Global Pharmaceuticals

Global Pharmaceuticals Survey Series (Part II): Ophthalmology We present the second edition of the Credit Suisse Global Pharmaceuticals Survey November 6, 2013 Series with insights on the eye market.

RESEARCH TEAM Key takeaways from our survey of 47 high prescribing optometrists and Vamil Divan, MD ophthalmologists include: (1) growth for AGN’s Restasis is expected to continue in the (212)-538-5394 medium term, with FDA decision on substitutability of generic version critical determinant to [email protected] longer-term, (2) AGN’s Lumigan is poised to maintain branded market leadership in Jason Kantor, PhD glaucoma with low share loss expected, (3) REGN/BAY’s Eylea positive momentum will likely (415) 249-7942 [email protected] continue post upcoming entry in diabetic macular edema, and (4) there is room for pipeline drugs assuming improvements in key characteristics such as dosing profile and efficacy. Ari Jahja (212) 325-0767 [email protected] Conclusions from survey results for key players are the following: European Pharma Team (44)-207-888-0304 AGN: The results underpin our view that Lumigan is poised to maintain market leadership in [email protected] branded prostaglandin market, despite stricter formulary management and competition from Fumiyoshi Sakai generic latanoprost. While meaningful share erosion is likely for Restasis post entry of (81) 3-4550-9737 version, medium-term growth is likely to continue. We remain cautious on pipeline drugs [email protected] DARPin and Ozurdex in DME, which represent optionality in our model. Jeremiah Shepard, PhD (415) 249-7933 REGN/BAY: Eylea [email protected] Key findings support our positive view on , of which growth will accelerate post approval in diabetic macular edema (DME) amid expected stable share in wet age- Ronak H. Shah, Pharm.D., CFA (212) 325-9799 related macular degeneration (wet AMD) . Furthermore, compounding pharmacy issue on [email protected] Avastin will likely have modest impact in the next 12-24 months, with Eylea is still viewed as Jeremy Joseph potential beneficiary. (212) 325-3870 [email protected] ROG/NOV: While Lucentis’ share will likely remain stable and market growth will provide support, long-term trajectory could decelerate post Eylea’s entry to DME. Overall, physicians still anticipate the majority of Lucentis use to be in wet AMD (~57%) indication, followed by the DME and central retinal vein occlusion (CRVO) indications. NOV: Ophthalmology remains a key driver for Novartis (Alcon), representing c.20% of NPV. Our survey highlights support for the Simbrinza launch in glaucoma but also some caution on Jetrea rollout, in line with CS expectations.

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CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION™ Client-Driven Solutions, Insights and Access Physicians' View and CS View on Key of Topics of Interest

Topic Physicians’ View CS View

Leading AGN’s Lumigan is poised to maintain Our Lumigan forecasts are slightly higher than Branded market leadership in the prostaglandin Consensus. We expect ex US growth to partially Glaucoma market with low share loss expected in offset pressure in the US. Upcoming generic entry Agents the medium term, despite headwinds of the 0.03% formulation is likely to pose limited from generic competitors and tougher threat. payor environment.

Modest growth is still expected for Our forecasts are higher than Consensus in 2014- Restasis Restasis in the medium term, driven by 2015, and are lower from 2016 onwards on Outlook market growth and success of direct-to- assumption of generic entry. While generic entry consumer strategy. However, branded will take time and effort, the FDA seems Restasis will likely face meaningful determined to allow it to happen. erosion even in the absence of human trials, assuming it is deemed substitutable by the FDA and priced at a reasonable discount.

Eylea is poised for robust uptake in Eylea growth will likely accelerate post approval in DME. While compounding pharmacy the DME indication. Longer term, we continue to Eylea Growth issue on Avastin usage will likely take believe that Eylea will benefit from increased time to play out, Eylea is also seen as regulation of compounding pharmacies. potential prime beneficiary.

On wet AMD, there is clear need for Despite potential long-term opportunity, we assume Pipeline longer duration of effect (less frequent minimum contribution from DARPin (wet AMD, Potential injections) and greater efficacy. phase 2) to our AGN model. Progress of Meanwhile, greater efficacy (IOP bimatoprost sustained release (glaucoma, phase 2) reduction) and cost are greatest areas of will be closely watched given potential to enhance focus in glaucoma. compliance. The authors of this report wish to acknowledge the contribution made by Selvakumar Nallasamy, an employee of CRISIL Global Research and Analytics, a business division of CRISIL Limited. CRISIL Limited is a third-party provider of offshore research services to Credit Suisse. Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 2 CS Estimates Slightly Higher than Consensus on Lumigan; In-line on Eylea and Lucentis

AGN’s Lumigan AGN’s Restasis (Sales in $ Million) (Sales in $ Million) $700 $646 $636 $1,200 $632 $629 $621 $614 $601 $1,027 $600 $572 $567 $559 $1,000 $968 $902 $897 $889 $500 $800 $748 $400 $578 $600 $559 $551 $300 $397 $200 $400

$100 $200

$0 $0 2013E 2014E 2015E 2016E 2017E 2013E 2014E 2015E 2016E 2017E CS Estimate Consensus CS Estimate Consensus

Novartis/Roche’s Lucentis Regeneron/Bayer’s Eylea (Sales in $ Billion) (Sales in $ Billion) $5 $5 $4.4 $4.2 $4.2 $4.2 $4.3 $4.1 $4.1 $4.2 $4.2 $4.1 $4.1 $4.1 $3.9 $3.9 $4 $4 $3.3 $3.2 $3 $3 $2.6 $2.5

$2 $2 $1.7 $1.7

$1 $1

$0 $0 2013E 2014E 2015E 2016E 2017E 2013E 2014E 2015E 2016E 2017E

CS Estimate Consensus CS Estimate Consensus Source for Consensus Data: Bloomberg, Evaluate Pharma Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 3 AGN, REGN, Santen Among the Most Leveraged to the Eye Market

Share of World Category Ethical Drug NPV – Bubble Size Refers to NPV for the Category

140

120 Thrombogenics

100

80 Santen Regeneron

40 Allergan

Other20 Companies Novartis Bayer Roche 0 PfizerMerck

-5 0 5 10 15 20 25 30 35 Share of Company NPV Accounted for by Category by for Company Share Accounted of NPV

-20

Novartis Roche Regeneron Allergan Bayer Santen Merck Thrombogenics Pfizer Other Companies

Source: Credit Suisse PharmaValues Database Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 4 Portfolio Manager’s Summary Ophthalmology is an attractive market with mid-single digit growth expected through 2016

Global pharma market size is estimated at $18 billion and expected to post 5% CAGR through 2016

Prescription drug growth will be fueled by VEGF inhibitors indicated for wet aged-related macular degeneration and dry eye segment – AGN is the most levered to the dry eye market; REGN/BAY and NOV/ROG most levered to wet AMD

Glaucoma is also an important market within ophthalmology and estimated to be ~$5 billion globally – AGN and NOV are the most levered to this market

Credit Suisse proprietary survey conducted to assess ophthalmology market dynamics in the US

23 US-based high prescribing optometrists see an average of ~300 patients in an average month

24 US-based high prescribing ophthalmologists see an average of ~550 patients in an average month

Key conclusions from our survey include:

Allergan’s Restasis growth is expected to continue in medium term; meaningful erosion expected longer-term should substitutable generic versions be approved by FDA

Allergan’s Lumigan is poised to maintain market leadership in the branded prostaglandin market with low share loss expected in the medium term, despite headwinds from generic competitors and tougher payor environment

Stable market share expected for Alcon/Roche’s Lucentis and Regeneron/Bayer’s Eylea usage in wet AMD

There is meaningful room for growth for Regeneron/Bayer’s Eylea in diabetic macular edema, while less so for Allergan’s Ozurdex

There is support for Novartis’ Simbrinza uptake in glaucoma, but also some caution on Jetrea rollout

Views on Dry Eye Products Restasis Growth Is Poised to Continue in the Medium Term

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 6 Optometrists Provide Representative Sample of Allergan’s Targeted Specialty Area for Dry Eye Treatment

Survey respondents (n=23) see an average of 289 patients in an average month

. Survey respondents see an average of 99 patients with dry eye in a typical month . ~91% of respondents believe that the state of the economy has medium to very significant impact on their practices . Only ~34% of respondents have seen an increase in patient visits compared to 2012 . ~65% of respondents think that the number of dry eye patients at their practices will increase in the next 12-24 months

YTD, Restasis volume growth has been helped by increased investment in direct-to-consumer advertising in the US and an expanding base of prescribers in US optometry

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 7 Dry Eye Market Expected to Grow at a Modest Rate in the Next 12-24 Months; Restasis Could Be Poised to Benefit

65% of the respondents expect an increase in the number of dry eye patients in the next 12-24 months

Q: How do you see the total number of patients at your practice with dry eye changing in the next 12-24 months? 0-10% decline, 4% >10% increase, 17%

No change, 30%

0-10% increase, 48%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 8 Two-Thirds of Optometrists Believe Allergan’s Direct-To-Consumer Efforts on Restasis Have Impacted Their Prescribing Patterns

66% of respondents cited that Allergan’s direct-to-consumer efforts on Restasis (such as through patient requests for the drug) have had medium to significant impact on their prescribing habits

Q: To what extent are your prescribing habits influenced by Allergan's direct-to-consumer efforts for Restasis (such as through patient requests for the drug)?

Significant impact = 1 9% Cumulative 4 22% 66% of respondents 3 35%

2 26%

No impact = 1 9%

0% 5% 10% 15% 20% 25% 30% 35% 40% % of Respondents

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 9 Branded Restasis Will Likely Face Meaningful Erosion If Generic Version Deemed Substitutable and Priced at Discount, Even in Absence of Human Clinical Trials

61% of respondents expect to significantly reduce prescribing branded Restasis or stop prescribing branded Restasis

Q: If a generic version of Restasis (cyclosporine ophthalmic emulsion) comes to market and the FDA deemed it substitutable based on bioequivalence studies but with no human clinical trials, how would it impact your future prescribing pattern?

Stop prescribing branded Restasis 13% Cumulative 61% of Significantly reduce prescribing respondents 48% branded Restasis

Slightly reduce prescribing branded 30% Restasis

Still continue prescribing branded 9% Restasis

0% 10% 20% 30% 40% 50% 60% % of Respondents

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 10 Optometrists Appear Willing to Switch Many Current Patients on Branded Restasis to Generic Version

65% of respondents expect more than 40% of patients already on branded Restasis would be switched over to the generic version approximately 12 months after launch

Q: If the FDA deemed it substitutable based on bioequivalence studies but with no human clinical trials, approximately 12 months after the launch of a generic Restasis, what % of your patients already on branded Restasis do you think you will have switched over to the generic version?

