`
`Valeant Pharmaceuticals International Management Discusses Q2 2013 Results Earnings Call Transcript | Seeking Alpha
`
`Valeant Pharmaceuticals International Management Discusses Q2
`2013 Results Earnings Call Transcript
`
`Aug. 7, 2013 3:20 PM ET
`by: SA Transcripts
`
`Valeant Pharmaceuticals International (NYSE:VRX)
`
`Q2 2013 Earnings Call
`
`August 07, 2013 8:00 am ET
`
`Executives
`
`Laurie Little
`
`J. Michael Pearson Chairman of the Board and Chief Executive Officer
`
`Howard Bradley Schiller Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Director
`
`Analysts
`
`Marc Goodman UBS Investment Bank, Research Division
`
`Lennox Gibbs TD Securities Equity Research
`
`Christopher T. Schott JP Morgan Chase & Co, Research Division
`
`Douglas Miehm RBC Capital Markets, LLC, Research Division
`
`Annabel Samimy Stifel, Nicolaus & Co., Inc., Research Division
`
`Timothy Chiang CRT Capital Group LLC, Research Division
`
`Alex Arfaei BMO Capital Markets U.S.
`
`David Amsellem Piper Jaffray Companies, Research Division
`
`Christopher Caponetti Morgan Stanley, Research Division
`
`David Krempa Morningstar Inc., Research Division
`
`David M. Steinberg Deutsche Bank AG, Research Division
`
`Graham Yoshio Tanaka Tanaka Capital Management, Inc.
`
`Gregory D. Fraser BofA Merrill Lynch, Research Division
`
`Andrew Finkelstein Susquehanna Financial Group, LLLP, Research Division
`
`Operator
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`Valeant Pharmaceuticals International Management Discusses Q2 2013 Results Earnings Call Transcript | Seeking Alpha
`3/14/2016
`Good morning. My name is Matthew, and I will be your conference operator today. At this time, I'd like to welcome everyone to
`the Valeant Pharmaceuticals Second Quarter 2013 Earnings Call. [Operator Instructions] Thank you. Laurie Little, you may
`begin your conference.
`
`Laurie Little
`
`Thanks, Matthew. Good morning, everyone, and welcome to Valeant's Second Quarter 2013 Financial Results Conference Call.
`Presenting on the call today are J. Michael Pearson, Chairman and Chief Executive Officer; and Howard Schiller, Chief
`Financial Officer. In addition to a live webcast, a copy of today's slide presentation could be found on our website under the
`Investor Relations section.
`
`Certain statements in this presentation may constitute forwardlooking statements. Please see Slide 1 for important information
`regarding these forwardlooking statements and associated risks and uncertainties. Readers are cautioned not to place undue
`reliance on any of these forwardlooking statements. The company undertakes no obligation to update any of these forward
`looking statements to reflect events or circumstances after the date of this presentation or to reflect the actual outcome. In
`addition, this presentation contains nonGAAP financial measures. For more information about nonGAAP financial measures,
`please refer to Slide #1. NonGAAP reconciliations can be found in the press release issued earlier today and posted on our
`website.
`
`And with that, I will turn the call over to Mike Pearson.
`
`J. Michael Pearson
`
`Thank you, Laurie. Good morning, everyone, and thank you for joining us. As you have read in our press release, we followed
`up our strong performance in the first quarter with another quarter of outstanding operating results. On today's call, I will review
`our second quarter results and performance and provide an update on Valeant's business. I will then turn the call over to
`Howard to provide an update on the Bausch + Lomb transaction, which closed Monday, and discuss the business going
`forward. After our remarks, Howard and I will be available for Q&A.
`
`This morning, we reported Valeant's second quarter results for 2013, which were driven by strong organic growth and solid
`results across all of our operating units. Total revenue for the quarter was $1.1 billion as compared to $775 million in the second
`quarter of 2012, which excludes the onetime milestone payment of $45 million we received from GSK for the U.S. launch of
`Potiga in the second quarter last year. Product sales for the second quarter of 2013 were $1.06 billion as compared to $743
`million in the same period in the prior year, an increase of 43%. Our second quarter cash EPS was $1.34 per share or an
`increase of 54% over 2012. Our cash EPS would have been $1.36 except for $0.01 for the preclosing financing cost of Bausch
`+ Lomb and a $0.01 negative impact for foreign exchange. Adjusted cash flow from operations was $423 million for the quarter
`or an increase of 61% over the prior year. We would also like to mention that our net income to adjusted cash flow from
`operations conversion ratio was greater than 1%, which has been our objective as we've talked about previously.
