SEC Filing | Mylan N.V.

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e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended September 30, 2010
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number 1-9114

MYLAN INC.

(Exact name of registrant as specified in its charter)


Pennsylvania (State or other jurisdiction of incorporation or organization)		25-1211621 (I.R.S. Employer Identification No.)

1500 Corporate Drive, Canonsburg, Pennsylvania 15317

(Address of principal executive offices)

(724) 514-1800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class of		Outstanding at
Common Stock		October 22, 2010

$0.50 par value		309,730,799

MYLAN INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q
For the Quarterly Period Ended
September 30, 2010


			Page

PART I — FINANCIAL INFORMATION
	ITEM 1.	Condensed Consolidated Financial Statements (unaudited)
		Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2010 and 2009		3
		Condensed Consolidated Balance Sheets — September 30, 2010 and December 31, 2009		4
		Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2010 and 2009		5
		Notes to Condensed Consolidated Financial Statements		6
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		43
	ITEM 4.	Controls and Procedures		43

PART II — OTHER INFORMATION
	ITEM 1.	Legal Proceedings		44
	ITEM 1A.	Risk Factors		47
	ITEM 5.	Other Information		67
	ITEM 6.	Exhibits		67
SIGNATURES				69
EX-10.1
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

MYLAN INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations


	Period Ended September 30,
	Three Months						Nine Months
	2010			2009			2010			2009
	(Unaudited; in thousands, except per share amounts)

Revenues:
Net revenues	$	1,344,999		$	1,255,708		$	3,979,648		$	3,679,868
Other revenues		10,114			8,366			36,375			61,100

Total revenues		1,355,113			1,264,074			4,016,023			3,740,968
Cost of sales		775,056			759,094			2,377,818			2,182,488

Gross profit		580,057			504,980			1,638,205			1,558,480

Operating expenses:
Research and development		71,992			69,812			200,076			202,665
Selling, general and administrative		272,285			259,609			796,420			780,953
Litigation settlements, net		1,462			114,281			14,299			111,530

Total operating expenses		345,739			443,702			1,010,795			1,095,148

Earnings from operations		234,318			61,278			627,410			463,332
Interest expense		87,536			77,034			239,985			240,209
Other (expense) income, net		(15,269	)		243			(29,437	)		29,741

Earnings (loss) before income taxes and noncontrolling interest		131,513			(15,513	)		357,988			252,864
Income tax (benefit) provision		(12,026	)		(11,092	)		33,245			52,539

Net earnings (loss)		143,539			(4,421	)		324,743			200,325
Net (earnings) loss attributable to the noncontrolling interest		(356	)		(841	)		525			(6,658	)

Net earnings (loss) attributable to Mylan Inc. before preferred dividends		143,183			(5,262	)		325,268			193,667
Preferred dividends		34,759			34,759			104,276			104,276

Net earnings (loss) attributable to Mylan Inc. common shareholders	$	108,424		$	(40,021	)	$	220,992		$	89,391

Earnings (loss) per common share attributable to Mylan Inc. common shareholders:
Basic	$	0.35		$	(0.13	)	$	0.72		$	0.29

Diluted	$	0.33		$	(0.13	)	$	0.71		$	0.29

Weighted average common shares outstanding:
Basic		309,446			305,285			308,470			304,951

Diluted		437,921			305,285			313,014			306,086

See Notes to Condensed Consolidated Financial Statements

MYLAN INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	September 30, 2010		December 31, 2009
	(Unaudited; in thousands,
	except share and per share amounts)

ASSETS
Current assets:
Cash and cash equivalents	$	610,921	$	380,516
Restricted cash		23,813		47,965
Marketable securities		30,108		27,559
Accounts receivable, net		1,251,862		1,234,634
Inventories		1,221,765		1,114,219
Deferred income tax benefit		247,917		248,917
Prepaid expenses and other current assets		76,899		231,576

Total current assets		3,463,285		3,285,386
Property, plant and equipment, net		1,150,750		1,122,648
Intangible assets, net		2,562,387		2,384,848
Goodwill		3,568,519		3,331,247
Deferred income tax benefit		44,204		36,610
Other assets		617,896		640,995

Total assets	$	11,407,041	$	10,801,734


LIABILITIES AND EQUITY
Liabilities
Current liabilities:
Trade accounts payable	$	551,329	$	518,252
Short-term borrowings		150,795		184,352
Income taxes payable		56,863		69,122
Current portion of long-term debt and other long-term obligations		7,741		9,522
Deferred income tax liability		1,335		1,986
Other current liabilities		954,278		934,913

Total current liabilities		1,722,341		1,718,147
Long-term debt		5,212,229		4,984,987
Other long-term obligations		460,123		485,905
Deferred income tax liability		469,408		467,497

Total liabilities		7,864,101		7,656,536

Equity
Mylan Inc. shareholders’ equity
Preferred stock — par value $0.50 per share
Shares authorized: 5,000,000
Shares issued: 2,139,000		1,070		1,070
Common stock — par value $0.50 per share
Shares authorized: 1,500,000,000
Shares issued: 399,344,974 and 396,683,892 as of September 30, 2010 and December 31, 2009		199,672		198,342
Additional paid-in capital		3,890,333		3,834,674
Retained earnings		881,123		660,130
Accumulated other comprehensive earnings		124,268		11,807

		5,096,466		4,706,023
Noncontrolling interest		12,812		14,052
Less: treasury stock — at cost
Shares: 89,718,669 and 90,199,152 as of September 30, 2010 and December 31, 2009		1,566,338		1,574,877

Total equity		3,542,940		3,145,198

Total liabilities and equity	$	11,407,041	$	10,801,734

See Notes to Condensed Consolidated Financial Statements

MYLAN INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows


	Nine Months Ended September 30,
	2010			2009
	(Unaudited; in thousands)

Cash flows from operating activities:
Net earnings	$	324,743		$	200,325
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		309,872			296,949
Stock-based compensation expense		24,156			23,591
Change in estimated sales allowances		6,096			62,288
Deferred income tax benefit		(78,450	)		(82,036	)
Other non-cash items		104,486			51,284
Litigation settlements, net		14,299			111,530
Changes in operating assets and liabilities:
Accounts receivable		64,721			48,390
Inventories		(69,340	)		11,188
Trade accounts payable		8,365			(57,854	)
Income taxes		80,883			(59,038	)
Deferred revenue		20,602			(24,029	)
Other operating assets and liabilities, net		(73,485	)		(36,038	)

Net cash provided by operating activities		736,948			546,550

Cash flows from investing activities:
Capital expenditures		(96,270	)		(83,135	)
Change in restricted cash		24,856			(22,861	)
Cash paid for acquisitions, net		(556,112	)		(211,209	)
Proceeds from sale of property, plant and equipment		4,947			—
Proceeds from sale of equity-method investee		—			23,333
Purchase of marketable securities		(7,835	)		(4,278	)
Proceeds from sale of marketable securities		4,739			14,970
Other items, net		4,975			237

Net cash used in investing activities		(620,700	)		(282,943	)

Cash flows from financing activities:
Cash dividends paid		(104,276	)		(104,276	)
Payment of financing fees		(23,704	)		—
Change in short-term borrowings, net		(45,036	)		(260	)
Proceeds from issuance of long-term debt		1,569,300			6,236
Payment of long-term debt		(1,305,224	)		(153,315	)
Proceeds from exercise of stock options		37,215			8,803

Net cash provided by (used in) financing activities		128,275			(242,812	)

Effect on cash of changes in exchange rates		(14,118	)		6,469

Net increase in cash and cash equivalents		230,405			27,264
Cash and cash equivalents — beginning of period		380,516			557,147

Cash and cash equivalents — end of period	$	610,921		$	584,411

See Notes to Condensed Consolidated Financial Statements

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)


1.	General

The accompanying unaudited Condensed Consolidated Financial Statements (“interim financial statements”) of Mylan Inc. and subsidiaries (“Mylan” or the “Company”) were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q; therefore, as permitted under these rules, certain footnotes and other financial information included in audited financial statements were condensed or omitted. The interim financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented.

These interim financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

The interim results of operations for the three and nine months ended September 30, 2010 and the interim cash flows for the nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period. The Company computed its provision for income taxes in the first three quarters of the year using an estimated effective tax rate for the full year with consideration to certain discrete tax items which occurred within the interim periods. In the three months ended September 30, 2010, the Company realized a tax benefit on positive earnings as a result of the release of several tax reserves, due to favorable tax rulings received from certain taxing authorities, as well as the expiration of certain statutes of limitations during the three-month period. The estimated annual effective tax rate for 2010 includes an estimate of the full-year effect of foreign tax credits that the Company anticipates it will claim against its 2010 U.S. tax liabilities. The Company did not claim foreign tax credits against its 2009 U.S. tax liabilities. Certain reclassifications of prior year amounts have been made to conform to the current year presentation.


2.	Revenue Recognition and Accounts Receivable

Mylan recognizes revenue for product sales when title and risk of loss pass to its customers and when provisions for estimates, including discounts, sales allowances, price adjustments, returns, chargebacks and other promotional programs, are reasonably determinable. Accounts receivable are presented net of allowances relating to these provisions. No revisions were made to the methodology used in determining these provisions during the nine months ended September 30, 2010 except as discussed below. Such allowances were $586.2 million and $607.9 million at September 30, 2010 and December 31, 2009. Other current liabilities include $266.0 million and $238.2 million at September 30, 2010 and December 31, 2009, for certain sales allowances and other adjustments that are paid to indirect customers.

During the current quarter, Mylan launched minocycline hydrochloride extended release (“minocycline ER”) tablets, the generic version of Medicis Pharmaceuticals Corporation’s Solodyn^® ER. After receiving final approval from the U.S. Food and Drug Administration on July 20, 2010, Mylan commenced immediate shipment of the product. Mylan also reached settlement and license agreements with Medicis Pharmaceuticals Corporation (“Medicis”) resolving patent litigation relating to minocycline ER, and the Company has ceased additional distribution. Pursuant to the terms of the agreements, Medicis will release Mylan from any liability related to the prior sales of the product, and Mylan will have the right to market minocycline ER in the U.S. beginning in November 2011, or earlier under certain circumstances.

As a result of significant uncertainties surrounding the pricing and market conditions with respect to this product, the Company is not able to reasonably estimate the amount of potential price adjustments, including product returns. Therefore, revenues on shipments of this product are currently being deferred until the resolution of such uncertainties. At the present time, such uncertainties are resolved upon our customers’ sale of this product. As a result, the Company is recognizing revenue only upon our customers’ sale of this product.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


3.	Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued revised accounting guidance for multiple-deliverable revenue arrangements. The amended guidance requires that consideration received be allocated at the inception of the arrangement to all deliverables using the relative selling price method and provides for expanded disclosures related to such arrangements. It is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

In April 2010, the FASB issued revised accounting guidance for the milestone method of revenue recognition. The amended guidance is effective for fiscal years beginning on or after June 15, 2010. It provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. The Company is currently evaluating the impact of adoption on its consolidated financial statements.


4.	Acquisitions

Termination of Joint Ventures

During the nine months ended September 30, 2009, Matrix and Aspen Pharmacare Holdings Limited (“Aspen”) terminated two joint ventures in which each held a 50% share; Astrix Laboratories Limited (“Astrix”) and Fine Chemicals Corporation (“FCC”). Under the agreed upon terms, Matrix sold its 50% interest in FCC to Aspen for $23.3 million. At the same time, a wholly-owned subsidiary of Mylan purchased from Aspen its 50% interest in Astrix for $38.9 million. These transactions resulted in a net gain of approximately $10.4 million, which is included in other (expense) income, net, in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2009. As of the date of purchase, June 1, 2009, the results of Astrix were consolidated with those of Mylan.

The Company accounted for the acquisition of the remaining 50% of Astrix using the purchase method of accounting. Under the purchase method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective fair values.

Biologics Agreement

On June 29, 2009, Mylan announced that it has executed a definitive agreement with Biocon Limited (“Biocon”), a publicly traded company on the Indian stock exchanges, for an exclusive collaboration on the development, manufacturing, supply and commercialization of multiple, high value generic biologic compounds for the global marketplace.

As part of this collaboration, Mylan and Biocon will share development, capital and certain other costs to bring products to market. Mylan will have exclusive commercialization rights in the U.S., Canada, Japan, Australia, New Zealand and in the European Union and European Free Trade Association countries through a profit sharing arrangement with Biocon. Mylan will have co-exclusive commercialization rights with Biocon in all other markets around the world. In conjunction with executing this agreement, Mylan recorded an $18.0 million research and development charge in the nine months ended September 30, 2009 related to its up-front, non-refundable obligation pursuant to the agreement.

Bioniche Pharma

On September 7, 2010, the Company completed the acquisition of 100% of the outstanding equity in Bioniche Pharma Holdings Limited (“Bioniche Pharma”), a privately held, global injectable pharmaceutical company. The Company financed the transaction using a combination of cash on hand and long-term borrowings (see Note 10). In accordance with the FASB accounting guidance regarding business combinations, the Company used the purchase

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

method of accounting to account for this transaction. Under the purchase method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at the date of acquisition at the estimate of their respective fair values.

Bioniche Pharma manufactures and sells a diverse portfolio of products across several therapeutic areas for the hospital setting, including analgesics/anesthetics, orthopedics, oncology, and urology, with most of the company’s sales made to customers in the U.S. The operating results of Bioniche Pharma from September 7, 2010 are included in the Condensed Consolidated Financial Statements as part of Mylan’s Generics Segment.

The purchase price of $543.7 million has been allocated to the assets acquired and liabilities assumed for the former Bioniche Pharma business as of the acquisition date as follows:


(In thousands)

Current assets (excluding inventories)	$	41,680
Inventories		28,500
Property, plant and equiptment, net		16,211
Identified intangible assets		186,000
In-process research and development		143,000
Goodwill		207,390

Total assets acquired		622,781
Current liabilities		(37,389	)
Deferred tax liabilities		(36,910	)
Other non-current liabilities		(4,746	)

Net assets acquired	$	543,736

The allocation of the purchase price is not yet final, primarily related to certain income tax-related accounts. The amount allocated to acquired in-process research and development represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not reached technological feasibility and had no alternative future use. The fair value of the acquired in-process technology and research projects was based on the excess earnings method, which utilizes forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges, on a project-by-project basis, and will be tested for impairment in accordance with FASB accounting guidance.

The identified intangible assets of $186.0 million are comprised of product rights and licenses that have a weighted average useful life of approximately nine years. The goodwill of $207.4 million arising from the acquisition consists largely of the value of the employee workforce and the value of products to be developed in the future. All of the goodwill was assigned to Mylan’s Generics Segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

Acquisition costs of $10.9 million and $12.5 million were expensed in the three and nine months ended September 30, 2010.

Pro Forma financial results

The operating results of Bioniche Pharma have been included in Mylan’s Condensed Consolidated Statement of Operations since September 7, 2010. The following table represents supplemental unaudited pro forma information as if the acquisition of Bioniche Pharma had occurred on January 1, 2010 for the three and nine months ended September 30, 2010 and on January 1, 2009 for the three and nine months ended September 30, 2009. This summary of the unaudited pro forma results of operations is not necessarily indicative of what Mylan’s results

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

of operations would have been had Bioniche Pharma been acquired at the beginning of each annual period presented and may not be indicative of future performance.

The unaudited pro forma financial information for the periods below includes the following charges directly attributable to the accounting for the acquisition: amortization of the step-up of inventory of $12.0 million for the nine months ended September 30, 2010 and 2009; amortization on intangibles of $5.2 million for the quarters ended September 30, 2009 and 2010; and amortization on intangibles of $15.6 million for the nine-month periods ended September 30, 2009 and 2010. In addition, the unaudited pro forma financial information for the periods presented includes the effects of certain additional borrowings used to purchase Bioniche Pharma as if they occurred on January 1, 2010 and 2009.


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010		2009
	(Unaudited; in thousands, except per share amounts)

Total revenues	$	1,386,730	$	1,286,589		$	4,127,302	$	3,800,616

Net earnings (loss) attributable to Mylan Inc. before preferred dividends		136,521		(7,685	)		305,021		178,521
Preferred dividends		34,759		34,759			104,276		104,276

Net earnings (loss) attributable to Mylan Inc. common shareholders	$	101,762	$	(42,444	)	$	200,745	$	74,245

Earnings (loss) per common share attributable to Mylan Inc. common shareholders
Basic	$	0.33	$	(0.14	)	$	0.65	$	0.24

Diluted	$	0.31	$	(0.14	)	$	0.64	$	0.24

Weighted average common shares outstanding:
Basic		309,446		305,285			308,470		304,951

Diluted		437,921		305,285			313,014		306,086

Matrix

On March 26, 2009, the Company announced plans to buy the remaining public interest in Matrix Laboratories Limited (“Matrix”) from its minority shareholders pursuant to a voluntary delisting offer. At the time, the Company owned approximately 71.2% of Matrix through a wholly-owned subsidiary and controlled more than 76% of its voting rights. During the calendar year ended December 31, 2009, the Company completed the purchase of an additional portion of the remaining interest from minority shareholders of Matrix, bringing both the Company’s total ownership and control to over 96%. During the nine months ended September 30, 2010, Mylan completed the purchase of an additional portion of the remaining interest from minority shareholders of Matrix, for cash of approximately $5.0 million, bringing both the Company’s total ownership and control to approximately 97%.

In addition, during the three months ended September 30, 2010, approximately $10.0 million was paid as part of the purchase consideration for a finished dosage form manufacturing facility in India.


5.	Stock-Based Incentive Plan

Mylan’s shareholders have approved the 2003 Long-Term Incentive Plan (as amended, the “2003 Plan”). Under the 2003 Plan, 37,500,000 shares of common stock are reserved for issuance to key employees, consultants, independent contractors and non-employee directors of Mylan through a variety of incentive awards, including: stock options, stock appreciation rights, restricted shares and units, performance awards, other stock-based awards

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

and short-term cash awards. Stock option awards are granted at the fair value of the shares underlying the options at the date of the grant, generally become exercisable over periods ranging from three to four years, and generally expire in ten years. In the 2003 Plan, no more than 8,000,000 shares may be issued as restricted shares, restricted units, performance shares and other stock-based awards.

Upon approval of the 2003 Plan, no further grants of stock options have been made under any other plan. However, there are stock options outstanding from frozen or expired plans and other plans assumed through acquisitions.

The following table summarizes stock option activity:


				Weighted
				Average
	Number of Shares			Exercise Price
	Under Option			per Share

Outstanding at December 31, 2009		26,268,678		$	15.22
Options granted		2,408,039			20.54
Options exercised		(2,667,422	)		14.00
Options forfeited		(908,190	)		14.91

Outstanding at September 30, 2010		25,101,105		$	15.87

Vested and expected to vest at September 30, 2010		24,019,159		$	15.89

Options exercisable at September 30, 2010		17,529,098		$	15.88

As of September 30, 2010, options outstanding, options vested and expected to vest, and options exercisable had average remaining contractual terms of 5.67 years, 5.55 years and 4.43 years, respectively. Also at September 30, 2010, options outstanding, options vested and expected to vest and options exercisable had aggregate intrinsic values of $83.5 million, $79.4 million and $56.5 million, respectively.

A summary of the status of the Company’s nonvested restricted stock and restricted stock unit awards as of September 30, 2010 and the changes during the nine-month period ended September 30, 2010, are presented below:


	Number of			Weighted Average
	Restricted			Grant-Date
	Stock Awards			Fair Value per Share

Nonvested at December 31, 2009		2,464,600		$	12.78
Granted		816,359			21.20
Released		(670,557	)		13.57
Forfeited		(133,180	)		12.46

Nonvested at September 30, 2010		2,477,222		$	15.37

As of September 30, 2010, the Company had $39.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to all of its stock-based awards, which will be recognized over the remaining weighted average period of 1.68 years. The total intrinsic value of stock-based awards exercised and restricted stock units converted during the nine months ended September 30, 2010 and September 30, 2009 was $32.6 million and $11.1 million.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


6.	Balance Sheet Components

Selected balance sheet components consist of the following:


	September 30, 2010		December 31, 2009
	(In thousands)

Inventories:
Raw materials	$	317,619	$	287,128
Work in process		235,647		198,280
Finished goods		668,499		628,811

	$	1,221,765	$	1,114,219

Property, plant and equipment:
Land and improvements	$	71,536	$	69,614
Buildings and improvements		651,176		625,303
Machinery and equipment		1,220,804		1,145,464
Construction in progress		135,514		118,410

		2,079,030		1,958,791
Less accumulated depreciation		928,280		836,143

	$	1,150,750	$	1,122,648

Other current liabilities:
Payroll and employee benefit plan accruals	$	176,799	$	188,743
Accrued sales allowances		265,979		238,161
Legal and professional accruals, including litigation reserves		232,896		218,813
Fair value of financial instruments		43,129		66,420
Other		235,475		222,776

	$	954,278	$	934,913


7.	Earnings (Loss) per Common Share attributable to Mylan Inc.

Basic earnings (loss) per common share is computed by dividing net earnings attributable to Mylan Inc. common shareholders by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per common share is computed by dividing net earnings attributable to Mylan Inc. common shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutable securities or instruments, if the impact is dilutive.

With respect to the Company’s convertible preferred stock, the Company considered the effect on diluted earnings per share of the preferred stock conversion feature using the if-converted method. The preferred stock is convertible into between 125,234,172 shares and 152,785,775 shares of the Company’s common stock, subject to anti-dilution adjustments, depending on the average stock price of the Company’s common stock over the 20 trading-day period ending on the third trading day prior to conversion, which will occur on November 15, 2010. For the three months ended September 30, 2010, the if-converted method is dilutive; therefore, the preferred stock conversion is included in the computation of diluted earnings per share. For the nine months ended September 30, 2010 and the three and nine months ended September 30, 2009, the if-converted method is anti-dilutive; therefore, the preferred stock conversion is excluded from the computation of diluted earnings per share.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Basic and diluted earnings (loss) per common share attributable to Mylan Inc. are calculated as follows:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2009			2010		2009
	(In thousands, except per share amounts)

Basic earnings (loss) attributable to Mylan Inc. common shareholders (numerator):
Net earnings (loss) attributable to Mylan Inc. before preferred dividends	$	143,183	$	(5,262	)	$	325,268	$	193,667
Less: Preferred dividends		34,759		34,759			104,276		104,276

Net earnings (loss) attributable to Mylan Inc. common shareholders	$	108,424	$	(40,021	)	$	220,992	$	89,391

Shares (denominator):
Weighted average shares outstanding		309,446		305,285			308,470		304,951

Basic earnings (loss) per common share attributable to Mylan Inc.	$	0.35	$	(0.13	)	$	0.72	$	0.29

Diluted earnings (loss) attributable to Mylan Inc. common shareholders (numerator):
Net earnings (loss) attributable to Mylan Inc. common shareholders	$	108,424	$	(40,021	)	$	220,992	$	89,391
Add: Preferred dividends		34,759		—			—		—

Earnings (loss) attributable to Mylan Inc. common shareholders and assumed conversions	$	143,183	$	(40,021	)	$	220,992	$	89,391

Shares (denominator):
Weighted average shares outstanding		309,446		305,285			308,470		304,951
Stock-based awards and warrants		3,241		—			4,544		1,135
Preferred stock conversion		125,234		—			—		—

Total dilutive shares outstanding		437,921		305,285			313,014		306,086

Diluted earnings (loss) per common share attributable to Mylan Inc.	$	0.33	$	(0.13	)	$	0.71	$	0.29

Additional stock options or restricted stock awards representing 7.5 million and 19.2 million shares were outstanding at September 30, 2010 and 2009 but were not included in the computation of diluted earnings per share, because the effect would be anti-dilutive.

During the nine months ended September 30, 2010, the Company paid dividends of $104.3 million on the preferred stock. On October 19, 2010, the Company announced that the last quarterly dividend of $16.25 per share had been declared (based on the annual dividend rate of 6.5% and a liquidation preference of $1,000 per share) and is payable on November 15, 2010, to the holders of preferred stock of record as of November 1, 2010. The preferred stock will also automatically convert into common stock on November 15, 2010.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


8.	Goodwill and Intangible Assets

A rollforward of goodwill from December 31, 2009 to September 30, 2010 is as follows:


	Generics Segment		Specialty Segment			Total
	(In thousands)

Goodwill	$	3,009,740	$	706,507		$	3,716,247
Accumulated impairment losses⁽¹⁾		—		(385,000	)		(385,000	)

Balance at December 31, 2009	$	3,009,740	$	321,507		$	3,331,247
Goodwill acquired during the year⁽²⁾		207,390		—			207,390
Foreign currency translation		29,882		—			29,882

Balance at September 30, 2010	$	3,247,012	$	321,507		$	3,568,519


⁽¹⁾		Represents the only impairment charge recognized by the Company under the currently effective accounting guidance.

⁽²⁾		Allocation of goodwill acquired through the acquisition of Bioniche Pharma (see Note 4).