More than 80% 13% Cumulative 61-80% 17% 65% of respondents

41-60% 35%

21-40% 22%

Less than 20% 13%

0% 5% 10% 15% 20% 25% 30% 35% 40% % of Respondents

65% of respondents expect more than 40% of new patients will be started on generic Restasis approximately 12 months after launch

Q: If the FDA deemed it substitutable based on bioequivalence studies but with no human clinical trials, approximately 12 months after the launch of a generic Restasis, what % of new patients would you consider putting on generic Restasis?

More than 80% 30%

Cumulative 65% 61-80% 13% of respondents

41-60% 22%

21-40% 13%

Less than 20% 22%

0% 5% 10% 15% 20% 25% 30% 35% % of Respondents

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 12 There Is Room to Grow for Dry Eye Pipeline Drug Lifitegrast from Low Physician Awareness Currently

Only 17% of respondents have heard about Shire’s phase 3 dry eye drug lifitegrast. However, they cited potentially better efficacy/slightly faster effect compared to Restasis

Q: Have you heard about late-stage pipeline dry eye drug lifitegrast (being developed by Shire)?

Heard about it, 17%

Haven't heard about it, 83%

Views on Glaucoma Products Lumigan’s Market Leadership Will Likely Continue, Despite Headwinds from Other Generics Products

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 14 Ophthalmologists Provide Representative Sample of Specialists Treating Various Key Indications

Survey respondents (n=24) see an average of 567 patients in an average month

Survey respondents see the following type of patients in a typical month:

Glaucoma: Average of 196 patients

Wet age-related macular degeneration: Average of 128 patients

Diabetic macular edema: Average of 80 patients

Symptomatic vitreomacular adhesion: Average of 35 patients

~79% of respondents believe that the state of the economy has medium to very significant impact on their practices

~58% of respondents have seen an increase in patient visits compared to 2012

~65% of respondents think that the number of patients at their practices will increase in the next 12-24 months

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 15 Allergan’s Lumigan and Alcon’s Travatan Are Perceived to Have Better Overall Profile than Generic Xalatan, Driven by Stronger Efficacy

Q: On scale of 1-5 (5 being best), please rate the following drugs/drug classes on the given parameters:

Overall Profile 5 4 3 Drug Overall Efficacy Safety Tolerability Cost Profile Cost Efficacy 2

1 Lumigan 3.7 4.3 4.0 3.5 2.3

Travatan 3.5 4.0 3.9 3.8 2.6

Generic 3.3 3.3 3.8 3.7 4.3 Xalatan Tolerability Safety

1= Worst; 5 = Best

Lumigan Travatan Generic Xalatan

Ophthalmologists Expect Modest Share Loss for Lumigan

However, real world implications likely to be more muted given promotion efforts and share of voice

Q: Please estimate what percentage of the time you use the following prostaglandins in treating your patients with glaucoma, now and 12 months from now.

Generic Xalatan (latanoprost) 41% 40%

Lumigan 26% 23%

Travatan 22% 22%

Xalatan 9% 10%

Other 3% 5%

0% 10% 20% 30% 40% 50%

Current average Patient Share 12 Months from Now

76% of the respondents expect an increase in the number of glaucoma patients in the next 12-24 months

Q: How do you see the total number of patients at your practice with glaucoma changing in the next 12-24 months?

0-10% decline, >10% increase, 4% 13% No change, 21%

0-10% increase, 63%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 18 Ophthalmologists’ Comments Suggest No Significant Changes in Glaucoma Treatment; Combos Could Gain More Traction in 2nd Line

Q: Please provide any applicable commentary on your usage of prostaglandins in treating your patients with glaucoma. – “Biggest issue is formulary coverage” – “Prefer Lumigan as first line agent, but generics prostaglandins have intense prescribing pressure from pharmacies and insurance” – “Travatan Z is better tolerated, but more expensive due to non formulary coverage for most patients” – “Pharmacies may change patients from brand to generic without informing doctors” – “Insurance companies pushing the change to generic latanaprost” – “More insurance companies and patient call backs on cost of medications”

Q: Please provide any applicable commentary on your usage of second line agents in treating your patients with glaucoma. – “I will use Simbrinza along with the other combos” – “No large changes anticipated” – “Combo therapies including Alcon’s Simbrinza will increase due to great efficacy” – “Using more Combigan”

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 19 Stricter Formulary Management Highlights Increasing Pressure Branded Drugs Will Be Under, Including Lumigan

~96% of respondents said that it has been tougher to prescribe Lumigan now than it was before the entry of latanoprost (generic Xalatan)

Q: How has the reimbursement process for Lumigan evolved after the entry of generic Xalatan (latanoprost)?

Significantly tougher now = 5 21%

Cumulative 4 29% 96% of respondents 3 46%

2 4%

No Change = 1 0%

0% 10% 20% 30% 40% 50% % of Respondents

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 20 Allergan’s DROP Study on Lumigan Have Had Limited Impact on Prescribing Pattern Allergan has published data on the benefits of lowered intraocular pressure when patients are switched from generic latanoprost to Lumigan 0.01%. It showed that patients can get an additional drop in pressure of the order of 3 millimeters or 4 millimeters of mercury.

At the time of our survey, 54% of respondents have seen the recently published DROP study by Allergan. However, it has not driven meaningful impact on prescribing pattern.

Q: Are you aware of the recently published DROP study by Allergan, Q: You answered that you are aware of the which compares published data on the benefits of lowered intraocular DROP study. Please elaborate on your pressure when patients are switched from generic latanoprost? thoughts on the results, and whether or not it has impacted your prescribing pattern. – “Has not impacted my prescribing behavior significantly” – “Interesting results, but it seems that formularies don’t care and still insist that patients are given generics” – “This has said it may be better but it has not No, 46% influenced me a lot”

Yes, 54% – “I had experienced similar results in my practice. Travatan and Lumigan work better” – “The first line agent, from the perspective of payors, is still latanoprost. If efficacy is not achieved, then conversion to brand name becomes applicable for most patients”

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 21 Meanwhile, Stable Share Trends Anticipated for Second Line Agents, Including Alpha 2 Agonists; Read-through to AGN’s Alphagan

Q: Please estimate what percentage of the time you use the following second line agents in treating your patients with glaucoma, now and 12 months from now.

Beta blockers 32% 30%

Fixed-combination treatments 27% 30%

Alpha 2 agonists 24% 23%

Carbonic anhydrase inhibitors 16% 16%

Other 1% 1%

0% 5% 10% 15% 20% 25% 30% 35%

Current average Patient Share 12 Months from Now

Examples of alpha 2 agonists: Allergan’s Alphagan P and Combigan, which are commonly used as adjunctive medicines

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 22 Efficacy and Cost Are Viewed as Most Important Areas of Improvement in Glaucoma Treatment

Q: How important are each of the following characteristics in terms of need for improvement in glaucoma therapy?

Efficacy (greater IOP reduction) 4.58

Cost (better payer coverage, less out of- 4.42 pocket cost to the patient)

Safety (improved tolerability profile) 4.13

Dosing (less frequent dosing) 4.08

Other 2.71

1 2 3 4 5

Not Very Important Important

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 23 Views on Products in Wet AMD, DME, and Other Indications - Stable Market Share Expected in Wet AMD - Eylea Is Well Positioned for Future Use in Diabetic Macular Edema

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 24 Ophthalmologists Provide Representative Sample of Specialists Treating Various Key Indications

Survey respondents (n=24) see an average of 567 patients in an average month

Survey respondents see the following type of patients in a typical month:

Glaucoma: Average of 196 patients

Wet age-related macular degeneration: Average of 128 patients

Diabetic macular edema: Average of 80 patients

Symptomatic vitreomacular adhesion: Average of 35 patients

~79% of respondents believe that the state of the economy has medium to very significant impact on their practices

~58% of respondents have seen an increase in patient visits compared to 2012

~65% of respondents think that the number of patients at their practices will increase in the next 12-24 months

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 25 Wet AMD Market Dynamics Share of New Patients with Wet AMD Requiring Intravitreal Drugs Is Expected to Be Relatively Unchanged in the Next Twelve Months

Q: Please estimate what % of the time you use the following drugs in treating your newly diagnosed patients with wet AMD requiring intravitreal drugs, now and 12 months from now.

Avastin 48% 49%

Eylea 27% 28%

Lucentis 17% 15%

Other 8% 8%

0% 10% 20% 30% 40% 50% 60% % of Time

Current average Patient Share 12 Months from Now

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 26 Wet AMD Market Dynamics Eylea’s Overall Profile Is Seen as Slightly Better than Lucentis

. Eylea modesty beats Lucentis on efficacy, cost and overall profile

. Avastin scores modestly lower than Eylea and Lucentis on safety, but major cost advantage brings its overall profile in-line with others

Q: On scale of 1-5 (5 being best), please rate the following new agents on the given parameters:

Overall Profile 5 Drug Overall Efficacy Safety Tolerability Cost 4 Profile 3 Cost Efficacy Eylea 3.7 4.1 3.9 3.8 1.9 2 1 Avastin 3.6 3.6 3.3 3.6 4.4

Lucentis 3.4 3.8 3.8 3.9 1.6

1= Worst; 5 = Best Tolerability Safety

Lucentis Eylea Avastin

Wet AMD Market Dynamics Eylea’s Overall Profile Is Viewed as Somewhat Better or Similar to Lucentis

No respondents view Eylea’s overall profile to be worse than Lucentis – This is consistent with findings outlined on previous slide, which shows that Eylea’s overall profile is seen as slightly better than Lucentis

Q: Based on available data and your experience, how would you rate Eylea's overall profile relative to Lucentis?

100%

60% 50% 50%

40% 38%

30%

20% 13% 10% 0% 0% 0% Significantly Somewhat No Difference Somewhat Signficantly Better Better Worse Worse

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 28 Compounding Pharmacy Prospects Most Physicians Have Not Experienced New Requirements for Additional Disclosures About the Use of Compounded Avastin

Q: Have you experienced any new requirements for additional disclosure to patients about the use of compounded Avastin?

Yes, 4%

No, 96%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 29 Compounding Pharmacy Prospects Stricter Compounding Pharmacy Regulation Will Only Impact ~30% of Overall Avastin Supply Source…

Q: Please select the Avastin supply source at your practice.

Compounded at Other my institution 3% 21%

Compounded locally by an independent pharmacy Acquired from 46% an out of state supplier 30%

Calculated based on number of patients share

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 30 Compounding Pharmacy Prospects …. Which Explains Modest Expected Impact on Avastin Usage in Next 12-24 Months

Q: How do you see the compounding pharmacy issue impacting Avastin usage for wet AMD in the next 12-24 months?

Small increase Significant 5% decline 14%

Small decline No change 28% 53%

Calculated based on number of patients share

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 31 Compounding Pharmacy Prospects Several Respondents Point to Eylea as Incremental Beneficiary of Possible Share Shift from Avastin

Q: Please rank what % of your Avastin use will go to the following agents over the next 12- 24 months?