`
`Organic growth continued to be strong for the company, even with the negative impact from the introduction of a generic
`competitor for the Zovirax Ointment. With this impact, our U.S. promoted business declined 5% on a samestore sales basis. But
`excluding the Zovirax Ointment and Cream, the rest of the promoted portfolio increased 7% on a samestore sales basis. We are
`not adjusting for any other generic products. As we expected, our neuro and other business returned to positive growth and
`increased 2% on a samestore sales basis, now that the impact of generic Cardizem CD and generic Ultram XR are largely
`behind us. Despite the continued headwind of generic [indiscernible] and a couple of other small products in Canada, our
`Canadian/Australian operations grew 4% on a samestore sales basis. Our Emerging Market segment delivered a total organic
`growth rate of 14% in the quarter, continuing the exceptionally strong progress seen in 2012.
`
`I will touch on the key growth drivers on the next slide. There are several key drivers that are fueling our growth this year. For
`example, U.S. promoted products overall grew 7% on a samestore sales basis as OraPharma, our oral health or dental
`business, continued its stellar performance and once again delivered doubledigit growth as it has each quarter since our
`acquisition. CeraVe also continued its positive track record and grew over 50% as compared to the previous year. I am pleased
`to report that our aesthetics franchise has its best quarter since Medicis launched its aesthetic products. In particular, Dysport
`had its best quarter ever and gained significant market share against BOTOX and ZMM. We expect that progress to continue as
`we roll out our new MMVP 2 [ph] loyalty program to physicians.
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`Our Emerging Market segment showed tremendous growth this quarter, which was driven by growth by several key markets. In
`Poland, we continue to grow faster than the market, which is growing 6% yeartodate according to IMS Health, while our
`operations are growing 11% and nearly double the market. In Russia, we increased organically 16% yeartodate, continuing to
`outperform the local market, which is growing at approximately 10%. Specifically, major products has delivered doubledigit
`growth the past 6 quarters since we announced the acquisition. Our operations in Southeast Asia, South Africa continued their
`track record of quarterly doubledigit growth. And our operations in Latin America have showed strength across the board,
`particularly our Probiotica business in Brazil, which has increased over 60% yeartodate. In addition, Mexico remains on track
`and has delivered 8% organic growth yeartodate versus the market growth rate of 3%.
`
`We had another active business development quarter. And clearly, the highlight of the quarter was the acquisition of Bausch +
`Lomb, which closed on August 5. In addition, we significantly strengthened our aesthetic product offering with the acquisition of
`Obagi, a leader in the physiciandispensed skincare market. The comarketing agreement with Mentor, which gives us access to
`the leading breast implants in the U.S., and the acquisition of Ideal Implant, a novel saline breast implant. We expect to gain FDA
`approval for the Ideal Implant in 2014.
`
`We also continue to strengthen our business in Russia with the acquisition of certain products from CROMA for the local market,
`and Ekomir, a leading Russian OTC business. Finally, we gained entry into Vietnam, one of the fastestgrowing emerging
`markets, with the acquisition of the majority share of Euvipharm. We plan to use of the Euvipharm platform to introduce other
`products into Vietnam. We continue to see interesting opportunities around the world and we would expect to be active with
`tuckin acquisitions over the rest of the year.
`
`As most of you are aware, once a year, Valeant overviews the performance of past acquisitions with our Board of Directors and
`our investors, reviewing key metrics to evaluate the success of our transactions. On the next 2 slides, we have analyzed all
`acquisitions that were over $75 million in purchase price and completed since 2008. As you can see, each of our acquisitions is
`performing extremely well as compared to the revenue forecasted in the original deal model with the exception of Afexa.
`Fortunately, Afexa and in particular, COLDFX has rebounded dramatically in 2013. And from a cash flow standpoint, Afexa is
`now on track as compared to our deal model. I would also like to note the strong performance of Biovail, Sanitas, PharmaSwiss
`and iNova, which are among the largest transactions over the last 5 years. In aggregate, our acquisitions have grown
`organically at 12% compound annual growth rate.
