Note: All New Or Revised Material Since the Last Report Is Highlighted s2

December 20, 2005

Research Associate: Falguni Sheth, M Sc. Editor: Nelson Bishop, CFA Research Digest Sr. Editor : Ian Madsen, CFA: [email protected] : 1-800-767-3771;x417

www.zackspro.com 155 North Wacker Drive Chicago, IL 60606 Ivax Corp. (IVX – NYSE) $31.50 Note: All new or revised material since the last report is highlighted.

Reason for Update: Mid-quarter update. Prev. Ed.: November 24, 2005.

Overview

Ivax Corporation (IVX) is one of the market’s leading generic drug manufacturers. The company has a number of ANDA filings which the analysts believe will contribute to growth in coming quarters. Additionally, IVX’s branded manufacturing business offers potential for improved margins and additional profit growth. An estimated $40-$45B in branded pharmaceuticals is expected to lose patent exclusivity through 2007. IVX states that through its 57 applications (13 of which it believes are first-to-file opportunities), the company has addressed nearly $11B by the end of 2Q05. This creates enormous opportunity; however, many of these filings will require litigation victories. As with any generic pharmaceutical, decisions made in the courts have a greater impact on growth than those made in the lab. Teva, an Israeli generic maker, has agreed to take over Ivax. The shareholders of both firms overwhelmingly approved the merger on October 27, 2005. The company’s website is www.ivax.com.

The analysts have identified the following factors for evaluating the investment merits of IVX:

Key Positive Arguments Key Negative Arguments The company has 59 ANDAs under the FDA review, IVX is fighting several high profile legal battles over with roughly 13 designated as first-to-file. branded drugs, any one of which it can lose. The total branded sales represented by ANDAs IVX is Valuation is fair to slightly overpriced. The Digest group seeking approval for is over $25B. predicts little upside at the current level. Margins are forecasted to improve considerably over the A few analysts cite a lack of confidence in the 2005 next few years based on stronger sales of branded guidance based on a lack of visibility. products. The company has a number of potentially large products IVX lost its Paragraph IV challenge for LLY’s Zyprexa. (Neurontin, Fosamax) and it is looking to bring a generic equivalent to market in 2005. The recent proposal of TEVA to acquire Ivax by 2005 end or early 2006. Significant pipeline products subject to litigation have been ultimately launched providing upside to revenue. Received the European Commission approval to proceed with Teva’s acquisition of Ivax.

IVAX is a multinational company engaged in the research, development, manufacture, and marketing of pharmaceutical products. The company manufactures and/or markets several brand name pharmaceutical products and a wide variety of brand equivalent (read: generics) and over-the counter (OTC) pharmaceutical products, primarily in the U.S., UK, and Latin America.

Yet, the analysts believe a number of the Paragraph IV ANDAs are long-drawn legal victories. 2005 EPS could be significantly high or low based on the outcome of potential court decisions.

Note: Ivax’s fiscal year ends in December; the fiscal year coincides with the calendar year.

Brand equivalent, or generic, sales of drugs account for approximately for 55-60% of Ivax’s sales. Proprietary and branded drug/other revenue accounted for the remaining percent. North America represents roughly half the global business, while strong operations in Europe and Latin America round up the remaining operations.

Teva has proposed a half cash/half stock offer for the shares of Ivax that valued the company at $26 per share. One analyst (Friedman, Billings) expects the acquisition of Ivax by Teva will strengthen Teva’s worldwide presence significantly, broaden the product portfolio and provide scope for synergies and efficiencies to boost the topline and reduce operating expenses. With IVAX and TEVA’s scope of operating in over 80 countries as well as a bookshelf full of Paragraph IV patent challenges, the government may take a few months longer to review the merger which suggests the deal will most likely close in early 2006. On November 25, 2005, TEVA and Ivax received an unconditional approval from the European Commission to proceed with the Teva’ acquisition of IVAX.