Lucentis, 43%

Eylea, 58%

N = 4

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 32 Future Competitive Landscape in Wet AMD Longer Duration of Effect and Greater Efficacy Are Most Desirable Areas of Improvement . Longer duration of effect (less frequent dosing) and . 76% of respondents expect to switch more than 30% greater efficacy and are viewed as top areas of desired of patients to a new drug with less frequent dosing improvement over current treatment options based on (e.g. once every 3 or 4 months), assuming in-line unmet need and clinical importance efficacy and safety profile with existing drugs

Q: Please rank the order the following metrics for areas of Q: Assuming similar efficacy and safety, how would less improvement that you desire over current treatment options frequent dosing (e.g. once every 3 or 4 months) of a new in wet AMD based on unmet need and clinical importance. drug affect your prescribing pattern on existing anti-VEGFs?

Most 1 Switch <10% Desirable Switch 10-30% of patients to Longer duration of patients to new agent, 4% of effect, 1.9 new agent, Switch >50% 21% 2 Greater efficacy, of patients to 2.0 new agent, 38%

Better long-term 3 safety profile, 3.1

Improved short- term tolerability, 3.6 4 Switch 30-50% Other, 4.5 of patients to Least new agent, Desirable 5 38%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 33 Future Competitive Landscape in Wet AMD Strong Commercial Emphasis Will Be Required on Future Pipeline Products Due to Low Physician Awareness Currently

. Only ~42% of respondents have heard about DARPin . Only ~36% of respondents have heard about Fovista

Q: Have you heard about mid-stage pipeline drug called Q: Have you heard about mid-stage pipeline drug called DARPin? The drug is currently in phase 2 studies, and has Fovista? The drug is entering phase 3 trials, and has the the potential to offer a once every three to four month potential to obtain label for use in combination with any dosing option compared to Eylea's every other month. existing anti-VEGF therapy.

Can't discuss, 4%

Yes, 36% Yes, 42%

No, 54% No, 64%

. 50% of respondents expect number of patients with . Majority of Lucentis Use is Still Anticipated to be in the diabetic macular edema at their practices to increase Wet AMD Indication, Followed by DME in the next 12-24 months, with remainder anticipating no change

Q: How do you see the total number of patients at your Q: For the next 10 patients in whom you prescribe practice with diabetic macular edema changing in the next Lucentis, please breakdown how many are treated 12-24 months? for each of the following indications.

>10% increase, Other, 4% 4%

Diabetic No change, macular edema, 50% 0-10% 26% Wet macular increase, 46% degeneration (AMD), 57%

Central retinal vein occlusion (CRVO), 13%

N = 5

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 35 Future Competitive Landscape in DME Eylea Is Expected to Have Meaningful Impact on DME Treatment Paradigm; Mixed Opinions on Ozurdex

. Only 13 out of 24 respondents are familiar with . Meanwhile, 15 our of 24 respondents are familiar with potential Ozurdex use in DME potential Eylea use in DME

. Of those, 53% expect Ozurdex to have meaningful impact on . Of those, 93% expect Eylea to have meaningful impact on their DME treatment paradigm DME treatment paradigm

Q: Do you expect Ozurdex to meaningfully impact the way Q: Do you expect Eylea to meaningfully impact the way you you treat your patients with diabetic macular edema? treat your patients with diabetic macular edema?

5 - Very meaningful impact 15% 5 - Very meaningful impact 7%

4 0% 4 27%

3 38% 3 60%

2 38% 2 0%

1 - No meaningful impact 8% 1 - No meaningful impact 7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 10% 20% 30% 40% 50% 60% 70%

Eylea Could Achieve Meaningful Share in DME Post Potential FDA Approval; While Stable Share Expected for Lucentis

Q: Please estimate what % of the time you will use the following drugs in treating your patients with diabetic macular edema at the moment, 12 months from now, and 24 months from now. Please assume that Eylea would have obtained FDA approval for this indication in that timeframe.

60%

50%

40%

30%

20%

10%

0% Avastin Lucentis Eylea Other

Now Next 12 Months Next 24 Months

Tepid Enthusiasm on ThromboGenics/Alcon’s Jetrea for Use in Symptomatic Vitreomacular Adhesion

Out of 24 respondents, 54% have used Jetrea for the treatment of symptomatic vitreomacular adhesion and another 17% intend to use the drug in the next 6 months

Q: Have you used Jetrea Q: If No, do you intend to use Jetrea (ocriplasmin) for the treatment of for the treatment of symptomatic symptomatic vitreomacular vitreomacular adhesion in the next 6 adhesion? months?

No, 29% Yes, 54% No, 46% Yes, 17%

. Jetrea is the first and only treatment of symptomatic VMA in the US; approved on January 14, 2013 . Symptomatic VMA is a progressive condition that, if left untreated, frequently leads to retinal distortion, further deterioration in vision and has the potential to cause irreversible damage and complications; it affects ~250,000 people in the US . The companies are targeting over 2,000 retinal physicians who treat most of the patients with symptomatic VMA Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 38 Other Indications

However, Share Uptick Is Anticipated over the Next 12-24 Months

Out of 17 respondents, 71% expect an increase in usage of Jetrea in the next 12-24 months

Q: How do you see the number of patients treated with Jetrea changing in the next 12-24 months?

>10% decline, >10% increase, 12% 6%

No change, 18%

0-10% increase, 65%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 40 Global Eye Market Is Anticipated to Deliver~5% CAGR, Primarily Driven by Retina and Dry Eye Segments

Global Ophthalmology Market Segments, 2011-2016 ($ Billion)

2011 Market Size: $17.8 billion 2016 Market Size: $23.1 billion $7.2 $6.7 $6.0 $5.8 $5.4

$3.9 $3.3 $2.4

Acute Care Glaucoma Dry Eye Retina

2011 2016

Tailwinds: Demographic trends; quality of vision is highly valued by patients and payors

Key players: Allergan, Novartis/Alcon, Roche, Pfizer, Merck, Senju, Santen, Regeneron, Bayer

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 41 Allergan’s Ophthalmology Business Forecasting Flattish Lumigan Outlook; Restasis Growth Will Continue in Medium Term

Credit Suisse Restasis forecasts are higher than Consensus in 2014-2015 – We assume generic entry in 2016

Our Lumigan forecasts are generally in-line with Consensus, as we expect limited erosion from generic version of old (discontinued) dose in 2014

2012 Sales Mix Breast Skin Care Latisse Aesthetics 4% 2% 7%

Facial Aesthetics 7% Eye 49%

Botox 31%

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 43 CS Estimates on Restasis (Dry Eye) Lower than Consensus Longer Term, but Higher in the Near Term

We forecast a -16% sales CAGR (2012-17) in the US Restasis Sales Estimates ($ Million) $1,200 Due to assumption of generic entry in 2016, our estimates $1,027 $1,000 $968 are higher than Consensus in 2014-2015 but below in $902 $897 $889

2016-2017 $800 $748

$559$578 – $50 mm and $220 mm above in 2014-2015, $600 $551 $397 respectively $400

– $40 mm and $190 mm below in 2016-2017, $200

respectively $0 2013E 2014E 2015E 2016E 2017E

CS Estimate Consensus

Restasis Prescription Breakdown (Monthly TRx) 300,000 YTD Share 250,000 18% 200,000

150,000 50% 100,000

50,000 32% 0

Optometry Ophthalmology Others

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 44 Dry Eye Is One of the Most Attractive Areas in Ophthalmology Pharmaceuticals, with High Barriers to Entry

Chronic dry eye is usually treated with over-the-counter artificial tear drops and ointments

AGN’s Restasis is the only prescription drop currently available

– Ophthalmic version of widely-used immunosuppressant cyclosporine

– Revenue: $792 mm in 2012 (40% CAGR since 2004), demonstrating greater recognition of dry eye as a progressive disease

Plenty of unmet need remains in dry eye

– 370 mm people suffer from dry eye disease worldwide (~25 million people in the U.S.)

– 9 mm candidates for therapy globally based on moderate to severe disease (~4 million people in the U.S.)

Only ~10% of addressable patient population in U.S. (moderate to severe disease) is treated with Restasis due to limited efficacy and side effects (stinging)

Key late-stage pipeline: Shire’s lifitegrast, aimed to treat signs and symptoms of dry eye, with possible launch in 2016

– Since Restasis is only indicated for increasing tear production (not treating signs and symptoms of dry eye), there could be place for lifitegrast in the market

Channel checks suggest the drug could be a credible competitor

Top-line data on phase 3 study (“OPUS-2”) to evaluate the efficacy of lifitegrast in patients currently using artificial tears will be released before year-end 2013. It could have a higher probability of success than the prior OPUS -1 study, which delivered mixed results.

– OPUS 2 recruited an “enhanced” patient population, with a minimal eye dryness score (40) at study entry. This was not the case in OPUS 1 which recruited all comers

CS European Pharmaceuticals team is forecasting US peak sales of $300 million, at 50% probability of success

Potential Advantages vs. Restasis Potential Disadvantages vs. Restasis Quicker onset of action Lack of commercial experience

Better side effect profile/tolerability Science not well understood

Greater competition from generic Restasis

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 46 Barriers Toward Generic Restasis Entry May Turn Out to Be Lower than Expected Given Recent Developments June 20, 2013: FDA’s Office of Generic Drugs issued less stringent than expected Draft Guidance toward potential generic version of Restasis

– Allows for an “in vitro” option for a generic drug to demonstrate bioequivalence (no need for a human trial)

– Restasis was one out of 16 new bioequivalence recommendations for specific products added by the FDA in June 2013

August 17, 2013: AGN responds to draft guidance, highlighting scientific and legal reasons why they believe in vivo comparative clinical studies must be required.