`
`Turning to Slide 8. Cash flows are clearly the most fundamental driver of a successful acquisition and the best measure of a
`deal's success. We are very pleased to note that all the acquisitions made since 2008 are either on track or well ahead of the
`deal model from a cash generation standpoint. In the aggregate, we are substantially ahead of the forecasted cash flows we
`modeled at the time of acquisition. We believe we are one of only a very few companies that has established such a track record
`based on both exceeding synergies but more important, overachieving on expected growth.
`
`Despite our reputation for not investing in R&D at the same levels of our competitors, we believe we have a very exciting late
`stage pipeline coming to the market over the next couple of years. Given some new news across a number of products, I would
`like to provide an update on this call. First, an update on efinaconazole or Jublia. As you know, we received a complete
`response letter in May. And I want to reiterate that there were no safety or efficacy concerns from the FDA regarding this
`compound. In July, Howard and I joined our team in Washington to meet with the FDA to discuss their concerns centered
`specifically on our container closure system. This week, we hope to reach a final agreement with FDA on a plan for addressing
`all of the same issues. And we expect to receive approval in the second or third quarter of 2014.
`
`On Acanya, 2 pieces of good news. We have been able to extend the patent life for Acanya previously set to expire in 2015 up to
`2029. This was a more specific formulation patent, which was granted. In addition, we have recently received Phase III results for
`a new formulation of Acanya, which demonstrate both improved efficacy and improved tolerability. We expect to file this new
`product with the FDA by the end of the year.
`
`Luliconazole or Luzu has been filed and has a PDUFA date of December 11, 2013. We have engaged in positive discussions
`with the FDA and hope to publish Phase III data later this year. BV METROGEL, which we entered into a licensing agreement
`with Actavis earlier this year, now has a PDUFA date of May 24, 2014. Our dermatology R&D group is also working on several
`line extensions for CeraVe. And we would expect the CeraVe family of products to surpass $100 million in sales by next year.
`We have successfully launched CeraVe in Canada and plan to launch in Mexico, Brazil and Australia later this year. Finally, we
`have a robust pipeline of branded generics and OTC products across our emerging markets, which we expect to launch the
`remainder of this year and next.
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`To wrap up our discussion of the quarter, we have provided this chart, so you can track and compare our recent quarterly
`performance. I will not go over each line item, but note that our margins continue to be within expectations with gross margins of
`77%, SG&A ratio of 22% and operating margins of 52%. There are 2 areas on our P&L that I did want to provide some overview.
`First, we recognized a noncash unrealized foreign exchange loss of $8.3 million on an intercompany loan this quarter that we
`excluded from our cash EPS calculation as we agreed to do at our last investor meeting. This related to the structure used by the
`iNova acquisition. Second, in the spring of 2012, the board addressed historical issues related to RSUs that have been
`previously issued to directors but would not be deliverable until after the director has left the board. Not wanting to encourage
`directors to leave in order to realize compensation, the board approved an acceleration of certain RSUs, which the company
`settled a portion of these awards in cash. And the resulting net economic impact was the same as the share repurchased by the
`company. This resulted in a onetime charge of $15 million in compensation expense.
`
`With this, I would like to turn the call over to Howard.
`
`Howard Bradley Schiller
`
`Thank you, Mike. Now turning to our acquisition of Bausch + Lomb. It's been a very busy time since we announced the deal back
`in May. During this time, we have learned more about the business and the people who've made it successful. I am pleased to
`note that Bausch + Lomb has very similar culture to Valeant, which will be an important factor as 2 companies come together.
`B+L is performancebased, much like Valeant, and they're teamoriented with a strong willingness to wear multiple hats and
`accept change. We are very excited that so many of the Bausch + Lomb senior management will be joining Valeant. And I look
`forward to working with all of them.
`
`Yesterday, Mike and I met with Fred Hassan, and we are pleased that he will be joining our board and actively advising us on
`the integration and ongoing operations of B+L. Our belief in the strategic rationale for the acquisition has only been reinforced
`through this process as well. Eye health is an attractive specialty both in the U.S. and globally. This acquisition expands our
`reach, not only in existing markets but now opens up new opportunities in territories, such as China, Turkey and the Middle East.
`And the fact that Western Europe and Japan are largely OTC contact lens and lens solution businesses and are profitable and
`growing, make our entry into those markets very attractive.
`
`Finally, we've also been able to refine and sharpen our deal model and feel very confident that we can significantly exceed our
`$800 million synergy target. In addition, recently launched products, such as Lotemax Gel, Prolensa, the new IOLs and the
`Biotrue daily contact lens, have provided us with revenue upside. And we expect several of the pipeline products to provide us
`with new revenue opportunities in the future as we do not build pipeline revenues into any deal model. Furthermore, B+L was
`recently able to extend a patent for Besivance from 2021 to 2031, which was not included in our deal model.
