, geographic, expansion and therapeutic area leadership support-type deals.
Sure, I'll answer the first one, and maybe ask <UNK> to touch on Restasis and Namenda XR formulary.
I think, with respect to the combination with Pfizer, I think it's incredibly exciting for our franchises and our growth profile.
When you look at the Pfizer organization, combined with the Allergan organization, I think the word that immediately comes to mind is opportunity.
That's opportunities to expand our capabilities, it's opportunities to strengthen our franchises, and it certainly is opportunity to expand our geographic footprint.
So when you look at those things in combination, it's intuitive.
I think the thing I picked up in last two months though is, it's also an opportunity for talent and capabilities.
And when you have an organization the size of the combined Pfizer-Allergan you really need strength in your executive and management ranks, and in the first two months, the combination of our executives and managers with Pfizer's looks like a huge opportunity to drive these businesses, and really have better performance than the market.
This is <UNK>.
As it relates to formulary coverage for Restasis and XR, I'll start with Restasis.
Sustaining growth for that product is going to be a function of formulary coverage, share of leadership and ultimately launching new other dry eye products.
The coverage for Restasis today is over 85%.
We expect that to be maintained through 2016, and we're already in the process of submitting bids, at least on the Part D side of the business, for 2017.
It's a very, very popular product with a big user base, and I don't expect any real surprises or major changes in formulary coverage for Restasis, and I think over the next two years we can continue to manage our discount rate.
And as it relates to XR, we look good for 2016, for both XR and Namzaric.
Optum just added both products to formulary, and here again, as we look into 2017, which we already have a line of sight to, I think the numbers are going to look very, very good.
Again, if Namenda XR and Namzaric are popular products, especially with neurologists and select primary care physicians.
I like the way the next two years looks for both businesses.
Yes, so I think with respect to Treasury, what's interesting to me is how much rhetoric there is around what Treasury will and won't do, and how many, I guess, supposed experts or pundits tend to want to opine on this, and how the market takes it as ---+ almost as it being real.
I think the reality is, Treasury has issued two notices of proposed rule making with respect to this provision, related to inversions.
We have carefully considered and evaluated both of those, and have constructed our deal in a manner that takes those into account.
What we understand is Treasury is working hard at promulgating the actual regulations to support those notices, and that seems to be their focus, as you would expect, and we don't hear anything about a third notice coming.
If in fact, a third notice did become public, then certainly we would evaluate that, but we don't expect anything Treasury could do could impact our deal, since we structured it according to the law.
And so we feel very optimistic.
I think most of the noise around the third ---+ or most of the rhetoric around the potential third notice is just noise.
The Treasury, from all we can tell, is working on promulgating the regulations to support the first two notices, which haven't been issued yet.
<UNK>.
In terms of caveats, I'm just trying to think this through, one, the projections are really on a standalone basis, and what we provided you were non-GAAP metrics, consistent with the guidance we provided you in the past.
And as also I noted in my prepared remarks earlier, that this guidance will remain in effect until prior to the filing of the EU prospectus to be filed by Allergan, in connection with the Pfizer transaction, subject to the US filing, so that's a technical matter, and also to note, it's not our long term guidance.
It's our 2016 guidance.
Okay, good.
First when I think about Restasis in 2016 and 2017 and beyond, I focus on the fact that 70% of our user base are repeat users.
It has got a great following in both ophthalmology and optometry.
As I mentioned earlier, after <UNK>'s question, the formulary coverage looks really good.
You're just scratching the surface of the dry eye market.
The percentage of people treated, as of the dry eye is sufferers, is very small.
We'll have perhaps a step down in the growth rate.
Of course, when Shire launches Lifitegrast, that's not surprising.
I think it will recover.
We came off of a very high double digit year.
When I look at Restasis relative to Lifitegrast, in terms of efficacy measures, sustaining tear production and goblet cell density, I think Restasis is a great option.
When you look at tolerability, it's an even better option, in my opinion.
We'll be launching Restasis multi-dose preservative-free in the second half of the year.
I think dry eye sufferers are going to love it, instead of getting 60 single unit vials, they're going to get one 60-dose vial.
And importantly, it's just much easier to administer a drop into your eye with a 60 unit vial as opposed to these single-unit vials.
And I think we're going to find out in the second half of the year they are going to prefer the option.
Even when you go beyond multi-dose preservative-free we have Oculeve and Mimetogen, and so we're essentially building a super market of dry eye products.
I like the overall outlook for the business.
As it relates to pricing, it is a highly economical product, relative to all the products that health plans are managing.
I don't expect any real issues.
We have excellent formulary coverage, preferred status on most plans.
I mentioned the 85% figure, and even with the introduction of Shire's Lifitegrast, I just don't see any major disruption.
Sure, so with respect to intellectual property and FDA guidance on Restasis, maybe I'll ask <UNK> <UNK>, our General Counsel to open.
<UNK>, with respect to your tax experts' review of the combined tax rate, I really think we can't comment on that.
I think Frank D'Amelio laid out the expectation of the combined Company tax rate many times, and I think we really have to leave it at that.
I think with respect to investor support of the deal, I have been out and about since the deal announcement, talking with investors, and we always get unsolicited comments from investors as well, and I really haven't picked up anything but support for the deal and enthusiasm for the deal.
Not suggesting that it's unanimous in any way, shape or form.
We have a very large shareholder base with very diverse opinions, but from what I can see and from where I sit, I think there is broad-based enthusiastic support for the deal, and I continue with the benefit of a little bit more hindsight in a few months of pre-integration, believe this is the absolute best course for Allergan shareholders.
I think owning 44% of the pro forma Company of the combined Pfizer-Allergan puts our shareholders in an absolute better position for continued growth, for continued value creation, and is absolutely the right move at the right time.
So I think that was our last question.
I thank everyone for joining us, and I would just add that 2015 was a highly successful year for Allergan on a broad number of areas, whether that be double-digit branded growth in our commercial performance, strong performance from our generics business during the face of a divestiture, and of course, R&D productivity both in brand and generics was I think of record pace.
We look forward to challenging ourselves to outperform our 2015 performance in 2016, and looking forward to keeping you all up-to-date as we move forward.
Thank you for your time.
