Amneal Pharmaceuticals - Q2 2023

Transcript

Operator (participant)

Hello, everyone, and welcome to the Amneal Pharmaceuticals Second Quarter 2023 Earnings Conference Call. My name is Bruno, and I'll be operating your call today. During the presentation, you can register to ask a question by pressing star, followed by one on your telephone keypad. Please also limit to one question, one follow-up. I will now hand over to your host, Anthony DiMeo, Head of Investor Relations. Please go ahead.

Anthony DiMeo (Head of Investor Relations)

Good morning, thank you for joining Amneal Pharmaceuticals Second Quarter 2023 Earnings Call. Our Q2 earnings press release and presentation are available at amneal.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions, are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled "Cautionary Statements on Forward-Looking Statements" in the earnings presentation and our SEC filings for a discussion of factors that may impact our future performance. We also discuss non-GAAP measures. Information on our use of these measures and reconciliation to U.S. GAAP are in the earnings presentation. On the call today are Chirag and Chintu Patel, Co-Founders and Co-CEOs, Tasos Konidaris, CFO, our commercial leaders, Andy Boyer for Generics, Joe Renda for Specialty, Harsher Singh for Biosciences, and Jason Daley, Chief Legal Officer.

I will now hand the call over to Chirag.

Chirag Patel (Co-founder and Co-CEO)

Thank you, Tony. Good morning, everyone. Q2 was another strong quarter, with $599 million of revenue, growing 7%, Adjusted EBITDA of $146 million, growing 9%, and net leverage at 4.9x. As a result of our solid momentum in the first half, we are pleased to be raising our full year 2023 guidance. On a personal note, this earnings call marks four years since Chintu and I returned to Amneal as Co-CEOs. At that time, we stated our goal was to return Amneal to growth and build a world-class, diversified pharmaceutical company, driven by our purpose to provide access to high quality and affordable essential medicines. Since then, we have methodically executed our long-term strategy to expand into high growth and high impact areas.

Today, Amneal has a diversified portfolio of approximately 270 marketed products and industry-leading R&D engine, excellent commercial capabilities, a foothold in key global markets, and significant growth catalysts ahead. We have delivered strong financial performance each year since 2019, as revenues have grown 10% and adjusted EBITDA has grown 12% on a CAGR basis. Further, we have reduced net leverage from 7.4x in 2019 to 4.9x currently, well on our way to below 4x by the year 2025. Based on the strength of our diversified portfolio, robust capabilities, and opportunities ahead, Amneal is well positioned to drive sustainable long-term growth, accelerate profitability, and continue deleveraging. Let me now walk through how we are executing our strategy across the business.

In the generics segment, we have retail generics, injectables, biosimilars, and in international business. We expect generics revenue growth will accelerate over the next several years, driven by complex products. Approximately 55% of our generics revenue is expected to come from complex products in 2023, compared to 35% in 2019, and we expect that mix shift will continue. First, in retail generics, we are expanding our portfolio of approximately 230 products to move up the value chain of complexity. As we have discussed, complex generics tend to have less competitors and drive more durable growth, revenues, and profit. As shown on the catalyst slide, we expect to advance over a dozen high-value complex generics to the finish line by 2024.

Second, in injectables, our goal is to be a top five U.S. business and a global player. Our strategy centers on being a key supplier of an expanding portfolio and offering a resilient supply chain in a market plagued by product shortages. Currently, we have about 30 injectables with over 30 new launches planned by 2025. With our recently added sites, we now have four injectable facilities to produce at scale across multiple formulations. As we ramp up production at our new facilities and launch new products, we expect the next inflection of injectables revenue in 2024, building to over $300 million by 2025. Third, in biosimilars, our first three oncology products are seeing strong uptake. particularly Alymsys, which is running ahead of our expectations. Alymsys and RELEUKO launched in Q4, 2022, and FYLNETRA launched in May.

Our biosimilars team has done an excellent job building the commercial infrastructure and establishing a market presence in the first year. Through June, we have continued to add customers. We now have 400 infusion locations, particularly oncologic clinics. Most notably, Alymsys' market share, based on dollar value, is at 4% as of June, only two quarters after having Q-code. We now expect about $60 million in biosimilar sales this year. We are well on our way to achieving over $200 million in peak sales by 2025. We look to add 2-4 additional biosimilars to the pipeline in 2023 and 2024, which have the potential to commercialize starting in 2025. We are committed to being a leader in biosimilars for long term. Internationally, we are utilizing our U.S. FDA-approved portfolio to expand globally.