`
`As recently stated in the memo to both Bausch + Lomb and Valeant employees, we have already identified synergies in excess
`of $800 million. We will be reducing our combined headcount between 10% to 15%, which is a lower percentage than in other
`recent large pharma mergers. We will achieve these synergies with no impact in the North American field forces and less than
`5% of the total synergies will be coming from sales forces globally. We expect to achieve at least $500 million in run rate
`synergies by the end of 2013 with the remainder to be achieved in 2014. Finally, we expect the cost to achieve these synergies
`will be significantly less than 1x full synergy target. And as always, we will update you on our progress.
`
`The next slide gives you the percentage of our $800 millionplus synergy target by business or function. As you can see, the bulk
`of the savings are coming from cutting G&A expenses, combining the 3 B+L business units into 1 eye health business unit and
`eliminating the B+L regional infrastructure and merging the businesses into our decentralized structure, reducing marketing
`spend and rationalizing spend on R&D projects. We continue to be extremely confident in our ability to significantly exceed our
`$800 million target. And we will update you on our progress.
`
`With the addition of B+L, we are extremely excited about the business mix and the opportunities it provides for both organic and
`inorganic growth. Now that Bausch + Lomb is closed, the U.S. represents about 50% of our sales with 2 leading specialty
`platforms: dermatology and aesthetics and eye health. We also have a very strong and growing Emerging Markets position,
`which represents about 25% of revenue. We have entered Western Europe and Japan with OTC contact lens and lens solution
`businesses. As I mentioned earlier, they are largely cash pay, profitable and growing. By type of business, branded Rx is still our
`largest category. But devices, which includes contact lenses, the B+L surgical business and aesthetics is now 20% of our
`business.
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`We're also diversifying from a product perspective with no 1 product representing more than 3% of total sales. The percentage of
`revenue from our top 10 products is around 21% and around 31% of revenue is derived from the top 20 products. This analysis
`demonstrate our diversification and has a unique position within our industry. Also given the pressures from governments
`around the world, we like the fact that 75% of our sales are either cash pay or private insurance.
`
`In addition to the benefits of diversification, we have a very small percentage of our sales exposed to patent laws. As you can
`see on this chart, no more than 3% of revenue is at risk for generic competition in any 1 year. And in the case of Bromday and
`Lotemax suspension, new products have already been launched to sustain these franchises. We would expect to be able to
`implement life cycle management programs to extend the lives of other franchises as well. As you are aware, focusing on small,
`durable products has and continues to be a big part of our strategy.
`
`We raised a total of $9.6 billion to finance the B+L transaction and retain some dry powder for tuckin acquisitions. In June, we
`raised $2.3 billion in equity or added 27 million shares. Going forward, our diluted share count will be approximately 340 million
`shares. In addition, we raised over $7 billion of debt and our total interest expense will now be approximately $245 million per
`quarter. We continue to have an objective to have our debttoadjusted EBITDA ratio below 4x and expect to get there in the
`second half of 2014.
`
`Before we get to our updated guidance for 2013, I want to remind everyone of our May guidance and our yeartodate
`performance. In May, we guided to $5.55 to $5.85 cash EPS for 2013. Yeartodate, we have delivered $2.64 cash EPS, which
`would imply, based on our May guidance, a $2.91 to $3.21 cash EPS for the second half of the year. With the B+L transaction
`now closed, we're updating our financial guidance for 2013, along with the quarterly breakdown for the second half of 2013 to
`provide greater clarity. Including this quarterly guidance is not a practice we plan to continue, but with the integration of B+L, we
`felt this was appropriate at this time.
`
`We now expect cash EPS in the range of $6 to $6.20 for 2013. This guidance includes a negative $0.11 per share for the pre
`closing cost of the B+L acquisition financing. That's both the interest expense and the impact of the additional shares pre
`closing. Of this $0.11, $0.01 was recognized in Q2 and $0.10 will negatively impact our results in Q3. In addition, FX movements,
`which cost us $0.01 in the second quarter, will cost us an additional $0.05 per share in the second half of 2013. As you can see,
`we expect $1.33 to $1.43 cash EPS in Q3 and $2.03 to $2.13 cash EPS in Q4. We estimate the combined organization will
`deliver revenues between $5.8 billion to $6.2 billion in 2013. We also plan to update guidance on adjusted cash flow from
`operations at the appropriate time, but we also expect them to continue to be quite strong.
