PRGO
#Yes, great question.
So we do have a fair amount of synergies on the, I'll call it the cost of goods and operating side, so I'll start there.
We put a team in place early on and said we've got to figure out what we can do.
They had a lot of outsourced products, a number of plants, as we do, and our team there, we put people on the ground, headed under our <UNK> Janish, with our whole Irish operating and supply team, and they have been delivering great synergies between the businesses, doing insourcing across our plants, making sure we deliver high value across the products.
That part has been going well and we continue to try and expand what we can do there to help their cost of goods, as well as their operating costs.
The other side is we have a platform in Ireland and we continue to combine our Irish platform there with the platform of the operations in Nazareth, Belgium and continue to get benefits out of doing that.
On the sales side, there are some synergies, not as much or as quick as we had originally expected.
We had originally expected to be able to launch more products.
We are launching some products that tie into their value chain there.
We are launching some products here eventually that we think we can launch as good brands or control brands.
But it's not as much early on as we expected.
We continue to want to drive more value there.
One of our good wins has been we had developed in the states, with our partner in Denmark, a nicotine gum that was sort of best-in-class and with the purchase of the nicotine products that we did in our international CHC business we were able to bring that innovation to them, and they actually launched that product here over the last month and a half or two months, and are seeing good results.
So we feel that franchise as smoking cessation, and those kind of things continue to grow in Europe that can be a good franchise for us there.
And as a global player, we have a good supply chain to back that up.
So that's a good example where working together has proven to be a beneficial thing.
Yes.
So the first part on the business side, I would say when we look at the markets today, the switch products, the categories, all of that, we still are very optimistic on our CHC business and feel good about that.
But when we look at all of the components that we tried to lay out with store brand growing, favorable consumer dynamics, new products, you could see pretty strong volume growth across the segment in that close to 5% to 6%, so good volume growth.
The plants are running well and those kind of things.
We do expect, and we put in here pricing headwinds, and so we build those into our model, we expect pricing and make sure that we have the cost and other initiatives to do that for net growth of 2% to 4%.
So rather than bridging back, we're certainly switching and that was also in those models in the past and big switches, as well as just general growth dynamics depending on the time period that we were in.
But as we look forward for the next few years, we're looking to be able to grow this, which I think in general, will be at or above the pace of the normal US consumer business within the pharmaceutical and healthcare arena that we operate.
Yes, I'll take the question on ---+ I think you phrased it the target kind of leverage metric.
So listen, if you've been tracking the Company, again, we have not provided full 2016 information, but if you look at the LTM metrics as of 9/30 you can see the Company is running somewhere, let's call it in the high three to four range relative debt to EBITDA.
So then you step back and say what is the Company's financial policies, what's our priorities, we talked about those.
So, again, you look at next year, we're looking at around $560 million, I think the exact number is $557 million in maturities.
Again, we've talked about how we are using operating cash flow as our intent to pay that debt down.
So to your question, you can take that off the balance sheet.
We just ---+ we're looking to close Tysabri by $2.2 billion in 20 days, as we mentioned on our remarks.
Now, again, it's a tax efficient structure, but you always can still look at the tax effect of the sale.
You got to look at what is the cost to pay debt down.
You can run the models based on what the debt is trading on today, do your own estimates, plus assume, for sake of discussion, they are somewhere in the $2 billion to $2.1 billion there, so just to give you a kind of range.
So what does that mean.
Again, I don't want to say every nickel and dime goes to debt pay down, but let's say we're continuing to commit to investment grade.
We're continuing to work with the rating agencies on our credit profile to ensure we continue marching down that path.
If you take those numbers, you're talking in the range of $2.6 billion to $2.7 billion of debt that would be paid down over the course of the year.
You can run the leverage metrics.
I don't think I need to do the math for you, so you can take the guidance, run off an EBITDA model and then start saying what does that metric come out to.
Thanks, <UNK>.
Yes, I think, again, I'm trying to not down play 2% to 4%.
I realize where you're going on the 5% to 10%, but 2% to 4% means with all of that, volume growing 5% to 6%, store brands gaining, certainly volume share, profitability being offset some with a where does pricing go and what happens there, but still good volume growth, good share growth when you look overall at what we're doing.
There are consumer dynamics, we believe, continue to go that way.
Those mega trends you talk about in my mind are still very much at work.
We're all getting older, healthcare costs are doing nothing but go up no matter what we want to talk about.
Having a value proposition for consumers when they go to get it is a great thing.
We believe all those work in our favor.
At this point, when we look at all of those balanced together, and say organically, so, again, organically with the portfolio, with the R & D that we're doing, what do we see.
We believe it's in that realm.
That does not mean that there aren't other inorganic opportunities there to provide additional growth.
What we're talking about here is base organic growth with the portfolio in R&D across the segments that we're operating in.
Yes, so I think, without going back a couple years ago and saying here is what those dynamics were, I feel good in laying out here is the dynamics today and kind of what organic growth I see.
And, again, there's still a fair amount of volume share.
I just think all the dynamics of growth, products, switches, all of those things lead us as guidance which, again, I feel is a very strong, growing faster than segments, driving share, doing those things performance.
If you can add on to that some inorganic pieces, that's a very good strong business.
Thanks, <UNK>.
Last question, please.
Sure, you bet.
So first let's start with the effective tax rate.
So, listen, you're in a stone's throw.
I'm not going to say it's right or wrong, so I think you're within a window of acceptability relative to the tax rate.
We aren't providing guidance on that today.
We'll certainly update our models and give that more detail once we do close the transaction.
So, again, within a stone's throw.
Listen, we've worked with our partner, we are not disclosing the terms and conditions and we are not obligated to until we close.
We would like to withhold that comment until we get to that point.
I think what you'll find is it's a natural curve relative to Tysabri sales.
There's always a bid/ask spread, as you always know, relative to any street model, so I don't want to predispose one street number versus another.
Biogen doesn't provide guidance, so for me to go out there and start providing estimated revenues for the milestones right now, I don't think is appropriate.
But, again, we've looked at those, we understand what the metrics are.
We worked with our partner in what are appropriate milestones for those sales thresholds, and, again, once the agreements and so forth become public, we'll provide more discussion at that point.
And I know you're referencing this, but it is $250 million in 2018 and $400 million in 2020.
So as we discussed, when they're due it's just the terms we will get disclosed once closed.
Thanks, <UNK>.
Thank you, everyone.
I really appreciate your time and consideration.
I appreciate it.
Thank you.