At the end of Q305, management cited 59 pending ANDAs with the FDA. IVX believes it is first-to-file on 13 of these products, representing $11.5B in annual sales (vs. previous quarter’s 57 ANDAs and 12 first- to-files targeting $11B). IVAX on October 31, 2005 added AstraZeneca’s Pulmicort Respules, with $561 million in annual brand sales, to its first-to-file list. One analyst (Lehman) continues to expect Ivax’s new generic product introduction outlook for 2005 to improve dramatically in ’06, as several of Ivax’s key new products enter the market. Among the noteworthy are Zoloft ($3.1B), & Proscar ($370M) both with 6- month exclusivity (though competition from an authorized generic is likely), and Zocor ($4.6B in branded sales) with the company challenging in court the FDA’s denial of its Citizen’s Petition requesting six months exclusivity and a court decision expected before the anticipated generic launch. Additionally, an appellate court ruling on generic Zyprexa is expected in H1:06. Ivax had previously stated that it expects a total of $46B in brand value from new generic product introductions during 2005-2007, with an expectation of $9B in ’05, $21B in ’06, and $17B in ’07.

Glucophage

Indication: For treatment of type II diabetes among adults and children.

Product Life Cycle: Recently received 180-day (Hatch-Waxman) exclusivity for the product.

Safety Issues: Side-effects are rare but Glucophage could cause a very rare, but potentially fatal, side effect known as lactic acidosis. The problem is most likely to occur in people whose liver or kidneys are not working well or have congestive heart failure.

Recent Results: The Company recently received approval for a Metformin ER, a generic of BMY’s Glucophage XR. Alpharma was the ‘first-to-file’ for generic Glucophage and the two companies have agreed to share profits for the 180-day period.

Competition: There are five new generic players (Par, Andrx, Teva, Impax, and Ranbaxy) in this market besides IVX. One analyst (Merrill) foresees additional competition at the end of the exclusivity period in December. The analyst further believes that though additional competition might reduce sales, yet the culmination of agreement with Alpharma could boost margins. On February 19, 2004 IVX had received approval for a generic version on BMY’s Glucovance.

Perhaps the greatest opportunity comes from four high-profile ANDAs of current branded blockbuster products:

Zyprexa

Zacks Investment Research Page 2 www.zackspro.com Indication: Very effective in treating symptoms of schizophrenia.

Product Life Cycle: Pending FDA approval.

Safety Issues: Minimal.

Recent Results: IVX wants to bring a bioequivalent of LLY’s schizophrenia blockbuster Zyprexa to market (Paragraph IV, first-to-file). The branded product represents sales of over $3.1B. Ivax had filed post-trial brief in mid May 2004. On April 14, 2005, the District of Southern Indiana found the Zyprexa `382 patent valid, enforceable and infringed by Ivax's generic version of Zyprexa. As a result of the decision, Ivax will be unable to market generic Zyprexa until the `382 patent expires in 2011. However, Ivax plans to file an appeal. IVAX is believed to hold first to file exclusivity on all doses excluding the 20mg.

Neurontin

Indication: Neurontin affects chemicals and nerves in the body that cause seizures and some types of pain.

Product Life Cycle: Recently received FDA approval.

Recent Results: PFE’s $2.2B blockbuster for epilepsy will lose patent protection in 2005. IVX just received final approval on 100mg, 300mg and 400mg tablets of Neurontin, which will be launched under the trade name Gabaron. IVX also announced that it received tentative approval for the 600mg and 800mg dosage strengths, which are, at present, being marketed by Pfizer. IVX announced the launch of gabapentin (generic Neurontin) tablets in 100mg, 300 mg, and 400mg strengths. IVX stated its launch would be limited to select customers. The analysts (Friedman, Billings, and Lehman) feel the limited launch, as opposed to full launch, reflects IVX’s fiscal prudence given the uncertainty of legal issues surrounding the product. Ivax launched the capsule doses on March 23 and tablet doses on April 29.

Competition: Three more generic players (Alpharma, Teva, and Greenstone) have entered the market since its launch. IVX enjoyed the privilege of being the only generic gabapentin in the market for nearly seven weeks. One analyst (Friedman, Billings) believes that one of the primary incentives to the generic version could be lower pricing, which they estimate would be available at a 25% discount to the branded version. The analyst believes IVX has current market opportunity (lower doses; in capsules) of roughly $1.7 billion, which represents 75% of the $2.3 billion market. It is important to note that the tablet formulation of the drug is non-AB rated. PFE’s Greenstone division has also launched its own generic Neurontin to help stem market share loss to players like Ivax and Alpharma. The company also admitted that sales were affected by the entry of AB-rated versions of Neurontin.