– Allergan, along with 22 medical societies, patient groups, and consumer groups, provided comments to the FDA. It is currently engaging with the FDA, especially the Office of Generic Drugs and various experts to understand what the FDA plans to do

Credit Suisse View: We expect generics ultimately to be allowed to enter the market but do not expect final resolution until the 2016 time frame

It is unclear if we will see disclosures of paragraph III applications on Restasis

– Certification under paragraph III allows for an ANDA approval on the expiration date of the patent pertaining to the reference listed drug

– A generic drug company may get the ANDA ready for submission well before the expiration date of the patent and file the ANDA with the FDA

– A generic company may obtain a tentative approval on the ANDA until the patent expires and then wait until the patent expires to launch its drug

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 47 AGN Has Filed a Compelling Response to the FDA’s Draft Guidance on Generic Cyclosporine; Ball Now Back in the FDA’s Court

Highlights of Allergan’s Arguments in Its Response to the FDA Draft Guidance FDA has failed to establish scientific basis for in vitro methods to establish bioequivalence of topical emulsions Scientific evidence demonstrates that FDA's draft guidance would permit nonbioequivalent products to be deemed bioequivalent A clinical endpoint study is required because product-specific factors and the precise mechanism of action of Restasis are unknown to the scientific community

Allergan is planning to take appropriate legal and regulatory actions to uphold branded Restasis, including possible Citizen’s Petition

The company had submitted studies of several test emulsions showing that these meet the draft guidelines, but differ significantly from Restasis

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 48 Using Xalatan as Benchmark, We Anticipate Relatively Rapid Restasis Erosion Should Generics Become Available

As frame of reference, generic Xalatan TRx share of total franchise reached >80% just two months after its March Generic TRx as % of Total Xalatan Franchise 2011 launch 100%

– No evidence that ophthalmologists or optometrists are 80% hesitant to use a generic agent 60%

– Payors will likely push for generic use as well 40% Using Xalatan as a guide and assuming it takes two to three 20% years to sort out the exact requirements for a generic agent, 0% we expect generic entry in 2016 and rapid erosion in the Restasis franchise thereafter

Line extension (“Restasis X”) could provide a buffer to generic entry, but it is still a few years away from entering the market – Could be a stronger concentration (e.g., 0.1%) or a better tolerated formulation – Allergan will post the phase 2 trial design of Restasis X on clinicaltrials.gov by year-end 2013

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 49 Generic Restasis Entry Could Erode One of AGN’s Key Growth Drivers, but We See Limited Impact Until at Least 2016

Restasis has delivered robust sales growth, driven by both increased volume and price – Key factors include broader physician adoption, earlier treatment, and consumer awareness

AGN has increased the number of details delivered by their sales force and increased investment in direct-to-consumer (DTC) advertising

Generic Restasis entry, as well as branded competition, could emerge in 2016

270,000 8% Price YoY Weighted Restasis Restasis 260,000 7% Increase WAC Growth 5/18/2013 5% 2013 YTD 10% 6% 250,000 1/5/2013 5% 2012 8% 5% 240,000 4/7/2012 5% 2011 9% 4% 10/22/2011 5% 2010 9% 230,000 3% 1/8/2011 4% 2009 6%

Monthly TRx Monthly 220,000 10/1/2010 5% Months Rolling GrowthRolling Months

2% - 1/9/2010 4%

210,000 1% 10/3/2009 5% YoY YoY 3

200,000 0% 1/24/2009 5%

Apr-11 Oct-10 Oct-11 Apr-12 Oct-12 Apr-13

Jun-11 Jun-12 Jun-13

Feb-11 Feb-12 Feb-13

Dec-10 Dec-11 Dec-12

Aug-11 Aug-12 Aug-13

Restasis YoY 3-Months Rolling Growth

Downside Base Upside

Restasis Global 2016 Sales $300 $559 $1,000 EBIT Margin 35% 35% 35%

AGN Tax Rate 27% 27% 27% AGN Share Count (MM) 299 299 299

EPS Contribution $0.26 $0.48 $0.86 % of Consensus EPS 4% 7% 13%

We forecast a 0% sales CAGR (2012-17) Lumigan Sales Estimates ($ Million) Key assumptions for glaucoma market (U.S.): $700 $646 $632 $629 $636 $621 $601 $614 – Glaucoma Market Growth: 2% CAGR (2012-17) $600 $572 $567 $559

– Branded Lumigan Share: 22% (in 2012) to 13% (2017) $500 – Price Increases: 3% per year $400 $300 On moving annual total through June 2013, the glaucoma market was $200

~$5.3 billion, growing at a rate of 2%. Allergan’s share is 26%. $100

$0 This compares to ~$5.2 billion as of June 2012. Allergan’s share was 24% 2013E 2014E 2015E 2016E 2017E

CS Estimate Consensus

Tailwinds Headwinds

Lumigan 2014 US formulary coverage in Part D Continued impact post generic latanoprost and in commercial plans will be broadly similar to entry in 2011 the situation in 2013

Upcoming Alcon’s Travatan LOE in 2014 Opportunities for modest US price increases continue to exist

Strong growth in ex US markets, driven by unit doses launch ($50-$100 million global peak year sales)

Glaucoma is a leading cause of irreversible blindness – Global prevalence is between 70-90 million and increasing

Loss of vision decreases quality of life and daily functioning

There are two clear segments in the $5.7 billion glaucoma market (2011 market size per Allergan) – First line agents (47% of total market are prostaglandin analogs (PGAs), such as Lumigan, Travatan, Xalatan (generic latanaprost also available) – Second line agents (53% of total market) are needed when further intraocular pressure lowering is required. . Alpha 2 agonists - Alphagan . Beta blockers - Timoptic . Carbonic anhydrase inhibitors - Trusopt, Azopt

Speaking of Alpha 2 agonists, Allergan’s Alphagan is a brimonidine tartrate ophthalmic solution. Meanwhile, Combigan is a combination of Alphagan and beta blocker timolol

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 54 Lumigan Growth Will Be Driven by Price Increases Amid Declining Branded Volume Growth in the United States

Lumigan is facing a headwind on volume growth since generic Xalatan (latanoprost) entry

Sales growth will be driven by price increases and ex-U.S. launches, which will more than offset modest pricing pressure on higher rebates in the U.S.

Allergan is working on several mid-stage glaucoma assets that are aimed to fulfill the needs of greater IOP reduction, better patient compliance, and better tolerability

Price YoY Weighted 300,000 8% Lumigan 0.01% Lumigan 0.01% Increase WAC Growth 290,000 6% 1/5/2013 8% 2013 YTD 12% 5/12/2012 8% 2012 15% 280,000 4% 1/7/2012 5% 2011 10% 270,000 2% 9/10/2011 6% 1/8/2011 8%

Monthly TRx Monthly 260,000 0%

Months Rolling GrowthRolling Months - 250,000 Generic Xalatan entered -2%

market in March 2011 YoY YoY 3

240,000 -4%

Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13

Jun-11 Jun-12 Jun-13

Feb-13 Feb-11 Feb-12

Aug-13 Dec-10 Aug-11 Dec-11 Aug-12 Dec-12

Lumigan YoY 3-Months Rolling Growth

Generic versions of Lumigan 0.03% and Alcon’s Travatan could enter the market in 2014 350,000 Lumigan TRX Breakdown 300,000 We assume minimal impact from generic Lumigan 250,000 0.03% (August 2014) 200,000 – Majority of patients converted to 0.01% 150,000 formulation, and 0.03% was withdrawn in 4Q12 100,000 – Limited side effects is seen as a benefit over 0.03% formulation, given comparable efficacy Monthly TRx Volume 50,000 – Generics have filed ANDA against longer-term 0

Lumigan 0.01% patents but NOT the ones

Jul-10 Jul-11 Jul-12 Jul-13

Apr-10 Apr-11 Apr-12 Apr-13

Oct-10 Oct-11 Oct-12

Jan-11 Jan-12 Jan-13 expiring in 2014. Jan-10 Alcon has filed a new formulation of Travatan in the Lumigan - 0.03% Lumigan - 0.01% U.S. in July 2013 – Alcon’s glaucoma franchise delivered 2% yoy operational growth in the first 9 months of 2013. – Positive US response to new launch Simbrinza, overall pricing discipline, and continued non-US growth was partially offset by US generic prostaglandin competition

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 56 Unexpected Entry of Generic Lumigan 0.01% Could Provide Downside Risk; Our Estimates Assume AGN Prevailing in the Court

Downside Base Upside

Lumigan Global 2016 Sales $166 $601 $694 EBIT $50 $180 $208 EBIT Margin 30% 30% 30%

AGN Tax Rate 27% 27% 27% AGN Share Count (MM) 299 299 299

EPS Contribution $0.12 $0.44 $0.51 % of Consensus EPS 2% 7% 8%

REGN/Bayer have announced positive headline data from two pivotal Eylea DME (diabetic macular edema) phase 3 studies – Data compare favorably with the DME data on the U.S. Lucentis label

REGN plans to file for DME in the U.S. in 2013 based on two-year DME data (what FDA required for Lucentis)

Eylea entry and our channel checks drive our belief in relatively limited potential for Ozurdex in DME – Ozurdex is currently approved for two relatively small indications of uveitis and retinal vein occlusion. The product is growing more rapidly in EU, relative to the US – Ozurdex provides sustained medication release with effect up to 6 months – AGN has filed for approvals of the drug in the U.S. and EU – The company is planning to position drug for 30-40% of patients who are resistant to anti-VEGF treatments or who need additional therapy. No FDA-approved treatments beyond anti-VEGF therapy typically used – Phase 2 data for DME suggests decent efficacy and safety profile

One of DARPin’s potential key advantages relative to Eylea (once every two months) and Lucentis (once a month) is dosing – DARPin injection could last three to four months

Ocular inflammation could be an issue, and manufacturing changes have been planned

AGN has stated that there was some product differentiation relative to Lucentis, but the data does not support direct advancement to phase 3

Further clarity on phase 2 results is awaited at the AAO meeting on November 15, 2013

Data from recently expanded phase 2 study could be available by early 2015, assuming current “three-stage” study completion date in August 2014 – Company plans to use the data to guide the phase 3 design

We forecast 2018 launch and 2023 probability-adjusted sales of ~$200 million – Expect limited potential given modest differentiation vs. Eylea and time to market

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 59 Unmet Medical Need Exists in Retina Segment; However, Allergan’s Pipeline Success Has Yet to Be Seen

Prevalence in the US

DME Wet AMD Dry AMD

1.4 MM 1.2 MM 7.3 MM

Expectations are low for both Ozurdex in DME and DARPin in wet AMD

Ozurdex in DME FDA action date in 1H 2014

DARPin phase 2 data presentation in November 2013 will provide better clarity on its profile

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 62 Regeneron/Bayer’s Positive Eylea DME Data to Drive Continued Product Growth; Filing in 2013 in US and EU

Best-corrected visual acuity (BCVA) Mean change from baseline in visual Drug Dose Study Time point acuity (control adjusted), # of letters p value

Eylea 2mg once monthly VIVID-DME 52 weeks 9.3 p<0.0001

Eylea 2mg every 2 months VIVID-DME 52 weeks 9.5 p<0.0001

Eylea 2mg once monthly VISTA-DME 52 weeks 12.3 p<0.0001

Eylea 2mg every 2 months VISTA-DME 52 weeks 10.5 p<0.0001 Lucentis 0.3mg DME1 24 weeks 8.6 p≤0.01 Lucentis 0.3mg DME2 24 weeks 9.9 p≤0.01

. Eylea’s data compares favorably with the DME data on the US Lucentis label

. For Eylea in DME, we forecast 90% probability of success with global peak sales of $1.4 billion ($650 million in ex-US markets represented by Bayer)