`
`In closing, we are very proud of our quarterly results and our yeartodate performance. We are very excited about our future and
`believe that with a continued focus on durable assets and growing markets, we're laying a solid foundation to continue our
`performance into the future. With that, we'll now open up the call for questions.
`
`QuestionandAnswer Session
`
`Operator
`
`[Operator Instructions] Your first question comes from the line of Marc Goodman with UBS.
`
`Marc Goodman UBS Investment Bank, Research Division
`
`First thing is in the past, you've talked about the accretion from Bausch + Lomb of 40%. As we think about actually, I was just
`curious. Given the change in interest rates and given the fact that you've got your equity deal done now and everything, can you
`talk about how you think about the accretion? Second thing is on Bausch, that was a pretty good detail of where the costs are
`going to come from. I was just curious. What's the extra costcutting that you found relative to your expectations? I heard a lot of
`comments about extra revenues that you found. I was curious. Where's the extra costcutting to get to the higher numbers
`quicker that you found? And then third, if you could just talk about Latin America specifically a little more. This has been an area
`that other companies have talked about as an area of weakness relative to expectations, and yet you continue to do really well
`there. So I was curious. How do you continue to do well? Just what's happening there and how to think about the growth there
`and how sustainable it is.
`
`J. Michael Pearson
`
`Okay. Marc, why don't we have Howard talk about the accretion, and I'll talk about the additional cost opportunities in Latin
`America?
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`Howard Bradley Schiller
`
`Sure. Marc, as you recall when we announced the B+L deal, when we talked about the 40% accretion, it was we talked about
`how the deal closed on January 1, 2013, and how we've gotten all the synergies. That's what the accretion would be. As you
`mentioned, the interest rates we ended up paying were slightly higher than what we anticipated. We also issued a few more
`shares than we had thought, which would impact that a bit. Now with that being said, we also would expect the synergies to
`exceed our initial target. I think we feel very good about the progress we're making. And that analysis we did based on 2013
`based on the new synergies is still roughly whole. But obviously, when we come out with our 2014 guidance, we'll see it be a
`much bigger impact of the synergy capture because we'll both, of course, capture much higher percentage of the synergies in
`2014 than we will in 2013. But in 2013, the guidance represents the beginning of that capture. But again 2014, we'll see a much
`bigger impact from the synergies.
`
`J. Michael Pearson
`
`Yes, Marc. In terms of where we're finding some additional cost opportunities. And as you know, it's a pretty detailed exercise
`going sort of by region, by function, going through all the details. I think we've found quite a bit in purchasing, probably more in
`purchasing than we expected to find when you compare rates that both companies are paying for things, like car rentals and IMS
`data and bottles and things like that, that we think we can get some nonpersonnel savings there, quite a bit higher than what we
`had thought. I think the area of the G&A, it was actually a pretty expensive, heavy model that they had in terms of both the 3
`divisions, the surgical, the contact lens and the pharma, and then the regional structures. So there's actually more G&A savings
`than we had expected to find. And we've also been able to leverage a lot of the commercial support functions that we had in our
`company with ones that they had. So for example, we'll now have a commercial support organization that will cover both the
`dermatology group, as well as the eye health group, which has led to more savings than we expected. But it's no one thing. And
`as we continue to look, the teams are doing a great job. They keep coming up with ideas and we continue to find incremental
`savings. And we're already well north of the $800 million. In terms of Latin America, our businesses I can't speak to issues
`other companies are having. But the market has slowed a little bit, both Brazil and Mexico. Brazil was growing at 15% plus, and
`it's down to probably about 10% or maybe even high singledigits in terms of the market. And Mexico was growing sort of high
`singledigits last year. It's down to probably about 3% this year. But we continue to outperform the markets. I think it speaks
`maybe to the types of products we have. The products we have tend to be, as you know, branded generics and the lowercost
`products. We don't have and I think the biggest issues in Latin America are the endofpatent life products. The line of products
`are coming offpatent, which obviously has the same dynamic as you see in the United States. And probably the other thing is
`we manage very carefully how much product we have in the distribution channels. And anything over 90 days, we basically write
`off. So we have very limited products compared to, I think, most companies in terms of in the channel. And we manage that
`very, very carefully. And we've seen that's been helpful also in Europe, for example, where we have many, many companies that
`have more than 6 months, almost up to 1 year of products in the channel, and we try to keep it around 2 months.