Litigation: The Federal District Court in New Jersey granted Ivax Corp. a motion for a summary non- infringement judgment on a Pfizer patent for Neurontin. Pfizer was still defending its U.S. patent No 6,054,482 for Neurontin. This decision clears up the patent confusion, allowing Ivax to continue selling gabapentin.

Lexapro

Indication: Treatment for depression.

Recent Results: Lexapro’s status has not changed lately and the ongoing litigation with FRX and FDA (Paragraph IV, first-to-file) still continues. Management stated that the trial date was rescheduled to March 15, 2006 (from 12/5/05) to accommodate the expected 10-day length of trial. The earliest Lexapro

Zacks Investment Research Page 3 www.zackspro.com patent does not expire until March 2006 and one analyst (J.P. Morgan) believes IVX will not be able to bring a generic product to market before then.

Flonase

Indication: Anti-inflammatory nasal spray used to treat the nasal symptoms of indoor and outdoor nasal allergies and year-round non-allergic nasal symptoms.

Product Life Cycle: A waiting the FDA approval.

Recent Results: Glaxo’s lengthy citizen petitions and concerns on labeling might create obstacles to its approval. One analyst (Friedman, Billings) believes this is a $100M opportunity for IVX. The analyst believes that generic Flonase is expected to be launched in 2005, assuming citizen’s petitions filed with the FDA by GlaxoSmithKline will be resolved over the next several months. Another analyst (SmithBarney) expects a 2007 launch. Some analysts (Lehman, Merrill, Friedman, Billings) believe there will be limited generic competition as very few generic companies have the ability to manufacture inhalers. Glaxo’s patent and pediatric extension on Flonase have both expired.

OxyContin

Indication: A central nervous system depressant.

Product Life Cycle: Key driver of revenue.

Recent Results: IVX became the authorized generic distributor of Purdue’s OxyContin on June 8, 2005, which had $1.8 billion in brand sales prior to the launch of generic versions. The news follows the June 7 court decision, which upheld a lower court ruling on Endo Pharma that found Purdue’s Oxycontin patents unenforceable. One analyst (Lehman) anticipates that IVX will split the generic OxyContin market with Endo Pharmaceuticals during the initial exclusivity period and maintain roughly 25% market share through 2006.

Augmentin ES-600

Indication: Augmentin is used to treat many different types of bacterial infections, such as sinusitis, pneumonia, ear infections, bronchitis, urinary tract infections, and infections of the skin.

Result Results: Ivax announced the launch of an authorized generic of Augmentin ES-600 Oral Suspension, with approximate branded sales of $280M. It will distribute the generic for GlaxoSmithKline (GSK), who made the deal to compete against the first generic of the drug shipped by TEVA.

Competition: The market for Augmentin ES-600 Oral Suspension is expected to be limited in the near term to three competitors i.e. TEVA, IVX and GSK. One analyst (Friedman, Billings) believes that due to the uncertainty of Ivax’s semi-exclusivity, the incremental earnings boost can not be ascertained, but it does help reinforce confidence in the estimates (Lehman).

Neoral

Indication: An immunosuppressant drug.

Recent Results: IVX has received approval for generic doses of NVS’s Neoral, a $209.7-million immunosuppressant drug that has limited generic competition. Till now it has taken 40% of the market share. However, one analyst (CIBC) believes there is scope for further gain.

Proscar

Zacks Investment Research Page 4 www.zackspro.com Indication: For the treatment of benign prostatic hyperplasia.

Recent Results: On January 10, 2005, IVX announced it has received tentative approval from the FDA for its generic version of Merck’s Proscar. IVAX was not sued by Merck regarding its first-to-file generic application. IVX believes that it has first-to-file status and will be entitled to a 180-day marketing exclusivity. The company expects to launch the product in June’06.

Zoloft

Indication: An anti-depressant drug.

Product Life Cycle: IVAX has filed Paragraph IV ANDAs for Zoloft.