Intangible assets consist of the following components:


	Weighted
	Average Life		Original		Accumulated		Net Book
	(Years)		Cost		Amortization		Value
	(Dollars in thousands)

September 30, 2010
Amortized intangible assets:
Patents and technologies		20	$	122,926	$	82,150	$	40,776
Product rights and licenses		10		3,251,430		964,040		2,287,390
Other⁽¹⁾		8		143,716		52,495		91,221

			$	3,518,072	$	1,098,685		2,419,387

In-process research and development								143,000

							$	2,562,387

December 31, 2009
Amortized intangible assets:
Patents and technologies		20	$	122,926	$	77,717	$	45,209
Product rights and licenses		10		2,913,475		672,999		2,240,476
Other⁽¹⁾		8		158,996		59,833		99,163

			$	3,195,397	$	810,549	$	2,384,848


⁽¹⁾		Other intangibles consist principally of customer lists and contracts.

Amortization expense, which is classified within cost of sales on the Company’s Condensed Consolidated Statements of Operations, for the nine months ended September 30, 2010 and 2009 was $209.9 million and $204.3 million, and is expected to be $76.1 million for the remainder of 2010, and $292.1 million, $285.4 million, $279.7 million and $272.1 million for the years ended December 31, 2011 through 2014, respectively.

In conjunction with the acquisition of Bioniche Pharma, we acquired $143.0 million of in-process research and development assets. Acquired in-process research and development assets are not currently being amortized. As

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

products in development are approved for sale, amounts will be allocated to product rights and licenses and will be amortized over the estimated useful life. Such in-process research and development will be subject to periodic impairment testing under FASB guidance.


9.	Financial Instruments and Risk Management

Financial Risks

The Company is exposed to certain financial risks relating to its ongoing business operations. The primary financial risks that are managed by using derivative instruments are foreign currency risk, interest rate risk and equity risk.

In order to manage foreign currency risk, Mylan enters into foreign exchange forward contracts to mitigate risk associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities. The foreign exchange forward contracts are measured at fair value and reported as current assets or current liabilities on the Condensed Consolidated Balance Sheets. Any gains or losses on the foreign exchange forward contracts are recognized in earnings in the period incurred in the Condensed Consolidated Statements of Operations.

During the nine months ended September 30, 2010, the Company entered into forecasted forward contracts to hedge foreign currency denominated sales from certain international subsidiaries. These contracts are designated as cash flow hedges to manage foreign currency risk and are measured at fair value and reported as current assets or current liabilities on the Condensed Consolidated Balance Sheets. Any changes in fair value are included in earnings or deferred through accumulated other comprehensive earnings (loss) (“AOCE”), depending on the nature and effectiveness of the offset.

As of September 30, 2010 and December 31, 2009, the Company had €679.2 million of borrowings under its senior credit agreement (the “Senior Credit Agreement”) that are designated as a hedge of its net investment in certain Euro-functional currency subsidiaries to manage foreign currency risk. The U.S. Dollar equivalent of such amount was $927.6 million at September 30, 2010 and $978.1 million at December 31, 2009. Borrowings designated as hedges of net investments are marked to market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation adjustment component of AOCE on the Condensed Consolidated Balance Sheet until the sale or substantial liquidation of the underlying net investments.

The Company enters into interest rate swaps in order to manage interest rate risk associated with the Company’s floating-rate debt. These interest rate swaps are designated as cash flow hedges. The Company’s interest rate swaps fix the interest rate on a portion of the Company’s variable-rate U.S. Tranche B Term Loans and Euro Tranche B Term Loans under the terms of its Senior Credit Agreement. Derivative contracts designated as hedges to manage interest rate risk are measured at fair value and reported as current assets or current liabilities on the Condensed Consolidated Balance Sheets. Any changes in fair value are included in earnings or deferred through AOCE, depending on the nature and effectiveness of the offset.

In conjunction with the notes offering in May 2010 and the associated prepayment of term debt (see Note 10), the Company terminated certain interest rate swaps that had previously fixed the interest rate on a portion of the Company’s variable-rate U.S. Tranche B Term Loans. As a result, during the nine months ended September 30, 2010, charges of approximately $7.4 million that had previously been classified in AOCE were recognized into other (expense) income, net. As of September 30, 2010 and December 31, 2009, the total notional amount of the Company’s floating-rate debt interest rate swaps was $1.27 billion and $2.29 billion.

Certain derivative contracts entered into by the Company are governed by Master Agreements, which contain credit-risk-related contingent features which would allow the counterparties to terminate the contracts early and request immediate payment should the Company trigger an event of default on other specified borrowings. The aggregate fair value of all such contracts that are in a liability position at September 30, 2010 is $39.6 million. The Company is not subject to any obligations to post collateral under derivative contracts.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The Company maintains significant credit exposure arising from the convertible note hedge on its Cash Convertible Notes. At September 30, 2010, the convertible note hedge had a total fair value of $391.1 million, which reflects the maximum loss that would be incurred should the parties fail to perform according to the terms of the contract. The counterparties are highly rated diversified financial institutions with both commercial and investment banking operations. The counterparties are required to post collateral against this obligation should they be downgraded below thresholds specified in the contract. Eligible collateral is comprised of a wide range of financial securities with a valuation discount percentage reflecting the associated risk.

The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant loss from failure of any counterparties to perform under any agreements.

Derivatives Designated as Hedging Instruments
Fair Values of Derivative Instruments

Asset Derivatives

September 30, 2010

December 31, 2009

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Foreign currency forward contracts

Prepaid expenses and other current assets

6,490

Prepaid expenses and other current assets

—

Total

6,490

—

Liability Derivatives

September 30, 2010

December 31, 2009

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Interest rate swaps

Other current liabilities

39,597

Other current liabilities

62,607

Foreign currency borrowings

Long-term debt

927,594

Long-term debt

978,059

Total

967,191

1,040,666

Derivatives Not Designated as Hedging Instruments
Fair Values of Derivative Instruments

Asset Derivatives

September 30, 2010

December 31, 2009

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Foreign currency forward contracts

Prepaid expenses and other current assets

3,690

Prepaid expenses and other current assets

8,793

Purchased cash convertible note hedge

Other assets

391,100

Other assets

410,600

Total

394,790

419,393

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Liability Derivatives

September 30, 2010

December 31, 2009

Balance Sheet

Location

Fair Value

Location

Fair Value

(In thousands)

Foreign currency forward contracts

Other current liabilities

3,532

Other current liabilities

5,694

Cash conversion feature of Cash Convertible Notes

Long-term debt

391,100

Long-term debt

410,600

Total

394,632

416,294

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Operations
Derivatives in Cash Flow Hedging Relationships


	Amount of Gain
	or (Loss) Recognized
	in AOCE (Net of Tax)
	on Derivative
	(Effective Portion)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2010		2009			2010		2009
(In thousands)

Foreign currency forward contracts	$	9,293	$	—		$	6,430	$	—
Interest rate swaps		7,440		(5,112	)		10,481		937

Total	$	16,733	$	(5,112	)	$	16,911	$	937


		Amount of Gain
	Location of Gain or	or (Loss) Reclassified
	(Loss) Reclassifed	from AOCE into Earnings
	from AOCE	(Effective Portion)
	into Earnings	Three Months Ended September 30,						Nine Months Ended September 30,
	(Effective Portion)	2010			2009			2010			2009
(In thousands)

Foreign currency forward contracts	Net revenues	$	(232	)	$	—		$	647		$	—
Interest rate swaps	Interest expense		(5,843	)		(14,047	)		(28,201	)		(34,417	)

Total		$	(6,075	)	$	(14,047	)	$	(27,554	)	$	(34,417	)


	Location of Loss	Amount of Loss
	Excluded from the	Excluded from the Assessment of Hedge Effectiveness
	Assessment of	Three Months Ended September 30,					Nine Months Ended September 30,
	Hedge Effectiveness	2010			2009		2010			2009
(In thousands)

Foreign currency forward contracts	Other (expense) income, net	$	(4,971	)	$	—	$	(3,721	)	$	—

Total		$	(4,971	)	$	—	$	(3,721	)	$	—

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
Derivatives in Net Investment Hedging Relationships


	Amount of Gain
	or (Loss) Recognized
	in AOCE (Net of Tax)
	on Derivative
	(Effective Portion)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010		2009
(In thousands)

Foreign currency borrowings	$	(58,079	)	$	(28,906	)	$	30,979	$	(31,356	)

Total	$	(58,079	)	$	(28,906	)	$	30,979	$	(31,356	)

There was no gain or loss recognized into earnings on derivatives with net investment hedging relationships during the three or nine months ended September 30, 2010 or 2009.

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
Derivatives Not Designated as Hedging Instruments


		Amount of Gain or (Loss)
	Location of Gain or	Recognized
	(Loss) Recognized in	in Earnings on Derivatives
	Earnings on	Three Months Ended September 30,						Nine Months Ended September 30,
	Derivatives	2010			2009			2010			2009
(In thousands)

Foreign currency forward contracts	Other (expense) income, net	$	(4,590	)	$	(15,461	)	$	(27,741	)	$	(18,003	)
Cash conversion feature of Cash Convertible Notes	Other (expense) income, net		(43,200	)		90,725			19,500			113,150
Purchased cash convertible note hedge	Other (expense) income, net		43,200			(90,725	)		(19,500	)		(113,150	)

Total		$	(4,590	)	$	(15,461	)	$	(27,741	)	$	(18,003	)

Fair Value Measurement

Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Financial assets and liabilities carried at fair value are classified in the tables below in one of the three categories described above:


	September 30, 2010
	Level 1		Level 2		Level 3		Total
			(In thousands)

Financial Assets:
Trading securities:
Equity securities — exchange traded funds	$	3,037	$	—	$	—	$	3,037

Total trading securities	$	3,037	$	—	$	—	$	3,037

Available-for-sale fixed income investments:
U.S. Treasuries	$	—	$	12,704	$	—	$	12,704
Corporate bonds		—		8,722		—		8,722
Agency mortgage-backed securities		—		2,087		—		2,087
Other		—		2,976		—		2,976

Total available-for-sale fixed income investments	$	—	$	26,489	$	—	$	26,489

Available-for-sale equity securities:
Biosciences industry	$	582	$	—	$	—	$	582

Total available-for-sale equity securities	$	582	$	—	$	—	$	582

Foreign exchange derivative assets	$	—		10,180	$	—	$	10,180
Purchased cash convertible note hedge		—		391,100		—		391,100

Total assets at fair value⁽¹⁾	$	3,619	$	427,769	$	—	$	431,388

Financial Liabilities:
Foreign exchange derivative liabilities	$	—	$	3,532	$	—	$	3,532
Interest rate swap derivative liabilities		—		39,597		—		39,597
Cash conversion feature of cash convertible notes		—		391,100		—		391,100

Total liabilities at fair value⁽¹⁾	$	—	$	434,229	$	—	$	434,229

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	December 31, 2009
	Level 1		Level 2		Level 3		Total
			(In thousands)

Financial Assets:
Available-for-sale fixed income investments	$	—	$	26,485	$	—	$	26,485
Available-for-sale equity securities		1,074		—		—		1,074
Foreign exchange derivative assets		—		8,793		—		8,793
Purchased cash convertible note hedge		—		410,600		—		410,600

Total assets at fair value⁽¹⁾	$	1,074	$	445,878	$	—	$	446,952

Financial Liabilities:
Foreign exchange derivative liabilities	$	—	$	5,694	$	—	$	5,694
Interest rate swap derivative liabilities		—		62,607		—		62,607
Cash conversion feature of cash convertible notes		—		410,600		—		410,600

Total liabilities at fair value⁽¹⁾	$	—	$	478,901	$	—	$	478,901


⁽¹⁾		The Company chose not to elect the fair value option for its financial assets and liabilities that had not been previously carried at fair value. Therefore, material financial assets and liabilities not carried at fair value, such as short-term and long-term debt obligations and trade accounts receivable and payable, are still reported at their carrying values.

For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including the LIBOR yield curve, foreign exchange forward prices, and bank price quotes. Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities:


	•	Trading securities — valued at the quoted market price from broker or dealer quotations or transparent pricing sources at the reporting date.

	•	Available-for-sale fixed income investments — valued at the quoted market price from broker or dealer quotations or transparent pricing sources at the reporting date.

	•	Available-for-sale equity securities — valued using quoted stock prices from the London Exchange at the reporting date and translated to U.S. Dollars at prevailing spot exchange rates.

	•	Interest rate swap derivative assets and liabilities — valued using the LIBOR/EURIBOR yield curves at the reporting date. Counterparties to these contracts are highly rated financial institutions, none of which experienced any significant downgrades during the nine months ended September 30, 2010, that would reduce the receivable amount owed, if any, to the Company.

	•	Foreign exchange derivative assets and liabilities — valued using quoted forward foreign exchange prices at the reporting date. Counterparties to these contracts are highly rated financial institutions, none of which experienced any significant downgrades during the nine months ended September 30, 2010 that would reduce the receivable amount owed, if any, to the Company.

	•	Cash conversion feature of cash convertible notes and purchased convertible note hedge — valued using quoted prices for the Company’s cash convertible notes, its implied volatility and the quoted yield on the Company’s other long-term debt at the reporting date. Counterparties to the purchased convertible note hedge are highly rated financial institutions, none of which experienced any significant downgrades during the nine months ended September 30, 2010, that would reduce the receivable amount owed, if any, to the Company.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Although the Company has not elected the fair value option for financial assets and liabilities, any future transacted financial asset or liability will be evaluated for the fair value election.


10.	Long Term Debt

On May 19, 2010, the Company issued $550.0 million aggregate principal amount of 7.625% Senior Notes due 2017 (the “2017 Senior Notes”) and $700.0 million aggregate principal amount of 7.875% Senior Notes due 2020 (the “2020 Senior Notes”) in a private offering exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”) to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act. During the quarter ended September 30, 2010, the Company privately placed $300.0 million aggregate principal amount of senior notes through a reopening of the 2020 Senior Notes. The notes were issued at a price of 105.5%, giving an effective yield to maturity of 7.087%. The 2017 Senior Notes and 2020 Senior Notes are the Company’s senior unsecured obligations and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries.

The 2017 Senior Notes bear interest at a rate of 7.625% per year, accruing from May 19, 2010. Interest on the 2017 Senior Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2011. The 2017 Senior Notes will mature on July 15, 2017, subject to earlier repurchase or redemption in accordance with the terms of the indenture. The 2020 Senior Notes bear interest at a rate of 7.875% per year, accruing from May 19, 2010. Interest on the 2020 Senior Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2011. The 2020 Senior Notes will mature on July 15, 2020, subject to earlier repurchase or redemption in accordance with the terms of the indenture.

The Company may redeem some or all of the 2017 Senior Notes at any time prior to July 15, 2014, and some or all of the 2020 Senior Notes at any time prior to July 15, 2015, in each case at a price equal to 100% of the principal amount redeemed plus accrued and unpaid interest, if any, to the redemption date and an applicable make-whole premium set forth in the indenture. On or after July 15, 2014 in the case of the 2017 Senior Notes, and on or after July 15, 2015 in the case of the 2020 Senior Notes, the Company may redeem some or all of the 2017 Senior Notes and 2020 Senior Notes of such series at redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to July 15, 2013, the Company may redeem up to 35% of the aggregate principal amount of either series of the 2017 Senior Notes and 2020 Senior Notes at a specified redemption price set forth in the indenture with the net cash proceeds of certain equity offerings. If the Company experiences certain change of control events, it must offer to repurchase the 2017 Senior Notes and 2020 Senior Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

The Company used approximately $1.00 billion of the net proceeds of the initial 2017 Senior Notes and 2020 Senior Notes offering to repay a portion of the U.S. Tranche B Term Loans due under the terms of its Senior Credit Agreement. Also, during the quarter ended September 30, 2010, the Company repaid approximately $300.0 million of debt under the Senior Credit Agreement, by repaying the remaining balance of the U.S. Tranche A Term Loans and a portion of the U.S. Tranche B Term Loans.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

A summary of long-term debt is as follows:


	September 30, 2010		December 31, 2009
	(In thousands)

U.S. Tranche A Term Loans(A)	$	—	$	156,250
Euro Tranche A Term Loans(A)		239,281		252,299
U.S. Tranche B Term Loans(A)		1,310,010		2,453,760
Euro Tranche B Term Loans(A)		688,313		725,760
Senior Convertible Notes(B)		558,550		538,693
Cash Convertible Notes(C)		841,906		847,136
2017 Senior Notes		550,000		—
2020 Senior Notes(D)		1,016,283		—
Other		12,670		17,437

		5,217,013		4,991,335
Less: Current portion		4,784		6,348

Total long-term debt	$	5,212,229	$	4,984,987


(A)		All 2010 and 2011 mandatory principal payments due under the Senior Credit Agreement were prepaid during 2009. During the nine months ended September 30, 2010, the Company also prepaid $156.3 million of the outstanding U.S. Tranche A Term Loans and $1.14 billion of the outstanding U.S. Tranche B Term Loans, using a portion of the net proceeds of the 2017 Senior Notes, the 2020 Senior Notes and cash on hand.

(B)		At September 30, 2010, the $558.6 million of debt is net of a $41.4 million discount. At December 31, 2009, the $538.7 million debt is net of a $61.3 million discount. Currently, the effective conversion rate for the Senior Convertible Notes is 42.156 shares of common stock per $1,000 principal amount of notes, representing a stock price of $23.72 per share, reflecting the Company’s suspension of its cash dividend.

(C)		At September 30, 2010, the $841.9 million consists of $450.8 million of debt ($575.0 million face amount, net of $124.2 million discount) and the bifurcated conversion feature with a fair value of $391.1 million recorded as a liability within long-term debt in the Condensed Consolidated Balance Sheet at September 30, 2010. Additionally, the Company has purchased call options, which are recorded as assets at their fair value of $391.1 million within other assets in the Condensed Consolidated Balance Sheet at September 30, 2010. At December 31, 2009, the $847.1 million consisted of $436.5 million of debt ($575.0 million face amount, net of $138.5 million discount) and the bifurcated conversion feature with a fair value of $410.6 million recorded as a liability within other long-term obligations in the Condensed Consolidated Balance Sheet. The purchased call options are assets recorded at their fair value of $410.6 million within other assets in the Condensed Consolidated Balance Sheet at December 31, 2009.

		As of September 30, 2010, because the closing price of our common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day in the September 30, 2010 period, was more than 130% of the applicable conversion reference price of $13.32 at September 30, 2010, the $575.0 million of Cash Convertible Notes was currently convertible. Although the Company’s experience is that convertible debentures are not normally converted by investors until close to their maturity date, it is possible that debentures could be converted prior to their maturity date if, for example, a holder perceives the market for the debentures to be weaker than the market for the common stock. Upon an investor’s election to convert, the Company is required to pay the full conversion value in cash. The amount payable per $1,000 notional bond would be calculated as the product of (1) the conversion reference rate (currently 75.0751) and (2) the average Daily Volume Weighted Average Price per share of common stock for a specified period following the conversion date. Any payment above the principal amount is matched by a convertible note hedge.

(D)		At September 30, 2010, the $1.02 billion of debt includes a $16.3 million premium.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Details of the interest rates in effect at September 30, 2010 and December 31, 2009, on the outstanding borrowings under the Term Loans are in the table below:


	September 30, 2010
	Outstanding		Basis	Rate
	(In thousands)

Euro Tranche A Term Loans	$	239,281	EURIBO + 2.75%		3.37%
U.S. Tranche B Term Loans
Swapped to Fixed Rate — December 2010⁽¹⁾⁽²⁾	$	500,000	Fixed		6.03%
Swapped to Fixed Rate — March 2012⁽¹⁾		500,000	Fixed		5.38%
Floating Rate		310,010	LIBOR + 3.25%		3.56%

Total U.S. Tranche B Term Loans	$	1,310,010
Euro Tranche B Term Loans
Swapped to Fixed Rate — March 2011⁽¹⁾	$	273,140	Fixed		5.38%
Floating Rate		415,173	EURIBO + 3.25%		3.87%

Total Euro Tranche B Term Loans	$	688,313


	December 31, 2009
	Outstanding		Basis	Rate
	(In thousands)

U.S. Tranche A Term Loans	$	156,250	LIBOR + 2.75%		3.00%
Euro Tranche A Term Loans	$	252,299	EURIBO + 2.75%		3.19%
U.S. Tranche B Term Loans
Swapped to Fixed Rate — December 2010⁽¹⁾⁽²⁾	$	500,000	Fixed		6.03%
Swapped to Fixed Rate — March 2010⁽¹⁾		500,000	Fixed		5.44%
Swapped to Fixed Rate — December 2010⁽¹⁾		1,000,000	Fixed		7.37%
Floating Rate		453,760	LIBOR + 3.25%		3.50%

Total U.S. Tranche B Term Loans	$	2,453,760
Euro Tranche B Term Loans
Swapped to Fixed Rate — March 2011⁽¹⁾	$	288,000	Fixed		5.38%
Floating Rate		437,760	EURIBO + 3.25%		3.83%

Total Euro Tranche B Term Loans	$	725,760


⁽¹⁾		This interest rate swap is designated as a cash flow hedge of expected future borrowings under the Senior Credit Agreement.

⁽²⁾		This interest rate swap has been extended to December 2012 at a rate of 6.60%, effective January 2011.

At September 30, 2010 and December 31, 2009, the fair value of the Senior Convertible Notes was approximately $624.6 million and $612.8 million. At September 30, 2010 and December 31, 2009, the fair value of the Cash Convertible Notes was approximately $908.6 million and $879.8 million.

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Mandatory minimum repayments remaining on the outstanding borrowings under the term loans and convertible notes at September 30, 2010, excluding the discounts, premium and conversion features, are as follows for each of the periods ending December 31:


	Euro		U.S.		Euro		Senior		Cash		2017		2020
	Tranche A		Tranche B		Tranche B		Convertible		Convertible		Senior		Senior
	Term Loans		Term Loans		Term Loans		Notes		Notes		Notes		Notes		Total
	(In thousands)

2010	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2011		—		—		—		—		—		—		—		—
2012		119,640		—		7,170		600,000		—		—		—		726,810
2013		119,641		—		7,170		—		—		—		—		126,811
2014		—		1,310,010		673,973		—		—		—		—		1,983,983
2015		—		—		—		—		575,000		—		—		575,000
Thereafter		—		—		—		—		—		550,000		1,000,000		1,550,000

Total	$	239,281	$	1,310,010	$	688,313	$	600,000	$	575,000	$	550,000	$	1,000,000	$	4,962,604


11.	Comprehensive Earnings

Comprehensive earnings consist of the following:


	Three Months Ended September 30,
	2010					2009
	(In thousands)

Net earnings (loss)			$	143,539				$	(4,421	)
Other comprehensive earnings, net of tax, as applicable:
Foreign currency translation adjustments				424,463					230,791
Change in unrecognized gains (losses) and prior service cost related to post-retirement plans				8					(974	)
Net unrecognized gain (loss) on derivatives				16,965					(5,112	)
Unrealized gains on available-for-sale securities
Net unrealized gains on available-for-sale securities	$	176				$	685
Less: Reclassification for gains included in net earnings		14		190			12		697

Total other comprehensive earnings, net of tax, as applicable:				441,626					225,402

Comprehensive earnings				585,165					220,981
Comprehensive earnings attributable to the noncontrolling interest				(356	)				(827	)

Comprehensive earnings attributable to Mylan Inc.			$	584,809				$	220,154

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Nine Months Ended September 30,
	2010				2009
	(In thousands)

Net earnings			$	324,743			$	200,325
Other comprehensive earnings, net of tax, as applicable:
Foreign currency translation adjustments				90,206				334,084
Change in unrecognized gains (losses) and prior service cost related to post-retirement plans				4,452				(754	)
Net unrecognized gain on derivatives				17,143				937
Unrealized gains on available-for-sale securities
Net unrealized gains on available-for-sale securities	$	489			$	1,062
Less: Reclassification for gains included in net earnings		171		660		173		1,235

Total other comprehensive earnings, net of tax, as applicable:				112,461				335,502

Comprehensive earnings				437,204				535,827
Comprehensive loss (earnings) attributable to the noncontrolling interest				525				(6,693	)

Comprehensive earnings attributable to Mylan Inc.			$	437,729			$	529,134

Accumulated other comprehensive earnings, as reflected on the Condensed Consolidated Balance Sheets, is comprised of the following:


	September 30, 2010			December 31, 2009
	(In thousands)

Net unrealized gain on available-for-sale securities, net of tax	$	1,535		$	875
Net unrecognized gains (losses) and prior service cost related
to post-retirement plans, net of tax		1,039			(3,413	)
Net unrecognized losses on derivatives, net of tax		(22,138	)		(39,281	)
Foreign currency translation adjustment		143,832			53,626

Accumulated other comprehensive earnings	$	124,268		$	11,807

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


12.	Shareholders’ Equity

A summary of the change in shareholders’ equity for the nine months ended September 30, 2010 and 2009 is as follows:


	Total Mylan Inc.			Noncontrolling
	Shareholders’ Equity			Interest			Total
	(In thousands)

December 31, 2009	$	3,131,146		$	14,052		$	3,145,198
Net earnings (loss)		325,268			(525	)		324,743
Other comprehensive earnings		112,461			—			112,461
Dividends paid on preferred stock		(104,276	)		—			(104,276	)
Stock option activity		37,215			—			37,215
Stock compensation expense		24,156			—			24,156
Purchase of subsidiary shares from noncontrolling interest		(4,376	)		(623	)		(4,999	)
Tax benefit of stock option plans		4,863			—			4,863
Other		3,671			(92	)		3,579

September 30, 2010	$	3,530,128		$	12,812		$	3,542,940


December 31, 2008	$	2,757,733		$	29,108		$	2,786,841
Net earnings		193,667			6,658			200,325
Other comprehensive income		335,467			35			335,502
Dividends paid on preferred stock		(104,276	)		—			(104,276	)
Stock option activity		8,803			—			8,803
Stock compensation expense		23,591			—			23,591
Impact on additional paid-in capital of equity transaction		(154,033	)		—			(154,033	)
Purchase of subsidiary shares from noncontrolling interest		—			(21,626	)		(21,626	)
Other		(2,117	)		(1,118	)		(3,235	)

September 30, 2009	$	3,058,835		$	13,057		$	3,071,892


13.	Segment Information

Mylan previously had three reportable segments, “Generics”, “Specialty” and “Matrix.” The Matrix Segment consisted of Matrix, which was previously a publicly traded company in India, in which Mylan held a 71.2% ownership stake. Following the acquisition of additional interests in Matrix and its related delisting from the Indian stock exchanges, Mylan has two reportable segments, “Generics” and “Specialty.” Mylan changed its segment disclosure to align with how the business is being managed after those changes. The former Matrix Segment is included within the Generics Segment. Information for earlier periods has been recast.