2007 2008 2009 2010 2011 2012 2013 YTD (Till Sep) Product Sales $ Sales $ Sales $ Sales $ Sales $ Sales $ Sales $ ALPHAGAN P 08/2001 ALL $58,480,744 $241,688,069 $247,683,900 $191,162,977 $188,753,004 $204,819,347 $164,688,689 COMBIGAN 11/2007 ALL $1,130,747 $35,993,708 $80,841,474 $113,114,595 $158,684,619 $192,400,047 $165,809,651 COSOPT 04/1998 MSD $85,908,111 $297,757,839 $44,864,087 $23,335,663 $16,007,769 $12,541,826 $8,101,378 COSOPT PF 06/2012 MSD $2,216,800 $7,781,849 LUMIGAN 03/2001 ALL $72,227,411 $291,003,807 $325,261,956 $375,404,965 $420,727,031 $469,488,007 $363,996,034 RESCULA 10/2000 S/U $598,405 RESTASIS 03/2003 ALL $94,200,151 $432,573,347 $534,643,474 $683,592,648 $772,271,616 $891,577,436 $763,770,293 SIMBRINZA 05/2013 NSV $2,742,349 TRAVATAN 03/2001 NSV $41,914,246 $154,219,184 $160,437,086 $84,982,441 $51,237 $6,149 $1,192 TRAVATAN Z 10/2006 NSV $22,366,653 $140,286,139 $239,783,229 $375,530,511 $495,482,323 $460,480,561 $333,767,193 TRUSOPT 05/1995 MSD $11,116,910 $39,511,468 $6,008,289 $2,904,421 $1,882,964 $1,371,555 $925,900 XALATAN 08/1996 PFZ $135,935,000 $576,361,232 $628,285,119 $732,614,561 $245,655,115 $38,133,291 $21,703,962 GENERIC LATANOPROST $49,168,552 $92,128,122 $87,619,926 ZIOPTAN 03/2012 MSD $6,340,604 $13,415,655 Grand Total $523,279,973 $2,209,394,793 $2,267,808,614 $2,582,642,782 $2,348,684,230 $2,371,503,745 $1,934,922,476

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 65 Allergan, Inc. (AGN, Outperform, $104 TP) Attractive Story on Core Franchise Strength with Valuation Reset on Restasis Risk (Link to note) CS PharmaFilter Investment Thesis Core Earnings Capital Catalysts Franchise Innovation Growth Allocation Newsflow Underappreciated base business strength provides a strong base upon which AGN can further grow Reduced growth visibility and Restasis risk already reflected in valuation Low expectations on mid- to late-stage pipeline provide room for Excellent Average Poor future upside

Catalysts Valuation DARPin data disclosures (Nov 2013); Court decision on Lumigan Allergan (AGN) 0.01% patents (early 2014); 2014 guidance release (February 2014); Current Price (Nov 4) $90.11 Enterprise Value ($ mm) $26,262 Levadex launch (2Q14). % of 52-Week High $0.77 2014 P/E 16.6x Target Price $104 Dividend Yield 0.2% Risks Upside / Downside (%) 15% Short Interest (Days) 1.3 Market Cap ($ mm) $26,750 Slower-than-expected growth from the base business; earlier-than- expected generic Restasis entry; further pipelines setbacks. Credit Suisse Estimates vs. Consensus Valuation Fiscal Year Ending December 31 ($ in millions, except per share data) Blended 75% DCF/25% relative target price of $104 (implies 19x AGN FY 2013 FY 2014 FY 2015 FY 2016 EPS Sales EPS Sales EPS Sales EPS Sales 2014 EPS), with $105 DCF (8.5% WACC, +2% terminal growth) and CS $4.76 $6,292 $5.44 $6,832 $6.07 $7,288 $5.87 $7,086 $101 relative (18.5x 2014 EPS $5.44). Consensus $4.76 $6,243 $5.41 $6,718 $5.86 $7,083 $6.39 $7,329 Allergan, Inc. (AGN) Difference ($) $0.00 $50 $0.03 $114 $0.21 $204 ($0.52) ($244) Volume (Thousands) Price (USD) 20,000 120 Difference (%) 0% 1% 1% 2% 4% 3% -8% -3% 18,000 115 16,000 110 14,000 12,000 105 Industry Ratings 10,000 100 8,000 95 6,000 90 Analysts Buys Holds Sells Total 4,000 2,000 85 0 80 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep No. of Recommendations 10 11 0 21 Volume Allergan, Inc. Source: FactSet Prices % 48% 52% 0% Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 66 CS View on Main Controversies Surrounding AGN Shares

Controversy Bull Case Bear Case CS View

Generic Generic Restasis won’t see the light Generics could enter the market soon It will take time for generics to enter the market, but FDA Restasis of day, as the FDA will require human after LOE in May 2014 and will lead to seems determined to allow it to happen. We assume trials for approvals. rapid substitution and share loss for the generic entry in 2016. branded drug.

Growth Through business development or Without the support of Restasis and Thanks to Botox Therapeutic and the company’s Potential internal projects, the company can still with Restasis X only entering phase 3 strong aesthetics business, the company should be able Without achieve its ~10% long-term sales in 2014, the company will be able to generate mid single-digit sales growth over the next Restasis growth aspiration, even without to achieve only low-single digit sales five years, even without Restasis and with no contribution Restasis. growth over the next five years. from Restasis X.

Pipeline Despite recent setbacks, Phase 2 Levadex will make only a minor DARPin and bimatoprost for scalp represent optionality, Potential assets DARPin and bimatoprost for impact following its approval in 2014, and we assume minimum contribution to our model, scalp could gain meaningful market while phase 2 assets DARPin and while we assume less than $300 million in sales for share, while the commercial potential for bimatoprost for scalp will not make Levadex in 2018. Levadex is being underappreciated in a it to the market for the foreseeable therapeutic area that AGN knows well. future.

2012-2017 8% 2% 5% Sales CAGR

2012-2017 12% 4% 8% EPS CAGR

Valuation $109; assumes 20x consensus 2014 $81; assumes 15x consensus 2014 Our target price of $104 is a 75/25 blend of DCF and EPS and implies 21% upside potential EPS and implies 10% downside risk relative valuation, and represents 19x 2014 P/E. This implies 15% upside potential from the current stock price.

KEY DIFFERENTIATION: Channel checks on base business, proprietary eye market survey, and operating margin analysis

PUSHBACK: The stock could be dead money in the next 12-24 months due to lack of catalysts. . We think the market underappreciates AGN's core franchise and is overly focused on upcoming entry of generic Restasis. The stock's re-rating could occur in the next 6-12 months simply on strong quarterly performance and more clarity on pipeline.

PUSHBACK: The company won't likely be able to deliver attractive growth without Restasis. . Thanks to Botox Therapeutic and the company’s strong aesthetics business, we believe Allergan should be able to generate at least mid-single digit sales growth over the next five years, even without Restasis. In addition, if/when generic versions of Restasis come on the market (we assume in 2016), our analysis of AGN’s cost structure suggests to us that there is a lot of excess spend that they can relatively quickly eliminate to still support their earnings base.

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 68 Bottom-Up SG&A Analysis Supports Our View; Reduction in DTC Spend Could Support Operating Margin Following Restasis Decline

SG&A Forecasts 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E Sales Force costs $721 $843 $900 $931 $962 $982 $1,001 $1,021 $1,042 YoY Growth 17.2% 17.0% 6.7% 3.4% 3.4% 2.0% 2.0% 2.0% 2.0%

Direct to Customer Advertising 176 181 185 194 204 214 160 163 167 YoY Growth (7.4%) 2.8% 2.0% 5.0% 5.0% 5.0% (25.0%) 2.0% 2.0%

"Others" (Plug) 1,053 1,130 1,164 1,261 1,327 1,385 1,290 1,340 1,392 YoY Growth 2.7% 7.3% 3.1% 8.3% 5.2% 4.4% (6.9%) 3.9% 3.9% Total SG&A 1,949.7 2,153.9 2,248.9 2,385.5 2,492.8 2,580.1 2,451.1 2,524.6 2,600.3 YoY Growth 6.6% 10.5% 4.4% 6.1% 4.5% 3.5% (5.0%) 3.0% 3.0% Absolute Change 120.1 204.2 95.0 136.6 107.3 87.2 (129.0) 73.5 75.7

Assumptions 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E # of Sales Rep 3,000 3,440 3,600 3,650 3,700 3,700 3,700 3,700 3,700 Cost per Rep $240,292 $245,098 $250,000 $255,000 $260,100 $265,302 $270,608 $276,020 $281,541 Inflation Rate 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Direct to Customer Advertising 176 181 185 194 204 214 160 163 167 YoY Growth (7.4%) 2.8% 2.0% 5.0% 5.0% 5.0% (25.0%) 2.0% 2.0% Absolute Change (14) 5 4 9 10 10 (53) 3 3

4Q 2013 1H 2014 2H 2014

High DARPin and Ozurdex Phase 2 data presentation at Earnings releases; updates on potential generics Restasis entry AAO Meeting on November 15

Lumigan DARPin phase 2 data readout Court decision on Lumigan 0.01% in late 2014 (Aug 2014 est. formulation patents primary completion date) Price Sensitivity

Levadex FDA approval in 2Q14

Potential FDA approval of Ozurdex in Low Voluma launch in mid- diabetic November macular edema

2015 Historical Consensus – Last 6 Months 2016 Historical Consensus – Last 6 Months ($ Million for Sales; $ for EPS) ($ Million for Sales; $ for EPS) $7,300 $6.20 $7,800 $7.00 $7,250 $7,700 $6.90 $6.10 $7,200 $7,600 $6.80 $6.70 $7,150 $6.00 $7,500 $6.60 $7,100 $7,400 $5.90 $6.50 $7,050 $7,300 $6.40 $7,000 $5.80 $7,200 $6.30 $6,950 $7,100 $6.20 $5.70 $6,900 $7,000 $6.10 $6,850 $5.60 $6,900 $6.00 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

2015 Sales (LHS) 2015 EPS (RHS) 2016 Sales (LHS) 2016 EPS (RHS)

$107

$104 $5.7 $105 $101

$98 $3.5 $95 $95 $92 +7%

$89 $89.24 $86

$83

$80 Current Stock AGN DCF Value US Restasis DCF US Lumigan DCF AGN DCF Value Price (Worst Case) Value (from 2016) Value (from 2015) (Base Case)

* Worst case scenario assumes zero revenue from US Lumigan sales starting in 4Q14 (in the context of potential generic entry on unfavorable court decision on Lumigan 0.01% patents) and zero revenue from US Restasis sales from 2016

120% Premium/Discount to S&P 500 Premium/Discount to Major Pharma

110%

100%

90% Historical Avg Premium to Major Pharma, 78% 80%

70%

60%

Historical Avg Premium to S&P 50% 500, 57%

40%

AGN FY1 P/E Premium/ Discount FY1Premium/ P/E AGN 30%

20% 16% 14% 10%

Jun-08 Mar-11 Jan-05 Apr-05 Jul-05 Oct-05 Dec-05 Apr-06 Jul-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