Recent Results: The Company settled the litigation with Pfizer, which allows IVX to enter the market in June 2006. Due to the settlement with Pfizer, IVAX will be the first company to launch the generic version of this drug. One analyst (Lehman) estimates annual brand product sales for Zoloft to be $2.8 billion. The analyst believes the generic exclusivity may extend beyond 6 months, thus providing a $0.15 upside to their EPS estimate for every 3 months of additional exclusivity. The agreement does not prohibit Pfizer from launching its own authorized generic.

Indication: Zocor is a prescription drug that is indicated as an addition to diet for many patients with high cholesterol when diet and exercise are inadequate.

Recent Results: The FDA has denied its citizens’ petition seeking the re-listing of certain Merck patents. Ivax is appealing the decision at the court of appeals for the federal circuit. Ivax expects to launch its product in mid 2006 regardless of the appeal, but believes it can obtain a verdict and potentially be awarded exclusivity. Ivax believes that it was the first to file for a Paragraph IV patent challenge. After it made its filing Merck withdrew the patents. One analyst (Lehman) believes the product can enter the market in 2006. IVAX had filed a Citizen’s Petition to request the FDA to honor its exclusivity period. Expiration of the final enforced patent for Zocor will occur in June 2006.

The company has two potential branded products, which will be launched in the near term. These are: a) Easi-Breathe and b) Volare

Easi-breathe

Indications: Treatment of asthma.

Product Life Cycle: Awaits final FDA approval, approved in UK. Easi-Breathe is currently being marketed in the U.K., France, Central and Eastern Europe and Mexico, and it has approvals received or pending in several other countries. Easi-Breathe has sold well wherever launched.

Importance: Represents one of the company’s most valuable assets. This product offers significant growth prospects in the EU as well.

Safety Issues: Does not contain environmentally harmful CFC’s.

Recent Results: In June 2005, the working group of parties related to the Montreal Protocol, seeking to curtail the use of substances that deplete the ozone layer, published a draft recommending European and United States to restrict CFC allocations to limit the use of CFC gasses in metered dose inhalers in 2006. Starting January 1, 2007, they recommend them to deny all CFC allocations to companies that have CFC-free or HFA albuterol products in the market. Final vote on the draft proposal is expected in late ’06. Ivax’s Easi-Breathe inhaler offers advantages over current products through its easy-to-use

Zacks Investment Research Page 5 www.zackspro.com breathe-actuated design (alleviates coordination difficulties) which is particularly attractive in the pediatric and elderly markets which make up a large subset of the total patient population. The FDA has issued its final rule for CFC albuterol, setting a deadline of December 12, 2008 for complete U.S. withdrawal, forcing a shift to HFA formulations. Thus, CFC-based albuterol metered-dose inhalers (MDIs) will no longer be allowed on the market. One analyst (SG Cowen) believes that the widespread use of the HFA albuterol formulations will begin to increase in late 2007 or early 2008. The analyst continues to believe competition will be limited.

Q’VAR: The product is indicated for the treatment of asthma. One analyst (Friedman, Billings) expressed enthusiasm over Q’VAR. QVAR’s market share has increased from 0.8% to more than 6.6% after the acquisition. They expect sales volume to increase.

Synthroid

Indication: A naturally occurring thyroid hormone used to treat low thyroid levels.

Marketing Rights: IVAX Corp. gained an exclusive license from an undisclosed company to distribute 11 different dose strengths of a generic version of Abbott Laboratories Inc.’s Synthroid thyroid medication.

Competition: According to the FDA, about 7 companies other than Abbott have received approvals to market generic Synthroid, the most recent being Canadian Merck KgaA affiliate Genpharm Inc. in June. Abbott reported U.S. Synthroid sales of $637 million in 2004.

Clozapine: On December 19, 2005, Ivax received FDA approval for 200mg strength of Clozapine, a generic equivalent of Novartis' Clozaril, for the treatment of schizophrenia. Ivax already has approval for 12.5 milligram, 25 milligram, 50 milligram and 100 milligram strengths, and commands about 53 percent of the $135.5 million U.S. clozapine market. The company said the new strength will be marketed through its Ivax Pharmaceuticals Inc. unit.

