The following discussion and analysis addresses material changes in the results of operations and financial condition of Mylan Inc. and subsidiaries (the "Company," "Mylan" or "we") for the periods presented. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Results of Operations and Financial Condition included in the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2008, the unaudited interim Condensed Consolidated Financial Statements and related Notes included in Part I - Item 1 of this Quarterly Report on Form 10-Q ("Form 10-Q") and the Company's other Securities and Exchange Commission filings and public disclosures.

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

Executive Overview

Mylan is the world's third largest producer of generic and specialty pharmaceuticals, offering one of the industry's broadest and highest quality product portfolios, a robust pipeline and a global commercial footprint that spans more than 140 countries and territories. Employing approximately 15,000 people, Mylan has attained leading positions in key international markets through its wide array of dosage forms and delivery systems, significant manufacturing capacity, global scale and commitment to customer service.

Through its controlling interest in Matrix Laboratories Limited ("Matrix"), Mylan has direct access to the third-largest active pharmaceutical ingredient ("API") manufacturer in the world. This relationship makes Mylan one of only two global generics companies with a comprehensive, vertically integrated supply chain.

Mylan has three reportable segments: "Generics," "Specialty" and "Matrix," as determined in accordance with Statement of Financial Accounting Standards ("SFAS") No. 131, Disclosures about Segments of an Enterprise and Related Information. The Company also reports in Corporate/Other certain general and administrative expenses; litigation settlements; amortization of intangible assets and certain purchase-accounting items (such as the inventory step-up); non-cash impairment charges; and other items not directly attributable to the segments. The measure of profitability used by the Company with respect to its segments is gross profit, less direct research and development ("R&D") and direct selling, general and administrative ("SG&A") expenses.

Acquisition of the Remaining Interest in Matrix Laboratories Limited

On March 26, 2009, the Company announced its plans to buy the remaining interest in Matrix Laboratories Limited ("Matrix") from its minority shareholders pursuant to a voluntary delisting offer. Mylan owns approximately 71.2% of Matrix through a wholly-owned subsidiary and controls more than 76% of its voting rights. Mylan's Board of Directors has approved an indicative acquisition price of up to 150 Rupees per share. Subsequent to March 31, 2009, the shareholders of Matrix Laboratories voted in favor of proceeding with the delisting offer. If Mylan acquires all remaining shares, the aggregate purchase price will total approximately $133.0 million. Mylan intends to fund the purchase using current cash balances. The acquisition and delisting is dependent upon Mylan accepting the exit price per share, which Mylan may accept or reject at its sole discretion, as well as the receipt of any statutory or regulatory approvals.

Financial Summary

Mylan's financial results for the three months ended March 31, 2009, included total revenues of $1.21 billion compared to $1.07 billion for the three months ended March 31, 2008. This represents an increase in revenues of $135.5 million. Consolidated gross profit for the current quarter was $525.7 million compared to $350.2 million in the comparable prior year period, an increase of 50.1%. For the current quarter, operating earnings of $227.3 million were realized compared to an operating loss of $371.5 million for the three months ended March 31, 2008.

Net earnings attributable to Mylan Inc. before preferred dividends of $34.8 million for the current quarter were $106.1 million which translates into earnings per diluted share of $0.23. Including the preferred dividend, net earnings attributable to Mylan Inc. common shareholders for the current quarter were $71.3 million. In the same prior year period, the net loss attributable to Mylan Inc common shareholders was $446.6 million which translates into a loss per diluted common share of $1.47. A more detailed discussion of the Company's financial results can be found below in the section titled "Results of Operations".

The comparability of results between the two periods is affected by the following items:

• Charges consisting primarily of incremental amortization related to purchased intangible assets and the amortization of the inventory step-up associated with the acquisition of the former Merck Generics business of $68.2 million (pre-tax) during the three months ended March 31, 2009, compared to $118.1 million (pre-tax) in the comparable prior year period; and

• A non-cash impairment loss on the goodwill of the Specialty Segment of $385.0 million (pre-tax and after-tax) recorded during the three-months ended March 31, 2008.

Results of Operations

Three Months Ended March 31, 2009, Compared to Three Months Ended March 31, 2008

Total Revenues and Gross Profit

For the current quarter, Mylan reported total revenues of $1.21 billion compared to $1.07 billion in the comparable prior year period. This represents an increase of $135.5 million or 13%. Net revenues increased $106.0 million, while other revenues increased $29.5 million. The increase in net revenues is due to higher third-party sales in all three of the Company's segments. The Generics Segment accounted for the majority of the increase ($92.6 million) followed by the Matrix Segment ($14.3 million) and the Specialty Segment ($2.3 million). Foreign exchange translation had an unfavorable impact on total revenues of approximately 9%, due primarily to the strengthening of the U.S. Dollar in comparison to the functional currencies of Mylan's other subsidiaries, primarily those in Europe, Australia and India. See below for a more detailed discussion of each segment.