`
`Operator
`
`Your next question comes from the line of Lennox Gibbs with TD Securities.
`
`Lennox Gibbs TD Securities Equity Research
`
`A couple of questions. First off, on the decision to move Medicis to New Jersey. I think your original position was that Medicis
`would have remained in Scottsdale. Can you step us through the change in the thought process around the Medicis operation?
`
`J. Michael Pearson
`
`Yes. I think there were 2 things that drove the decision. One was the acquisition of B+L, where we had again I was just
`speaking to the commercial infrastructure. You need to support pharmaceutical business as a device business. So this business,
`things like regulatory support, supply chain support, the commercial operations in terms of providing samples out to the field,
`processing expense accounts, all those types of things. Before we had B+L, dermatology was really our largest business in the
`United States and most of that was out there. But with B+L, they had the same structure basically in New Jersey, where that was
`the home of their pharmaceutical business. So it didn't make sense to have 2 structures performing the same function. So we
`had to make a choice. We also have as seen over the 6 months or so that we've owned Medicis, the ability to attract and retain
`and recruit people in Arizona with pharmaceutical experience is quite limited. And therefore, it becomes quite expensive. So
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`when people left, we were paying a premium to have to attract talent. So New Jersey seemed to be the much more natural place
`to have this commercial infrastructure for the long term. And so again, that has led to more synergies and, quite frankly, probably
`a higherperforming group since it's a little bit larger and more professional.
`
`Lennox Gibbs TD Securities Equity Research
`
`Okay, good. And then secondly with respect to your recent comments around the aspiration to become one of the world's largest
`health care companies. It seems that you might need to adopt more of a mainstream strategy, maybe larger therapeutic
`categories in order to achieve that objective. Maybe you can tell me if that's a fair assessment. But if it is, what are some of the
`new segments that you foresee targeting in order to drive that kind of expansion?
`
`J. Michael Pearson
`
`Yes. Lennox, I don't actually, I think we would plan to have our same model. We think we can be successful by not doing what
`large pharma companies are doing. And that's been our strategy, that will continue to be our strategy. And so we're not looking
`to get into the traditional we're not going to go therapeutic areas are largely driven by R&D in terms of why people organize
`that way. I mean, we don't plan to spend increase our R&D spend with the percent of sales to what other companies are doing.
`And we'll continue to focus on both specialty segments and attractive geographic markets. So I think our strategy will remain the
`same. And we did put a big aspiration out there. But that's our approach, it's motivational to our people. And it's a plan we hope
`to achieve.
`
`Lennox Gibbs TD Securities Equity Research
`
`But what additional specialty categories do you think might be attractive in order to get to that objective?
`
`J. Michael Pearson
`
`I don't think we want to discuss specifics on the call. But I think it will be similar from a characteristic standpoint to what Howard
`was outlining earlier when he talked about Bausch + Lomb, which is sort of cash pay, smaller products, durable products. I think
`that we like the device area as well. So we would continue to grow that area. But in terms of specific categories, I don’t think we
`want to go into them on this call.
`
`Operator
`
`Your next question comes from the line of Chris Schott with JPMorgan.
`
`Christopher T. Schott JP Morgan Chase & Co, Research Division
`
`A couple of questions. First, you talked a bit about it in the presentation. But can you elaborate a little bit more on the Western
`European operations for Bausch? This is an area where you historically don't have exposure. Bausch, obviously, a very different
`business, more cash pay, et cetera. But just interested in your views on that part of the franchise. The second question on the
`initial call on Bausch, I think you highlighted a 5% growth rate for the ophthalmology market on a global basis. I guess, do you
`see the assets you're acquiring here as having growth that's in line with that target, above or below that target? Just trying to get
`a sense of how you're viewing the opportunities over the next few years. And then the final question I had is I just was
`wondering, as we think about the cost structure here, do you see anything unique about Bausch's cost structure that's allowing
`for this high synergy level? Or should we think about this type of cost reduction as something that could be applied to, I guess,
`other more traditionally run global pharma businesses over time?
`
`Howard Bradley Schiller
`
`Okay. I'll start with the last question about the Bausch cost structure. As Mike mentioned earlier that when we approach this, this
`is very much bottomsup. And every company is structured a little bit differently. On paper,