Pravachol: Pravachol blocks the production of cholesterol (a type of fat) in the body. IVX received tentative approval for a generic version of BMY’s Pravachol (Paragraph IV). The Pravachol international patents expire next year, with the U.S. patent expiring early 2006.

Onxol: Used in the treatment of breast, ovary and lung cancers, and AIDS-related Kaposi’s sarcoma. Approved in September 2000, it is a generic of BMY’s Taxol for the treatment of breast, ovarian, and lung cancers. Sales in 2005 will most likely be down significantly given additional generic competition (loss of Hatch-Waxman protection).

Paxene: Paxene is indicated for a) advanced AIDS-related Kaposi’s sarcoma (KS) who have failed prior liposomal anthracycline therapy, b) metastatic carcinoma of the breast (MBC) who have failed, or are not candidates for, standard anthracycline containing therapy and c) metastatic carcinoma of the ovary (MOC) after failure of platinum containing combination therapy without taxanes. IVX also has a proprietary injectable (branded) paclitaxel product called Paxene for which it has received European approval. IVX will most likely sell Paxene at a discount to Taxol in the EU.

Pulmicort Respules: Management noted that its most recently disclosed first-to-file opportunity is Astrazeneca’s Pulmicort Respules (budesonide inhalation suspension), an inhaled cortisteroid with annual brand sales of $620M. Ivax was sued by AstraZeneca on 10/26/05, translating to the automatic 30-month stay not expiring until early 2008. The product is marketed as a preventive-type asthma therapy for children 12 months to 8 years of age.

Pipeline Products

Zacks Investment Research Page 6 www.zackspro.com  A treatment for multiple sclerosis called Mylinax is expected to be launched in 2006 (with Serono). Phase III trials are under way. The FDA permitted Serono to skip Phase II trials and progress straight into Phase III.  Preparations for Phase Iib trials are under way for Talampanel (for the treatment of epilepsy and Parkinson’s disease).  Ivax’s soft corticosteroid entered Phase II testing. The company completed a pivotal trial for its soft corticosteroid in seasonal allergic rhinitis and is preparing for an EU submission this year. Preparations for Phase III trials are under way.

The FTC could force a pipeline divestiture with IVAX Cladrabine for MS, an oral Phase III compound already out licensed to Serono. According to one analyst (WR Hambrecht), TEVA’s or Ivax’s brands (products or pipelines) are highly unlikely to be impacted by potential overlaps in the core generic business, while in some international markets minor impact may occur on the business combination. They believe that TEVA and IVAX may divest potential overlaps proactively as part of the cost-cutting synergy strategy and thus, FTC issues will not prevent the deal from closing.

Total Revenue Synopsis: Overall performance was mixed in the quarter, with high double-digit revenue growth clipped by a lower gross margin and higher SG&A spending. In addition to the company reiterating its previously stated guidance for 2005, it reconfirmed guidance a 2006 EPS of between $1.35 and $1.55, excluding any potential benefit from generic versions of Zyprexa, Flonase, Lexapro, and Zocor.

Geographically, Ivax performed well on all business regions with North America achieving all-time record revenue. Europe sales were helped by recognition of deferred revenue from a license agreement with Mayne Group Limited for Paxene, and also from revenue from Polfa Kutno (acquired in December 2004). Latin America experienced 10 consecutive quarters of YOY growth. Total 3Q05 revenues improved by 40.7% to $617.7 million, 7% QOQ from $577.3 million in 2Q05 and consensus estimate of $569 million. Ivax’s growth has become strong overseas after a series of acquisitions. Management has not included revenue contributions from Zoloft, Lexapro and Zyprexa.

US generic sales of $295 million was $34 million higher than the 2Q05 figure of $261 million, reflecting volume increases in base products as well as contributions from new product sales and the distribution of the authorized generic OxyContin. New product sales were fueled by authorized generic Oxycontin and, to a lesser extent, Neurontin contributions. Europe and Latin America also posted solid quarters, with sales in Europe of $191 million, up 26% year over year, benefiting from higher sales in central and Eastern Europe and the acquisition of Polfa Kutno in 4Q-04 and Latin America sales of $95 million, up 14% year over year.