AGN: Historical FY1 P/E Trading Multiple AGN appears cheap relative to itself and the S&P 500 at a 35x FY1 P/E multiple of 18.7x

30x – Implies 10% discount to its own historical average (six years) 25x Average, 20.9x – 16% premium to the S&P 500, compared to 57% 20x historical premium to S&P 500 18.7x AGN trades in line with the specialty pharma group on 2013 15x P/E, but valued at ~14% premium on 2014 P/E. This is

10x reasonable given management's strong long-term track

record

Jul-09 Jul-08 Jul-10 Jul-11 Jul-12 Jul-13

Mar-13 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

Nov-11 Nov-07 Nov-08 Nov-09 Nov-10 Nov-12 Nov-13

P/E 2012-2017 CAGR 2013 2014 2015 Sales EPS

AGN 18.7x 16.4x 14.7x 5% 8% JAZZ 14.7x 11.8x 10.2x 21% 19% SLXP 23.0x 17.6x 14.2x 20% 18% VRX 17.8x 12.6x 10.7x 22% 21% ACT 16.8x 12.2x 10.9x 14% 22% PRGO 21.6x 18.0x 16.0x 9% 15% Average (ex AGN) 18.8x 14.4x 12.4x 17% 19%

DCF Valuation Snapshot Perpetuity Growth 1.0% 2.0% 3.0% DCF valuation: $105/share 6.5% $133 $152 $181 W 7.5% $112 $124 $141 Key assumptions driving DCF valuation A 8.5% $96 $105 $115 C – Forecast horizon extends through 2023 9.5% $85 $90 $98 C – Perpetuity growth rate beyond 2023: +2% 10.5% $76 $80 $85 (perpetuity rate positive given strength and sustainability of Botox franchise and aesthetics business) * Terminal Value is 56% of EV – WACC: 8.5% (consistent for U.S. specialty pharma) * Pipeline contributes 11% of 2020 Sales

P/E valuation implied price: $101/share Weight

Key assumptions driving P/E valuation 75% 25%

– U.S. pharma multiple in-line with Credit Suisse global equity DCF 2014 P/E Target Blended Target Price strategy team’s 2014 S&P 500 target multiple of 16.4x (target of AGN $104 1,900) $105 $101 – We apply a multiple of 18.5x our 2014 EPS estimate, implying a 13% premium to pharma multiple due to above group average EPS growth

Sources: Company data, Credit Suisse estimates, FactSet, Bloomberg, IMS Health, Wolters Kluwer, regulatory documents, scientific presentations/publications, expert discussions, other publicly-available information 75 Allergan’s Capital Deployment Strategy Targeted Acquisitions Most Likely Use of Capital

While valuation looks cheap relative to recent history, it remains to be seen if pharma companies would have the appetite for a relatively large acquisition – ~$32.5 billion transaction cost assuming simple 30% premium to AGN's current price

An acquisition and associated premium would imply confidence on Botox growth and optionality on AGN’s pipeline – Cost synergies would be plausible for players with footprint in aesthetics/glaucoma

M&A rumors could provide some support for AGN, but we believe that a takeout is unlikely given major pharma’s current lack of appetite for large deals

As a stand-alone entity, we think AGN will be more active on pipeline augmentation to boost growth in 2014 onwards – Management has reiterated its focus on internal R&D rather than acquisitions – Net cash had increased to $1.1 billion in 3Q13 from $513 million sequentially – The company still has borrowing power of ~$700MM from long-term credit facility & commercial paper combined (per 2Q 10Q) – We view recent collaboration with Korea-based Medytox as strategically positive

We expect AGN to continue to focus on medical dermatology, neuroscience, and urology – $3 billion Inamed acquisition remains AGN’s largest vs. average deal size of ~$319 million

Ophthalmics Medical Medical Neurosciences Urologics Company Presence Aesthetics Dermatology Allergan (AGN) X X X X X Latest 12 Months All Transactions Number of Transactions 2 24 As Buyer/Seller 2/0 20/4 Transaction Value - Total 1,150.0 6,064.9 Transaction Value - Average 575.0 319.2 Transaction Value - Minimum 375.0 7.0 Transaction Value - Maximum 775.0 3,016.0 Latest M&A Deals As Buyer (10 of 20) Announce Date Close Date Deal Title Transaction Value 22 Jan '13 01 Mar '13 Allergan, Inc. acquires MAP Pharmaceuticals, Inc. 775.0 16 Nov '12 19 Dec '12 Allergan, Inc. acquires SkinMedica, Inc. 375.0 05 Aug '11 05 Aug '11 Allergan, Inc. acquires Precision Light, Inc. 17.9 19 Jul '11 22 Jul '11 Allergan, Inc. acquires Vicept Therapeutics, Inc. 275.0 17 Jun '11 17 Jun '11 Allergan, Inc. takes a minority stake in Alacer Biomedical, Inc. 7.0 04 Feb '10 04 Feb '10 Allergan, Inc. acquires Serica Technologies, Inc. 95.6 19 Sep '07 17 Oct '07 Allergan, Inc. acquires Esprit Pharma, Inc. from Esprit Pharma Holding Co., Inc. 370.0 22 Feb '07 22 Feb '07 Allergan, Inc. acquires EndoArt SA 97.0 02 Nov '06 30 Nov '06 Allergan, Inc. acquires Groupe Corneal Laboratoires SAS 215.7 15 Nov '05 23 Mar '06 Allergan, Inc. acquires INAMED Corp. 3,016.0 Latest M&A Deals As Seller (4 of 4) Announce Date Close Date Deal Title Transaction Value 02 Jul '07 02 Jul '07 Croma-Pharma GmbH acquires Groupe Corneal Laboratoires SAS /Optha Surgical Device Ops/ from Allergan, Inc. 28.6 01 Mar '99 Cancelled Mentor Corp. fails to acquire Collagen Aesthetics, Inc. 123.7 08 Jul '96 Pending Bain Capital Holdings LLC offers to acquire Pilkington Barnes Hind from Allergan, Inc. 79.0 29 Apr '92 05 Nov '92 O.S.I. Corp. takes a minority stake in Essilor International SA /Contact Lens Business/ from Allergan, Inc. --

Purchase Annual Purchase Date Price Revenues Price/Revenues Announced Acquiror Target Target Therapeutic Area ($MM) ($MM) Multiple Comments Valeant Pharmaceuticals Obagi Nu-Derm, Condition & Enhance, Obagi- 3/19/2013 Obagi Medical Products Dermatology $417.0 $120.7 3.5x Intl. C Rx, ELASTIDerm and CLENZIDerm

Valeant Pharmaceuticals Medicis' broad-spectrum tetracycline 9/3/2012 Medicis Pharmaceutical Corp Dermatology $2,600.0 $764.0 3.4x Intl. antibiotic, Solodyn (minocycline),

Dermik has rights to Sculptra, Benzaclin, 7/11/2011 Valeant Pharmaceuticals Dermik Lab Dermatology $425.0 $240.0 1.8x Carac, and Sculptra.

Ortho's assets includes prescription brands 7/15/2011 Valeant Pharmaceuticals Ortho Derma Division of Janssen Dermatology $345.0 $150.0 2.3x such as Retin-A-Micro. Ertaczo, and Renova.

4/1/2010 Merz BioForm Dermatology $253.0 $66.5 3.8x Radiesse

Combined revenue of Stiefel and GSK's 04/20/09 GlaxoSmithKline Stiefel Laboratories Inc Dermatology $3,300.0 $900.0 3.7x Dermatology division represents 8% of global prescription dermatology market. 12/10/08 Valeant Pharmaceuticals Dow Pharmaceutical Dermatology $285.0 $45.0 6.3x Mentor corp had 50% US implant share in 12/01/08 Johnson & Johnson Mentor Corp Cosmetics $1,070.0 $373.2 2.9x 2009. 09/17/08 Valeant Pharmaceuticals Coria Laboratories Dermatology $95.0 $40.0 2.4x 06/23/08 Stiefel Laboratories Barrier Therapeutics Dermatology $148.0 $23.5 6.3x The acquisition makes Nycomed US a leader 10/30/07 Nycomed Bradley Pharmaceuticals Dermatology $346.0 $144.8 2.4x in the US dermatology market, with combined annualised dermatology sales of $450 million. 10/23/06 Stiefel Laboratories Connetics Dermatology $640.0 $184.3 3.5x 11/15/05 Allergan Inamed Cosmetics $3,200.0 $384.4 8.3x Allergan topped Medicis's $2.8bn bid. Mean 3.9x Median 3.5x

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Pharmaceuticals - Marketed

Eye Care Pharma Alphagan Franchise 419.4 453.2 470.4 485.5 501.8 518.7 536.3 554.4 573.2 384.7 Lumigan Franchise 612.7 622.6 631.6 645.9 620.8 600.6 614.4 604.8 603.5 600.8 Restasis 697.1 792.0 901.9 968.5 1,026.8 559.3 397.2 291.7 244.3 209.5 Ozurdex 50.0 58.0 71.3 85.6 102.7 123.3 141.8 155.9 166.9 175.2 Other Eye Care Pharma 741.0 766.4 787.4 803.2 819.3 835.6 852.4 869.4 886.8 904.5 Total Eye Care Pharma 2,520.2 2,692.2 2,862.7 2,988.7 3,071.4 2,637.5 2,541.9 2,476.3 2,474.6 2,274.7 Percentage of Total Sales 47.1% 47.2% 46.2% 44.2% 42.4% 37.4% 34.8% 32.0% 30.1% 26.9% Botox Aesthetics 781.5 865.5 969.1 1,032.9 1,095.1 1,155.5 1,207.4 1,235.6 1,279.9 1,325.6 Therapeutics 813.4 900.8 1,028.3 1,179.1 1,354.7 1,530.4 1,711.6 1,870.3 2,017.4 2,148.9 Total Botox 1,594.9 1,766.3 1,997.3 2,211.9 2,449.9 2,685.9 2,919.1 3,105.8 3,297.3 3,474.4 Percentage of Total Sales 29.8% 30.9% 32.3% 32.7% 33.8% 38.1% 39.9% 40.2% 40.1% 41.1% Skin Care Latisse 93.6 94.7 109.1 116.2 142.4 146.6 151.0 154.3 158.9 163.5 Other Skin Care 166.5 203.7 378.2 463.6 496.0 396.8 408.7 421.0 429.4 438.0 Total Skin Care 260.1 298.4 487.3 579.8 638.4 543.5 559.7 575.3 588.3 601.5 Percentage of Total Sales 4.9% 5.2% 7.9% 8.6% 8.8% 7.7% 7.7% 7.4% 7.1% 7.1% Urology 56.8 27.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Percentage of Total Sales 1.1% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Pharma Sales 4,432.0 4,784.6 5,347.3 5,780.4 6,159.7 5,866.8 6,020.7 6,157.5 6,360.2 6,350.6 Medical Aesthetics Facial Aesthetics 362.7 387.6 455.6 507.1 543.9 583.1 616.5 638.2 660.9 680.8 Breast Aesthetics 349.3 377.1 389.4 409.3 425.9 439.2 451.9 465.8 477.5 489.4 Obesity Intervention 203.1 159.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Medical Aesthetics 915.1 924.2 844.9 916.4 969.8 1,022.3 1,068.4 1,104.0 1,138.4 1,170.3 Percentage of Total Sales 17.1% 16.2% 13.6% 13.6% 13.4% 14.5% 14.6% 14.3% 13.8% 13.9% Other/Contract Revenues 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Marketed Products 5,347.1 5,708.8 6,192.2 6,696.8 7,129.5 6,889.1 7,089.1 7,261.5 7,498.5 7,520.9 Pipeline SER 120 (Nocturia) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Levadex 0.0 0.0 0.0 60.0 108.0 156.6 219.2 285.0 356.3 409.7 Phase II Pipeline 0.0 0.0 0.0 0.0 0.0 0.0 0.0 181.0 377.0 515.0 Total Pipeline 0.0 0.0 0.0 60.0 108.0 156.6 219.2 466.0 733.3 924.7 Total Product Sales 5,347.1 5,708.8 6,192.2 6,756.8 7,237.5 7,045.7 7,308.4 7,727.5 8,231.8 8,445.6 Pipeline as % of Sales 0% 0% 0% 1% 1% 2% 3% 6% 9% 11%