The increase in other revenue in the current quarter was the result of approximately $26.0 million of incremental revenue resulting from the cancellation of product development agreements for which the revenue had been previously deferred. Prior to the termination of these agreements, Mylan had been amortizing the previously received non-refundable, upfront payments over a period of several years.

Gross profit for the three months ended March 31, 2009 was $525.7 million, and gross margins were 43.5%. For the three months ended March 31, 2008, gross profit was $350.2 million, and gross margins were 32.6%. Gross profit for the current quarter is impacted by certain purchase accounting related items recorded during the three months ended March 31, 2009, of approximately $68.2 million, which consisted primarily of incremental amortization related to purchased intangible assets and the inventory step-up associated with the acquisition of the former Merck Generics business. Excluding such items, gross margins would have been approximately 49.1%. Prior year gross profit is also impacted by similar purchase accounting related items in the amount of $118.1 million. Excluding such items, gross margins in the prior year would have been approximately 43.6%. The increase in gross margins excluding purchase accounting related items is due primarily to the launch of new products in North America. During the current quarter, Mylan launched divalproex sodium extended-release ("divalproex ER") tablets, the generic version of Abbott Laboratories' Depakote® ER. Products generally contribute most significantly to gross margin at the time of their launch and even more so in periods of market exclusivity, as is the case with divalproex ER, or where there is limited generic competition. In addition, increased margins from Matrix

served to offset lower margins in Australia and certain European countries as a result of continued pricing pressure in those markets.

Generics Segment

For the current quarter, the Generics Segment reported total revenues of $1.03 billion. Generics Segment total revenues are derived from sales primarily in or from the U.S. and Canada (collectively, "North America"), Europe, the Middle East and Africa (collectively, "EMEA") and Australia, Japan and New Zealand (collectively, "Asia Pacific").

Total revenues from North America were $586.0 million for the three-month period ended March 31, 2009, compared to $388.8 million for the three months ended March 31, 2008. Included in total revenues are other revenues of $36.7 million in the current quarter compared to $5.7 million in the prior year. As discussed above, this increase is the result of approximately $26.0 million of incremental revenue resulting from the cancellation of product development agreements.

North America net revenues were $549.4 million in the current quarter compared to $383.2 million in the prior year, an increase of $166.2 million or 43%. This increase is the result of revenue from new products and favorable volume, partially offset by unfavorable pricing. New products contributed net revenues of $185.2 million, the majority of which was divalproex ER and paroxetine extended-release.

Fentanyl, Mylan's AB-rated generic alternative to Duragesic®, continued to contribute significantly to both revenue and gross profit despite the entrance into the market of additional generic competition. Sales of fentanyl have remained strong primarily due to Mylan's ability to continue to be a stable and reliable source of supply to the market. As is the case in the generic industry, the entrance into the market of additional competition generally has a negative impact on the volume and pricing of the affected products. Competition on fentanyl in the future could have an unfavorable impact on pricing and market share.

Total revenues from EMEA were $332.9 million for the three-month period ended March 31, 2009, compared to $389.0 million for the comparable prior year period. Foreign currency translation had a negative impact on EMEA revenues of approximately 14%, mainly due to the strengthening of the U.S. Dollar in comparison to the Euro. Excluding the impact of foreign exchange, EMEA revenues were consistent from period to period.

Within EMEA, approximately 70% of net revenues are derived from the three largest markets: France, the U.K. and Germany. Increased revenues in France, driven mainly by new product launches, served to offset lower revenues in Germany. A number of markets in which we operate have implemented or may implement "tender systems" for generic pharmaceuticals in an effort to lower prices. Such measures are likely to have a negative impact on sales and gross profit in these markets. The German market is one that has begun to implement tender systems. Current quarter revenues in Germany were negatively impacted by the price reductions as a result of these tenders. Also contributing to EMEA's total revenues in the current quarter are sales from the Central and Eastern European businesses acquired in June 2008.

Total revenues from Asia Pacific were $109.0 million for the three-month period ended March 31, 2009, compared to $128.9 million for the three months ended March 31, 2008, representing a decrease of $19.9 million or 15%. The majority of revenues from Asia Pacific are contributed by Alphapharm, Mylan's Australian subsidiary, with the remainder comprised of sales in Japan and New Zealand.