In India, we are leveraging our local infrastructure and expanding our portfolio. In other geographies, such as Europe, we are working with partners to commercialize our products. Based on our initial progress, we expect international expansion will add $50 million-$100 million in revenue by 2027, and scale further over time. Next, in the specialty segment, we are continuing to drive growth in our key branded products, RYTARY for Parkinson's, and UNITHROID for hypothyroidism. Touching on IPX203, we shared last month that we received a CRL requesting additional data. We plan to meet with the FDA soon to align on the pathway to approval, which Chintu will discuss further. With 1 million U.S. Parkinson's patients, 5 million annual scripts, and an unmet need for this degenerative disease, there is a much broader opportunity for IPX203.

Overall, we are focused on growing specialty to over $500 million revenue by 2027. In our third segment, AvKARE, we see continued momentum across multiple channels: distribution, government, and unit dose. We expect AvKARE will deliver around $500 million in revenue in 2023, building to over $600 million by 2025. Overall, we see strong momentum across our diversified global pharmaceuticals company. Our business does not rely on any one product. Each quarter, we are adding new complex therapies to expand our reach and impact on patients. As we execute and build on our sustainable growth profile, we expect to drive revenue growth and meaningfully higher levels of Adjusted EBITDA. I will now pass it to Chintu.

Chintu Patel (Co-CEO)

Good morning. Thank you, Chirag, and thank you to the global Amneal family, who work hard every day to advance our mission of making healthy possible for patients. As Chirag discussed, we have been focused these last four years on building an innovative, well-diversified, and differentiated global pharmaceuticals company, capable of driving sustainable growth in key areas of medicine. We are very excited about our strong performance in the first half of 2023 and the outlook ahead. I will touch on how our operational excellence, highly productive R&D engine, resilient supply chain, and expanded capabilities continue to propel our success. First, we remain focused on driving operational excellence and efficiency. As an example, we are in the process of moving production for about 30 products to lower-cost locations, and we are continuously evaluating opportunities to bring costs down.

We have strengthened our global supply chain by expanding our infrastructures in key areas, adding redundancy and resiliency of our operations. Importantly, our global operations are at scale to support long-term growth. Most notably, we see the benefit in injectables, where today we have four facilities with 19 production lines. Over the last few years, we have doubled our injectables capacity. At the same time, the overall injectables market continue to face chronic supply shortages. As we look at our commercial portfolio and pending ANDAs, 16 products are on the U.S. FDA shortage list, with additional 12 in our pipeline. Amneal is well-positioned with our expanded supply chain and capacity to help address drug shortages in the United States. We expand our footprint and build our capabilities. We are committed to maintaining our quality track record.

Since 2005, the U.S. FDA has conducted 95 successful inspections, including four this year, with no observations or minor 483s. Moving to generics R&D, we have made tremendous progress diversifying our portfolio with new complex medicines. We have launched 18 new products so far this year, and we are on track to launch over 30 new products in 2023. Overall, we have 92 ANDAs pending FDA approval, with 61% representing non-oral solid products. This includes 29 injectables, 11 ophthalmics, nine topicals, and four inhalation products. Behind that, we have 67 pipeline products, with 90% being non-oral solids. With our well-established and diversified portfolio, we have incrementally shifted our focus to high-value, complex categories. In fact, 40% of pending ANDAs and 70% of our pipeline are expected to be first to market, first to file, or 505(b)(2) opportunities.

Most recently, we announced the ANDA filing of three complex generics, including generic ProAir in inhalation, bimatoprost in ophthalmics, and propofol emulsion in injectables. These products are indicative of the high-value R&D programs we are most focused on. In injectables, we have launched six new products year to date. In July, we launched our first LVP bag, magnesium sulfate, from one of our two new injectable facilities, and plerixafor, an oncology injectable. We are advancing a number of other complex injectables and expect to do file our first two 505(b)(2) ready-to-use bags in Q3. We expect a strong cadence of new injectables in 2023 and 2024, including the launch of PEMRYDI RTU in January 2024. We are very excited about the opportunity ahead in injectables for Amneal. After injectables, we see inhalation as Amneal's next key growth area in complex generics.