The bull case for IVX is that many of the significant pipeline products, which were subject to litigation, have been ultimately launched providing significant upside to current estimates. For example, Zocor is not included in estimates due to the uncertainty surrounding its expected approval. The bear case for IVX is that the deal between IVX and Teva may fall through. IVX has noted that its shares have traded up significantly since the announcement of the transaction.

2003A 2004A 2005E 2006E 2007E Est. Growth Total Revs. $1420M $1837.4M $2322M ↑ $2744.1M ↓ $3121.2M ↑ 24.6%

Margins

The company is in a high spending mode in its attempt to grow business. It is in the midst of a plan to revamp sales. To accomplish this, IVX must spend to ramp its R&D efforts. Some analysts (Merrill, Friedman, Billings) approve of this added spending. Others (CIBC, Lehman) are concerned about its negative impact on earnings. IVX is clearly in a “spend-to-grow” mode, and interpretations from the sell-

Zacks Investment Research Page 7 www.zackspro.com side vary. IVX is in the middle of building out a massive manufacturing facility that would lead to higher margins (Merrill). Additionally, the company is expanding and upgrading current facilities to grow the API business. Branded sales are also starting to contribute a larger percent of the total business as products such as Q’VAR and Paxene begin to take off. Investors can see from the chart below that IVX has a positive trend in gross margin going forward.

Digest Average Gross Margin Operating Margin Net Margin 2003A 45.0% 12.1% 7.2% 2004A 46.4% 13.7% 10.8% 2005E 42.4% ↑ 13.1% ↓ 9.1% ↓ 2006E 46.4% ↑ 18.6% ↓ 13.2% ↓ 2007E 45.7% ↑ 19.3% ↑ 13.7% ↓

Gross margin of 42.3% declined 110 bps from 43.4% in the year ago quarter and up 130 basis points sequentially over Q2. Gross profit in Q3 was $261M (up 36.9% YOY), fueled by higher U.S. generic sales volume, the business acquisitions in Poland and Peru in 2004, of Phoenix Scientific (May 2005), and the recognition of deferred revenues from renegotiated agreement with Mayne regarding Paxene (paclitaxel). Operating income for the quarter was $89.1 million improving 75.7% YOY and 23.7% sequentially. Operating margin in the quarter increased from 10% in 3Q04 to 12.5%.

On the expense side, total expenses for 3Q05 was $540M, driven primarily by the higher cost of sales, but also merger-related expenses of $10M. SG&A was roughly $7 million and up a robust 21% year over year, reflecting a higher cost structure from recent business acquisitions. Selling expenses as percentage of total revenue declined to 12.54% from 15.13%. General and administrative spending as a percentage of revenue dipped to 8.32% from 9.19%. R&D expenses for the quarter were $35 million. Research and development outlays as a percentage of revenue decreased to 5.64% from 7.66%. Tax rate for the quarter was 30.1%.

Earnings per Share

IVAX reported Q3 EPS of $0.20 (up 17.6% YOY and sequentially), $0.03 below the consensus estimate of $0.23. Proforma EPS stood at $0.24 (up 41.2% YOY and QOQ), as earnings were impacted by non tax-deductible charges of $0.04 per share related to the pending merger with TEVA of $10.2 million. Most analysts expect 3Q05 to be Ivax’s last quarterly update as a standalone company as they expect the Teva-Ivax merger to close by year-end or early 1Q06. Hence, the management refrained from giving any guidance for FY05. Ivax fully diluted shares outstanding were 282.6 million.

2005E 2006E Street Consensus $0.78 ↓ $1.35 ↓ Company Guidance - - Low Estimate $0.73 $0.96 High Estimate $0.84 $1.52

Management has consistently stated that results will improve as each quarter benefits due to a strong tailwind from authorized generics and recently closed acquisitions.