The Generics Segment primarily develops, manufactures, sells and distributes generic or branded generic pharmaceutical products in tablet, capsule, injectable or transdermal patch form, as well as active pharmaceutical ingredients (“API”). The Specialty Segment engages mainly in the manufacture and sale of branded specialty nebulized and injectable products.

The Company’s chief operating decision maker evaluates the performance of its reportable segments based on total revenues and segment profitability. For the Generics and Specialty Segments, segment profitability represents

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

segment gross profit less direct research and development expenses and direct selling, general and administrative expenses. Certain general and administrative and research and development expenses not allocated to the segments, as well as reserves for litigation settlements, impairment charges and other expenses not directly attributable to the segments, are reported in Corporate/Other. Additionally, amortization of intangible assets, and other purchase accounting related items, as well as any other significant special items, are included in Corporate/Other. Items below the earnings from operations line on the Company’s Condensed Consolidated Statements of Operations are not presented by segment, since they are excluded from the measure of segment profitability reviewed by the Company’s chief operating decision maker. The Company does not report depreciation expense, total assets and capital expenditures by segment, as such information is not used by the chief operating decision maker.

The accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Intersegment revenues are accounted for at current market values.

Presented in the table below is segment information for the periods identified and a reconciliation of segment information to total consolidated information.


	Generics		Specialty		Corporate /
	Segment		Segment		Other⁽¹⁾			Consolidated
	(In thousands)

Three Months Ended September 30, 2010
Total revenues
Third party	$	1,213,216	$	141,897	$	—		$	1,355,113
Intersegment		2,392		13,689		(16,081	)		—

Total	$	1,215,608	$	155,586	$	(16,081	)	$	1,355,113
Segment profitability	$	357,393	$	49,761	$	(172,836	)	$	234,318


	Generics		Specialty		Corporate /
	Segment		Segment		Other⁽¹⁾			Consolidated

Nine Months Ended September 30, 2010
Total revenues
Third party	$	3,663,733	$	352,290	$	—		$	4,016,023
Intersegment		34,314		47,419		(81,733	)		—

Total	$	3,698,047	$	399,709	$	(81,733	)	$	4,016,023
Segment profitability	$	1,015,980	$	104,881	$	(493,451	)	$	627,410


	Generics		Specialty		Corporate /
	Segment		Segment		Other⁽¹⁾			Consolidated

Three Months Ended September 30, 2009
Total revenues
Third party	$	1,113,199	$	150,875	$	—		$	1,264,074
Intersegment		2,608		3,776		(6,384	)		—

Total	$	1,115,807	$	154,651	$	(6,384	)	$	1,264,074
Segment profitability	$	295,190	$	39,799	$	(273,711	)	$	61,278

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)


	Generics		Specialty		Corporate /
	Segment		Segment		Other⁽¹⁾			Consolidated

Nine Months Ended September 30, 2009
Total revenues
Third party	$	3,387,921	$	353,047	$	—		$	3,740,968
Intersegment		20,836		15,196		(36,032	)		—

Total	$	3,408,757	$	368,243	$	(36,032	)	$	3,740,968
Segment profitability	$	995,207	$	71,494	$	(603,369	)	$	463,332


⁽¹⁾		Includes certain corporate general and administrative and research and development expenses; reserves for litigation settlements; certain intercompany transactions, including eliminations; amortization of intangible assets and certain purchase-accounting items; impairment charges; and other expenses not directly attributable to segments.


14.	Restructuring

Included in other current liabilities in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 are restructuring reserves totaling $16.6 million and $39.3 million. Of these amounts, $10.9 million and $27.0 million, as of September 30, 2010 and December 31, 2009, relate to certain estimated exit costs associated with the acquisition of the former Merck Generics business, and the remainder of each balance relates to the Company’s intention to restructure certain other activities and incur certain related exit costs.

The plans related to the exit activities associated with the former Merck Generics business were finalized during calendar year 2008. During the nine months ended September 30, 2010, payments of $16.1 million were made against the reserve, of which $6.7 million was for severance costs and the remaining $9.4 million was for other exit costs. The majority of the remaining accrual relates to additional severance and related costs, and the remainder consists of other exit costs.

In addition, the Company has announced its intent to restructure certain activities and incur certain related exit costs, including costs related to the realignment of the Dey business and the right-sizing of certain businesses in markets outside of the U.S. Accordingly, the Company has recorded a reserve for such activities, of which approximately $5.8 million remains at September 30, 2010. During the nine months ended September 30, 2010, the Company recorded restructuring charges of approximately $4.9 million, nearly all of which relates to severance and related costs. Spending during the nine months, primarily related to severance, amounted to approximately $11.4 million.


15.	Contingencies

While it is not possible to determine with any degree of certainty the ultimate outcome of the following legal proceedings, the Company believes that it has meritorious defenses with respect to the claims asserted against it and intends to vigorously defend its position. The Company is also party to certain litigation matters, some of which are described below, for which Merck KGaA has agreed to indemnify the Company, under the terms by which Mylan acquired the former Merck Generics business. An adverse outcome in any of these proceedings, or the inability or denial of Merck KGaA to pay an indemnified claim, could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

Lorazepam and Clorazepate

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

the amount of approximately $12.0 million, which has been accrued for by the Company. The jury found that Mylan and its co-defendants willfully violated Massachusetts, Minnesota and Illinois state antitrust laws in connection with API supply agreements entered into between the Company and its API supplier (Cambrex) and broker (Gyma) for two drugs, lorazepam and clorazepate, in 1997, and subsequent price increases on these drugs in 1998. The case was brought by four health insurers who opted out of earlier class action settlements agreed to by the Company in 2001 and represents the last remaining antitrust claims relating to Mylan’s 1998 price increases for lorazepam and clorazepate. Following the verdict, the Company filed a motion for judgment as a matter of law, a motion for a new trial, a motion to dismiss two of the insurers and a motion to reduce the verdict. On December 20, 2006, the Company’s motion for judgment as a matter of law and motion for a new trial were denied and the remaining motions were denied on January 24, 2008. In post-trial filings, the plaintiffs requested that the verdict be trebled and that request was granted on January 24, 2008. On February 6, 2008, a judgment was issued against Mylan and its co-defendants in the total amount of approximately $69.0 million, which, in the case of three of the plaintiffs, reflects trebling of the compensatory damages in the original verdict (approximately $11 million in total) and, in the case of the fourth plaintiff, reflects their amount of the compensatory damages in the original jury verdict plus doubling this compensatory damage award as punitive damages assessed against each of the defendants (approximately $58 million in total), some or all of which may be subject to indemnification obligations by Mylan. Plaintiffs are also seeking an award of attorneys’ fees and litigation costs in unspecified amounts and prejudgment interest of approximately $8.0 million. The Company and its co-defendants have appealed to the U.S. Court of Appeals for the D.C. Circuit and have challenged the verdict as legally erroneous on multiple grounds. The appeals were held in abeyance pending a ruling on the motion for prejudgment interest, which has been granted. Mylan intends to contest this ruling along with the liability finding and other damages awards as part of its pending appeal, which is proceeding in the Court of Appeals for the D.C. Circuit, with oral argument having been held on October 8, 2010. In connection with the Company’s appeal of the lorazepam judgment, the Company submitted a surety bond underwritten by a third-party insurance company in the amount of $74.5 million. This surety bond is secured by a pledge of a $15.0 million cash deposit (which is included as restricted cash on the Company’s Condensed Consolidated Balance Sheets) and an irrevocable letter of credit for $34.5 million issued under the Senior Credit Agreement.

Pricing and Medicaid Litigation

Beginning in September 2003, Mylan, MPI and/or UDL Laboratories Inc. (“UDL”), together with many other pharmaceutical companies, have been named in civil lawsuits filed by state attorneys general (“AGs”) and municipal bodies within the state of New York alleging generally that the defendants defrauded the state Medicaid systems by allegedly reporting “Average Wholesale Prices” and/or “Wholesale Acquisition Costs” that exceeded the actual selling price of the defendants’ prescription drugs, causing state programs to overpay pharmacies and other providers. To date, Mylan, MPI and/or UDL have been named as defendants in substantially similar civil lawsuits filed by the AGs of Alabama, Alaska, California, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Massachusetts, Mississippi, Missouri, Oklahoma, South Carolina, Texas, Utah and Wisconsin and also by the city of New York and approximately 40 counties across New York State. Several of these cases have been transferred to the AWP multi-district litigation proceedings pending in the U.S. District Court for the District of Massachusetts for pretrial proceedings. Others of these cases will likely be litigated in the state courts in which they were filed. Each of the cases seeks money damages, civil penalties and/or double, treble or punitive damages, counsel fees and costs, equitable relief and/or injunctive relief. Certain of these cases may go to trial in 2010. Mylan and its subsidiaries have denied liability and intend to defend each of these actions vigorously. On January 27, 2010, in the New York Counties cases, the U.S. District Court for the District of Massachusetts granted the plaintiffs’ motion for partial summary judgment as to liability under New York Social Services Law § 145-b against Mylan and several other defendants. The District Court has not ruled on the remaining issues of liability and damages. On February 8, 2010, Mylan, and a majority of the other defendants, filed a motion to amend the court’s decision, requesting the court to certify a question of New York state law pertaining to the court’s finding of requisite causation under the Social Services Law to the First Circuit Court of Appeals, so that the defendants could in turn request that the First Circuit

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

Court of Appeals certify the question to the New York Court of Appeals. The District Court denied this motion on May 4, 2010.

In May 2008, an amended complaint was filed in the U.S. District Court for the District of Massachusetts by a private plaintiff on behalf of the United States of America, against Mylan, MPI, UDL and several other generic manufacturers. The original complaint was filed under seal in April 2000, and Mylan, MPI and UDL were added as parties in February 2001. The claims against Mylan, MPI, UDL and the other generic manufacturers were severed from the April 2000 complaint (which remains under seal) as a result of the federal government’s decision not to intervene in the action as to those defendants. The complaint alleges violations of the False Claims Act and sets forth allegations substantially similar to those alleged in the state AG cases mentioned in the preceding paragraph and purports to seek nationwide recovery of any and all alleged overpayment of the “federal share” under the Medicaid program, as well as treble damages and civil penalties. In February 2010, the Company reached an agreement in principle to settle this case (except for the claims related to the California federal share) and the Texas state action mentioned above. This settlement is contingent upon the execution of definitive settlement documents and court approval. The settlement would resolve a significant portion of the damages claims asserted against Mylan, MPI and UDL in the various pending pricing litigations. In addition, Mylan has reached agreement in principle to settle the Hawaii state action, and the Massachusetts state action, which settlements are contingent upon the execution of definitive settlement documents. With regard to the remaining state actions, the Company continues to believe that it has meritorious defenses and will continue to vigorously defend itself in those actions. The Company has accrued $160 million in connection with the above-mentioned settlement in principle and the remaining state actions. The Company reviews the status of these actions on an ongoing basis, and from time to time, the Company may settle or otherwise resolve these matters on terms and conditions that management believes are in the best interests of the Company. There are no assurances that settlements can be reached on acceptable terms or that adverse judgments, if any, in the remaining litigation will not exceed the amounts reserved.

In addition, by letter dated January 12, 2005, MPI was notified by the U.S. Department of Justice of an investigation concerning calculations of Medicaid drug rebates. The investigation involved whether MPI and UDL may have violated the False Claims Act by classifying certain authorized generics as non-innovator rather than innovator drugs for purposes of Medicaid and other federal healthcare programs on sales from 2000 through 2004. MPI and UDL denied the government’s allegations and denied that they engaged in any wrongful conduct. On October 19, 2009, a lawsuit, filed in March 2004 by a private relator, in which the federal government subsequently intervened, was unsealed by the U.S. District Court for the District of New Hampshire. That same day, MPI and UDL announced that they had entered into a settlement agreement with the federal government, relevant states and the relator for approximately $121.0 million, resolving both the lawsuit and the U.S. Department of Justice investigation. A stipulation of dismissal with prejudice has been filed with the court. The resolution of the matter did not include any admission or finding of wrongdoing on the part of either MPI or UDL. The Company has recovered approximately $50 million of the settlement amount based on overpayments resulting from adjusted net sales during the relevant timeframe.

Dey is a defendant currently in lawsuits brought by the state AGs of California, Illinois, Kentucky, and Pennsylvania, as well as three New York counties. Dey is also named as a defendant in several class actions brought by consumers and third-party payors. Dey has reached a settlement of these class actions, which has been preliminarily approved by the court. Additionally, a complaint was filed under seal by a plaintiff on behalf of the United States of America against Dey in August 1997. In August 2006, the Government filed its complaint-in-intervention and the case was unsealed in September 2006. The Government has asserted that Dey is jointly liable with a codefendant and seeks recovery of alleged overpayments, together with treble damages, civil penalties and equitable relief. These cases all generally allege that Dey falsely reported certain price information concerning certain drugs marketed by Dey, that Dey caused false claims to be made to Medicaid and to Medicare, and that Dey caused Medicaid and Medicare to make overpayments on those claims. Certain of these cases may go to trial in 2010. Dey intends to defend each of these actions vigorously. The Company has approximately $96 million recorded in other liabilities related to the price-related litigation involving Dey. As

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

stated above, in conjunction with the acquisition of the former Merck Generics business, Mylan is entitled to indemnification from Merck KGaA. As a result, the Company has recorded approximately $96 million in other assets.

Modafinil Antitrust Litigation and FTC Inquiry

Beginning in April 2006, Mylan, along with four other drug manufacturers, has been named as a defendant in civil lawsuits filed in or transferred to the Eastern District of Pennsylvania, by a variety of plaintiffs purportedly representing direct and indirect purchasers of the drug modafinil and a third-party payor and one action brought by Apotex, Inc., a manufacturer of generic drugs, seeking approval to market a generic modafinil product. These actions allege violations of federal and state laws in connection with the defendants’ settlement of patent litigation relating to modafinil. On March 29, 2010, the Court in the Eastern District of Pennsylvania denied the defendants’ motions to dismiss. Mylan intends to defend each of these actions vigorously. In addition, by letter dated July 11, 2006, Mylan was notified by the U.S. Federal Trade Commission (“FTC”) of an investigation relating to the settlement of the modafinil patent litigation. In its letter, the FTC requested certain information from Mylan, MPI and Mylan Technologies, Inc. pertaining to the patent litigation and the settlement thereof. On March 29, 2007, the FTC issued a subpoena, and on April 26, 2007, the FTC issued a civil investigative demand to Mylan requesting additional information from the Company relating to the investigation. Mylan has cooperated fully with the government’s investigation and completed all requests for information. On February 13, 2008, the FTC filed a lawsuit against Cephalon in the U.S. District Court for the District of Columbia and the case has subsequently been transferred to the U.S. District Court for the Eastern District of Pennsylvania. On July 1, 2010, the FTC issued a third party subpoena to Mylan requesting documents in connection with its lawsuit against Cephalon. Mylan is in the process of responding to the subpoena. Mylan is not named as a defendant in the FTC’s lawsuit, although the complaint includes certain allegations pertaining to the Mylan/Cephalon settlement.

Digitek^® Recall

On April 25, 2008, Actavis Totowa LLC, a division of Actavis Group, announced a voluntary, nationwide recall of all lots and all strengths of Digitek (digoxin tablets USP). Digitek was manufactured by Actavis and distributed in the United States by MPI and UDL. The Company has tendered its defense and indemnity in all lawsuits and claims arising from this event to Actavis, and Actavis has accepted that tender, subject to a reservation of rights. While the Company is unable to estimate total potential costs with any degree of certainty, such costs could be significant. As of October 15, 2010, there are approximately 1,039 cases pending against Mylan, UDL and Actavis pertaining to the recall. Most of these cases have been transferred to the multi-district litigation proceedings pending in the U.S. District Court for the Southern District of West Virginia for pretrial proceedings. The remainder of these cases will likely be litigated in the state courts in which they were filed. In September 2010, Actavis entered into a Settlement Agreement with the plaintiffs in a majority of the claims and lawsuits. Mylan and UDL will not contribute monetarily to the settlement, but will be dismissed with prejudice from any settled cases. Any lawsuits in which the plaintiffs choose to opt out of this settlement will continue to be litigated. An adverse outcome in these lawsuits or the inability or denial of Actavis to pay on an indemnified claim could have a materially negative impact on the Company’s financial position, results of operations or cash flows.

EU Commission Proceedings

MYLAN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

merely signifies that the Commission will deal with the case as a matter of priority.” No statement of objections has been filed against Matrix in connection with its investigation. On August 5, 2009, Matrix and Generics [U.K.] Ltd. received requests for information from the EU Commission in connection with this matter, and both companies have responded. By letters dated February 17, 2010, the EU Commission served additional requests for information on Matrix and Mylan S.A.S. The companies responded to these requests. On August 13, 2010, Matrix received an additional request for information. Matrix has responded to this request. Matrix is cooperating with the Commission in this investigation.

In addition, the EU Commission is conducting a pharmaceutical sector inquiry involving approximately 100 companies concerning the introduction of innovative and generic medicines. Mylan S.A.S. has responded to the questionnaires received in connection with the sector inquiry and has produced documents and other information in connection with the inquiry.

On October 6, 2009, the Company received notice that the EU Commission was initiating an investigation pursuant to Article 20(4) of Regulation No. 1/2003 to explore possible infringement of Articles 81 and 82 EC by the Company and its affiliates. Mylan S.A.S., acting on behalf of its Mylan affiliates, has produced documents and other information in connection with the inquiry. The Company and Mylan S.A.S. received an additional request for information with the same case reference on December 18, 2009 and have responded to the questionnaire. Additional requests were received on March 18, 2010 and July 29, 2010. Mylan S.A.S. has responded to these requests. Mylan is cooperating with the Commission in connection with the investigation. No statement of objections has been filed against Mylan in connection with the investigation.

On March 19, 2010, Mylan Inc. and Generics [U.K.] Ltd. received notice that the EU Commission had opened proceedings against Lundbeck with respect to alleged unilateral practices and/or agreements related to citalopram in the European Economic Area. On this same date, Mylan Inc. and Generics [U.K.] Ltd. received requests for information from the EU Commission in connection with any agreements between Lundbeck and Generics [U.K.] Ltd. concerning citalopram. Both companies are cooperating with the EU Commission. Generics [U.K.] Ltd. responded to the request for information on May 10, 2010 and September 30, 2010. No statement of objections has been filed in connection with this investigation.

Other Litigation

The Company is involved in various other legal proceedings that are considered normal to its business, including certain proceedings assumed as a result of the acquisition of the former Merck Generics business. While it is not feasible to predict the ultimate outcome of such other proceedings, the ultimate outcome of any such proceeding is not expected to have a material adverse effect on its financial position, results of operations or cash flows.


ITEM 2.	*MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS*

The following discussion and analysis addresses material changes in the financial condition and results of operations of Mylan Inc. and subsidiaries (the “Company,” “Mylan” or “we”) for the periods presented. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, the unaudited interim Condensed Consolidated Financial Statements and related Notes included in Part I — ITEM 1 of this Quarterly Report on Form 10-Q (“Form 10-Q”) and our other Securities and Exchange Commission (“SEC”) filings and public disclosures. The interim results of operations for the three and nine months ended September 30, 2010 and the interim cash flows for the nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.

This Form 10-Q may contain “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about our market opportunities, strategies, competition and expected activities and expenditures, and at times may be identified by the use of words such as “may”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “intend”, “continue” and variations of these words or comparable words. Forward-looking statements inherently involve risks and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks described below under “Risk Factors” in Part II, ITEM 1A. The Company undertakes no obligation to update any forward-looking statements for revisions or changes after the filing date of this Form 10-Q.

Executive Overview

Mylan is the world’s third largest producer of generic and specialty pharmaceuticals, offering one of the industry’s broadest and highest quality product portfolios, a robust pipeline and a global commercial footprint that spans more than 140 countries and territories. Employing over 15,500 people, Mylan has attained leading positions in key international markets through its wide array of dosage forms and delivery systems, significant manufacturing capacity, global scale and commitment to customer service. Through our Matrix Laboratories Limited (“Matrix”) subsidiary, Mylan controls one of the world’s largest active pharmaceutical ingredient (“API”) manufacturers with respect to the number of drug master files filed with regulatory agencies. This relationship makes Mylan one of only two global generics companies with a comprehensive, vertically integrated supply chain.

Mylan previously had three reportable segments, “Generics”, “Specialty” and “Matrix.” The Matrix Segment consisted of Matrix, which was previously a publicly traded company in India, in which Mylan held a 71.2% ownership stake. Following the acquisition of additional interests in Matrix, beginning in 2009, and its related delisting from the Indian stock exchanges, Mylan now has two reportable segments, “Generics” and “Specialty.” Mylan revised its segment disclosure to align with how the business is being managed after those changes. The former Matrix Segment is included within the Generics Segment. Information for earlier periods has been recast.

Generics primarily develops, manufactures, sells and distributes generic or branded generic pharmaceutical products in tablet, capsule, injectable or transdermal patch form, as well as API. Specialty engages mainly in the manufacture and sale of branded specialty nebulized and injectable products. We also report in Corporate/Other certain research and development expenses, general and administrative expenses, litigation settlements, amortization of intangible assets and certain purchase-accounting items, impairment charges, and other items not directly attributable to the segments.

Issuance of Senior Notes and Loan Repayment

In May 2010, we issued $550.0 million of 7.625% Senior Notes due 2017 (the “2017 Senior Notes”) and $700.0 million of 7.875% Senior Notes due 2020 (the “2020 Senior Notes”). These notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933 to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the

Securities Act. During the quarter ended September 30, 2010, we privately placed $300.0 million aggregate principal amount of senior notes through a reopening of our 2020 Senior Notes. The 2017 Senior Notes and 2020 Senior Notes are Mylan’s senior unsecured obligations and are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries.

We used approximately $1.00 billion of the net proceeds of the initial 2017 Senior Notes and 2020 Senior Notes offering to repay a portion of the U.S. Tranche B Term Loans due under the terms of its Senior Credit Agreement. Also, during the quarter ended September 30, 2010, we repaid approximately $300.0 million of debt under the Senior Credit Agreement, by repaying the remaining balance of the U.S. Tranche A Term Loans and a portion of the U.S. Tranche B Term Loans.

Acquisition of Bioniche Pharma Holdings Limited

On September 7, 2010, we acquired 100% of the outstanding equity in Bioniche Pharma, a privately held, global injectable pharmaceutical company, for a purchase price of $543.7 million in cash. Mylan did not assume any of Bioniche Pharma’s outstanding long-term debt or acquire any of its cash as part of the transaction. We financed this transaction using a combination of cash on hand and long-term borrowings.

Bioniche Pharma manufactures and sells a diverse portfolio of products across several therapeutic areas for the hospital setting, including analgesics/anesthetics, orthopedics, oncology, and urology, and most of its sales are made to customers in the U.S. The results for Bioniche Pharma from the date of the acquisition through September 30, 2010 are included in the Condensed Consolidated Results of Operations and disclosed as part of the North American region of our Generics Segment.