We have two key metered-dose inhaler ANDAs pending with generic QVAR and generic ProAir. Both are expected to launch in 2024 upon approval. Other high-value MDI programs are in development as well. We are developing several Respimat inhalation devices utilizing the soft mist technology platform. Let me now highlight key launches currently underway. First, we launched an authorized generic version of Xyrem in July. Second, we are set to launch lisdexamfetamine, a key ADHD medicine in Q3. Third, our pending ANDA for generic NARCAN is under priority review. We are very passionate about this over-the-counter product, which will improve access to a critical life-saving opioid overdose treatment. A broader list of our notable planned launches is included on our catalyst slide. In biosimilar, we are very excited about the potential for Amneal in this space.

Our first oncology biosimilars are seeing excellent uptake, and there is a compelling opportunity to expand our portfolio through partnerships for further molecules. We see biosimilar as a key long-term growth driver. Turning to specialty R&D, we continue to work to advance our 505(b)(2) pipeline. As we disclosed, the CRL we received for IPX203 requested additional data related to the scientific bridge for the safety of carbidopa. We expect to have a Type A meeting with FDA in the next few weeks. We look to provide data necessary to address the comments and launch IPX203 following approval. We continue to see IPX203 as an innovation that advances the standard of care with a broad appeal for Parkinson's patients.

In summary, we are driving operational excellence and executing on our innovation strategy, which together are fueling our ability to drive sustainable growth. I will now hand it over to Tasos.

Tasos Konidaris (CFO)

Thank you, Chintu. Good morning. I'll start first with our Q2 results, move on to our year-to-date strength, then raising our full year 2023 guidance. First, we're very pleased with the performance of all our business segments in driving strong financial performance for another quarter. In the second quarter, total net revenue of $599 million grew 7%. Adjusted EBITDA of $146 million grew 9%, and adjusted diluted EPS of $0.19 was in line with prior year. Our Q2 generics net revenue of $374 million was up 9% sequentially and up 2% versus prior year. Growth was driven by Adrenaclick, ZAFEMY, multiple new product launches, and strong commercial execution by our biosimilars team. New products launched in 2022 and 2023 added $24 million to Q2 revenue growth.

As the year develops, we expect robust performance across our generic segment as new product launches ramp up, biosimilars become a larger part of our business, and our global supply and commercial teams work hard to ensure continuity of supply and market share growth. As we have said in the past, Amneal is now a much more diversified company than ever before, which allows us to deliver consistent financial outcomes despite the typical ups and downs. Furthermore, as our portfolio continues to shift toward more complex products, our ability to deliver increased levels of growth and profitability grows substantially. Moving on to our specialty business, where in the second quarter, net revenue of $97 million was up 6% sequentially and flat with the prior year. Growth was driven by UNITHROID, which grew 17% sequentially and 24% versus prior year.

RYTARY revenue was impacted by timing and was down 2% sequentially and down 4% versus prior year. Having said that, RYTARY total prescriptions are up 4% versus prior year, which bodes well for revenue growth in the back half of the year. Our AvKARE business continues to perform exceedingly well, with Q2 net revenue of $128 million, up 5% sequentially and 32% compared to the prior year. Growth was driven across all lines of business, which includes distribution, government, and unit dose. Improved product flow, pricing, and strong execution have led to a substantial increase in profitability. We expect that the strong momentum in AvKARE will continue to reach about $500 million in revenue in 2023, up from $406 million in 2022.

As expected, Q2 2023 adjusted gross margin of 43% was substantially higher than the 39% of the first quarter of 2023, albeit 1% below prior year. It is also worth noting that consistent with our earnings call in May, generics adjusted gross margin grew substantially to 43% in the second quarter, compared to 37% in the first quarter, a 600 basis point sequential improvement. Q2 Adjusted EBITDA of $146 million increased sequentially by $30 million, or 26%, and $12 million, or 9% compared to prior year. Performance reflects strong revenue growth, solid gross margins, and operating expense leverage. As we have said in the past, our overall business is pretty much at scale, which provides strong operational leverage and bodes well for increased levels of profitability as revenue grows over time.