Long-Term Growth

From an industry standpoint IVX looks solid. The secular growth in generics could present a strong tailwind for IVX to build its business. However, analysts do not believe all industry players will thrive. IVX expects to have over 65 ANDAs filed by the end of the year. Being first-to-file is a significant advantage, and IVX believes it has this designation on 13 ANDAs. Most of the analysts recommend

Zacks Investment Research Page 8 www.zackspro.com keeping an eye on how many of the ongoing legal battles regarding Neurontin, Zyprexa, and Fosamax progress. These three drugs amount to nearly $8B in branded sales, presenting an enormous opportunity. One analyst (Merrill) continues to believe that Ivax can create significant value for patent longer term investors.

The Digest average for long-term growth rate is 23.5% (↑ from the last updated figure of 22.3%. Based on the consensus income statement in the IVX.xls file, the three-year CAGR estimated for 2003–2006 is 39.3%.

Teva and Ivax signed a definitive agreement for Teva to acquire Ivax. TEVA management has stated that the acquisition of Ivax would be accretive to earnings in the first year. Additionally, the company stated that combined revenue is expected to be higher than the simple addition of each firm’s revenue base, implying topline synergies. IVAX could provide major generic product opportunities for TEVA, including six month generic exclusivities for Zoloft and Proscar in 2006, and potential exclusivity on generic Zocor (also in 2006) and generic Flonase. These high-barrier opportunities on billion-dollar brand drugs, in addition to the chance to be a primary supplier of non-CFC albuterol products (asthma), were the key factors behind the acquisition. IVAX sells roughly 100 products in the U.S., which will add to Teva’s line of 200 products. On October 27, Teva and Ivax announced that over 98% of the company’s shareholders voted in favor of the proposals relating to the acquisition of Ivax by Teva.

One analyst (William Blair) believes the company has potential catalysts in the form of products like generic Flonase, and non-CFC Albuterol. The FDA has issued its final rule for CFC albuterol, setting a deadline of December 12, 2008 for complete U.S. withdrawal, forcing a shift to HFA formulations. One analyst (SG Cowen) believes the widespread use of the HFA albuterol formulations will begin to increase in late 2007 or early 2008.

Most analysts expect that the authorized generic for Zoloft and Proscar could aggressively cut its price in order to win market share. A greater than 50% generic price discount relative to the brand price would reduce the $0.50 EPS contribution from the two drugs in 2006.

IVX is planning to expand into Poland. It had offered to acquire Polfa Kutno, one of Poland’s leading pharmaceutical companies for $163.3M in a stock-for-stock transaction. The acquisition has recently been completed and IVX will be the first US Company to be listed in the Warsaw Stock Exchange. IVX now holds approximately 98% of Polfa Kutno’s shares.

Target Price/Valuation

The PEG for IVX is about average for the generic group as well. While branded large-cap pharmaceuticals typically sell at 1.5X growth, it is noted the generics typically trade at only 1X growth. It is believed that roughly 23.5% is a fair LTG rate for IVX, and thus the PEG of 0.96X is fair.

Looking at Ivax’s current price ($31.50), the stock trades at 40.38X 2005 EPS. The P/E multiple for ADRX is 22.49 is at par with the specialty pharma average of 20-22x. Most of the analysts use a forward PE multiple in the 16 – 20X range. The Digest group predicts growth to be 23.5%, so the PEG based on 2005 EPS is 1.72X. This is above the large-cap pharma group average of approximately 1.5X. Of the seven price targets quoted for Ivax the lowest is $26 (Prudential, 17.46% downside from the current price) and the highest is $33.40 (Zacks Investment Research, 6.03% upside from the current price). The average TP is $29.07/share (↑ from the previous updated figure of $26.50, 7.71% downside from the current price). Possible positive ANDA filings or legal victories pertaining to Zocor, Zyprexa, Zoloft and Flonase along with the closing of the pending acquisition by Teva could warrant upward EPS revisions.