Financial Summary

For the three months ended September 30, 2010, Mylan reported total revenues of $1.36 billion compared to $1.26 billion for the three months ended September 30, 2009. This represents an increase in revenues of $91.0 million, or 7.2%. Consolidated gross profit for the current quarter was $580.1 million compared to $505.0 million in the comparable prior year period, an increase of $75.1 million, or 14.9%. For the current quarter, earnings from operations of $234.3 million were realized compared to $61.3 million for the three months ended September 30, 2009.

The net earnings attributable to Mylan Inc. before preferred dividends for the three months ended September 30, 2010 were $143.2 million and earnings per diluted share were $0.33. In the same prior year period, the net loss attributable to Mylan Inc. common shareholders was $40.0 million, which translates into a loss per diluted share of $0.13. A more detailed discussion of the company’s financial statements can be found below in the section titled “Results of Operations.”

Included in the results for the three months ended September 30, 2010 and 2009 are the following items of note:

Three months ended September 30, 2010:


	•	Amortization, primarily related to purchased intangible assets associated with acquisitions, of $74.6 million;

	•	Interest of $17.6 million, primarily related to the accretion of the discounts on our convertible debt instruments, net of amortization of the premium on our 2020 Senior Notes;

	•	Net unfavorable litigation settlement charges of $1.5 million;


	•	Costs related to the acquisition of Bioniche Pharma of $10.9 million;

	•	A loss on the sale of certain non-operating assets of $4.9 million;

	•	Additional costs, primarily restructuring, totaling $16.0 million; and

	•	A tax effect of $79.7 million related to the above items and other income tax-related items.

Three months ended September 2009:


	•	Amortization, primarily related to purchased intangible assets associated with acquisitions, of $71.8 million;

	•	Interest of $10.8 million relating to the accretion of the discounts on our convertible debt instruments;

	•	Net unfavorable litigation settlement charges of $114.3 million (pre-tax), primarily related to the settlement of an investigation by the U.S. Department of Justice, concerning calculations of Medicaid drug rebates;

	•	Additional costs, primarily restructuring, related to the integration of acquired entities, and other costs, totaling $15.8 million; and

	•	A tax effect of $65.3 million related to the above items and other income tax-related items.

Mylan’s financial results for the nine months ended September 30, 2010 include total revenues of $4.02 billion compared to $3.74 billion for the nine months ended September 30, 2009, representing an increase of $275.1 million, or 7.4%. Consolidated gross profit for the nine months ended September 30, 2010 was $1.64 billion compared to $1.56 billion in the same prior year period. For the nine months ended September 30, 2010, earnings from operations of $627.4 million were realized compared to $463.3 million for the same prior year period.

The net earnings attributable to Mylan Inc. common shareholders for the nine months ended September 30, 2010 were $221.0 million, which translates into earnings per diluted share of $0.71. In the same prior year period, net earnings attributable to Mylan Inc. common shareholders were $89.4 million, which translates into earnings per diluted share of $0.29. A more detailed discussion of the Company’s financial statements can be found below in the section titled “Results of Operations.”

Included in the results for the nine months ended September 30, 2010 and 2009 are the following items of note:

Nine months ended September 30, 2010:


	•	Amortization, primarily related to purchased intangible assets associated with acquisitions, of $217.6 million;

	•	Interest of $42.0 million, primarily related to the accretion of discounts on our convertible debt instruments, net of amortization of the premium on our 2020 Senior Notes;

	•	Net unfavorable litigation charges of $14.3 million;

	•	Charges, related to the refinancing, of $15.0 million, primarily swap termination fees and the write-off of deferred financing costs included in other (expense) income, net;

	•	Costs related to the acquisition of Bioniche Pharma of $12.5 million;

	•	A loss on the sale of certain non-operating assets of $4.9 million;

	•	Additional costs, primarily restructuring, totaling $44.9 million; and

	•	A tax effect of $165.9 million related to the above items and other income tax-related items.

Nine months ended September 30, 2009:


	•	Amortization, primarily related to purchased intangible assets associated with acquisitions, of $210.9 million;

	•	Other revenues of approximately $28.5 million resulting from the cancellation of product development agreements for which the revenue had been previously deferred;


	•	Interest of $31.7 million relating to the accretion of the discounts on our convertible debt instruments;

	•	Net unfavorable litigation settlement charges of $111.5 million (pre-tax), primarily related to the settlement of an investigation by the U.S. Department of Justice, concerning calculations of Medicaid drug rebates;

	•	A charge of $18.0 million related to an up-front payment made with respect to the Company’s execution of a co-development agreement;

	•	A net gain of approximately $10.4 million on the termination of two joint ventures;

	•	Additional costs, primarily restructuring, related to the integration of acquired entities, and other costs, totaling $51.0 million; and

	•	A tax effect of $137.7 million related to the above items and other income tax-related items.

Results of Operations

Three Months Ended September 30, 2010, Compared to Three Months Ended September 30, 2009

Total Revenues and Gross Profit

For the current quarter, Mylan reported total revenues of $1.36 billion compared to $1.26 billion in the comparable prior year period. Total revenues include both net revenues and other revenues from third parties. Third party net revenues for the current quarter were $1.34 billion compared to $1.26 billion for the same prior year period, representing an increase of $89.3 million, or 7.1%. Other third party revenues for the current quarter were $10.1 million compared to $8.4 million in the same prior year period, an increase of $1.7 million.

Total revenues were negatively impacted by the effect of foreign currency translation, primarily reflecting a stronger U.S. dollar in comparison to the functional currencies of Mylan’s Euro-denominated subsidiaries, partially offset by the strengthening against the U.S. dollar of the currencies of Mylan’s subsidiaries in Australia, Japan and India. Translating current year revenues at prior year exchange rates would have resulted in year-over-year growth in total revenues excluding foreign currency of approximately $109 million, or approximately 9%.

Gross profit for the three months ended September 30, 2010 was $580.1 million and gross margins were 42.8%. For the three months ended September 30, 2009, gross profit was $505.0 million, and gross margins were 39.9%. Gross profit for the current quarter is impacted by certain purchase accounting related items recorded during the three months ended September 30, 2010, of approximately $74.6 million, which consisted primarily of amortization related to purchased intangible assets associated with acquisitions. Excluding such items, gross margins would have been approximately 48.3%. Prior year gross profit is also impacted by similar purchase accounting related items in the amount of $71.8 million. Excluding such items, gross margins in the prior year would have been approximately 45.6%.

The increase in gross margins, excluding the items noted above, can primarily be attributed to both Generics, mainly the North America region, and Specialty. In North America, favorable gross margins were primarily the result of new product introductions, while Specialty benefitted from favorable pricing, mainly on the EpiPen^® Auto-injector.

Generics Segment

For the current quarter, Generics third party net revenues were $1.20 billion compared to $1.11 billion in the comparable prior year period, an increase of $96.1 million, or 8.7%. Translating Generics third party net revenues for the current quarter at prior year comparative period exchange rates would have resulted in year-over-year growth of approximately $114 million, or 10%. Generics sales are derived primarily in or from the U.S. and Canada (collectively “North America”), Europe, Middle East and Africa (collectively, “EMEA”) and India, Australia, Japan, and New Zealand (collectively, “Asia Pacific”).

Third party net revenues from North America were $572.5 million for the current quarter, compared to $487.9 million for the comparable prior year period, representing an increase of $84.6 million, or 17.3%. The effect of foreign currency is insignificant within North America. New products launched in the U.S. and Canada

contributed sales of $106.5 million, which drove the growth in revenue year over year. Partially offsetting the impact of new products was unfavorable pricing on certain other existing products, including divalproex sodium extended-release (“divalproex ER”) tablets, the generic version of Abbott Laboratories’ Depakote^® ER. Additional generic competition on divalproex ER entered the market in August 2009. As such, sales of divalproex ER in the current quarter were significantly lower than the comparable prior year quarter.

Sales volumes for Fentanyl, our AB-rated generic alternative to Duragesic^®, have remained relatively constant primarily due to Mylan’s ability to continue to be a stable and reliable source of supply to the market, and as a result fentanyl continues to contribute to both net revenues and gross profit. As is the case in the generic industry, the entrance into the market of additional competition generally has a negative impact on the volume and pricing of the affected products. Competition on fentanyl in the future could have an unfavorable impact on pricing and market share.

Third party net revenues from EMEA were $363.5 million for the three-month period ended September 30, 2010, compared to $413.8 million for the comparable prior year period, a decrease of $50.3 million, or 12.2%. However, translating current quarter third party net revenues from EMEA at prior year exchange rates would have reduced the year-over-year decrease in third party net revenues excluding the effect of foreign currency to approximately $14 million, or 3%. This decrease was mainly the result of unfavorable pricing in many of the European markets in which Mylan operates, partially offset by new product launches in several markets totaling approximately $25.3 million.

Certain markets in which we do business have recently undergone government-imposed price reductions. Such measures, along with the tender systems discussed below, are likely to have a negative impact on sales and gross profit in these markets. However, some pro-generic government initiatives in certain markets could help to offset some of this unfavorability by potentially increasing generic substitution.

In the current quarter, the most significant impact of government-imposed price reductions was felt by our subsidiaries in Portugal and Spain. Spain, however, realized year over year growth in net revenues mainly as a result of new product launches which more than offset the impact of the pricing reform.

New product launches were also the driving force behind year over year local currency growth by Mylan’s largest European subsidiary in France. In addition to new products, France realized increased volumes on existing products. Partially offsetting these drivers were pricing pressures resulting from increased competition in the French market.

In Italy, excluding the effect of foreign currency, third party sales increased as a result of successful new product launches and increased market penetration, which resulted in increased volume. In addition, our Italian subsidiary benefitted from certain regulatory changes which resulted in an overall positive pricing effect. In June 2010, additional regulatory changes were introduced which decreased prices on certain products, and which may offset these positive pricing impacts in future periods.

A number of markets in which we operate have implemented or may implement tender systems for generic pharmaceuticals in an effort to lower prices. Generally speaking, tender systems can have an unfavorable impact on revenue and profitability. Under such tender systems, manufacturers submit bids which establish prices for generic pharmaceutical products. Upon winning the tender, the winning company will receive a preferential reimbursement for a period of time. The tender system often results in companies underbidding one another by proposing low pricing in order to win the tender. While certain of our subsidiaries, in particular, the Netherlands, have benefited from recent tenders, sales in Germany continue to be negatively affected by the implementation of tender systems in that country.

In Asia Pacific, third party net revenues were $267.9 million for the three-month period ended September 30, 2010, compared to $206.1 million for the comparable prior year period, an increase of $61.8 million, or 30.0%. Excluding the effect of foreign currency, calculated as described above, the increase was approximately $44 million, or 22%. This increase is primarily driven by higher third party sales by our Matrix subsidiary in India, with growth in third party sales in Australia and Japan also contributing.

At our Matrix subsidiary, the increase in third party net revenues is due to double-digit growth, excluding the effect of foreign currency, in sales of both anti-retroviral (“ARV”) finished dosage form (“FDF”) generic products, which are used in the treatment of HIV/AIDS, and API. In addition to third party sales, the Asia Pacific region also supplies both FDF generic products and API to Mylan subsidiaries in conjunction with Mylan’s vertical integration strategy. Intercompany revenues recognized by the Asia Pacific region were $46.6 million for the three months ended September 30, 2010, compared to $21.3 million in the comparable prior year period. These intercompany sales eliminate within, and therefore are not included in, Generics or consolidated net revenues.

As in EMEA, both Japan and Australia have undergone government-imposed price reductions which have had, and could continue to have, a negative impact on sales and gross profit in these markets. In the current quarter, these price reductions offset the positive contribution from new products, mainly those launched in Japan.

Specialty Segment

For the current quarter, Specialty reported third party net revenues of $141.1 million, a decrease of $6.8 million, or 4.6%, from the comparable prior year period of $147.9 million. Intercompany sales by Specialty totaled $13.7 million in the current quarter compared to $3.8 million in the same prior year period. The increase is due to the fact that certain generic products previously sold to third parties by Specialty are now sold to Mylan subsidiaries in North America who, in turn, sell the products to third parties. Excluding the sale of such products from 2009 third party net revenues would have resulted in an increase in third party net revenues in the current quarter of $7.8 million or 5.9%.

The most significant contributor to Specialty Segment revenues continues to be the EpiPen Auto-injector, which is used in the treatment of severe allergic reactions. Globally, the EpiPen Auto-injector is the number one epinephrine auto-injector for the treatment of severe allergic reactions with world-wide market share of approximately 91%. In the U.S., the EpiPen Auto-injector is the number one prescribed treatment for severe allergic reactions with market share of approximately 96%. Specialty realized increased sales of the EpiPen Auto-injector, mainly as a result of favorable pricing.

Operating Expenses

Research and development (“R&D”) expense for the three months ended September 30, 2010 was $72.0 million, compared to $69.8 million in the same prior year period, an increase of $2.2 million. The increase is due primarily to costs associated with higher volumes of internal and external product development.

Selling, general and administrative (“SG&A”) expense for the current quarter was $272.3 million, compared to $259.6 million for the same prior year period, an increase of $12.7 million, which includes a favorable impact from foreign currency of approximately $5 million. Excluding the impact of foreign currency, SG&A increased approximately $18 million compared to the same prior year period. This increase is primarily the result of professional fees, including those incurred in connection with the Bioniche Pharma acquisition, as well as increased payroll and payroll related costs.

Litigation Settlements, net

During the three months ended September 30, 2010, we recorded net unfavorable litigation charges of $1.5 million, compared to $114.3 million during the prior year quarter. The prior year amount is made up primarily of a charge for $121.0 million, pre-tax (approximately $83.0 million, after-tax), related to the settlement of an investigation by the U.S. Department of Justice concerning calculations of Medicaid drug rebates.

Interest Expense

Interest expense for the three months ended September 2010, totaled $87.5 million, compared to $77.0 million for the three months ended September 30, 2009. The increase is primarily due to interest associated with the 2017 and 2020 Senior Notes debt offerings in May 2010 and July 2010, partially offset by lower overall debt balances on the Company’s Senior Credit Facility. Included in interest expense for the current quarter and the comparable prior year period are $17.6 million and $10.8 million, primarily related to the accretion of the discounts on our convertible debt instruments, net of accretion of the premium on our 2020 Senior Notes.

Other (Expense) Income, net

Other (expense) income, net, was expense of $15.3 million in the current quarter compared to income of $0.2 million in the comparable prior year period. Generally included in other (expense) income are interest and dividend income and foreign exchange gains and losses. Additionally, included in the current quarter is a $4.9 million loss on the sale of certain non-operating assets and certain non-income-based taxes related to our acquisition of Bioniche Pharma.

Income Tax Expense

We recorded an income tax benefit of $12.0 million in the current quarter compared to a benefit of $11.1 million in the prior year quarter. In the current quarter, the Company realized a tax benefit on positive earnings as a result of the release of several tax reserves, due to favorable tax rulings received from certain taxing authorities, as well as the expiration of certain statutes of limitations during the three-month period.

Nine Months Ended September 30, 2010, Compared to Nine Months Ended September 30, 2009

Total Revenues and Gross Profit

For the current nine-month period, Mylan reported total revenues of $4.02 billion compared to $3.74 billion in the comparable prior year period. Total revenues include both net revenues and other revenues from third parties. Third party net revenues for the current nine months were $3.98 billion compared to $3.68 billion for the same prior year period, representing an increase of $299.8 million, or 8.1%.

Other revenues from third parties for the nine months ended September 30, 2010, were $36.4 million compared to $61.1 million in the same prior year period, a decrease of $24.7 million, or 40.5%. During the nine months ended September 30, 2009, within Generics, we recognized $28.5 million of incremental revenue resulting from the cancellation of product development agreements for which the revenue had been previously deferred. There was no such revenue recognized during the current year period.

Total revenues were positively impacted by the effect of foreign currency translation, primarily reflecting a weaker U.S. dollar in comparison to the functional currencies of Mylan’s subsidiaries in Australia, Japan and India, partially offset by the impact of a stronger U.S. dollar in comparison to the functional currencies of certain of our subsidiaries in Europe. Translating current year third party total revenues at prior year exchange rates would have resulted in year-over-year growth excluding foreign currency of approximately $229 million, or 6%.

Gross profit for the nine months ended September 30, 2010 was $1.64 billion and gross margins were 40.8%. For the nine months ended September 30, 2009, gross profit was $1.56 billion, and gross margins were 41.7%. Gross profit for the current year to date period is impacted by certain purchase accounting related items recorded during the nine months ended September 30, 2010, of approximately $217.6 million, which consisted primarily of amortization related to purchased intangible assets associated with acquisitions. Excluding such items, gross

margins would have been approximately 46.2%. Prior year gross profit is also impacted by similar purchase accounting related items in the amount of $210.9 million. Excluding such items, gross margins in the prior year would have been approximately 47.3%.

The decrease in gross margins, excluding the items noted above, can generally be attributed to pricing pressure across the EMEA region of Generics and the impact of the timing of significant product launches in the North America region, partially offset by favorable pricing on Specialty’s EpiPen Auto-injector. During the first quarter of 2009, Mylan launched divalproex ER. Products generally contribute most significantly to gross margin at the time of their launch and even more so in periods of market exclusivity, as was the case with divalproex ER until August 2009, or in periods of limited generic competition.

Generics Segment

For the nine months ended September 30, 2010, Generics reported third party net revenues of $3.63 billion, compared to $3.33 billion in the comparable prior year period, an increase of $300.9 million, or 9.0%. Excluding the effect of foreign currency, calculated as described above, the increase was approximately $255.0 million, or 7.7%.

Third party net revenues from North America were $1.71 billion for the nine-month period, compared to $1.56 billion for the comparable prior year period, representing an increase of $150.9 million, or 9.7%. Excluding the effect of foreign currency, calculated as described above, the increase was approximately $139 million, or 9%. This increase was driven by sales contributed from new products in the U.S. and Canada totaling approximately $255.0 million, and, to a lesser extent, increased revenues on certain products as a result of Mylan’s ability to remain a source of stable supply as certain competitors experienced regulatory and supply issues. Partially offsetting these increases were decreases in certain other existing products, mainly divalproex ER. Additional generic competition on divalproex ER entered the market upon expiration of Mylan’s market exclusivity in August 2009. As such, sales of divalproex ER in the current year were significantly lower than in the prior year.

Third party net revenues from EMEA were $1.15 billion for the nine-month period ended September 30, 2010, compared to $1.16 billion for the comparable prior year period, a decrease of $11.3 million, or 1.0%. Translating current year third party net revenues from EMEA at prior year exchange rates would have resulted in year-over-year increase in third party net revenues excluding the effect of foreign currency of approximately $25 million, or 2%.

The most significant revenue growth was realized in Italy, as a result of higher volumes driven by increased market penetration, and certain regulatory changes which had a positive impact on pricing. In June 2010, new regulatory changes were introduced which decreased prices on certain products, and which may offset the positive pricing impacts in future periods. Italy’s strong third party net revenues for the nine months ended September 30, 2010, were also bolstered by sales of new products.

New products were also primarily responsible for a year over year increase in third party net revenues realized in France. This increase was partially offset by unfavorable pricing as a result of increased competition in the French market.

Unfavorable pricing, as a result of government-imposed price reductions, had a significant impact in the current year in certain markets in which Mylan operates, most notably in Portugal and Spain. Spain, however, realized year over year growth in net revenues mainly as a result of new product launches which more than offset the impact of the pricing reform. In total for EMEA, new products contributed net revenues of approximately $86.4 million during the nine months ended September 30, 2010.

Sales in Germany continue to be negatively affected by the implementation of tender systems in that country. Current year to date revenues were negatively impacted by the price reductions as a result of these tenders, and by the loss of sales related to tenders which Mylan did not win. Conversely, sales in the Netherlands were favorably impacted as a result of tenders won by Mylan.

In Asia Pacific, third party net revenues were $769.1 million for the nine-month period ended September 30, 2010, compared to $607.9 million for the comparable prior year period, an increase of $161.2 million, or 26.5%. Excluding the effect of foreign currency, calculated as described above, the increase was approximately $91 million, or 15%. This increase is primarily driven by higher third party sales from our operations in India and Japan.

At our Matrix subsidiary, the increase in third party net revenues is due to double-digit growth, excluding the effect of foreign currency, in sales of both ARV FDF generic products and API. In addition to third party sales, the Asia Pacific region also supplies both FDF generic products and API to Mylan subsidiaries in conjunction with Mylan’s vertical integration strategy. Intercompany revenues recognized by the Asia Pacific region were $110.6 million for the nine months ended September 30, 2010, compared to $41.6 million in the comparable prior year period. These intercompany sales eliminate within, and therefore are not included in, Generics or consolidated net revenues.

In Japan, third party net revenues were favorably impacted by new product launches, as well as a full nine months of revenues from products launched mid-way through 2009. Partially offsetting this new product revenue were unfavorable price variances as a result of government-imposed price reductions.

Third party net revenues in Australia were flat as compared to the prior year to date period as a result of unfavorable pricing due to both government-imposed price reductions and increased competition. Partially offsetting the unfavorable pricing were favorable volume on existing products and revenue from the launch of new products.

Specialty Segment

For the nine months ended September 30, 2010, Specialty reported third party net revenues of $347.8 million, a decrease of $1.1 million, or 0.3% over the comparable prior year period of $348.9 million. Intercompany sales of product by Specialty totaled $47.4 million in the current nine-month period compared to $15.2 million in the same prior year period. As in the quarter, the increase is due to the fact that certain generic products previously sold to third parties by Specialty are now sold to Mylan subsidiaries in North America who, in turn, sell the products to third parties. Excluding the sale of such products from 2009 third party net revenues would have resulted in an increase in third party net revenues in the current year of $44.7 million or 14.8%.

The most significant contributor to Specialty revenues continues to be the EpiPen Auto-injector, which is used in the treatment of severe allergic reactions. Globally, the EpiPen Auto-injector is the number one epinephrine auto-injector for the treatment of severe allergic reactions with world-wide market share of approximately 91%. In the U.S., the EpiPen Auto-injector is the number one prescribed treatment for severe allergic reactions with market share of approximately 96%.

In addition to the continued strong sales of the EpiPen Auto-injector, the increase in third-party sales included increased sales of Perforomist^® Solution, Dey’s maintenance therapy for patients with moderate to severe chronic obstructive pulmonary disease.

Operating Expenses

R&D expense for the nine months ended September 30, 2010 was $200.1 million, compared to $202.7 million in the same prior year period, a decrease of $2.6 million, which includes an unfavorable impact from foreign currency of approximately $3 million. Excluding the impact of foreign currency, R&D decreased approximately $5 million compared to the same prior year period. Included in R&D for the nine months ended September 30, 2009, was an up-front payment of $18 million related to our execution of a co-development agreement. Excluding this payment, R&D is higher in the current year mainly as a result of costs associated with higher volumes of internal and external product development.

SG&A expense for the nine months ended September 30, 2010 was $796.4 million, compared to $781.0 million for the same prior year period, an increase of $15.5 million, which includes an unfavorable impact from foreign currency of approximately $9 million. Excluding the impact of foreign currency, SG&A increased approximately $7 million compared to the same prior year period. This increase is not considered to be significant.

Litigation Settlements, net

During the nine months ended September 30, 2010, we recorded net unfavorable litigation charges of $14.3 million related to the potential settlement of certain ongoing matters. During the nine months ended September 30, 2009, we recorded net unfavorable litigation charges of $111.5 million. The prior year amount

consists primarily of a charge for $121.0 million, pre-tax (approximately $83.0 million, after-tax), related to the settlement of an investigation by the U.S. Department of Justice concerning calculations of Medicaid drug rebates.

Interest Expense

Interest expense for the nine months ended September 30, 2010, totaled $240.0 million, compared to $240.2 million for the nine months ended September 30, 2009. Incremental interest in the current year associated with the 2017 and 2020 Senior Notes offerings in May 2010 and July 2010, was offset by less interest on our Senior Credit Facility as a result of prepayments made in March 2009 and December 2009. Included in interest expense for the current nine months and the comparable prior year period are $42.0 million and $31.7 million, primarily related to the accretion of the discounts on our convertible debt instruments, net of accretion of the premium on our 2020 Senior Notes.

Other (Expense) Income, net

Other (expense) income, net was expense of $29.4 million in the current nine-month period compared to income of $29.7 million in the comparable prior year period. Generally included in other (expense) income are interest and dividend income and foreign exchange gains and losses. Additionally, included in the current year is a $4.9 million loss on the sale of certain non-operating assets, charges associated with the termination of certain interest rate swaps totaling $7.4 million, the write-off of previously deferred financing fees of $7.6 million, in conjunction with the debt offering during the current period, and certain non-income-based taxes related to our acquisition of Bioniche Pharma. The prior year period includes a favorable adjustment of $13.9 million to the restructuring reserve as a result of a reduction in the estimated remaining spending on accrued projects, as well as a net gain of $10.4 million realized on the termination of two joint ventures.