Q2 adjusted diluted EPS of $0.19 was up $0.07 sequentially and flat to prior year, reflecting our Adjusted EBITDA growth along with higher interest expense. Let me now spend a moment on our Q2 year-to-date performance, where our teams are delivering strong performance across all our business segments. Year to date, top line is up 9%, as generics grew 5%, specialty grew 4%, and AvKARE grew 30%. Strong operating expense focus has allowed us to invest in new areas like biosimilars, while delivering year-to-date Adjusted EBITDA growth of 12% and adjusted EPS growth of 3%. We feel really good about our cash generation as we generated operating cash flow of $128 million year to date, compared to -$5 million last year, an increase of $134 million.

As we shared with you in the past, with the company's increased profitability and many of the investments to expand our portfolio and infrastructure already in our place, puts us in a good position to further reduce debt. At the end of Q2, our net leverage was 4.9x, which is substantially below the 5.5x at the end of Q2 of last year, and 5.3x at the end of 2022. In addition, in July, we paid down an additional $30 million in gross debt, and we're targeting net leverage below 4x by the end of 2025.

Let me now turn to our full year guidance. As you may have seen in our press release this morning, we are raising our full year 2023 expectations to reflect the strength of our year-to-date performance across all segments of our business. From a revenue perspective, we now expect net revenue of $2.3 billion-$2.4 billion in 2023, up $50 million from the prior range. Our accelerated revenue growth outlook reflects mid to high single-digit revenue growth for 2023. Due to the strength of revenue, we're raising our 2023 Adjusted EBITDA guidance range from $525 million-$540 million, up about $20 million from the prior range of $500 million-$530 million.

We're also raising 2023 adjusted EPS guidance to $0.45-$0.55, up $0.05 from the prior range of $0.40-$0.50. We're also raising our 2023 operating cash flow guidance to $220 million-$250 million, which is an improvement of $20 million compared to the prior range of $200 million-$230 million. This range includes interest expense and excludes legal settlement costs of about $90 million, mostly related to the Opana ER case. I think it is also important to note that we expect continued momentum in 2024 and beyond. With that, let me turn it over back to Chirag.

Chirag Patel (Co-founder and Co-CEO)

Thank you, Tasos. Our diversified portfolio of essential medicines is driving strong results. We expect our momentum and profitability acceleration will build in 2024 and beyond, driven by catalysts happening now, including biosimilars and new complex generics launches on the horizon. We said it would be a long-term journey to strategically reposition the company for sustainable long-term growth. That journey is at an inflection point as Amneal 2.0 is hitting its strides now. We will now open the call for Q&A.

Operator (participant)

Ladies and gentlemen, if you'd like to ask a question, please press Star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. To withdraw your question, press star followed by two, and please do also remember to unmute your microphone when it is your turn to speak. Our first question comes from Nathan Rich from Goldman Sachs. Nathan, your line is now open. Please proceed.

Nathan Rich (Equity Research Analyst)

Great. Good morning, and thanks for the questions. Maybe, starting with biosimilars, you talked about Alymsys running ahead of expectations. You know, can you talk about maybe where you've been kind of successful in the market in terms of picking up that early share? Then, you know, when it comes to future biosimilar opportunities, you know, are you looking to stay in the oncology and kind of provider-administered space, or do you see yourselves kind of looking at some of the, you know, self-administered products that go through the pharmacy channel? I'm just curious to get your thoughts on, you know, relative attractiveness between the two.

Chirag Patel (Co-founder and Co-CEO)

Thanks, Nathan. Biosimilars is a long-term journey and long-term play. As you know, more than 70 biologics products will become biosimilars in over the next 10 years. It's not just a U.S. play, it's also a global play, providing the more access and affordability. The number one reason why we have been successful is we have built a solid commercial team, and I have Mr. Harsher Singh here, who leads our team, which will provide more details without giving any confidential information to competitors, how we did it. And your seconf, I'll pass it on to you, Harsher. Hold on. Your 2nd question was, where do we play? Right now, we are in oncology, and we'll continue to add more products and add related products within oncology as well.

We are evaluating the pharmacy benefit products in immunology and other categories because to play biosimilars for the long term, we would have obviously like to have leadership in oncology, but also have additional products as we mature our biosimilar portfolio. Thank you, Nathan. I'll pass it on to Harsher on commercial success.