The decrease in total revenues is due primarily to the unfavorable impact of foreign exchange, which reduced sales by approximately 12%, primarily as a result of the strengthening of the U.S. Dollar in comparison to the Australian Dollar. On a local currency basis, sales at Alphapharm declined as a result of the government mandated pricing reform that took place in calendar year 2008. The unfavorable impact on pricing as a result of the pricing reform was partially offset by increased volumes and new product launches. The decrease in revenues at Alphapharm was partially offset by an increase in revenues at Mylan's Japanese subsidiary, driven by certain pro-generic measures implemented by the Japanese government.

Certain markets in which the Company does business have recently undergone government-imposed price reductions thereby increasing pricing pressures on pharmaceutical products. This is true in France and Australia,

though this issue is not limited to solely these markets. Such measures, along with the tender systems discussed above, are likely to have a negative impact on sales and gross profit in these markets. However, some pro-generic government initiatives in certain markets could help to offset some of this unfavorability by potentially increasing generic substitution.

For the three months ended March 31, 2009, the segment profitability for the Generics Segment was $356.6 million compared to $192.9 million in the prior year comparable period. This increase is the result of higher revenues and gross profit, mainly from North America, as well as lower operating expenses as discussed below.

Specialty Segment

For the current quarter, the Specialty Segment reported total revenues of $83.7 million, of which $79.4 million represented third-party sales, compared to total revenues of $89.5 million in the same prior year period, of which $77.1 million represented third-party sales. The Specialty Segment consists of Dey, which focuses on the development, manufacturing and marketing of specialty pharmaceuticals in the respiratory and severe allergy markets. The most significant contributor to Specialty Segment revenues and profitability is EpiPen®, an epinephrine auto-injector, which is used in the treatment of severe allergies. EpiPen is the number one prescribed treatment for severe allergic reactions with a U.S market share of over 95%.

In addition to the continued strong sales of EpiPen, the increase in third-party revenues is due primarily to increased sales of Perforomist® Solution, Dey's maintenance therapy for patients with moderate to severe chronic obstructive pulmonary disease. Partially offsetting these increases was a decrease in DuoNeb® sales that resulted from additional competition following the loss of patent protection in late 2007. The additional competition not only affected Dey's sales of the branded product, but also impacted the profit share received from sales of the licensed generic.

Segment profitability for the current quarter was $1.9 million compared to $2.5 million in the comparable three-month period. The current quarter includes restructuring charges of $3.1 million related to the Company's planned realignment of the Dey business.

Matrix Segment

For the three months ended March 31, 2009, the Matrix Segment reported total revenues of $126.0 million, of which $102.6 million represented third-party sales compared to total revenues of $103.4 million, of which $87.6 million represented third party sales, during the prior year comparable period. Approximately 50% of the Matrix Segment's third-party net revenues are derived from the sale of API and intermediates, and approximately 12% comes from its distribution business in Europe. The majority of the remainder came from sales of Matrix's finished dose form ("FDF") anti-retroviral ("ARV") products, which was the primary driver of the increase in sales. Matrix launched its FDF business in late calendar year 2007. The 17% increase in third-party revenues is due primarily to the higher revenue from the sale of first-line ARV FDF products, which were launched subsequent to March 31, 2008, as well as a significant increase in second-line ARV FDFs. Foreign currency had an unfavorable impact on Matrix's sales as a result of the strengthening of the U.S. Dollar against the Indian Rupee and the Euro. Excluding the effect of foreign exchange, third-party sales would have increased by 44%.

In addition to third party net revenue, Matrix realized other revenue of $18.6 million in the current quarter through intersegment product development agreements compared to $11.8 million in the same prior year period. Intersegment net revenue consists of API sales to the Generics Segment primarily in conjunction with Mylan's vertical integration strategy.

Segment profitability for the Matrix Segment for the current quarter was $22.7 million compared to $3.6 million in the comparable three-month period. This increase is the result of increased revenue and gross profit, including the intersegment development agreements discussed previously, as operating expenses were consistent on a year over year basis.

Operating Expenses

R&D expense for the three months ended March 31, 2009, was $58.8 million compared to $83.8 million in the same prior year period, a decrease of $25.0 million. The decrease was primarily realized by the Generics Segment and is reflective of certain restructuring activities undertaken by the Company with respect to the previously announced rationalization and optimization of the global manufacturing and research and development platforms. Additionally, R&D expense was favorably impacted by foreign currency fluctuations and the timing of certain 2009 development projects.

SG&A expense for the current quarter was $239.6 million compared to $252.9 million for the same period in the prior year, a decrease of $13.3 million. This decrease is due primarily to lower costs associated with the integration of the former Merck Generics business, for which integration-related costs were much higher in the prior year. Additionally, certain headcount reductions done as part of the Company's ongoing restructuring initiatives resulted in lower payroll and payroll related costs in certain regions of the world. Finally, SG&A expense was favorably impacted by foreign currency fluctuations.