Income Tax Expense

We recorded income tax expense of $33.2 million in the nine months ended September 30, 2010 compared to $52.5 million in the comparable prior year period. The decrease in tax expense is driven by a decrease in the effective tax rate. The effective rate for the current year period was 9.3%, versus 20.8% in the comparable prior year period. The decrease in the effective rate was mainly due to the release of certain tax reserves due to favorable tax rulings from taxing authorities and expirations of statutes of limitations.

Liquidity and Capital Resources

Our primary source of liquidity is cash provided by operations, which was $736.9 million for the nine months ended September 30, 2010. We believe that cash provided by operating activities will continue to allow us to meet our needs for working capital, capital expenditures, interest and principal payments on debt obligations and other cash needs over the next several years. Nevertheless, our ability to satisfy our working capital requirements and debt service obligations, or fund planned capital expenditures, will substantially depend upon our future operating performance (which will be affected by prevailing economic conditions), and financial, business and other factors, some of which are beyond our control. During the nine months ended September 30, 2010, changes in operating assets and liabilities resulted in a net cash inflow of $31.7 million, primarily due to the receipt of approximately $98.8 million, representing a tax refund received in the first quarter, and cash collections on accounts receivable, partially offset by an increase in our inventory balances.

Cash used in investing activities for the nine months ended September 30, 2010 was $620.7 million, consisting primarily of cash paid for acquisitions and capital expenditures. On September 7, 2010, we acquired Bioniche Pharma, a privately held, global injectable pharmaceutical company, for $543.7 million. We believe Bioniche Pharma will provide Mylan not only an immediate entry into the North American injectables market but also a platform for future growth opportunities. In addition, cash of approximately $10.0 million was paid as part of the purchase consideration for an FDF manufacturing facility in India. Capital expenditures were $96.3 million, and were made primarily for equipment, including a portion related to our previously announced planned expansions and integration plans. Capital expenditures for the year 2010 are expected to be approximately $200.0 to $250.0 million.

Cash provided by financing activities was $128.3 million for the nine months ended September 30, 2010. During the nine months ended September 30, 2010, we completed a private placement of $550.0 million aggregate principal amount of 7.625% Senior Notes due 2017 and $700.0 million aggregate principal amount of 7.875% Senior Notes due 2020. Through a reopening of the 2020 Senior Notes during the quarter ended September 30, 2010, the Company privately placed $300.0 million aggregate principal amount of senior notes, which were issued at a price of 105.5%, giving an effective yield to maturity of 7.087%. We used approximately $1.30 billion of the net proceeds from the private placement to repay a portion of our outstanding term loans. Additionally, we paid cash dividends of $104.3 million on our 6.5% mandatory convertible preferred stock.

As of September 30, 2010, because the closing price of our common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day in the September 30, 2010 period was more than 130% of the applicable conversion reference price of $13.32 at September 30, 2010, the $575.0 million of Cash Convertible Notes were currently convertible. Although the Company’s experience is that convertible debentures are not normally converted by investors until close to their maturity date, it is possible that debentures could be converted prior to their maturity date if, for example, a holder perceives the market for the debentures to be weaker than the market for the common stock. Upon an investor’s election to convert, the Company is required to pay the full conversion value in cash. The amount payable per $1,000 notional bond would be calculated as the product of (1) the conversion reference rate and (2) the average Daily Volume Weighted Average Price per share of common stock for a specified period following the conversion date. Any payment above the principal amount is matched by a convertible note hedge.

We are involved in various legal proceedings that are considered normal to our business. While it is not possible to predict the outcome of such proceedings, an adverse outcome in any of these proceedings could materially affect our financial position and results of operations. Additionally, for certain contingencies assumed in conjunction with the acquisition of the former Merck Generics business, Merck KGaA, the seller, has indemnified Mylan. The inability or denial of Merck KGaA to pay on an indemnified claim could have a material adverse effect on our financial position, results of operations or cash flows.

Our Condensed Consolidated Balance Sheet as of September 30, 2010 includes restructuring reserves of $16.6 million. Spending against this balance, which consists primarily of severance and related costs and costs associated with the previously announced rationalization and optimization of our global manufacturing and research and development platforms, is expected to occur during 2010 and 2011.

On October 19, 2010, the Company announced that the last quarterly dividend of $16.25 per share had been declared, based on the annual dividend rate of 6.5% and a liquidation preference of $1,000 per share, payable on November 15, 2010, to the holders of preferred stock of record as of November 1, 2010. All outstanding shares of preferred stock will also automatically convert to common stock on November 15, 2010.

We are actively pursuing, and are currently involved in, joint projects related to the development, distribution and marketing of both generic and branded products. Many of these arrangements provide for payments by us upon the attainment of specified milestones. While these arrangements help to reduce the financial risk for unsuccessful projects, fulfillment of specified milestones or the occurrence of other obligations may result in fluctuations in cash flows.

We are continuously evaluating the potential acquisition of products, as well as companies, as a strategic part of our future growth. Consequently, we may utilize current cash reserves or incur additional indebtedness to finance any such acquisitions, which could impact future liquidity. In addition, on an ongoing basis, we review our operations including the evaluation of potential divestitures of products and businesses as part of our future strategy. Any divestitures could impact future liquidity.

At September 30, 2010 and December 31, 2009, we had $85.2 million and $77.5 million, respectively, outstanding under existing letters of credit. Additionally, as of September 30, 2010, we had $44.6 million available under the $100.0 million subfacility on our Senior Credit Agreement for the issuance of letters of credit.

Mandatory minimum repayments remaining on the outstanding borrowings under the term loans and notes at September 30, 2010, excluding the discounts, premium and conversion features, are as follows for each of the periods ending December 31:


	Euro		U.S.		Euro		Senior		Cash		2017		2020
	Tranche A		Tranche B		Tranche B		Convertible		Convertible		Senior		Senior
	Term Loans		Term Loans		Term Loans		Notes		Notes		Notes		Notes		Total
	(In thousands)
2010	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2011		—		—		—		—		—		—		—		—
2012		119,640		—		7,170		600,000		—		—		—		726,810
2013		119,641		—		7,170		—		—		—		—		126,811
2014		—		1,310,010		673,973		—		—		—		—		1,983,983
2015		—		—		—		—		575,000		—		—		575,000
Thereafter		—		—		—		—		—		550,000		1,000,000		1,550,000

Total	$	239,281	$	1,310,010	$	688,313	$	600,000	$	575,000	$	550,000	$	1,000,000	$	4,962,604

The Senior Credit Agreement contains customary affirmative covenants for facilities of this type, including covenants pertaining to the delivery of financial statements, notices of default and certain other information, maintenance of business and insurance, collateral matters and compliance with laws, as well as customary negative covenants for facilities of this type, including limitations on the incurrence of indebtedness and liens, mergers and certain other fundamental changes, investments and loans, acquisitions, transactions with affiliates, dispositions of assets, payments of dividends and other restricted payments, prepayments or amendments to the terms of specified indebtedness and changes in lines of business. The Senior Credit Agreement contains financial covenants requiring maintenance of a minimum interest coverage ratio and a senior leverage ratio, both of which are defined within the agreement. We have been compliant with the financial covenants during the nine months ended September 30, 2010.

Recent Accounting Pronouncements

In October 2009, the FASB issued revised accounting guidance for multiple-deliverable revenue arrangements. The amended guidance requires that consideration received be allocated at the inception of the arrangement to all deliverables using the relative selling price method and provides for expanded disclosures related to such arrangements. It is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Mylan is currently evaluating the impact of adoption on its consolidated financial statements.

In April 2010, the FASB issued revised accounting guidance for the milestone method of revenue recognition. The amended guidance is effective for fiscal years beginning on or after June 15, 2010. It provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. Mylan is currently evaluating the impact of adoption on its consolidated financial statements.


ITEM 3.	*QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK*

For a discussion of the Company’s market risk, see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report filed on Form 10-K.


ITEM 4.	*CONTROLS AND PROCEDURES*

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Principal Executive Officer and the Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2010. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2010, the Company completed its acquisition of Bioniche Pharma. Bioniche Pharma will be excluded for the purposes of managements’ evaluation of the Company’s internal control over financial reporting as of December 31, 2010.

Management has not identified any other changes in the Company’s internal control over financial reporting that occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION


ITEM 1.	*LEGAL PROCEEDINGS*

Lorazepam and Clorazepate

On June 1, 2005, a jury verdict was rendered against Mylan, Mylan Pharmaceuticals Inc. (“MPI”), and co-defendants Cambrex Corporation and Gyma Laboratories in the U.S. District Court for the District of Columbia in the amount of approximately $12.0 million, which has been accrued for by the Company. The jury found that Mylan and its co-defendants willfully violated Massachusetts, Minnesota and Illinois state antitrust laws in connection with API supply agreements entered into between the Company and its API supplier (Cambrex) and broker (Gyma) for two drugs, lorazepam and clorazepate, in 1997, and subsequent price increases on these drugs in 1998. The case was brought by four health insurers who opted out of earlier class action settlements agreed to by the Company in 2001 and represents the last remaining antitrust claims relating to Mylan’s 1998 price increases for lorazepam and clorazepate. Following the verdict, the Company filed a motion for judgment as a matter of law, a motion for a new trial, a motion to dismiss two of the insurers and a motion to reduce the verdict. On December 20, 2006, the Company’s motion for judgment as a matter of law and motion for a new trial were denied and the remaining motions were denied on January 24, 2008. In post-trial filings, the plaintiffs requested that the verdict be trebled and that request was granted on January 24, 2008. On February 6, 2008, a judgment was issued against Mylan and its co-defendants in the total amount of approximately $69.0 million, which, in the case of three of the plaintiffs, reflects trebling of the compensatory damages in the original verdict (approximately $11 million in total) and, in the case of the fourth plaintiff, reflects their amount of the compensatory damages in the original jury verdict plus doubling this compensatory damage award as punitive damages assessed against each of the defendants (approximately $58 million in total), some or all of which may be subject to indemnification obligations by Mylan. Plaintiffs are also seeking an award of attorneys’ fees and litigation costs in unspecified amounts and prejudgment interest of approximately $8.0 million. The Company and its co-defendants have appealed to the U.S. Court of Appeals for the D.C. Circuit and have challenged the verdict as legally erroneous on multiple grounds. The appeals were held in abeyance pending a ruling on the motion for prejudgment interest, which has been granted. Mylan intends to contest this ruling along with the liability finding and other damages awards as part of its pending appeal, which is proceeding in the Court of Appeals for the D.C. Circuit, with oral argument having been held on October 8, 2010. In connection with the Company’s appeal of the lorazepam judgment, the Company submitted a surety bond underwritten by a third-party insurance company in the amount of $74.5 million. This surety bond is secured by a pledge of a $15.0 million cash deposit (which is included as restricted cash on the Company’s Condensed Consolidated Balance Sheets) and an irrevocable letter of credit for $34.5 million issued under the Senior Credit Agreement.

Pricing and Medicaid Litigation

of New York and approximately 40 counties across New York State. Several of these cases have been transferred to the AWP multi-district litigation proceedings pending in the U.S. District Court for the District of Massachusetts for pretrial proceedings. Others of these cases will likely be litigated in the state courts in which they were filed. Each of the cases seeks money damages, civil penalties and/or double, treble or punitive damages, counsel fees and costs, equitable relief and/or injunctive relief. Certain of these cases may go to trial in 2010. Mylan and its subsidiaries have denied liability and intend to defend each of these actions vigorously. On January 27, 2010, in the New York Counties cases, the U.S. District Court for the District of Massachusetts granted the plaintiffs’ motion for partial summary judgment as to liability under New York Social Services Law § 145-b against Mylan and several other defendants. The District Court has not ruled on the remaining issues of liability and damages. On February 8, 2010, Mylan, and a majority of the other defendants, filed a motion to amend the court’s decision, requesting the court to certify a question of New York state law pertaining to the court’s finding of requisite causation under the Social Services Law to the First Circuit Court of Appeals, so that the defendants could in turn request that the First Circuit Court of Appeals certify the question to the New York Court of Appeals. The District Court denied this motion on May 4, 2010.

preliminarily approved by the court. Additionally, a complaint was filed under seal by a plaintiff on behalf of the United States of America against Dey in August 1997. In August 2006, the Government filed its complaint-in-intervention and the case was unsealed in September 2006. The Government has asserted that Dey is jointly liable with a codefendant and seeks recovery of alleged overpayments, together with treble damages, civil penalties and equitable relief. These cases all generally allege that Dey falsely reported certain price information concerning certain drugs marketed by Dey, that Dey caused false claims to be made to Medicaid and to Medicare, and that Dey caused Medicaid and Medicare to make overpayments on those claims. Certain of these cases may go to trial in 2010. Dey intends to defend each of these actions vigorously. The Company has approximately $96 million recorded in other liabilities related to the price-related litigation involving Dey. As stated above, in conjunction with the acquisition of the former Merck Generics business, Mylan is entitled to indemnification from Merck KGaA. As a result, the Company has recorded approximately $96 million in other assets.

Modafinil Antitrust Litigation and FTC Inquiry

Digitek^® Recall

EU Commission Proceedings

On or around July 3, 2009, the European Commission (the “EU Commission” or the “Commission”) stated that it had initiated antitrust proceedings pursuant to Article 11(6) of Regulation No. 1/2003 and Article 2(1) of Regulation No. 773/2004 to explore possible infringement of Articles 81 and 82 EC and Articles 53 and 54 of the EEA Agreement by Les Laboratoires Servier (“Servier”) as well as possible infringement of Article 81 EC by Matrix and four other companies, each of which entered into agreements with Servier relating to the product perindopril. Matrix is cooperating with the EU Commission in connection with the investigation. The EU Commission stated that the “initiation of proceedings does not imply that the Commission has conclusive proof of an infringement but merely signifies that the Commission will deal with the case as a matter of priority.” No statement of objections has been filed against Matrix in connection with its investigation. On August 5, 2009, Matrix and Generics [U.K.] Ltd. received requests for information from the EU Commission in connection with this matter, and both companies have responded. By letters dated February 17, 2010, the EU Commission served additional requests for information on Matrix and Mylan S.A.S. The companies responded to these requests. On August 13, 2010, Matrix received an additional request for information. Matrix has responded to this request. Matrix is cooperating with the Commission in this investigation.

Other Litigation


ITEM 1A.	*RISK FACTORS*

The following risk factors could have a material adverse effect on our business, financial position or results of operations and could cause the market value of our common stock to decline. These risk factors may not include all of the important factors that could affect our business or our industry or that could cause our future financial results to differ materially from historic or expected results or cause the market price of our common stock to fluctuate or decline.

CURRENT ECONOMIC CONDITIONS MAY ADVERSELY AFFECT OUR INDUSTRY, BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Over the past few years, the global economy has undergone a period of unprecedented volatility, and the economic environment may continue to be less favorable than that of past years. This has led, and could further lead, to reduced consumer spending in the foreseeable future, and this may include spending on healthcare. While generic drugs present an ideal alternative to higher-priced branded products, our sales could be negatively impacted if patients forego obtaining healthcare. In addition, reduced consumer spending may drive us and our competitors to decrease prices. These conditions may adversely affect our industry, business, financial position and results of operations and may cause the market value of our common stock to decline.

OUR INTEGRATION OF ACQUIRED BUSINESSES INVOLVES A NUMBER OF RISKS. THESE RISKS COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

There are a number of operational risks associated with the integration of acquired businesses, including Bioniche Pharma. These risks include, but are not limited to, difficulties in achieving identified financial and operating synergies, cost savings, revenue synergies and growth opportunities; difficulties in consolidating information technology platforms, business applications and corporate infrastructure; our substantial indebtedness and assumed liabilities; challenges in operating in other markets outside of the U.S. that are new to us; and the unanticipated effects of export controls, exchange rate fluctuations, domestic and foreign political conditions or domestic and foreign economic conditions.

These factors could impair our growth and ability to compete, require us to focus additional resources on integration of operations rather than other profitable areas, or otherwise cause a material adverse effect on our business, financial position and results of operations and could cause a decline in the market value of our common stock.

WE HAVE GROWN AT A VERY RAPID PACE. OUR INABILITY TO PROPERLY MANAGE OR SUPPORT THIS GROWTH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We have grown very rapidly over the past few years, through our acquisitions of the former Merck Generics business and Matrix, as well as the recent acquisition of Bioniche Pharma. This growth has put significant demands on our processes, systems and people. We expect to make further investments in additional personnel, systems and internal control processes to help manage our growth. Attracting, retaining and motivating key employees in various departments and locations to support our growth are critical to our business, and competition for these people can be intense. If we are unable to hire and retain qualified employees and if we do not continue to invest in systems and processes to manage and support our rapid growth, there may be a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.

OUR GLOBAL FOOTPRINT EXPOSES US TO ADDITIONAL RISKS WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our operations extend to numerous countries outside the U.S. Operating globally exposes us to certain additional risks including, but not limited to:


	•	compliance with a variety of national and local laws of countries in which we do business, including restrictions on the import and export of certain intermediates, drugs and technologies;

	•	changes in laws, regulations, and practices affecting the pharmaceutical industry and the healthcare system, including but not limited to imports, exports, manufacturing, cost, pricing, reimbursement, approval, inspection, and delivery of healthcare;


	•	fluctuations in exchange rates for transactions conducted in currencies other than the functional currency;

	•	adverse changes in the economies in which we operate as a result of a slowdown in overall growth, a change in government or economic liberalization policies, or financial, political or social instability in such countries that affects the markets in which we operate, particularly emerging markets;

	•	wage increases or rising inflation in the countries in which we operate;

	•	supply disruptions, and increases in energy and transportation costs;

	•	natural disasters, including droughts, floods and earthquakes in the countries in which we operate;

	•	communal disturbances, terrorist attacks, riots or regional hostilities in the countries in which we operate; and

	•	government uncertainty, including as a result of new or changed laws and regulations.

We also face the risk that some of our competitors have more experience with operations in such countries or with international operations generally. Any of the above factors could have a material adverse effect on our business, financial position and results of operations and could cause a decline in the market value of our common stock.

MATRIX, AN IMPORTANT PART OF OUR BUSINESS, IS LOCATED IN INDIA AND IT IS SUBJECT TO REGULATORY, ECONOMIC, SOCIAL AND POLITICAL UNCERTAINTIES IN INDIA. THESE UNCERTAINTIES CREATE RISKS WHICH COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

In recent years, Matrix has benefited from many policies of the Government of India and the Indian state governments in the states in which it operates, which are designed to promote foreign investment generally, including significant tax incentives, liberalized import and export duties and preferential rules on foreign investment and repatriation. There is no assurance that such policies will continue. Various factors, such as changes in the current federal government, could trigger significant changes in India’s economic liberalization and deregulation policies and disrupt business and economic conditions in India generally and our business in particular.

In addition, our financial performance may be adversely affected by general economic conditions and economic and fiscal policy in India, including changes in exchange rates and controls, interest rates and taxation policies, as well as social stability and political, economic or diplomatic developments affecting India in the future. In particular, India has experienced significant economic growth over the last several years, but faces major challenges in sustaining that growth in the years ahead. These challenges include the need for substantial infrastructure development and improving access to healthcare and education. Our ability to recruit, train and retain qualified employees and develop and operate our manufacturing facilities in India could be adversely affected if India does not successfully meet these challenges.

Southern Asia has, from time to time, experienced instances of civil unrest and hostilities among neighboring countries, including India and Pakistan, and within the countries themselves. Rioting, military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel more difficult. Resulting political tensions could create a greater perception that investments in companies with Indian operations involve a high degree of risk, and that there is a risk of disruption of services provided by companies with Indian operations, which could have a material adverse effect on the market for Matrix’s products. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, Matrix might not be able to continue its operations. We generally do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts and wars. These risks could cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

MOVEMENTS IN FOREIGN CURRENCY EXCHANGE RATES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

A significant portion of our revenues, indebtedness and our costs are denominated in foreign currencies, including the Australian Dollar, the British Pound, the Canadian Dollar, the Euro, the Indian Rupee and the Japanese Yen. We report our financial results in U.S. Dollars. Our results of operations and, in some cases, cash flows, could be adversely affected by certain movements in exchange rates. From time to time, we may implement currency hedges intended to reduce our exposure to changes in foreign currency exchange rates. However, our hedging strategies may not be successful, and any of our unhedged foreign exchange payments will continue to be subject to market fluctuations. These risks could cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE ARE SUBJECT TO THE U.S. FOREIGN CORRUPT PRACTICES ACT AND SIMILAR WORLDWIDE ANTI-BRIBERY LAWS, WHICH IMPOSE RESTRICTIONS AND MAY CARRY SUBSTANTIAL PENALTIES. ANY VIOLATIONS OF THESE LAWS, OR ALLEGATIONS OF SUCH VIOLATIONS, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

The U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws, which often carry substantial penalties. We operate in jurisdictions that have experienced governmental corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices. We cannot assure you that our internal control policies and procedures always will protect us from reckless or other inappropriate acts committed by our affiliates, employees or agents. Violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

OUR FUTURE REVENUE GROWTH AND PROFITABILITY ARE DEPENDENT UPON OUR ABILITY TO DEVELOP AND/OR LICENSE, OR OTHERWISE ACQUIRE, AND INTRODUCE NEW PRODUCTS ON A TIMELY BASIS IN RELATION TO OUR COMPETITORS’ PRODUCT INTRODUCTIONS. OUR FAILURE TO DO SO SUCCESSFULLY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our future revenues and profitability will depend, to a significant extent, upon our ability to successfully develop and/or license, or otherwise acquire and commercialize, new generic and patent or statutorily protected pharmaceutical products in a timely manner. Product development is inherently risky, especially for new drugs for which safety and efficacy have not been established and the market is not yet proven. Likewise, product licensing involves inherent risks including uncertainties due to matters that may affect the achievement of milestones, as well as the possibility of contractual disagreements with regard to terms such as license scope or termination rights. The development and commercialization process, particularly with regard to new drugs, also requires substantial time, effort and financial resources. We, or a partner, may not be successful in commercializing any of such products on a timely basis, if at all, which could adversely affect our business, financial position and results of operations and could cause the market value of our common stock to decline.

Before any prescription drug product, including generic drug products, can be marketed, marketing authorization approval is required by the relevant regulatory authorities and/or national regulatory agencies (for example the Food and Drug Administration (“FDA”) in the U.S. and the European Medicines Agency (“EMA”) in the EU). The process of obtaining regulatory approval to manufacture and market new and generic pharmaceutical products is rigorous, time consuming, costly and largely unpredictable. Outside the U.S., the approval process may be more or less rigorous, and the time required for approval may be longer or shorter than that required in the U.S. Bioequivalency studies conducted in one country may not be accepted in other countries, and the approval

of a pharmaceutical product in one country does not necessarily mean that the product will be approved in another country. We, or a partner, may be unable to obtain requisite approvals on a timely basis for new generic or branded products that we may develop, license or otherwise acquire. Moreover, if we obtain regulatory approval for a drug it may be limited with respect to the indicated uses and delivery methods for which the drug may be marketed, which could in turn restrict our potential market for the drug. Also, for products pending approval, we may obtain raw materials or produce batches of inventory to be used in efficacy and bioequivalence testing, as well as in anticipation of the product’s launch. In the event that regulatory approval is denied or delayed, we could be exposed to the risk of this inventory becoming obsolete. The timing and cost of obtaining regulatory approvals could adversely affect our product introduction plans, business, financial position and results of operations and could cause the market value of our common stock to decline.

The approval process for generic pharmaceutical products often results in the relevant regulatory agency granting final approval to a number of generic pharmaceutical products at the time a patent claim for a corresponding branded product or other market exclusivity expires. This often forces us to face immediate competition when we introduce a generic product into the market. Additionally, further generic approvals often continue to be granted for a given product subsequent to the initial launch of the generic product. These circumstances generally result in significantly lower prices, as well as reduced margins, for generic products compared to branded products. New generic market entrants generally cause continued price and margin erosion over the generic product life cycle.

In the U.S., the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, provides for a period of 180 days of generic marketing exclusivity for each abbreviated new drug application (“ANDA”) applicant that is first-to-file an ANDA containing a certification of invalidity, non-infringement or unenforceability related to a patent listed with respect to a reference drug product, commonly referred to as a Paragraph IV certification. During this exclusivity period, which under certain circumstances may be required to be shared with other applicable ANDA sponsors with Paragraph IV certifications, the FDA cannot grant final approval to other ANDA sponsors holding applications for the same generic equivalent. If an ANDA containing a Paragraph IV certification is successful and the applicant is awarded exclusivity, the applicant generally enjoys higher market share, net revenues and gross margin for that product. Even if we obtain FDA approval for our generic drug products, if we are not the first ANDA applicant to challenge a listed patent for such a product, we may lose significant advantages to a competitor that filed its ANDA containing such a challenge. The same would be true in situations where we are required to share our exclusivity period with other ANDA sponsors with Paragraph IV certifications. Such situations could have a material adverse effect on our ability to market that product profitably and on our business, financial position and results of operations, and the market value of our common stock could decline.