2013 M ar-13 Jun-13 Sep-13 Dec-13 CAGR CAGR FY 2011 FY 2012 1QA 2QA 3QA 4QE FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 '12-'17 17-'23 Product Net Sales 5,347.1 5,708.8 1,432.5 1,577.0 1,528.4 1,654.3 6,192.2 6,756.8 7,237.5 7,045.7 7,308.4 7,727.5 8,231.8 8,445.6 5.1% 3.8% Other Revenues 70.0 97.3 27.1 20.7 30.3 22.0 100.1 75.0 50.0 40.0 40.0 40.0 40.0 40.0 Revenues 5,417.1 5,806.1 1,459.6 1,597.7 1,558.7 1,676.3 6,292.3 6,831.8 7,287.5 7,085.7 7,348.4 7,767.5 8,271.8 8,485.6 4.8% 3.7% COGS 748.3 775.1 191.0 199.0 192.2 230.4 812.6 909.2 970.5 960.0 1,006.9 1,065.9 1,130.4 1,140.0 5.4% 3.6% Gross Profit 4,668.8 5,031.0 1,268.6 1,398.7 1,366.5 1,446.0 5,479.8 5,922.7 6,317.0 6,125.7 6,341.4 6,701.6 7,141.4 7,345.6 4.7% 3.8% SG&A 2,153.9 2,248.9 586.9 605.7 582.9 610.0 2,385.5 2,492.8 2,580.1 2,451.1 2,524.6 2,600.3 2,678.4 2,731.9 2.3% 2.0% R&D 857.6 926.8 248.8 265.8 250.9 263.2 1,028.7 1,100.7 1,155.8 1,213.6 1,262.1 1,312.6 1,352.0 1,392.5 6.4% 2.7% Amortization 23.6 23.5 5.6 1.4 1.1 1.4 9.5 8.0 8.0 8.0 8.0 8.0 8.0 8.0 (19.4%) Operating Income 1,633.7 1,831.8 427.3 525.8 531.6 571.4 2,056.1 2,321.1 2,573.1 2,453.1 2,546.7 2,780.7 3,103.1 3,213.2 6.8% 5.9% Interest Income 6.9 6.7 1.6 2.0 1.5 2.3 7.4 11.7 12.8 17.5 21.3 25.1 29.9 35.2 26.0% 16.5% Interest Expense (64.5) (62.7) (17.3) (19.9) (19.3) (21.6) (78.1) (86.2) (86.2) (64.7) (40.7) (40.7) (33.2) (33.2) (8.3%) (16.6%) Other Income (expense) (10.3) (7.8) (6.3) (0.1) (7.9) 0.0 (14.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Pre-Tax Income 1,565.8 1,768.0 405.3 507.8 505.9 552.1 1,971.1 2,246.6 2,499.7 2,405.8 2,527.3 2,765.1 3,099.7 3,215.2 7.4% 6.2% Provision for Income Tax 432.4 492.0 107.2 137.9 136.1 149.1 530.3 606.6 674.9 649.6 682.4 746.6 836.9 868.1 6.8% 6.2% Minority Interest 3.6 3.7 1.9 1.3 1.0 1.0 5.2 4.0 4.0 4.0 4.0 4.0 4.0 4.0 1.6% Net Income 1,129.8 1,272.3 296.2 368.6 368.8 402.0 1,435.6 1,636.0 1,820.8 1,752.3 1,841.0 2,014.5 2,258.8 2,343.1 7.7% 6.2% Diluted Shares Outstanding 310.2 307.1 303.6 301.3 300.7 300.6 301.5 300.9 299.7 298.6 297.5 296.4 295.3 294.2 Pro-forma EPS $3.65 $4.14 $0.98 $1.22 $1.23 $1.34 $4.76 $5.44 $6.07 $5.87 $6.19 $6.80 $7.65 $7.96 8.4% 6.6%

4.20 Margin Analysis Gross margin (Excl. Other Revenues) 86.0% 86.4% 86.7% 87.4% 87.4% 86.1% 86.9% 86.5% 86.6% 86.4% 86.2% 86.2% 86.3% 86.5% SG&A % sales 40.3% 39.4% 41.0% 38.4% 38.1% 36.9% 38.5% 36.9% 35.6% 34.8% 34.5% 33.7% 32.5% 32.3% R&D % sales 16.0% 16.2% 17.4% 16.9% 16.4% 15.9% 16.6% 16.3% 16.0% 17.2% 17.3% 17.0% 16.4% 16.5% EBITDA margin 35.0% 35.9% 34.1% 36.6% 37.7% 37.4% 36.5% 37.7% 38.8% 38.1% 38.0% 38.7% 40.4% 40.9% Operating margin 30.2% 31.5% 29.3% 32.9% 34.1% 34.1% 32.7% 34.0% 35.3% 34.6% 34.7% 35.8% 37.5% 37.9% Pre-tax margin 28.9% 30.5% 27.8% 31.8% 32.5% 32.9% 31.3% 32.9% 34.3% 34.0% 34.4% 35.6% 37.5% 37.9% Tax rate 27.6% 27.8% 26.4% 27.2% 26.9% 27.0% 26.9% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% Net margin 20.9% 21.9% 20.3% 23.1% 23.7% 24.0% 22.8% 23.9% 25.0% 24.7% 25.1% 25.9% 27.3% 27.6%

Year/Year Changes Sales 10.9% 7.2% 4.9% 7.1% 10.2% 11.1% 8.4% 8.6% 6.7% (2.8%) 3.7% 5.7% 6.5% 2.6% Gross profit 12.2% 7.8% 6.0% 8.5% 11.5% 9.6% 8.9% 8.1% 6.7% (3.0%) 3.5% 5.7% 6.6% 2.9% SG&A 10.5% 4.4% 2.2% 5.8% 8.5% 8.0% 6.1% 4.5% 3.5% (5.0%) 3.0% 3.0% 3.0% 2.0% R&D 12.6% 8.1% 10.7% 14.6% 8.7% 10.0% 11.0% 7.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% Net income 16.0% 12.6% 11.3% 11.7% 13.5% 14.5% 12.8% 14.0% 11.3% (3.8%) 5.1% 9.4% 12.1% 3.7% Earnings per share 15.5% 13.5% 13.5% 14.3% 15.2% 16.2% 14.9% 14.2% 11.7% (3.4%) 5.5% 9.8% 12.5% 4.1%

2013 M ar-13 Jun-13 Sep-13 Dec-13 FY 2011 FY 2012 1QA 2QA 3QE 4QE FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Current Assets Cash and Cash Equivalents 2,406.1 2,701.8 2,198.8 2,484.0 2,767.7 3,184.4 3,184.4 4,581.0 6,296.7 7,135.4 8,840.9 10,306.0 12,388.2 13,839.3 Short Term Investments 179.9 260.6 50.0 184.8 184.8 184.8 184.8 184.8 184.8 184.8 184.8 184.8 184.8 184.8 Accounts Receivable, net 730.6 764.2 887.9 917.2 922.4 918.5 918.5 1,006.4 998.3 970.6 1,006.6 1,042.8 1,110.5 1,139.2 Inventories, net 249.7 282.9 269.2 274.4 280.1 290.3 290.3 294.9 319.1 315.6 331.0 350.4 371.6 374.8 Other Current Assets 482.0 449.3 663.6 621.8 467.6 502.9 502.9 551.0 583.0 566.9 587.9 621.4 661.7 678.8 Total Current Assets 4,048.3 4,458.8 4,069.5 4,482.2 4,622.7 5,081.0 5,081.0 6,618.2 8,381.9 9,173.3 10,951.2 12,505.4 14,716.8 16,216.9

Long-term assets Investments and Other Assets 247.1 192.1 193.2 194.4 194.4 194.4 194.4 194.4 194.4 194.4 194.4 194.4 194.4 194.4 Property, Plant and Equipment, net 807.0 852.9 853.9 866.2 893.9 924.9 924.9 1,057.9 1,121.3 1,163.5 1,198.4 1,258.8 1,319.9 1,372.3 Goodw ill and Intangibles 3,253.6 3,468.6 4,059.0 4,043.5 4,014.2 3,986.0 3,986.0 3,873.3 3,774.1 3,696.8 3,640.1 3,585.5 3,531.7 3,478.7 Other Long Term Assets 152.6 206.9 74.9 88.7 155.9 167.6 167.6 183.7 182.2 177.1 183.7 194.2 206.8 212.1 Total Assets 8,508.6 9,179.3 9,250.5 9,675.0 9,881.0 10,353.9 10,353.9 11,927.5 13,653.9 14,405.1 16,167.8 17,738.3 19,969.6 21,474.5

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities Notes Payable, Current Portion 83.9 48.8 57.2 51.6 51.6 51.6 51.6 51.6 51.6 51.6 51.6 51.6 51.6 51.6 Convertible Notes, Current Portion 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Accounts Payable 200.4 233.1 218.5 237.0 210.6 252.5 252.5 268.1 265.9 263.0 275.9 292.0 309.7 312.3 Accr. Comp. & Other Accr. Expenses 670.7 813.3 785.8 809.3 741.9 737.6 737.6 734.7 801.6 779.4 808.3 776.7 827.2 848.6 Total Current Liabilities 955.0 1,095.2 1,061.5 1,097.9 1,004.2 1,041.7 1,041.7 1,054.4 1,119.1 1,094.0 1,135.8 1,120.4 1,188.5 1,212.5