Harsher Singh (SVP of Biosciences)

Nathan, thank you for your question. The short answer here is, we've done disproportionately well in the oncology segment, largely because they are, more likely to change and more able to change their prescription behavior over a shorter timeframe. We expect to continue that success, both in oncology and in the hospital segment in the coming quarters. We like buy and build, and we hope to remain winners in that segment.

Chirag Patel (Co-founder and Co-CEO)

Thank you, Harsher.

Nathan Rich (Equity Research Analyst)

Great. Thanks for the comment. If I could just ask a quick follow-up on the guidance. You know, the EBITDA increase, I think, was a little bit lower than we would have expected, just given the 2Q results and the updated revenue guide. Tasos, I just wanted to see if there was anything to call out there as we think about, you know, EBITDA cadence, or is that kind of just embedded conservatism over the balance of the year?

Tasos Konidaris (CFO)

Yeah, we try to be as conservative as we can, that's number one. That way, we're put in a position to meet all our commitments and hopefully exceed. I wouldn't read anything more than that. There's still six months to play. We feel great about the growth so far, which as I mentioned before, record revenues, record EBITDA, up 9% and 12%. We'll see how the rest of the year plays, but we feel really good about exiting the year in a very strong position, in a really, you know, great trajectory for 2024 and 2025.

Nathan Rich (Equity Research Analyst)

Great. Thank you.

Operator (participant)

Our next question comes from David Amsellem from Piper Sandler. David, your line's now open. Please go ahead. David, your line is now open. Please go ahead with your question. Okay, I think we lost connection with David. Our next question in line comes from Balaji from Barclays. Balaji, your line is now open. Please proceed.

Speaker 9

Good morning, everyone. This is Michaela on for Balaji. Thanks for taking our questions. just wondering what your latest thinking on generic pricing trends is, and can you specifically talk about price erosion for the injectables business? Thanks so much.

Tasos Konidaris (CFO)

Hey, Michaela. Good morning. This is Tasos. Overall, we're seeing an improved pricing environment. Still prices continue to decline. Just the rate of decline is less so than prior year, and that obviously creates less of a headwind for us and a good thing for an industry that is trying to be helpful with the shortages and increased kind of compliance requirements from a regulatory perspective. That's kind of the high level pricing comment. On injectables, that's an area that we like. You know, we see less of a pricing pressure than the oral solids, as a result, the profitability of that segment is higher than the typical orals.

This is why that's an area of focus for us, and that's why our pipeline disproportionately favors injectable products, which, you know, will help drive increased level of profitabilities for the next few years.

Speaker 9

Great, and just one follow-up, if I can. I guess, do you just see this stabilization continuing for some time?

Tasos Konidaris (CFO)

You know, nobody really knows, right? Our expectation is as the industry kind of, just kind of consolidates, as the industry has to deal with increased investments in, in their plants and the quality control processes, and, you know, people are dealing with improved access to high quality medicines. I mean, this, this industry has to focus on improved profitability, which requires price stability at some point in time.

Chirag Patel (Co-founder and Co-CEO)

Yes, and I'll add on to that, that the shortages you've been hearing about, it's not the major reason, as we know, for the shortages is the generics industry sustainability. It's the pricing. When pricing are driven down so low, the demand gets concentrated within one or two suppliers. Any issues with that one or two suppliers causing the shortages, that's the number one reason I would rank it as 90% why shortages are happening. Our, the buying groups are well aware of this, both on the, the retail side as well as hospital sides, and they're being very responsible because at the end of the day, we cannot have patients without products and then doctors without using chemotherapy products.

We, as American company, always have led the efforts to what can we do to alleviate shortages and also what can we do to make the generics industry sustainable. It just would be very prudent to do, and time is now. We cannot wait because we'll see more and more shortages if we, if we do not address this. I do see stabilization or further improvements.

Operator (participant)

Our next question comes from Chris Schott from JPMorgan. Chris, your line is now open. Please proceed.

Speaker 10

Hi, this is Ekaterina on for Chris from JPMorgan. Thank you so much for taking our questions. First on injectables, you've kind of touched upon this, but thought specifically on the Pfizer Rocky Mount facility and what impact that could potentially have on the sterile injectables market. As we think about, you know, potential shortages there, is that something that Amneal can help with and benefit, kind of given some of the capacity that you've been building? The second question is on the CRL for IPX203, can you just elaborate a little bit more as to what, what could be required to address some of the FDA concerns and basically what the path forward could look like and timelines for that?