In Europe, there is no exclusivity period for the first generic. The EMA or national regulatory agencies may grant marketing authorizations to any number of generics. However, if there are other relevant patents when the core patent expires, for example, new formulations, the owner of the original brand pharmaceutical may be able to obtain preliminary injunctions in certain European jurisdictions preventing launch of the generic product, if the generic company did not commence proceedings in a timely manner to invalidate any relevant patents prior to launch of its generic.

In addition, in other jurisdictions outside the U.S., we may face similar regulatory hurdles and constraints. If we are unable to navigate our products through all of the regulatory hurdles we face in a timely manner it could adversely affect our product introduction plans, business, financial position and results of operations and could cause the market value of our common stock to decline.

WE EXPEND A SIGNIFICANT AMOUNT OF RESOURCES ON RESEARCH AND DEVELOPMENT EFFORTS THAT MAY NOT LEAD TO SUCCESSFUL PRODUCT INTRODUCTIONS. FAILURE TO SUCCESSFULLY INTRODUCE PRODUCTS INTO THE MARKET COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS, AND THE MARKET VALUE OF OUR COMMON STOCK COULD DECLINE.

Much of our development effort is focused on technically difficult-to-formulate products and/or products that require advanced manufacturing technology. We conduct research and development primarily to enable us to manufacture and market approved pharmaceuticals in accordance with applicable regulations. We also partner with

third parties to develop products. Typically, research expenses related to the development of innovative compounds and the filing of marketing authorization applications for innovative compounds (such as new drug applications (“NDAs”) in the U.S.) are significantly greater than those expenses associated with the development of and filing of marketing authorization applications for generic products (such as ANDAs in the U.S. and abridged applications in Europe). As we and our partners continue to develop new products, our research expenses will likely increase. Because of the inherent risk associated with research and development efforts in our industry, particularly with respect to new drugs, our, or a partner’s, research and development expenditures may not result in the successful introduction of new pharmaceutical products approved by the relevant regulatory bodies. Also, after we submit a marketing authorization application for a new compound or generic product, the relevant regulatory authority may request that we conduct additional studies and, as a result, we may be unable to reasonably determine the total research and development costs to develop a particular product. Finally, we cannot be certain that any investment made in developing products will be recovered, even if we are successful in commercialization. To the extent that we expend significant resources on research and development efforts and are not able, ultimately, to introduce successful new products as a result of those efforts, our business, financial position and results of operations may be materially adversely affected, and the market value of our common stock could decline.

OUR APPROVED PRODUCTS MAY NOT ACHIEVE EXPECTED LEVELS OF MARKET ACCEPTANCE, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR PROFITABILITY, BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Even if we are able to obtain regulatory approvals for our new pharmaceutical products, generic or branded, the success of those products is dependent upon market acceptance. Levels of market acceptance for our new products could be impacted by several factors, including but not limited to:


	•	the availability of alternative products from our competitors;

	•	the price of our products relative to that of our competitors;

	•	the timing of our market entry;

	•	the ability to market our products effectively to the retail level; and

	•	the acceptance of our products by government and private formularies.

Some of these factors are not within our control. Additionally, continuing studies of the proper utilization, safety and efficacy of pharmaceutical products are being conducted by the industry, government agencies and others. Such studies, which increasingly employ sophisticated methods and techniques, can call into question the utilization, safety and efficacy of previously marketed products. In some cases, studies have resulted, and may in the future result, in the discontinuance of product marketing or other risk management programs such as the need for a patient registry. These situations, should they occur, could have a material adverse effect on our profitability, business, financial position and results of operations, and could cause the market value of our common stock to decline.

OUR BUSINESS IS HIGHLY DEPENDENT UPON MARKET PERCEPTIONS OF US, OUR BRANDS AND THE SAFETY AND QUALITY OF OUR PRODUCTS. OUR BUSINESS OR BRANDS COULD BE SUBJECT TO NEGATIVE PUBLICITY, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Market perceptions of our business are very important to us, especially market perceptions of our brands and the safety and quality of our products. If we, or our brands, suffer from negative publicity, or if any of our products or similar products which other companies distribute are proven to be, or are claimed to be, harmful to consumers, then this could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline. Also, because we are dependant on market perceptions, negative publicity associated with illness or other adverse effects resulting from our products could have a material adverse impact on our business, financial position and results of operations and could cause the market value of our common stock to decline.

THE ILLEGAL DISTRIBUTION AND SALE BY THIRD PARTIES OF COUNTERFEIT VERSIONS OF OUR PRODUCTS OR OF STOLEN PRODUCTS COULD HAVE A NEGATIVE IMPACT ON OUR REPUTATION AND A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

The drug supply has been increasingly challenged by the vulnerability of distribution channels to illegal counterfeiting and the presence of counterfeit products in a growing number of markets and over the Internet. The World Health Organization estimates that more than 10% of medications being sold globally are counterfeit.

Third parties may illegally distribute and sell counterfeit versions of our products, which do not meet the rigorous manufacturing and testing standards that our products undergo. Counterfeit products are frequently unsafe or ineffective, and can be potentially life-threatening. Counterfeit medicines may contain harmful substances, the wrong dose of the active pharmaceutical ingredient (“API”) or no API at all. However, to distributors and users, counterfeit products may be visually indistinguishable from the authentic version.

Reports of adverse reactions to counterfeit drugs or increased levels of counterfeiting could materially affect patient confidence in the authentic product. It is possible that adverse events caused by unsafe counterfeit products will mistakenly be attributed to the authentic product. In addition, thefts of inventory at warehouses, plants or while in-transit which are not properly stored and which are sold through unauthorized channels could adversely impact patient safety, our reputation and our business.

Public loss of confidence in the integrity of pharmaceutical products as a result of counterfeiting or theft could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

IF WE OR ANY PARTNER FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS, THEN WE COULD LOSE REVENUE UNDER OUR LICENSING AGREEMENTS OR LOSE SALES TO GENERIC COPIES OF OUR BRANDED PRODUCTS. THESE RISKS COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our success, particularly in our specialty business, depends in part on our or any partner’s ability to obtain, maintain and enforce patents, and protect trade secrets, know-how and other proprietary information. Our ability to commercialize any branded product successfully will largely depend upon our or any partner’s ability to obtain and maintain patents of sufficient scope to prevent third-parties from developing substantially equivalent products. In the absence of patent and trade secret protection, competitors may adversely affect our branded products business by independently developing and marketing substantially equivalent products. It is also possible that we could incur substantial costs if we are required to initiate litigation against others to protect or enforce our intellectual property rights.

We have filed patent applications covering composition of, methods of making, and/or methods of using, our branded products and branded product candidates. We may not be issued patents based on patent applications already filed or that we file in the future, and if patents are issued, they may be insufficient in scope to cover our branded products. The issuance of a patent in one country does not ensure the issuance of a patent in any other country. Furthermore, the patent position of companies in the pharmaceutical industry generally involves complex legal and factual questions and has been and remains the subject of much litigation. Legal standards relating to scope and validity of patent claims are evolving. Any patents we have obtained, or obtain in the future, may be challenged, invalidated or circumvented. Moreover, the U.S. Patent and Trademark Office or any other governmental agency may commence interference proceedings involving our patents or patent applications. Any challenge to, or invalidation or circumvention of, our patents or patent applications would be costly, would require significant time and attention of our management, could cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE FACE VIGOROUS COMPETITION FROM OTHER PHARMACEUTICAL MANUFACTURERS THAT THREATENS THE COMMERCIAL ACCEPTANCE AND PRICING OF OUR PRODUCTS. SUCH COMPETITION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

The generic pharmaceutical industry is highly competitive. We face competition from many U.S. and foreign manufacturers, some of whom are significantly larger than we are. Our competitors may be able to develop products and processes competitive with or superior to our own for many reasons, including but not limited to the possibility that they may have:


	•	proprietary processes or delivery systems;

	•	larger research and development and marketing staffs;

	•	larger production capabilities in a particular therapeutic area;

	•	more experience in preclinical testing and human clinical trials;

	•	more products; or

	•	more experience in developing new drugs and greater financial resources, particularly with regard to manufacturers of branded products.

Any of these factors and others could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

THE USE OF LEGAL, REGULATORY AND LEGISLATIVE STRATEGIES BY COMPETITORS, BOTH BRAND AND GENERIC, INCLUDING “AUTHORIZED GENERICS” AND CITIZEN’S PETITIONS, AS WELL AS THE POTENTIAL IMPACT OF PROPOSED LEGISLATION, MAY INCREASE OUR COSTS ASSOCIATED WITH THE INTRODUCTION OR MARKETING OF OUR GENERIC PRODUCTS, COULD DELAY OR PREVENT SUCH INTRODUCTION AND/OR COULD SIGNIFICANTLY REDUCE OUR PROFIT POTENTIAL. THESE FACTORS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our competitors, both branded and generic, often pursue strategies to prevent or delay competition from generic alternatives to branded products. These strategies include, but are not limited to:


	•	entering into agreements whereby other generic companies will begin to market an authorized generic, a generic equivalent of a branded product, at the same time generic competition initially enters the market;

	•	filing citizen’s petitions with the FDA or other regulatory bodies, including timing the filings so as to thwart generic competition by causing delays of our product approvals;

	•	seeking to establish regulatory and legal obstacles that would make it more difficult to demonstrate bioequivalence;

	•	initiating legislative efforts to limit the substitution of generic versions of brand pharmaceuticals;

	•	filing suits for patent infringement that may delay regulatory approval of many generic products;

	•	introducing “next-generation” products prior to the expiration of market exclusivity for the reference product, which often materially reduces the demand for the first generic product for which we seek regulatory approval;

	•	obtaining extensions of market exclusivity by conducting clinical trials of brand drugs in pediatric populations or by other potential methods;


	•	persuading regulatory bodies to withdraw the approval of brand name drugs for which the patents are about to expire, thus allowing the brand name company to obtain new patented products serving as substitutes for the products withdrawn; and

	•	seeking to obtain new patents on drugs for which patent protection is about to expire.

In the U.S., some companies have lobbied Congress for amendments to the Hatch-Waxman legislation that would give them additional advantages over generic competitors. For example, although the term of a company’s drug patent can be extended to reflect a portion of the time an NDA is under regulatory review, some companies have proposed extending the patent term by a full year for each year spent in clinical trials rather than the one-half year that is currently permitted.

If proposals like these in the U.S., Europe or in other countries where we operate were to become effective, our entry into the market and our ability to generate revenues associated with new products may be delayed, reduced or eliminated, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

OUR COMPETITORS, INCLUDING BRANDED PHARMACEUTICAL COMPANIES, OR OTHER THIRD PARTIES MAY ALLEGE THAT WE ARE INFRINGING THEIR INTELLECTUAL PROPERTY, FORCING US TO EXPEND SUBSTANTIAL RESOURCES IN RESULTING LITIGATION, THE OUTCOME OF WHICH IS UNCERTAIN. ANY UNFAVORABLE OUTCOME OF SUCH LITIGATION, INCLUDING IN AN “AT-RISK LAUNCH” SITUATION, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Companies that produce brand pharmaceutical products routinely bring litigation against ANDA or similar applicants that seek regulatory approval to manufacture and market generic forms of their branded products. These companies allege patent infringement or other violations of intellectual property rights as the basis for filing suit against an ANDA or similar applicant. Likewise, patent holders may bring patent infringement suits against companies that are currently marketing and selling their approved generic products. Litigation often involves significant expense and can delay or prevent introduction or sale of our generic products. If patents are held valid and infringed by our products in a particular jurisdiction, we would, unless we could obtain a license from the patent holder, need to cease selling in that jurisdiction and may need to deliver up or destroy existing stock in that jurisdiction.

There may also be situations where the Company uses its business judgment and decides to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an “at-risk launch” situation). The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, among other things, damages measured by the profits lost by the patent owner and not necessarily by the profits earned by the infringer. In the case of a willful infringement, the definition of which is subjective, such damages may be trebled. Moreover, because of the discount pricing typically involved with bioequivalent products, patented branded products generally realize a substantially higher profit margin than bioequivalent products. An adverse decision in a case such as this or in other similar litigation could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

OUR SPECIALTY BUSINESS DEVELOPS, FORMULATES, MANUFACTURES OR IN-LICENSES AND MARKETS BRANDED PRODUCTS THAT ARE SUBJECT TO RISKS. THESE RISKS COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our branded products developed, formulated, manufactured (or alternatively, in-licensed) and marketed by our specialty business may be subject to the following risks, among others:


	•	limited patent life, or the loss of patent protection;

	•	competition from generic products;


	•	reductions in reimbursement rates by third-party payors;

	•	importation by consumers;

	•	product liability;

	•	drug development risks arising from typically greater research and development investments than generics; and

	•	unpredictability with regard to establishing a market.

In addition, developing and commercializing branded products is generally more costly than generic products. If such business expenditures do not ultimately result in the launch of commercially successful brand products, or if any of the risks above were to occur, there could be a material adverse effect on our business, financial position and results of operations and the market value of our common stock could decline.

A RELATIVELY SMALL GROUP OF PRODUCTS MAY REPRESENT A SIGNIFICANT PORTION OF OUR NET REVENUES, GROSS PROFIT OR NET EARNINGS FROM TIME TO TIME. IF THE VOLUME OR PRICING OF ANY OF THESE PRODUCTS DECLINES, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Sales of a limited number of our products from time to time represent a significant portion of our net revenues, gross profit and net earnings. If the volume or pricing of our largest selling products declines in the future, our business, financial position and results of operations could be materially adversely affected, and the market value of our common stock could decline.

A SIGNIFICANT PORTION OF OUR NET REVENUES IS DERIVED FROM SALES TO A LIMITED NUMBER OF CUSTOMERS. ANY SIGNIFICANT REDUCTION OF BUSINESS WITH ANY OF THESE CUSTOMERS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS, AND THE MARKET VALUE OF OUR COMMON STOCK COULD DECLINE.

A significant portion of our net revenues is derived from sales to a limited number of customers. If we were to experience a significant reduction in or loss of business with one such customer, or if one such customer were to experience difficulty in paying us on a timely basis, our business, financial position and results of operations could be materially adversely affected, and the market value of our common stock could decline.

WE DEPEND TO A LARGE EXTENT ON THIRD-PARTY SUPPLIERS AND DISTRIBUTORS FOR THE RAW MATERIALS, PARTICULARLY THE CHEMICAL COMPOUND(S) COMPRISING THE ACTIVE PHARMACEUTICAL INGREDIENT, THAT WE USE TO MANUFACTURE OUR PRODUCTS AS WELL AS CERTAIN FINISHED GOODS. A PROLONGED INTERRUPTION IN THE SUPPLY OF SUCH PRODUCTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We typically purchase the active pharmaceutical ingredient (i.e., the chemical compounds that produce the desired therapeutic effect in our products) and other materials and supplies that we use in our manufacturing operations, as well as certain finished products, from many different foreign and domestic suppliers.

Additionally, we maintain safety stocks in our raw materials inventory and, in certain cases where we have listed only one supplier in our applications with regulatory agencies, have received regulatory agency approval to use alternative suppliers should the need arise. However, there is no guarantee that we will always have timely and sufficient access to a critical raw material or finished product. A prolonged interruption in the supply of a single-sourced raw material, including the active ingredient, or finished product could cause our business, financial position and results of operations to be materially adversely affected, and the market value of our common stock

could decline. In addition, our manufacturing capabilities could be impacted by quality deficiencies in the products which our suppliers provide, which could have a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.

We utilize controlled substances in certain of our current products and products in development and therefore must meet the requirements of the Controlled Substances Act of 1970 and the related regulations administered by the Drug Enforcement Administration (“DEA”) in the U.S. as well as similar laws in other countries where we operate. These laws relate to the manufacture, shipment, storage, sale and use of controlled substances. The DEA and other regulatory agencies limit the availability of the active ingredients used in certain of our current products and products in development and, as a result, our procurement quota of these active ingredients may not be sufficient to meet commercial demand or complete clinical trials. We must annually apply to the DEA and other regulatory agencies for procurement quota in order to obtain these substances. Any delay or refusal by the DEA or such regulatory agencies in establishing our procurement quota for controlled substances could delay or stop our clinical trials or product launches, or could cause trade inventory disruptions for those products that have already been launched, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE HAVE A LIMITED NUMBER OF MANUFACTURING FACILITIES PRODUCING A SUBSTANTIAL PORTION OF OUR PRODUCTS. PRODUCTION AT ANY ONE OF THESE FACILITIES COULD BE INTERRUPTED, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

A substantial portion of our capacity as well as our current production is attributable to a limited number of manufacturing facilities. A significant disruption at any one of those facilities, even on a short-term basis, could impair our ability to produce and ship products to the market on a timely basis, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE MAY EXPERIENCE DECLINES IN THE SALES VOLUME AND PRICES OF OUR PRODUCTS AS THE RESULT OF THE CONTINUING TREND TOWARD CONSOLIDATION OF CERTAIN CUSTOMER GROUPS, SUCH AS THE WHOLESALE DRUG DISTRIBUTION AND RETAIL PHARMACY INDUSTRIES, AS WELL AS THE EMERGENCE OF LARGE BUYING GROUPS. THE RESULT OF SUCH DEVELOPMENTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

A significant amount of our sales are to a relatively small number of drug wholesalers and retail drug chains. These customers represent an essential part of the distribution chain of generic pharmaceutical products. Drug wholesalers and retail drug chains have undergone, and are continuing to undergo, significant consolidation. This consolidation may result in these groups gaining additional purchasing leverage and consequently increasing the product pricing pressures facing our business. Additionally, the emergence of large buying groups representing independent retail pharmacies and the prevalence and influence of managed care organizations and similar institutions potentially enable those groups to attempt to extract price discounts on our products. The result of these developments may have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

BECAUSE THE PHARMACEUTICAL INDUSTRY IS HEAVILY REGULATED, WE FACE SIGNIFICANT COSTS AND UNCERTAINTIES ASSOCIATED WITH OUR EFFORTS TO COMPLY WITH APPLICABLE REGULATIONS. SHOULD WE FAIL TO COMPLY, WE COULD EXPERIENCE MATERIAL ADVERSE EFFECTS ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS, AND THE MARKET VALUE OF OUR COMMON STOCK COULD DECLINE.

The pharmaceutical industry is subject to regulation by various governmental authorities. For instance, we must comply with requirements of the FDA and similar requirements of similar agencies in our other markets with

respect to the manufacture, labeling, sale, distribution, marketing, advertising, promotion and development of pharmaceutical products. Failure to comply with regulations of the FDA and other regulators can result in fines, disgorgement, unanticipated compliance expenditures, recall or seizure of products, total or partial suspension of production and/or distribution, suspension of the applicable regulator’s review of our submissions, enforcement actions, injunctions and criminal prosecution. Under certain circumstances, the regulators may also have the authority to revoke previously granted drug approvals. Although we have internal regulatory compliance programs and policies and have had a favorable compliance history, there is no guarantee that these programs, as currently designed, will meet regulatory agency standards in the future. Additionally, despite our efforts at compliance, there is no guarantee that we may not be deemed to be deficient in some manner in the future. If we were deemed to be deficient in any significant way, our business, financial position and results of operations could be materially affected and the market value of our common stock could decline.

In Europe we must also comply with regulatory requirements with respect to the manufacture, labeling, sale, distribution, marketing, advertising, promotion and development of pharmaceutical products. Some of these requirements are contained in EU regulations and governed by the EMA. Other requirements are set down in national laws and regulations of the EU Member States. Failure to comply with the regulations can result in a range of fines, penalties, product recalls/suspensions or even criminal liability. Similar laws and regulations exist in most of the markets in which we operate.

In addition to the new drug approval process, government agencies also regulate the facilities and operational procedures that we use to manufacture our products. We must register our facilities with the FDA and other similar regulators. Products manufactured in our facilities must be made in a manner consistent with current good manufacturing practices or similar standards in each territory in which we manufacture. Compliance with such regulations requires substantial expenditures of time, money and effort in such areas as production and quality control to ensure full technical compliance. The FDA and other agencies periodically inspect our manufacturing facilities for compliance. Regulatory approval to manufacture a drug is site-specific. Failure to comply with good manufacturing practices at one of our manufacturing facilities could result in an enforcement action brought by the FDA or other regulatory bodies which could include withholding the approval of our submissions or other product applications of that facility. If any regulatory body were to require one of our manufacturing facilities to cease or limit production, our business could be adversely affected. Delay and cost in obtaining FDA or other regulatory approval to manufacture at a different facility also could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

We are subject, as are generally all manufacturers, to various federal, state and local laws regulating working conditions, as well as environmental protection laws and regulations, including those governing the discharge of materials into the environment. We are also required to comply with data protection and data privacy rules in many countries. Although we have not incurred significant costs associated with complying with environmental provisions in the past, if changes to such environmental laws and regulations are made in the future that require significant changes in our operations or if we engage in the development and manufacturing of new products requiring new or different environmental controls, we may be required to expend significant funds. Such changes could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

OUR REPORTING AND PAYMENT OBLIGATIONS UNDER THE MEDICARE AND/OR MEDICAID REBATE PROGRAM AND OTHER GOVERNMENTAL PURCHASING AND REBATE PROGRAMS ARE COMPLEX AND MAY INVOLVE SUBJECTIVE DECISIONS THAT COULD CHANGE AS A RESULT OF NEW BUSINESS CIRCUMSTANCES, NEW REGULATORY GUIDANCE, OR ADVICE OF LEGAL COUNSEL. ANY DETERMINATION OF FAILURE TO COMPLY WITH THOSE OBLIGATIONS COULD SUBJECT US TO PENALTIES AND SANCTIONS WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS, AND THE MARKET VALUE OF OUR COMMON STOCK COULD DECLINE.

The regulations regarding reporting and payment obligations with respect to Medicare and/or Medicaid reimbursement and rebates and other governmental programs are complex. Because our processes for these calculations and the judgments involved in making these calculations involve, and will continue to involve,

subjective decisions and complex methodologies, these calculations are subject to the risk of errors. In addition, they are subject to review and challenge by the applicable governmental agencies, and it is possible that such reviews could result in material changes. Further, effective October 1, 2007, the Centers for Medicaid and Medicare Services, or CMS, adopted new rules for Average Manufacturer’s Price (“AMP”) based on the provisions of the Deficit Reduction Act of 2005 (“DRA”). While the matter remains subject to litigation and proposed legislation, one potential significant change as a result of the DRA is that AMP would need to be disclosed to the public. AMP was historically kept confidential by the government and participants in the Medicaid program. Disclosing AMP to competitors, customers, and the public at large could negatively affect our leverage in commercial price negotiations.

In addition, as also disclosed herein, a number of state and federal government agencies are conducting investigations of manufacturers’ reporting practices with respect to Average Wholesale Prices (“AWP”) in which they have suggested that reporting of inflated AWP has led to excessive payments for prescription drugs. We and numerous other pharmaceutical companies have been named as defendants in various actions relating to pharmaceutical pricing issues and whether allegedly improper actions by pharmaceutical manufacturers led to excessive payments by Medicare and/or Medicaid.

Any governmental agencies that have commenced, or may commence, an investigation of the Company could impose, based on a claim of violation of fraud and false claims laws or otherwise, civil and/or criminal sanctions, including fines, penalties and possible exclusion from federal health care programs including Medicare and/or Medicaid. Some of the applicable laws may impose liability even in the absence of specific intent to defraud. Furthermore, should there be ambiguity with regard to how to properly calculate and report payments — and even in the absence of any such ambiguity — a governmental authority may take a position contrary to a position we have taken, and may impose civil and/or criminal sanctions. Any such penalties or sanctions could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE MAY EXPERIENCE REDUCTIONS IN THE LEVELS OF REIMBURSEMENT FOR PHARMACEUTICAL PRODUCTS BY GOVERNMENTAL AUTHORITIES, HMOS OR OTHER THIRD-PARTY PAYORS. IN ADDITION, THE USE OF TENDER SYSTEMS COULD REDUCE PRICES FOR OUR PRODUCTS OR REDUCE OUR MARKET OPPORTUNITIES. ANY SUCH REDUCTIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Various governmental authorities (including the U.K. National Health Service and the German statutory health insurance scheme) and private health insurers and other organizations, such as health maintenance organizations (“HMOs”) in the U.S., provide reimbursement to consumers for the cost of certain pharmaceutical products. Demand for our products depends in part on the extent to which such reimbursement is available. In the U.S., third-party payors increasingly challenge the pricing of pharmaceutical products. This trend and other trends toward the growth of HMOs, managed health care and legislative health care reform create significant uncertainties regarding the future levels of reimbursement for pharmaceutical products. Further, any reimbursement may be reduced in the future, perhaps to the point that market demand for our products declines. Such a decline could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In addition, a number of markets in which we operate have implemented or may implement tender systems for generic pharmaceuticals in an effort to lower prices. Under such tender systems, manufacturers submit bids which establish prices for generic pharmaceutical products. Upon winning the tender, the winning company will receive a preferential reimbursement for a period of time. The tender system often results in companies underbidding one another by proposing low pricing in order to win the tender.