Zacks Investment Research Page 9 www.zackspro.com Capital Structure/Solvency/Cash Flow/Governance/Other

Teva has made an offer to acquire Ivax. The Ivax shareholders will be able to choose between either cash or shares. But if the choice of any one is oversubscribed, a system of proration will be imposed such that from the Teva perspective, the deal will consist of 50% cash and 50% stock. IVAX share holders will receive either $26 per share or 0.8471 shares of Teva. Most analysts do not anticipate any legal or regulatory hurdles which could prevent this deal from closing. Most analysts expect shareholders of both companies to approve the deal. The combination of these two large generic players offers the typical synergies of such high profiled deals, such as cost savings and a larger pipeline of products. IVAX management continues to forecast deal closure of the merger with TEVA by year end 2005, or early 2006. On October 27, 2005, TEVA and Ivax announced that over 98% of the company’s shareholders voted in favor of the proposals related to the acquisition of Ivax by TEVA. On October 11, the U.S. Federal Trade Commission (FTC) requested additional information regarding TEVA’s proposed acquisition of Ivax. The companies continue to expect the transaction would be finalized in late 2005 or early 2006. The European approval to proceed with TEVA’s $7.3 billion takeover of Ivax completes the non-U.S. regulatory review process required before the closure of the transaction.

Further benefits from the combined company include:  Employment of 25,000 people  A pipeline of 300 products  Operations in 50 countries  Annual revenue of $7.0 billion

Cash equivalents and marketable securities increased to $569.6 million from $398.0 million. Accounts receivable rose to $458.4 million from $392.4 million. Long-term debt decreased to $772.1 million from $1.058 billion.

On December 15, 2005, Ivax launched Heliocare, a new oral nutritional antioxidant supplement capsule which helps the body deal with the effects of UV that reaches the skin and aging. It is recommended in addition to a sunscreen.

Upcoming Events

Date Event Comments Mid 2006 Launch of generic Flonase $100M opportunity 2H-05 Commence P3 trials for Mylinax and Talampanel June’06 Launch of generic version of Merck’s Proscar June’06 Launch of Zocor June’06 Launch of Zoloft 4Q05/1Q06 TEVA-IVX merger October’06 Launch of Pravachol March 15, 2006 Trial on Lexapro On first-to-file status

Individual Analyst Opinions

Zacks Investment Research Page 10 www.zackspro.com POSITIVE RATINGS

WR Hambrecht – Buy ($30) November 9, 2005: The analysts view TEVA’s acquisition of IVAX as a strategic coup which should maximize earnings potential for a 2006 watershed year for the generic industry, with generic volumes expected to increase significantly with over $20 billion in anticipated brand patent expirations and the implementation of the Medicare Drug Benefit. Target price has gone up from $28 to $30.

NEUTRAL RATINGS

Wall Street Strategies– Hold-($29) – November 10, 2005: The proposed merger between Teva and Ivax could catapult the combined company into the number one position in global generic drug sales. Target price raised up from $26.50 to $29.

Friedman, Billings – Market perform (Target Price-$29.50) November 9, 2005: The analysts raised their price target to $29.50 from $26 to reflect the terms of the acquisition and the current Teva share price of $38.99.

Prudential – Neutral ($26) November 8, 2005: The analysts predict a strong 2006, with IVAX contributing the Zoloft and Proscar generic exclusivities and Teva its leadership position in the generic segment to the proposed merger. After that, merger synergies and an improved brand presence could bolster earnings. They remain positive about the proposed combination of Teva and Ivax as it should create the best positioned generic company in 2006.

Smith Barney – Hold - ($29) – November 8, 2005: The analyst expects Teva acquisition of Ivax to close around year end. Pending the completion of the acquisition, they expect Ivax's share price to be influenced by that of Teva, reflecting the value of Teva shares to be received in the deal. Strategically, they believe the combined company would benefit from the growth drivers identified for Ivax.

William Blair – Market perform- November 9, 2005: The analysts are optimistic on Ivax’s assets delivering increased returns to shareholders under Teva's control.

NEGATIVE RATINGS

NOT EXPLICITELY RATED: FAVORABLE

Lehman – Equal-Weight ($29) –November 17, 2005: The analysts view that geographically diversified earnings base coupled with new generic product launches in the U.S. will play a key role in the combined companies’ (Teva and Ivax) solid outlook for remainder of 2005 and FY06.

Appendix-A

Analyst sales estimates by product, EPS forecasts, and a consensus income statement are available in IVX.xls.

Appendix-B

Quick Take Score: How the Digest average changed after the 3Q05 results: 3 () = (Revenue, Margins, LTG Rate) 1 () = (EPS) 0 () =

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