Long-term liabilities Long-Term Debt 1,515.4 1,512.4 2,107.7 2,104.6 2,104.6 2,104.6 2,104.6 2,104.6 2,104.6 1,304.6 1,304.6 1,054.6 1,054.6 404.6 Long-Term Convertible Notes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Deferred Tax Liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Long Term Liabilties 705.8 709.1 718.9 725.2 748.2 804.6 804.6 881.6 874.5 850.3 881.8 854.4 909.9 848.6 Total Long-Term Liabilities 2,221.2 2,221.5 2,826.6 2,829.8 2,852.8 2,909.2 2,909.2 2,986.2 2,979.1 2,154.9 2,186.4 1,909.0 1,964.5 1,253.2

Shareholders' equity Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Common Stock 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 Additional Paid-In Capital 2,761.8 2,900.6 2,951.2 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 2,975.6 Retained Earnings 2,969.3 3,832.1 3,761.9 4,089.4 4,375.2 4,763.1 4,763.1 6,342.9 8,107.8 9,804.3 11,589.7 13,549.0 15,752.7 18,040.9 Less Treasury Stock (183.2) (654.1) (1,113.2) (1,064.1) (1,074.1) (1,084.1) (1,084.1) (1,184.1) (1,284.1) (1,384.1) (1,484.1) (1,584.1) (1,684.1) (1,784.1) Accum. Other Comprehensive Loss (241.4) (244.6) (265.9) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) (282.1) Total AGN Shareholders' Equity 5,309.6 5,837.1 5,337.1 5,721.9 5,997.7 6,375.6 6,375.6 7,855.4 9,520.3 11,116.8 12,802.2 14,661.5 16,765.2 18,953.4 Non-Controlling Interest 22.8 25.5 25.3 25.4 26.4 27.4 27.4 31.4 35.4 39.4 43.4 47.4 51.4 55.4 Total Equity 5,332.4 5,862.6 5,362.4 5,747.3 6,024.1 6,403.0 6,403.0 7,886.8 9,555.7 11,156.2 12,845.6 14,708.9 16,816.6 19,008.8

Total Liabilities and Shareholders' Equity 8,508.6 9,179.3 9,250.5 9,675.0 9,881.0 10,353.9 10,353.9 11,927.5 13,653.9 14,405.1 16,167.8 17,738.3 19,969.6 21,474.5

2013 M ar-13 Jun-13 Sep-13 Dec-13 FY 2011 FY 2012 1QA 2QA 3QE 4QE FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Statement of Cash Flows

Cash From Operating Activities Net Income (Loss) 938.1 1,102.5 14.4 361.2 300.8 403.0 1,079.4 1,640.0 1,824.8 1,756.3 1,845.0 2,018.5 2,262.8 2,347.1 Adjustments to Net Income Depreciation and Amortization 253.4 256.6 73.1 61.3 56.2 55.9 246.4 252.9 254.5 247.7 242.2 227.2 240.9 255.1 Amort. of Debt Discount and Issuance Costs 9.7 1.9 0.5 0.7 0.0 0.0 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Amort. of Net Real. Gain on Interest Rate Sw ap (1.3) (7.7) (3.6) (3.6) 0.0 0.0 (7.2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Expense of Share-based Compensation Plans 86.3 109.1 29.0 27.8 0.0 0.0 56.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Non-Cash Expenses, net (41.8) (33.9) 270.5 (25.0) 0.0 0.0 245.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Changes in Assets & Labilities: Decrease (Increase) In Accounts Receivable (105.6) (34.3) (152.8) (40.2) (5.2) 3.9 (194.3) (87.9) 8.2 27.6 (36.0) (36.1) (67.7) (28.7) Decrease (Increase) in Inventories, net (24.0) (7.3) 0.1 (19.7) (5.7) (10.2) (35.5) (4.6) (24.2) 3.5 (15.4) (19.4) (21.2) (3.1) Decrease (Increase) In Other Current Assets (33.1) (16.0) 7.8 20.9 154.2 (35.3) 147.6 (48.1) (32.0) 16.1 (21.0) (33.5) (40.3) (17.1) Increase (Decrease) in Accounts Payable (19.3) 32.7 (28.5) 22.1 (26.4) 41.8 9.1 15.7 (2.2) (2.9) 12.9 16.2 17.7 2.6 Increase (Decrease) in Accrued Liabilities 39.1 73.1 (66.3) 47.5 (67.4) (4.3) (90.5) (2.9) 66.9 (22.2) 28.9 (31.6) 50.4 21.4 Other Assets & Liabilities, net (19.6) 123.2 (24.6) 28.5 0.0 0.0 3.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net Cash From Operations 1,081.9 1,599.9 119.6 481.5 406.5 454.7 1,462.3 1,765.0 2,096.0 2,026.1 2,056.5 2,141.3 2,442.5 2,577.2

Cash From Investing Activities Acquisitions/ Sale, net of Cash (101.4) (349.2) (871.4) (20.7) 0.0 0.0 (892.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net Addition to Property, Plant & Equipment, net (117.4) (141.5) (23.6) (38.7) (54.6) (58.7) (175.5) (273.3) (218.6) (212.6) (220.5) (233.0) (248.2) (254.6) Additions of Capitalized Softw are (11.2) (13.9) (2.7) (2.9) 0.0 0.0 (5.6) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Additions to Intangible Assets (0.3) (4.1) (0.3) 0.0 0.0 0.0 (0.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Sale (Purchase) of Short-Term Investments 569.2 (80.6) 210.6 (134.8) 0.0 0.0 75.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase in Other Long-Term Assets 1.9 0.0 0.0 0.0 (44.2) 44.7 0.5 61.0 (5.7) (19.2) 25.0 (37.9) 42.9 (66.7) Cash From Investing Activities 340.8 (589.3) (687.4) (197.1) (98.7) (14.0) (997.2) (212.3) (224.3) (231.7) (195.5) (270.9) (205.3) (321.3) Cash from Operating and Investing Activities 1,422.7 1,010.6 (567.8) 284.4 307.7 440.8 465.1 1,552.7 1,871.7 1,794.4 1,861.0 1,870.4 2,237.2 2,256.0

Cash From Financing Activities Dividends to Stockholders (61.1) (60.4) (14.9) (14.8) (15.0) (15.0) (59.8) (60.2) (59.9) (59.7) (59.5) (59.3) (59.1) (58.8) Issue/ Repayment of Borrow ings (778.2) (35.1) 603.2 (6.7) 0.0 0.0 596.5 0.0 0.0 (800.0) 0.0 (250.0) 0.0 (650.0) Issuance/ Repurchase of Common Stock, net (461.7) (662.6) (536.2) 27.7 (10.0) (10.0) (528.5) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) Other Financing Activities 298.7 40.6 20.7 0.0 1.0 1.0 22.7 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Net Cash From Financing Activities (1,002.3) (717.5) 72.8 6.2 (24.0) (24.0) 30.9 (156.2) (155.9) (955.7) (155.5) (405.3) (155.1) (804.8) Foreign Exchange Effect (5.5) 2.6 (8.0) (5.4) 0.0 0.0 (13.4) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase/(decrease) in cash and cash equiv. 414.9 295.7 (503.0) 285.2 283.7 416.7 482.6 1,396.6 1,715.7 838.6 1,705.5 1,465.1 2,082.2 1,451.2 Beginning cash balance 1,991.2 2,406.1 2,701.8 2,198.8 2,484.0 2,767.7 2,701.8 3,184.4 4,581.0 6,296.7 7,135.4 8,840.9 10,306.0 12,388.2 Ending cash balance 2,406.1 2,701.8 2,198.8 2,484.0 2,767.7 3,184.4 3,184.4 4,581.0 6,296.7 7,135.4 8,840.9 10,306.0 12,388.2 13,839.3 Average cash balance 2,198.7 2,554.0 2,450.3 2,341.4 2,625.8 2,976.1 2,943.1 3,882.7 5,438.9 6,716.1 7,988.1 9,573.5 11,347.1 13,113.7

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%)

Companies Mentioned (Price as of 06-Nov-2013) Outperform/Buy* 42% (55% banking clients) Neutral/Hold* 41% (49% banking clients) Allergan Inc. (AGN.N, $88.8, OUTPERFORM, TP $104.0) Bayer (BAYGn.DE, €93.87) Underperform/Sell* 15% (40% banking clients) GlaxoSmithKline plc (GSK.L, 1649.5p) Restricted 3% Jazz Pharmaceuticals (JAZZ.OQ, $93.78) *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond Novartis (NOVN.VX, SFr70.9) Perrigo (PRGO.N, $145.28) to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) Pfizer (PFE.N, $30.97) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors. Regeneron Pharmaceutical (REGN.OQ, $288.27) Roche (ROG.VX, SFr252.2) Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market Salix Pharmaceuticals, Ltd (SLXP.OQ, $73.04) Santen Pharmaceutical (4536.T, ¥4,835) that may have a material impact on the research views or opinions stated herein. Shire Pharmaceuticals (SHP.L, 2830.0p) ThromboGenics (THR.BR, €22.16) Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Watson Pharmaceuticals (ACT.N, $156.09) Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html Disclosure Appendix Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. Important Global Disclosures I, Vamil Divan, MD, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and Price Target: (12 months) for Allergan Inc. (AGN.N) securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. Method: Our TP of $104 for AGN (implies 19.1 times our 2014 EPS estimate) is based on 75/25 blend of DCF value ($105) and forward P/E ($100). We apply 8.5% WACC and perpetuity growth forecast of 2% for DCF valuation and 18.5 times 2014 EPS of $5.42 for P/E valuation. 3-Year Price and Rating History for Allergan Inc. (AGN.N) Risk:

AGN.N Closing Price Target Price Date (US$) (US$) Rating Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target 18-Mar-11 70.25 76.00 N * price method and risk sections. 10-May-11 82.00 78.00 19-May-11 83.50 81.00 See the Companies Mentioned section for full company names 16-Aug-11 75.62 91.00 O The subject company (AGN.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. 27-Sep-11 84.55 93.00 26-Mar-12 94.74 102.00 Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (AGN.N) within the next 3 29-Mar-12 94.91 104.00 months. 25-Sep-12 91.23 105.00 As of the date of this report, Credit Suisse makes a market in the following subject companies (AGN.N). 07-Feb-13 106.18 122.00 22-May-13 97.73 NR NEUTRAL Important Regional Disclosures 08-Oct-13 88.96 104.00 O * OUTPERFORM N O T RAT ED Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. * Asterisk signifies initiation or assumption of coverage. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (AGN.N) within the past 12 revenues, a portion of which are generated by Credit Suisse's investment banking activities months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS- As of December 10, 2012 Analysts’ stock rating are defined as follows: -Subordinate Voting Shares. Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. 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