Certain other countries may consider the implementation of a tender system. Even if a tender system is ultimately not implemented, the anticipation of such could result in price reductions. Failing to win tenders, or the implementation of similar systems in other markets leading to further price declines, could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

LEGISLATIVE OR REGULATORY PROGRAMS THAT MAY INFLUENCE PRICES OF PHARMACEUTICAL PRODUCTS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Current or future federal, state or foreign laws and regulations may influence the prices of drugs and, therefore, could adversely affect the prices that we receive for our products. For example, programs in existence in certain states in the U.S. seek to set prices of all drugs sold within those states through the regulation and administration of the sale of prescription drugs. Expansion of these programs, in particular state Medicare and/or Medicaid programs, or changes required in the way in which Medicare and/or Medicaid rebates are calculated under such programs, could adversely affect the prices we receive for our products and could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In order to control expenditure on pharmaceuticals, most member states in the EU regulate the pricing of products and, in some cases, limit the range of different forms of pharmaceuticals available for prescription by national health services. These controls can result in considerable price differences between member states.

Several countries in which we operate have implemented, or plan to implement, government mandated price reductions, including but not limited to Spain, Portugal, Italy, Australia, Japan and Canada. When such price cuts occur, pharmaceutical companies have generally experienced significant declines in revenues and profitability and uncertainties continue to exist within the market. Such price reductions could have an adverse effect on our business, and as uncertainties are resolved or if other countries in which we operate enact similar measures, they could have a further material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

HEALTHCARE REFORM LEGISLATION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

In recent years, there have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for, the availability of and reimbursement for healthcare services in the U.S., and it is likely that federal and state legislatures and health agencies will continue to focus on health care reform in the future. The Patient Protection and Affordable Care Act (H.R. 3590; Public Law 111-148) (“PPACA”) and The Health Care and Education and Reconciliation Act of 2010 (H.R. 4872), which amends the PPACA (collectively the “Health Reform Laws”), were signed into law in March 2010. While the Health Reform Laws may increase the number of patients who have insurance coverage for our products, they also include provisions such as the assessment of a pharmaceutical manufacturer fee and an increase in the amount of rebates that manufacturers pay for coverage of their drugs by Medicaid programs.

We are unable to predict the future course of federal or state healthcare legislation. The Health Reform Laws and further changes in the law or regulatory framework that reduce our revenues or increase our costs could also have a material adverse effect on our business, financial condition and results of operations and cash flows, and could cause the market value of our common stock to decline.

Additionally, we encounter similar regulatory and legislative issues in most other countries. In the EU and some other international markets, the government provides health care at low cost to consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government-sponsored health care system. This international system of price regulations may lead to inconsistent prices. Within the EU and in other countries, the availability of our products in some markets at lower prices undermines our sales in some markets with higher prices. Additionally, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, our inability to secure adequate prices in a particular country may also impair our ability to obtain acceptable prices in existing and potential new markets, and may create the opportunity for third party cross border trade.

If significant additional reforms are made to the U.S. healthcare system, or to the healthcare systems of other markets in which we operate, those reforms could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE ARE INVOLVED IN VARIOUS LEGAL PROCEEDINGS AND CERTAIN GOVERNMENT INQUIRIES AND MAY EXPERIENCE UNFAVORABLE OUTCOMES OF SUCH PROCEEDINGS OR INQUIRIES, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We are involved in various legal proceedings and certain government inquiries, including, but not limited to, patent infringement, product liability, breach of contract and claims involving Medicare and/or Medicaid reimbursements, some of which are described in our periodic reports, that involve claims for, or the possibility of fines and penalties involving substantial amounts of money or other relief. If any of these legal proceedings or inquiries were to result in an adverse outcome, the impact could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

With respect to product liability, we maintain commercial insurance to protect against and manage a portion of the risks involved in conducting our business. Although we carry insurance, we believe that no reasonable amount of insurance can fully protect against all such risks because of the potential liability inherent in the business of producing pharmaceuticals for human consumption. To the extent that a loss occurs, depending on the nature of the loss and the level of insurance coverage maintained, it could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In addition, in limited circumstances, entities we acquired in the acquisition of the former Merck Generics business are party to litigation in matters under which we are entitled to indemnification by Merck KGaA. However, there are risks inherent in such indemnities and, accordingly, there can be no assurance that we will receive the full benefits of such indemnification, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

IF THE INTERCOMPANY TERMS OF CROSS BORDER ARRANGEMENTS WE HAVE AMONG OUR SUBSIDIARIES ARE DETERMINED TO BE INAPPROPRIATE, OUR TAX LIABILITY MAY INCREASE, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We have potential tax exposures resulting from the varying application of statutes, regulations and interpretations which include exposures on intercompany terms of cross border arrangements among our subsidiaries in relation to various aspects of our business, including manufacturing, marketing, sales and delivery functions. Although our cross border arrangements between affiliates are based upon internationally accepted standards, tax authorities in various jurisdictions may disagree with and subsequently challenge the amount of profits taxed in their country, which may result in increased tax liability, including accrued interest and penalties, which would cause our tax expense to increase. This could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

UNANTICIPATED CHANGES IN OUR TAX PROVISIONS OR EXPOSURE TO ADDITIONAL INCOME TAX LIABILITIES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. The final determination of any tax audits or related litigation could be materially different from our historical income tax provisions and accruals.

Additionally, changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in our overall profitability, changes in the valuation of deferred tax assets and liabilities, the results of audits and the examination of previously filed tax returns by taxing authorities and continuing assessments of our tax exposures could impact our tax liabilities and affect our income tax expense, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

CHANGES IN INCOME TAX LAWS AND TAX RULINGS MAY HAVE A SIGNIFICANTLY ADVERSE IMPACT ON OUR EFFECTIVE TAX RATE AND INCOME TAX EXPENSE, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

The Education, Jobs and Medicaid Assistance Act was passed on August 5, 2010 and contained several provisions meant to limit the ability of corporations to claim foreign tax credits in reduction of their U.S. tax liability. We do not anticipate that the enactment of these provisions will materially impact our overall effective tax rate and income tax expense. Other proposals to change the U.S. income tax rules were proposed by the Obama administration in their fiscal year 2011 budget. The proposals would, among other things, limit the use of foreign tax credits to reduce residual U.S. income tax on non-U.S. source income and defer the deduction of interest attributable to non-U.S. source income of foreign subsidiaries. Each of these proposals would be effective only for taxable years beginning after December 31, 2010. We cannot determine whether these proposals will be enacted into law or what, if any, changes will be made to such proposals prior to their being enacted into law. If enacted, and depending on its precise terms, such legislation could materially increase our overall effective income tax rate and income tax expense. This could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

The Tax Extenders Act of 2009 includes legislation which would extend, for one year, 49 expiring tax provisions. On May 20, 2010, a new tax extenders bill, the American Jobs and Tax Loophole Closing Act of 2010, was introduced. This bill was passed by the House on May 28, 2010 and is now pending action in the Senate. The total impact to the Company of an extension of these expiring tax provisions is currently unknown due to the potential impact of revenue offsets, which may be included in the final version of this legislation, if enacted. If enacted, and depending on its precise terms, such legislation could materially increase our overall effective income tax rate and income tax expense. This could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE HAVE SUBSTANTIAL INDEBTEDNESS AND WILL BE REQUIRED TO APPLY A SUBSTANTIAL PORTION OF OUR CASH FLOW FROM OPERATIONS TO SERVICE OUR INDEBTEDNESS. OUR SUBSTANTIAL INDEBTEDNESS COULD LEAD TO ADVERSE CONSEQUENCES THAT MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our high level of indebtedness could have important consequences, including but not limited to:


	•	increasing our vulnerability to general adverse economic and industry conditions;

	•	requiring us to dedicate a substantial portion of our cash flow from operations and proceeds of any equity issuances to payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

	•	making it difficult for us to optimally capitalize and manage the cash flow for our businesses;

	•	limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate;

	•	making it difficult for us to meet the leverage and interest coverage ratios required by our Senior Credit Agreement;


	•	limiting our ability to borrow money or sell stock to fund our working capital, capital expenditures, acquisitions and debt service requirements and other financing needs;

	•	increasing our vulnerability to increases in interest rates in general because a substantial portion of our indebtedness bears interest at floating rates;

	•	requiring us to sell assets in order to pay down debt;

	•	restricting us from exploiting business opportunities;

	•	increasing our cost of borrowings; and

	•	placing us at a competitive disadvantage to our competitors that have less debt.

Our ability to service our indebtedness will depend on our future operating performance and financial results, which will be subject, in part, to factors beyond our control, including interest rates and general economic, financial and business conditions. If we do not have sufficient cash flow to service our indebtedness, we may need to refinance all or part of our existing indebtedness, borrow more money or sell securities, some or all of which may not be available to us at acceptable terms or at all. In addition, we may need to incur additional indebtedness in the future in the ordinary course of business. Although the terms of our Senior Credit Agreement allow us to incur additional debt, this is subject to certain limitations which may preclude us from incurring the amount of indebtedness we otherwise desire.

In addition, if we incur additional debt, the risks described above could intensify. Furthermore, the global credit markets are currently experiencing an unprecedented contraction. If current pressures on credit continue or worsen, future debt financing may not be available to us when required or may not be available on acceptable terms, and as a result we may be unable to grow our business, take advantage of business opportunities, respond to competitive pressures or satisfy our obligations under our indebtedness. Any of the foregoing could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE MAY DECIDE TO SELL ASSETS, WHICH COULD ADVERSELY AFFECT OUR PROSPECTS AND OPPORTUNITIES FOR GROWTH, AND WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We may from time to time consider selling certain assets if (a) we determine that such assets are not critical to our strategy, or (b) we believe the opportunity to monetize the asset is attractive or for various reasons including we want to reduce indebtedness. We have explored and will continue to explore the sale of certain non-core assets. Although our intention is to engage in asset sales only if they advance our overall strategy, any such sale could reduce the size or scope of our business, our market share in particular markets or our opportunities with respect to certain markets, products or therapeutic categories. We also continue to review the carrying value of manufacturing and intangible assets for indications of impairment as circumstances require. Future events and decisions may lead to asset impairments and/or related costs. As a result, any such sale or impairment could have an adverse effect on our business, prospects and opportunities for growth, financial position and results of operations and could cause the market value of our common stock to decline.

OUR CREDIT FACILITIES, SENIOR UNSECURED NOTES, OTHER OUTSTANDING INDEBTEDNESS AND ANY ADDITIONAL INDEBTEDNESS WE INCUR IN THE FUTURE IMPOSE, OR MAY IMPOSE, SIGNIFICANT OPERATING AND FINANCIAL RESTRICTIONS, WHICH MAY PREVENT US FROM CAPITALIZING ON BUSINESS OPPORTUNITIES. THESE FACTORS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Our credit facilities, senior unsecured notes, other outstanding indebtedness and any additional indebtedness we incur in the future impose, or may impose, significant operating and financial restrictions on us. These

restrictions limit our ability to, among other things, incur additional indebtedness, make investments, pay certain dividends, prepay other indebtedness, sell assets, incur certain liens, enter into agreements with our affiliates or restricting our subsidiaries’ ability to pay dividends, merge or consolidate. In addition, our Senior Credit Agreement requires us to maintain specified financial ratios. We cannot assure you that these covenants will not adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities. A breach of any of these covenants or our inability to maintain the required financial ratios could result in a default under the related indebtedness. If a default occurs, the relevant lenders could elect to declare our indebtedness, together with accrued interest and other fees, to be immediately due and payable. These factors could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

THE TOTAL AMOUNT OF INDEBTEDNESS RELATED TO OUR OUTSTANDING CASH CONVERTIBLE NOTES DUE 2015 (THE “CASH CONVERTIBLE NOTES”) WILL INCREASE IF OUR STOCK PRICE INCREASES. IN ADDITION, OUR OUTSTANDING SENIOR NOTES SETTLEMENT VALUE INCREASES AS OUR STOCK PRICE INCREASES, ALTHOUGH WE DO NOT ACCOUNT FOR THIS AS AN INCREASE IN INDEBTEDNESS. ALSO, WE HAVE ENTERED INTO NOTE HEDGES AND WARRANT TRANSACTIONS IN CONNECTION WITH THE 1.25% SENIOR CONVERTIBLE NOTES DUE 2012 (THE “SENIOR CONVERTIBLE NOTES”) AND CASH CONVERTIBLE NOTES IN ORDER TO HEDGE SOME OF THE RISK ASSOCIATED WITH THE POTENTIAL INCREASE OF INDEBTEDNESS AND SETTLEMENT VALUE. SUCH TRANSACTIONS HAVE BEEN CONSUMMATED WITH CERTAIN COUNTERPARTIES, MAINLY HIGHLY RATED FINANCIAL INSTITUTIONS. ANY INCREASE IN INDEBTEDNESS, NET EXPOSURE RELATED TO THE RISK OR FAILURE OF ANY COUNTERPARTIES TO PERFORM THEIR OBLIGATIONS, COULD HAVE ADVERSE EFFECTS ON US, INCLUDING UNDER OUR DEBT AGREEMENTS, AND COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Under applicable accounting rules, the cash conversion feature that is a term of the Cash Convertible Notes must be recorded as a liability on our balance sheet and periodically marked to fair value. If our stock price increases, the liability associated with the cash conversion feature would increase and, because this liability must be periodically marked to fair value on our balance sheet, the total amount of indebtedness related to the notes that is shown on our balance sheet would also increase. This could have adverse effects on us, including under our existing and any future debt agreements. For example, our senior credit facilities contain covenants that restrict our ability to incur debt, make capital expenditures, pay dividends and make investments if, among other things, our leverage ratio, exceeds certain levels. In addition, the interest rate we pay under our senior credit facilities increases if our leverage ratio increases. Because the leverage ratio under our senior credit facilities is calculated based on a definition of total indebtedness as defined under accounting principles generally accepted in the United States of America (“GAAP”), if the amount of our total indebtedness were to increase, our leverage ratio would also increase. As a result, we may not be able to comply with such covenants in the future, which could, among other things, restrict our ability to grow our business, take advantage of business opportunities or respond to competitive pressures. Any of the foregoing could have a material adverse effect on our business, financial position and results of operations and could cause the market value of the notes and our common stock to decline.

Although the conversion feature under our Senior Convertible Notes is not marked to market, the conversion feature also increases as the price of our common stock increases. If our stock price increases, the settlement value of the conversion feature increases.

In connection with the issuance of the Cash Convertible Notes and Senior Convertible Notes, we entered into note hedge and warrant transactions with certain financial institutions, each of which we refer to as a counterparty. The Cash Convertible Note hedge is comprised of purchased cash-settled call options that are expected to reduce our exposure to potential cash payments required to be made by us upon the cash conversion of the notes. The Senior Convertible Notes hedge is comprised of call options that are expected to reduce our exposure to the settlement value (issuance of common stock) upon the conversion of the notes. We have also entered into respective warrant transactions with the counterparties pursuant to which we will have sold to each counterparty warrants for the

purchase of shares of our common stock. Together, each of the note hedges and warrant transactions are expected to provide us with some protection against increases in our stock price over the conversion price per share. However, there is no assurance that these transactions will remain in effect at all times. Also, although we believe the counterparties are highly rated financial institutions, there are no assurances that the counterparties will be able to perform their respective obligations under the agreement we have with each of them. Any net exposure related to conversion of the notes or any failure of the counterparties to perform their obligations under the agreements we have with them could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

ANY FUTURE ACQUISITIONS OR DIVESTITURES WOULD INVOLVE A NUMBER OF INHERENT RISKS. THESE RISKS COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We may continue to seek to expand our product line through complementary or strategic acquisitions of other companies, products or assets, including those in rapidly developing economies, or through joint ventures, licensing agreements or other arrangements or may determine to divest certain products or assets. Any such acquisitions, joint ventures or other business combinations may involve significant challenges in integrating the new company’s operations, and divestitures could be equally challenging. Either process may prove to be complex and time consuming and require substantial resources and effort. It may also disrupt our ongoing businesses, which may adversely affect our relationships with customers, employees, regulators and others with whom we have business or other dealings.

We may be unable to realize synergies or other benefits, including tax savings, expected to result from any acquisitions, joint ventures or other transactions or investments we may undertake, or be unable to generate additional revenue to offset any unanticipated inability to realize these expected synergies or benefits. Realization of the anticipated benefits of acquisitions or other transactions could take longer than expected, and implementation difficulties, unforeseen expenses, complications and delays, market factors or a deterioration in domestic and global economic conditions could alter the anticipated benefits of any such transactions. We may also compete for certain acquisition targets with companies having greater financial resources than us or other advantages over us that may prevent us from acquiring a target. These factors could impair our growth and ability to compete, require us to focus additional resources on integration of operations rather than other profitable areas, or otherwise cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE ENTER INTO VARIOUS AGREEMENTS IN THE NORMAL COURSE OF BUSINESS WHICH PERIODICALLY INCORPORATE PROVISIONS WHEREBY WE INDEMNIFY THE OTHER PARTY TO THE AGREEMENT. IN THE EVENT THAT WE WOULD HAVE TO PERFORM UNDER THESE INDEMNIFICATION PROVISIONS, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

In the normal course of business, we periodically enter into employment, legal settlement, and other agreements which incorporate indemnification provisions. We maintain insurance coverage which we believe will effectively mitigate our obligations under certain of these indemnification provisions. However, should our obligation under an indemnification provision exceed our coverage or should coverage be denied, our business, financial position and results of operations could be materially adversely affected and the market value of our common stock could decline.

OUR FUTURE SUCCESS IS HIGHLY DEPENDENT ON OUR CONTINUED ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL. ANY FAILURE TO ATTRACT AND RETAIN KEY PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

It is important that we attract and retain qualified personnel in order to develop new products and compete effectively. If we fail to attract and retain key scientific, technical or management personnel, our business could be affected adversely. Additionally, while we have employment agreements with certain key employees in place, their employment for the duration of the agreement is not guaranteed. If we are unsuccessful in retaining our key employees, it could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE ARE IN THE PROCESS OF ENHANCING AND FURTHER DEVELOPING OUR GLOBAL ENTERPRISE RESOURCE PLANNING SYSTEMS AND ASSOCIATED BUSINESS APPLICATIONS. AS WITH ANY ENHANCEMENTS OF SIGNIFICANT SYSTEMS, DIFFICULTIES ENCOUNTERED COULD RESULT IN BUSINESS INTERRUPTIONS, AND COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

We are enhancing and further developing our global enterprise resource planning (“ERP”) systems and associated applications to provide more operating efficiencies and effective management of our business operations. Such changes to ERP systems and related software carry risks such as cost overruns, project delays and business interruptions and delays. If we experience a material business interruption as a result of our ERP enhancements, it could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

WE MUST MAINTAIN ADEQUATE INTERNAL CONTROLS AND BE ABLE, ON AN ANNUAL BASIS, TO PROVIDE AN ASSERTION AS TO THE EFFECTIVENESS OF SUCH CONTROLS. FAILURE TO MAINTAIN ADEQUATE INTERNAL CONTROLS OR TO IMPLEMENT NEW OR IMPROVED CONTROLS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

Effective internal controls are necessary for the Company to provide reasonable assurance with respect to its financial reports. We are spending a substantial amount of management time and resources to comply with changing laws, regulations and standards relating to corporate governance and public disclosure. In the U.S. such changes include the Sarbanes-Oxley Act of 2002, Securities and Exchange Commission (“SEC”) regulations and the NASDAQ listing standards. In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires management’s annual review and evaluation of our internal control over financial reporting and attestations as to the effectiveness of these controls by our independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting. Additionally, internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. In addition, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If the Company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved controls, this could have a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.

THERE ARE INHERENT UNCERTAINTIES INVOLVED IN ESTIMATES, JUDGMENTS AND ASSUMPTIONS USED IN THE PREPARATION OF FINANCIAL STATEMENTS IN ACCORDANCE WITH GAAP. ANY FUTURE CHANGES IN ESTIMATES, JUDGMENTS AND ASSUMPTIONS USED OR NECESSARY REVISIONS TO PRIOR ESTIMATES, JUDGMENTS OR ASSUMPTIONS OR CHANGES IN ACCOUNTING STANDARDS COULD LEAD TO A RESTATEMENT OR REVISION TO PREVIOUSLY CONSOLIDATED FINANCIAL STATEMENTS OR CHARGES, INCLUDING IMPAIRMENT CHARGES, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL POSITION AND RESULTS OF OPERATIONS AND COULD CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DECLINE.

The Consolidated and Condensed Consolidated Financial Statements included in the periodic reports we file with the SEC are prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP involves making estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and income. Estimates, judgments and assumptions are inherently subject to change in the future and any necessary revisions to prior estimates, judgments or assumptions could lead to a restatement. Furthermore, although we have recorded reserves for lawsuits based on estimates of probable future costs, such lawsuits could result in substantial further costs. Also, any new or revised accounting standards may require adjustments to previously issued financial statements. Any such changes could result in corresponding changes to the amounts of liabilities, revenues, expenses and income. Any such changes could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In addition, a significant amount of our total assets are related to acquired intangible assets and goodwill. Such assets require impairment testing periodically and/or under certain circumstances. Impairment testing requires the use of significant estimates, judgments and assumptions, which involve inherent uncertainty. Any future changes to estimates, judgments and assumptions used in impairment testing could lead to impairment charges, which could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.


ITEM 5.	*OTHER INFORMATION*

None.


ITEM 6.	*EXHIBITS*


3	.1	Amended and Restated Articles of Incorporation of the registrant, as amended to date, filed as Exhibit 3.1 to the Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.
3	.2	Bylaws of the registrant, as amended to date, filed as Exhibit 3.2 to the Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.
4	.1(a)	Rights Agreement dated as of August 22, 1996, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on September 3, 1996, and incorporated herein by reference.
4	.1(b)	Amendment to Rights Agreement dated as of November 8, 1999, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 1 to Form 8-A/A filed with the SEC on March 31, 2000, and incorporated herein by reference.
4	.1(c)	Amendment No. 2 to Rights Agreement dated as of August 13, 2004, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on August 16, 2004, and incorporated herein by reference.
4	.1(d)	Amendment No. 3 to Rights Agreement dated as of September 8, 2004, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on September 9, 2004, and incorporated herein by reference.
4	.1(e)	Amendment No. 4 to Rights Agreement dated as of December 2, 2004, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on December 3, 2004, and incorporated herein by reference.


4	.1(f)	Amendment No. 5 to Rights Agreement dated as of December 19, 2005, between the registrant and American Stock Transfer & Trust Company, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on December 19, 2005, and incorporated herein by reference.
4	.2(a)	Indenture, dated as of July 21, 2005, between the registrant and The Bank of New York, as trustee, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on July 27, 2005, and incorporated herein by reference.
4	.2(b)	Second Supplemental Indenture, dated as of October 1, 2007, among the registrant, the Subsidiaries of the registrant listed on the signature page thereto and The Bank of New York, as trustee, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on October 5, 2007, and incorporated herein by reference.
4	.3	Registration Rights Agreement, dated as of July 21, 2005, among the registrant, the Guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNY Capital Markets, Inc., KeyBanc Capital Markets (a Division of McDonald Investments Inc.), PNC Capital Markets, Inc. and SunTrust Capital Markets, Inc., filed as Exhibit 4.2 to the Report on Form 8-K filed with the SEC on July 27, 2005, and incorporated herein by reference.
4	.4	Indenture, dated as of September 15, 2008, among the registrant, the guarantors named therein and Bank of New York Mellon as trustee, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on September 15, 2008, and incorporated herein by reference.
4	.5	Indenture, dated as of May 19, 2010, among the registrant, the guarantors named therein and The Bank of New York Mellon as trustee, filed as Exhibit 4.1 to the Report on Form 8-K filed with the SEC on May 19, 2010, and incorporated herein by reference.
10	.1	Purchase Agreement, dated as of July 30, 2010, among the registrant, the guarantors named therein and Goldman, Sachs & Co.
31	.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	.INS	XBRL Instance Document
101	.SCH	XBRL Taxonomy Extension Schema
101	.CAL	XBRL Taxonomy Extension Calculation Linkbase
101	.LAB	XBRL Taxonomy Extension Label Linkbase
101	.PRE	XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Mylan Inc. (Registrant)


	By:	/s/ Robert J. Coury

Robert J. Coury

Chairman and Chief Executive Officer

(Principal Executive Officer)

October 27, 2010


		/s/ John D. Sheehan

John D. Sheehan

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

October 27, 2010


		/s/ Daniel C. Rizzo, Jr.

Daniel C. Rizzo, Jr.