Interest Expense

Interest expense for the three months ended March 31, 2009, totaled $85.0 million compared to $96.5 million for the three months ended March 31, 2008. The decrease is due to the reduction of our outstanding debt balance through repayments made in December 2008 and March 2009, as well as lower interest rates.

Other Income, net

Other income, net was $4.2 million in the current quarter compared to $7.0 million in the comparable three-month period. The decrease is primarily the result of lower interest and dividend income.

Income Tax Expense

The Company's provision for income tax was an expense of $37.5 million for the three-month period ending March 31, 2009 compared to a benefit of $47.1 million in the comparable prior year quarter. The fluctuation in the tax provision is due to deductibility of certain carryovers, less anticipated losses of certain subsidiaries and less additions to tax contingency reserves than in the prior year. In the three-month period ending March 31, 2008, a larger operating loss was offset by the non-deductible impairment charge related to Dey.

The change to the FIN 48 reserve this quarter is not material.

Liquidity and Capital Resources

Cash flows from operating activities were $126.3 million for the three months ended March 31, 2009. The amount consists primarily of net earnings and non-cash addbacks for depreciation and amortization, partially offset by a decrease in cash from net changes in operating assets and liabilities. Within operating assets and liabilities, an increase in cash, generated primarily from the change in accounts receivable, net, was offset by decreases in cash primarily from changes in accounts payable and income taxes payable.

Accounts receivable decreased primarily due to the timing of the cash receipts and the issuance of credits against open receivable balances. The timing of payments made for accounts payable and income taxes is responsible for the change in those account balances.

Cash used in investing activities for the three months ended March 31, 2009 was $29.6 million, consisting primarily of capital expenditures. Such expenditures were incurred primarily for equipment, including with respect to the Company's previously announced planned expansions and integration plans with respect to the acquisition of the former Merck Generics business.

Cash used in financing activities was $191.9 million for the three months ended March 31, 2009. Cash dividends of $34.8 million were paid on the Company's 6.50% mandatory convertible preferred stock. Additionally, the Company made repayments on its long-term debt in the amount of $151.6 million. These payments represented the prepayment of amounts due in 2010 under the Company's Senior Credit Agreement.

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

The Company's Condensed Consolidated Balance Sheet as of March 31, 2009 includes restructuring reserves of $75.3 million. Spending against this balance, which consists primarily of severance and related costs and costs associated with the previously announced rationalization and optimization of the Company's global manufacturing and research and development platforms, is expected to occur over the next two to three years.

Additionally, as finalization of these plans is still in progress, the Company has not yet estimated the total amount expected to be incurred in connection with such activities. However, Mylan expects that the majority of such costs will relate to one-time termination benefits and certain asset write-downs, which could be significant.

On February 17, 2009, Mylan's Board of Directors unanimously approved an increase in the number of authorized shares of Mylan's common stock from 600,000,000 to 1,500,000,000, and recommended that the shareholders of Mylan approve this increase at the May 7, 2009 scheduled shareholder's meeting.

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

The Company is continuously evaluating the potential acquisition of products, as well as companies, as a strategic part of its future growth. Consequently, the Company may utilize current cash reserves or incur additional indebtedness to finance any such acquisitions, which could impact future liquidity. As previously discussed, the Company has announced its plans to purchase the remaining interest in Matrix from its minority shareholders pursuant to a voluntary delisting offer. The aggregate purchase price, which, if Mylan acquires all remaining shares, will total approximately $133.0 million, will be funded using current cash balances. In addition, on an ongoing basis, the Company reviews its operations including the evaluation of potential divestures of products and businesses as part of its future strategy. Any divestitures could impact future liquidity.

Mandatory minimum repayments remaining on the outstanding borrowings under the term loans and convertible notes at March 31, 2009, are as follows for each of the periods ending December 31:

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

2009         $         -     $         -     $         -     $         -     $           -     $           -     $         -
2010                   -               -               -               -                 -                 -               -
2011              62,500          92,854          25,560           6,956                 -                 -         187,870
2012              78,125         116,078          25,560           6,956           519,541                 -         746,260
2013              78,125         116,078          25,560           6,956                 -                 -         226,719
2014                   -               -       2,402,640         653,888                 -                 -       3,056,528
Thereafter             -               -               -               -                 -           737,124         737,124

Total        $   218,750     $   325,010     $ 2,479,320     $   674,756     $     519,541     $     737,124     $ 4,954,501

Recent Accounting Pronouncements

On January 1, 2009, the Company adopted Financial Accounting Standards Board Staff Position ("FSP") No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement) ("FSP No. APB 14-1"). Under the new rules, for convertible debt instruments

(including the Company's Senior Convertible Notes) that may be settled entirely . . .