P&GSuppliers

November 3, 2011

To Our Valued External Business Partners: 

P&G and Teva Pharmaceuticals have completed their deal to form a partnership in consumer health care.  The companies are creating a new business model by bringing together both companies’ over-the-counter (OTC) products and complementary capabilities to accelerate growth. Here are the basics:

- A joint venture (JV) that will combine both companies’ OTC businesses from essentially all markets outside North America.  The JV will be a new, separate legal entity.   
- P&G will maintain ownership of their current North American OTC business.  Teva will provide access to its non-North American OTC portfolio to both the JV and P&G’s NA OTC business.Together, P&G and Teva will collaborate to develop new OTC products and brands that will be marketed around the world, including in North America. 
- Upon deal closing, P&G will transfer their OTC operations at the Greensboro Swing Road and Phoenix plants to Teva, who will assume responsibility for supply of PHC products sourced at these plants.  The companies are in process of completing a joint global sourcing study to determine the best scenario for the supply of all of the remaining OTC business and the structure of all remaining Product Supply capabilities.  The companies intend for Teva to take responsibility for manufacturing, purchasing for the plants and quality assurance; supplying both the joint venture and P&G’s existing OTC business in North America.  The companies intend for P&G to retain purchasing responsibility for most Brand Building (media and non-media) activities and to assume responsibility for most of Teva’s current and JV future OTC media and non-media spending.

As we indicated in March 2011 when we announced our plans to pursue this deal, our suppliers and partners are critical to P&G’s success.  We ask for your utmost support to make this partnership a success for all of us.   There are many details to be worked out over the coming months on how the JV will affect the materials and services supplied for these OTC products.  We will communicate additional updates as soon as it is practical to do so. 

Transition Approach:
Our goal is to transition purchasing responsibility to Teva seamlessly.  We plan to transition the responsibility for purchasing in phases (with the exception of Global Brand Building as noted above) beginning with some of our capital and utilities work right away followed by the other areas months later.  The goal is to have most of the purchases transition complete within a year after closing.  There are a few things to keep in mind.

- Under the terms of our Transition Services Agreement with Teva, P&G Purchases will continue to manage much of the commercial interaction with P&G suppliers for up to one year.  As such, unless you have been notified of changes specifically, your interfaces and contacts will remain the same until a formal transition plan is implemented. 
- All payments for goods & services (except for capital related sales which will be addressed separately), will continue to be made according to established policies and procedures.
- All existing invoices received at P&G locations related to existing purchase orders will continue to be paid as usual.  Paper invoices should include “Sold to: Teva” when sent to P&G.
- P&G is no longer responsible for tax reporting as of closing.  Therefore for Greensboro-Swing Road only, if the good or service provided is taxable, suppliers should charge the tax in the invoice.  If there are any invoicing or payment issues post closing, you should work with the same people as you do today. 
- The systems that we use to run the OTC business with you will remain in effect until notified differently.

With aggressive goals for the growth of this exciting new JV, we invite you to identify savings and other improvement ideas to create a winning business outcome for all of us.  If you have questions or comments, please contact your primary business contact at P&G Purchases.  P&G and Teva will be working with you to ensure a clear and effective transition process over the coming months.  We look forward to working with you as a continued and valued part of our OTC business.

Respectfully,

Rick Hughes