Senior Vice President, Chief Accounting Officer and

Corporate Controller

(Principal Accounting Officer)

October 27, 2010

EXHIBIT INDEX


10	.1	Purchase Agreement, dated as of July 30, 2010, among the registrant, the guarantors named therein and Goldman, Sachs & Co.
31	.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	.INS	XBRL Instance Document
101	.SCH	XBRL Taxonomy Extension Schema
101	.CAL	XBRL Taxonomy Extension Calculation Linkbase
101	.LAB	XBRL Taxonomy Extension Label Linkbase
101	.PRE	XBRL Taxonomy Extension Presentation Linkbase

exv10w1

Exhibit 10.1

MYLAN INC.

7.875% Senior Notes due 2020

Purchase Agreement

July 30, 2010

Goldman, Sachs & Co.
200 West Street,
New York, New York 10282-2198

Ladies and Gentlemen:

Mylan Inc., a Pennsylvania corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to Goldman, Sachs & Co. (the “Purchaser”) an aggregate of $300,000,000 principal amount of its 7.875% Senior Notes due 2020 (the “Securities”). The Securities will be issued pursuant to that certain indenture, dated as of May 19, 2010 (the “Indenture”), that was entered into among the Company, the Guarantors (as defined below) and The Bank of New York Mellon, as trustee (the “Trustee”). The Company’s obligations under the Securities will be irrevocably and unconditionally guaranteed (the “Guarantees”) as to the payment of principal, premium and interest on a senior basis, jointly and severally, initially by each of the subsidiary guarantors listed on the signature pages of this Agreement (each a “Guarantor” and, collectively, the “Guarantors”). This Agreement, the Securities, the Guarantees and the Indenture are collectively referred to herein as the “Transaction Documents.”

The Company and each Guarantor represent and warrant to, and agree with, you that:

(a) A preliminary offering circular, dated July 29, 2010 (the “Preliminary Offering Circular”) and an offering circular, dated July 30, 2010 (the “Offering Circular”), have been prepared in connection with the offering of the Securities. The Preliminary Offering Circular, as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(b)), is hereinafter referred to the “Pricing Circular.” Any reference to the Preliminary Offering Circular, the Pricing Circular or the Offering Circular shall be deemed to refer to and include the Company’s most recent Annual Report on Form 10-K and all subsequent documents filed with the United States Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a), 13(c) or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) on or prior to the date of such circular and any reference to the Preliminary Offering Circular or the Offering Circular, as the case may be, as amended or supplemented, as of any specified date, shall be deemed to include (i) any documents filed with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of the Preliminary Offering Circular or the Offering Circular, as the case may be, and prior to such specified date and (ii) any Additional Issuer Information (as defined in Section 5(f)) furnished by the Company prior to the completion of the distribution of the Securities; and all

documents filed under the Exchange Act and so deemed to be included in the Preliminary Offering Circular, the Pricing Circular or the Offering Circular, as the case may be, or any amendment or supplement thereto are hereinafter called the “Exchange Act Reports”. The Exchange Act Reports, when they were or are filed with the Commission, conformed or will conform in all material respects to the applicable requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder; and no such documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule I(a) hereof. The Preliminary Offering Circular or the Offering Circular and any amendments or supplements thereto and the Exchange Act Reports did not and will not, as of their respective dates, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by you expressly for use therein;

(b) For the purposes of this Agreement, the “Applicable Time” is 12:00 pm (Eastern time) on the date of this Agreement; the Pricing Circular as supplemented by the information set forth in Schedule II hereto, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Company Supplemental Disclosure Document (as defined in Section 6(a)) listed on Schedule I(b) hereto does not conflict with the information contained in the Pricing Circular or the Offering Circular and each such Company Supplemental Disclosure Document, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in a Company Supplemental Disclosure Document in reliance upon and in conformity with information furnished in writing to the Company by you expressly for use therein;

(c) Deloitte & Touche LLP, the accountants who certified the financial statements and supporting schedules included or incorporated by reference in the Offering Circular and the Pricing Circular are independent public accountants with respect to the Company and its subsidiaries within the meaning of the United States Securities Act of 1933, as amended (the “Securities Act”) and the rules and regulations thereunder;

(d) The financial statements of the Company included in the Pricing Circular and the Offering Circular, together with the related schedules and notes, present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the results of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved. The supporting schedules, if any, included in the Pricing Circular and the Offering Circular present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information of the Company included in the Pricing Circular and the Offering Circular present fairly the information shown therein and have been compiled on a basis consistent

with that of the audited financial statements of the Company incorporated by reference in the Pricing Circular and the Offering Circular;

(e) Since the respective dates as of which information is given in the Pricing Circular and the Offering Circular, except as otherwise stated therein, (i) there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries, or any material adverse change in the condition, financial or otherwise, results of operations, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), and (ii) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise;

(f) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Pennsylvania and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Pricing Circular and the Offering Circular and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(g) Each Designated Subsidiary (as defined below) has been duly organized and is validly existing as a corporation, limited partnership or limited liability company in good standing under the laws of the jurisdiction of its formation, has corporate or other power and authority to own, lease and operate its properties and to conduct its business as described in the Pricing Circular and the Offering Circular and is duly qualified as a foreign corporation or limited liability company to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; except as otherwise disclosed in the Pricing Circular and the Offering Circular, all of the issued and outstanding capital stock of each Designated Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock of the Designated Subsidiaries was issued in violation of any preemptive or similar rights of any securityholder of such Designated Subsidiary. “Designated Subsidiary” means (a) each Guarantor and (b) each other direct or indirect subsidiary of the Company that holds at least 5% of the consolidated total assets of the Company or accounts for at least 5% of the consolidated total revenues of the Company;

(h) The authorized, issued and outstanding capital stock of the Company is as set forth in the Pricing Circular and the Offering Circular. The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company;

(i) This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors;

(j) The Indenture has been duly authorized, executed and delivered by the Company and each of the Guarantors and constitutes a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law);

(k) The Securities have been duly authorized and, when the notes representing the Securities are executed and authenticated in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers) reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture;

(l) The Guarantees have been duly authorized and, when executed in the manner provided for in the Indenture as provided in this Agreement, will constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers) reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture;

(m) The Securities and the Guarantees will conform in all material respects to the respective statements relating thereto contained in the Pricing Circular and the Offering Circular and will be in substantially the respective forms last delivered to you prior to the date of this Agreement; the Indenture conforms in all material respects to the statements relating thereto contained in the Pricing Circular and the Offering Circular;

(n) Neither the Company nor any of its subsidiaries is (a) in violation of its charter or by-laws or (b) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject (collectively, “Agreements and Instruments”) except in the case of this clause (b) for defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(o) The execution, delivery and performance of this Agreement, the Indenture and the Securities and any other agreement or instrument entered into or issued or to be entered into or issued by the Company or the Guarantors in connection with the transactions contemplated hereby or thereby or in the Pricing Circular and the Offering Circular and the consummation of the transactions contemplated herein and in the Pricing Circular and the Offering Circular (including the issuance and

sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Pricing Circular and the Offering Circular under the caption “Use of Proceeds”) and compliance by the Company and the Guarantors with their obligations hereunder have been duly authorized by all necessary corporate or other action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, the Agreements and Instruments except for such conflicts, breaches or defaults or Repayment Events or liens, charges or encumbrances that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, nor will such action result in any violation of (x) the provisions of the charter or by-laws of the Company or any of its subsidiaries or (y) any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations, except in the case of clause (y) above, any such violations that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries;

(p) No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary’s principal suppliers, manufacturers, customers or contractors, except such disputes or disturbances that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(q) Except as described in the Pricing Circular and the Offering Circular and except such matters as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment. Except as described in the Pricing Circular and the Offering Circular, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened or contemplated, against or affecting the Company or any of its subsidiaries that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or which might materially and adversely affect the consummation of the transactions contemplated by this Agreement or the performance by the Company of its obligations hereunder. The aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective property or assets is the subject which are not described in the Pricing Circular and the Offering Circular, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect;

(r) All United States federal income tax returns of the Company and its subsidiaries required by law to be filed have been filed or extensions thereof have been duly requested and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided or where the failure to pay would not, individually or in the aggregate,

reasonably be expected to result in a Material Adverse Effect. The Company and its subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law except insofar as the failure to file such returns would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided or where the failure to pay would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(s) The Company and its subsidiaries maintain a system of internal control over financial reporting (as such term is defined in Rule 13a—15(f) of the Exchange Act) that complies with the requirements of the Exchange Act, designed by, or under the supervision of, the Company’s principal executive officer and principal financial officer, or persons performing similar functions, sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements for external purposes in conformity with GAAP and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management’s general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting. Since the date of the latest audited financial statements included or incorporated by reference in the Pricing Circular, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;

(t) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;

(u) The Company and its subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect;

(v) The Company is, and immediately after the Time of Delivery will be, Solvent. As used herein, the term “Solvent” means, with respect to the Company on a particular date, that on such date (A) the fair market value of the assets of the Company is greater than the total amount of liabilities (including contingent liabilities) of the Company, (B) the present fair salable value of the assets of the Company is greater than the amount that will be required to pay the probable liabilities of the Company on its debts as they become absolute and matured, (C) the Company is able to realize upon

its assets and pay its debts and other liabilities, including contingent obligations, as they mature, and (D) the Company does not have unreasonably small capital;

(w) Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate take, directly or indirectly, any action which is designed to or which has constituted or which would be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities;

(x) Except as described in the Pricing Disclosure Package and the Offering Circular, the Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by them, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(y) Except as disclosed in the Pricing Circular and the Offering Circular and other than registration or qualification under state securities or blue sky laws in connection with the offer and sale of the Securities, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement or for the due execution, delivery or performance of the Indenture by the Company and the Guarantors, except such as have been already obtained;

(z) Except as described in the Pricing Circular and the Offering Circular, the Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, except where the failure to so possess would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to result in a Material Adverse Effect;

(aa) The Company and its subsidiaries have good and marketable title to all real property owned by the Company and its subsidiaries and good and marketable title to all other properties

owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in the Pricing Circular and the Offering Circular or (b) do not, individually or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries; and all of the leases and subleases under which the Company or any of its subsidiaries holds properties described in the Pricing Circular and the Offering Circular, are in full force and effect, except where the failure of such lease or sublease to be in full force and effect would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any of its subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or any subsidiary thereof to the continued possession of the leased or subleased premises under any such lease or sublease;

(bb) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, no supplier of merchandise to the Company or any of its subsidiaries has ceased shipments of merchandise to the Company;

(cc) Except as described in the Pricing Circular and the Offering Circular and except such matters as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or any action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or Environmental Laws;

(dd) The Company is not required, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Pricing Circular and the Offering Circular will not be required, to register as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

(ee) Neither the Company nor any of its affiliates, as such term is defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”) (each, an “Affiliate”), has, directly or indirectly, solicited any offer to buy, sold or offered to sell or otherwise negotiated in respect of, nor will, directly

or indirectly, solicit any offer to buy, sell or offer to sell or otherwise negotiate in respect of, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities or the Guarantees in a manner that would require the Securities or the Guarantees to be registered under the Securities Act;

(ff) The Securities are eligible for resale pursuant to Rule 144A and will not be, at the Time of Delivery, of the same class (within the meaning of Rule 144A of the Securities Act) as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system;

(gg) None of the Company, its Affiliates or any person acting on its or any of their behalf (other than you, as to whom the Company makes no representation) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act, or, with respect to Securities sold outside the United States to non-U.S. persons (as defined in Rule 902 under the Securities Act), by means of any directed selling efforts within the meaning of Rule 902 under the Securities Act and the Company, any Affiliate of the Company and any person acting on its or any of their behalf (other than you, as to whom the Company makes no representation) has complied with and will implement the “offering restrictions” within the meaning of such Rule 902;

(hh) Subject to compliance by (i) you with the representations and warranties set forth in Section 3 and (ii) the “Purchasers” under and as defined in that certain purchase agreement, dated as of May 12, 2010, among the Company, the Guarantors and you, as representative of the several “Purchasers” named therein (the “May Purchase Agreement”), with the representations, warranties and covenants set forth in Section 3 of the May Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities to you and to each subsequent purchaser in the manner contemplated by this Agreement, the Pricing Circular and the Offering Circular to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended;

(ii) The statements set forth in the Pricing Circular and Offering Circular under the caption “Description of Notes”, insofar as they purport to constitute a summary of the terms of the Securities, are accurate, complete and fair in all material respects;

(jj) The Company is subject to Section 13 or 15(d) of the Exchange Act;

(kk) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (a) none of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or affiliate is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”); and (b) the Company and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith; and

(ll) None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or affiliate is currently subject to any U.S. sanctions administered by

the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; and the Company will not directly or indirectly use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any of its subsidiaries, joint venture partners or other person, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to you, and you agree to purchase from the Company, at a purchase price of 104.600% of the principal amount thereof, $300,000,000 principal amount of the 2020 Notes.

Upon the authorization by you of the release of the Securities, you propose to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and you hereby represent and warrant to, and agree with the Company and each Guarantor that:

	(a)		You will offer and sell the Securities only to: (i) persons who you reasonably believe are “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A under the Securities Act in transactions meeting the requirements of Rule 144A or (ii) upon the terms and conditions set forth in Annex I to this Agreement;

	(b)		You are an Institutional Accredited Investor within the meaning of Rule 501(a) under the Securities Act; and

	(c)		You will not offer or sell the Securities by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Securities Act.

4.	(a)	The Securities to be purchased by you hereunder will be represented by one or more definitive global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Securities to you, for your account, against payment by or on behalf of you of the purchase price therefor by wire transfer in Federal (same day) funds, by causing DTC to credit the Securities to your account at DTC. The Company will cause the certificates representing the Securities to be made available to you for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022-4834 (the “Closing Location”). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on August 13, 2010 or such other time and date as you and the Company may agree upon in writing. Such time and date are herein called the “Time of Delivery”.

(b)		The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Securities and any additional documents requested by you pursuant to Section 8(g) hereof, will be delivered at such time and date at the Closing Location, and the Securities will be delivered at DTC or its designated custodian, all at the Time of Delivery. A meeting will be held at the Closing Location at 5:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the

purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.

The Company and each Guarantor agree, jointly and severally, with you:

	(a)		To prepare the Offering Circular in a form approved by you; to make no amendment or any supplement to the Offering Circular which shall be disapproved by you promptly after reasonable notice thereof; and to furnish you with copies thereof;

	(b)		Promptly from time to time to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction or to subject itself to taxation as a foreign corporation in such jurisdiction if it is not otherwise so subject;

	(c)		To furnish you with written and electronic copies thereof in such quantities as you may from time to time reasonably request, and if, at any time prior to the expiration of nine months after the date of the Offering Circular, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without charge to you and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such compliance;

	(d)		During the period beginning from the date hereof and continuing until the date 90 days after the Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder any securities of the Company that are substantially similar to the Securities without your prior written consent;

	(e)		Not to be or become, at any time prior to the expiration of two years after the Time of Delivery, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act;

	(f)		At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Securities, to furnish at its expense, upon request, to holders of Securities and prospective purchasers of securities information (the “Additional Issuer Information”) satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Securities Act;

	(g)		Until the offering of the Securities is complete, the Company will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act;

	(h)		During the one year period after the Time of Delivery, the Company will not, and will not permit any of its “affiliates” (as defined in Rule 144 under the Securities Act) to, resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them; and

	(i)		To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Pricing Circular under the caption “Use of Proceeds.”

	(a)		The Company and each Guarantor represent and agree that, without your prior consent, it has not made and will not make any offer relating to the Securities that, if the offering of the Securities contemplated by this Agreement were conducted as a public offering pursuant to a registration statement filed under the Securities Act with the Commission, would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act (any such offer is hereinafter referred to as a “Company Supplemental Disclosure Document”);

	(b)		You represent and agree that, without the prior consent of the Company, other than one or more term sheets relating to the Securities containing customary information and conveyed to purchasers of securities, you have not made and will not make any offer relating to the Securities that, if the offering of the Securities contemplated by this Agreement were conducted as a public offering pursuant to a registration statement filed under the Securities Act with the Commission, would constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act (any such offer (other than any such term sheets), is hereinafter referred to as a “Purchaser Supplemental Disclosure Document”); and

	(c)		Any Company Supplemental Disclosure Document or Purchaser Supplemental Disclosure Document, the use of which has been consented to by the Company and you, is listed on Schedule I(b) hereto.

The Company and each Guarantor, jointly and severally, covenant and agree with you that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s and the Guarantors’ counsel and accountants in connection with the issue of the Securities and all other expenses in connection with the preparation, printing, reproduction and filing of the Preliminary Offering Circular and the Offering Circular and any amendments and supplements thereto and the mailing and delivering of copies thereof to you and the dealers; (ii) the cost of printing or producing, this Agreement, the Indenture, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the reasonable fees and disbursements of counsel for you in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of the Trustee and any agent

of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; and (vii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 9 and 11 hereof, you will pay all of your own costs and expenses, including the fees of your counsel, transfer taxes on resale of any of the Securities by you, and any advertising expenses connected with any offers you may make.

Your obligations hereunder shall be subject, in your discretion, to the condition that all representations and warranties and other statements of the Company and each Guarantor herein are, at and as of the Time of Delivery, true and correct, the condition that the Company and each Guarantor shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:

	(a)		Latham & Watkins LLP, counsel for you, shall have furnished to you its opinion and negative assurance letter, in each case dated the Time of Delivery, in form and substance acceptable to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

	(b)		(i) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company and the Guarantors, shall have furnished to you their written opinions and negative assurance letter, dated the Time of Delivery, satisfactory to you and substantially in the form set forth in Exhibit A hereto; and (ii) Kristin Kolesar, Senior Vice President and Global General Counsel, Operations of the Company shall have furnished to you her written opinion, dated the Time of Delivery, satisfactory to you and substantially in the form set forth in Exhibit B hereto;

	(c)		On the date of the Offering Circular prior to the execution of this Agreement and also at the Time of Delivery, Deloitte & Touche LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you;

	(d)		(i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Circular any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Circular and the Offering Circular, and (ii) since the respective dates as of which information is given in the Pricing Circular and the Offering Circular there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Pricing Circular and the Offering Circular, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and in the Offering Circular;

	(e)		On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Company’s outstanding indebtedness by any “nationally recognized statistical

			rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s outstanding indebtedness;

	(f)		On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or on NASDAQ; (ii) a suspension or material limitation in trading in the Company’s securities on NASDAQ; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in the Offering Circular; and

	(g)		The Company and the Guarantors shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Company and the Guarantors satisfactory to you as to the accuracy of the representations and warranties of the Company and the Guarantors herein at and as of such Time of Delivery, as to the performance by the Company and the Guarantors of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsection (d) of this Section and as to such other matters as you may reasonably request.

9.	(a)	The Company and the Guarantors will, jointly and severally, indemnify you and hold you harmless against any losses, claims, damages or liabilities, joint or several, to which you may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular, or any amendment or supplement thereto, any Company Supplemental Disclosure Document, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, and will reimburse you for any legal or other expenses reasonably incurred by you in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular or any such amendment or supplement, or any Company Supplemental Disclosure Document, in reliance upon and in conformity with written information furnished to the Company by you expressly for use therein.

(b)		You will indemnify and hold harmless the Company and the Guarantors against any losses, claims, damages or liabilities to which such parties may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue

			statement of a material fact contained in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular, or any amendment or supplement thereto, or any Company Supplemental Disclosure Document, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular or any such amendment or supplement, or any Company Supplemental Disclosure Document in reliance upon and in conformity with written information furnished to the Company or any Guarantor by you expressly for use therein; and you will reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company or the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred.

	(c)		Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.

	(d)		If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand you on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by

			such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantors on the one hand and you on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and you on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Guarantors bear to the total underwriting discounts and commissions received by you, in each case as set forth in the Offering Circular. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors on the one hand or you on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and you agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), you shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by you and distributed to investors were offered to investors exceeds the amount of any damages which you have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

	(e)		The obligations of the Company and the Guarantors under this Section 9 shall be in addition to any liability which the Company and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to any of your affiliates and each person, if any, who controls you within the meaning of the Securities Act; and your obligations under this Section 9 shall be in addition to any liability which you may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or any Guarantor and to each person, if any, who controls the Company or any Guarantor within the meaning of the Securities Act.

10.

The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantors and you, set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of you or any controlling person of you, or the Company or any Guarantor, or any officer or director or controlling person of the Company or any Guarantor, and shall survive delivery of and payment for the Securities.

11.

If this Agreement shall be terminated for any reason and the Securities are not delivered by or on behalf of the Company and the Guarantors as provided herein, the Company and the Guarantors will reimburse you for all expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by you in making preparations for the purchase, sale and delivery

of the Securities, but the Company and the Guarantors shall then be under no further liability to you except as provided in Sections 7 and 9 hereof.

12.

All statements, requests, notices and agreements hereunder shall be in writing, and if to you shall be delivered or sent by mail, telex or facsimile transmission to Goldman, Sachs & Co. at 200 West Street, New York, New York 10282-2198, Attention: Registration Department; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Secretary. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), you are required to obtain, verify and record information that identifies your clients, including the Company, which information may include the name and address of your clients, as well as other information that will allow you to properly identify your clients.

13.

This Agreement shall be binding upon, and inure solely to the benefit of, you, the Company, the Guarantors and, to the extent provided in Sections 9 and 10 hereof, the officers and directors of the Company and the Guarantors and each person who controls the Company, any Guarantor or you, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from you shall be deemed a successor or assign by reason merely of such purchase.

14.

Time shall be of the essence of this Agreement.

15.

The Company and each Guarantor acknowledge and agree that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company and the Guarantors, on the one hand, and you, on the other, (ii) in connection therewith and with the process leading to such transaction you are acting solely as a principal and not the agent or fiduciary of the Company or any Guarantor, (iii) you have not assumed an advisory or fiduciary responsibility in favor of the Company or any Guarantor with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether you have advised or are currently advising the Company or any Guarantor on other matters) or any other obligation to the Company or any Guarantor except the obligations expressly set forth in this Agreement and (iv) the Company and the Guarantors have consulted their own legal and financial advisors to the extent they have deemed appropriate. The Company and the Guarantors agree that they will not claim that you, or any of them, have rendered advisory services of any nature or respect, or owe a fiduciary or similar duty to the Company or any Guarantor, in connection with such transaction or the process leading thereto.

16.

This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Guarantors and you, or any of them, with respect to the subject matter hereof.

17.

THIS AGREEMENT AND ANY MATTERS RELATED TO THIS TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF

NEW YORK. The Company and the Guarantors agree that any suit or proceeding arising in respect of this agreement or our engagement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Company agrees to submit to the jurisdiction of, and to venue in, such courts.

18.

The Company, the Guarantors and you hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

19.

This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

20.

Notwithstanding anything herein to the contrary, the Company (and the Company’s employees, representatives, and other agents) are authorized to disclose to any and all persons, the tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company relating to that treatment and structure, without your imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax treatment” means US federal and state income tax treatment, and “tax structure” is limited to any facts that may be relevant to that treatment.

[Remainder of page intentionally left blank]

If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof shall constitute a binding agreement among you and the Company and each Guarantor.


	Very truly yours, MYLAN INC.
	By:
		Name:
		Title:


	BERTEK INTERNATIONAL, INC.
	By:
		Name:
		Title:


	DEY, INC.
	By:
		Name:
		Title:


	DEY PHARMA, L.P.
	By:
		Name:
		Title:


	DEY LIMITED PARTNER, INC.
	By:
		Name:
		Title:


	EMD, INC.
	By:
		Name:
		Title:


	MLRE LLC
	By:
		Name:
		Title:


	MP AIR INC.
	By:
		Name:
		Title:


	MYLAN BERTEK PHARMACEUTICALS INC.
	By:
		Name:
		Title:


	MYLAN CARIBE, INC.
	By:
		Name:
		Title:


	MYLAN DELAWARE INC.
	By:
		Name:
		Title:


	MYLAN LLC
	By:
		Name:
		Title:


	MYLAN LHC INC.
	By:
		Name:
		Title:


	MYLAN PHARMACEUTICALS INC.
	By:
		Name:
		Title:


	MYLAN TECHNOLOGIES INC.
	By:
		Name:
		Title:


	UDL LABORATORIES, INC.
	By:
		Name:
		Title:


Accepted as of the date hereof: GOLDMAN, SACHS & CO.
By:
	(Goldman, Sachs & Co.)

exv31w1

Exhibit 31.1

Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002


I,	Robert J. Coury, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mylan Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period[s] presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Robert J. Coury

Robert J. Coury

Chairman and Chief Executive Officer

(Principal Executive Officer)

Date: October 27, 2010

exv31w2

Exhibit 31.2

Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002


I,	John D. Sheehan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mylan Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John D. Sheehan

John D. Sheehan

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

Date: October 27, 2010

exv32

Exhibit 32

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Mylan Inc. (the “Company”) for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert J. Coury

Robert J. Coury

Chief Executive Officer

(Principal Executive Officer)

/s/ John D. Sheehan

John D. Sheehan

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

Date: October 27, 2010

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished in accordance with Securities and Exchange Commission Release No. 34-47551 and shall not be considered filed as part of the Form 10-Q.