Then building on that, you, you have the RYTARY API, I think, going away, sometime in 2025. Does having less time, I guess, between the IPX203 launch and the RYTARY, will you change your approach to that launch at all? Thank you so much.

Chintu Patel (Co-CEO)

Thanks, Ekaterina. Regarding Pfizer, I think it's unfortunate what has happened, not expected. It was a plant that manufactured a lot of sterile injectable products and supplied in the U.S. I mentioned, that we as Amneal, we have expanded our injectable capacity. We have four FDA-approved facilities with 19 injectable lines. There are certain products that Amneal would be able to help in the supply chain in near future to avoid the shortages, we are ready.

We have the available resources, and we are also working with FDA on some of the pending products that might be on Pfizer issues or other shortage list. As a company, we are very driven and passionate about bringing many, many of these shortage products and alleviate the shortage situation in U.S., which is absolutely not acceptable for the American patient. Regarding on IPX203, the CRL, we conducted a very robust clinical study as part of our SPA agreement with FDA. With totality, with all the data across our clinical study, we are very confident in the safety profile of IPX203 and able to provide the necessary data on a carbidopa safety bridge.

That's the only question we received on our CRL. There was no question about the efficacy, safety of levodopa on a CMC or the manufacturing, it's one question about the safety bridge of carbidopa. We expect to meet with FDA as part of our Type A meeting in coming weeks. After the meeting, we'll have a more clarity as onto the timeline. Regarding the launch, we don't expect more than, you know, 6-9 months delay. I will pass it over to Chirag on the market, potential.

Chirag Patel (Co-founder and Co-CEO)

Yeah. Thank you, Katrina. Your question, we have been very clear from the beginning, that this has nothing to do with RYTARY switching over. As you, you may be aware that RYTARY has 235,000 approximate prescriptions out of 5 million. Majority, 95% is with the old product, immediate release, which has all kind of issues, as very well known. That represents almost 4.5 million plus prescriptions we can go after. IPX is an excellent product, clear differentiator, so we believe we would tap into much more bigger market share with general neurologists than even RYTARY. Yes, we would have loved to launch it in June, but didn't happen. We are very hopeful that we will get it through and launch the product as soon as possible.

Speaker 10

Thank you so much.

Operator (participant)

Our next question comes from Leszek Sulewsky from Truist. Les, your line is now open. Please proceed.

Leszek Sulewski (VP of Spec Pharma and Biotech Equity Research)

Good morning. Thank you for taking my questions, congrats on the progress, guys. First, just quickly, has a Type A meeting been scheduled on the CRL for IPX203 FDA with the FDA? Secondarily, on, do you see any opportunities to trim any existing low-margin lines within generics? As a follow-up, what opportunities are you seeing in the generics market, given the disruptions that we're seeing? Are you looking to pursue any additional deals, and which verticals? Perhaps just kind of walk us through how you think about BD plans in general.

Chirag Patel (Co-founder and Co-CEO)

Leszek, thank you very much. Type A meetings will be scheduled as soon as possible, but it in the very near future. The interesting question on the trend on low-margin products. The low-margin products have reached very, very bottom, and it cannot go any further. It has to go up. Even doesn't matter where it is supplied from, the cost, even in manufacturing in India, is going up, so is in Europe, so is in Israel. We don't expect, like companies cannot survive, right? Charlie Munger would say that no businesses can be successful when they lose money. That has to change, the low-margin trends.

On the deals and the consolidation, as you know, the industry had faced tremendous unfair treatment from FTC, compared with what they allow the buying groups and the vertical integrations with PBM insurance company retails, and they do not allow the generics manufacturers to consolidate. That has to change. It's so obvious we need the strong generics industry in order to alleviate shortages, in order to have invest in a further automation, continuous manufacturing, next-generation technologies. It fills 92% of prescriptions, so we hope FTC allows consolidation going forward, and we would love to play a major role in consolidating the generics industry if we are allowed to do so, but at the right time. Right now, we are completely focused on deleveraging.

We would want to substantially reduce our debt, which we can do it from our operating cash flow. It does not compromise any of our investments. We still have somewhere between $162 million, in the future, could be $180 million, $200 million every year, R&D investments, which is very efficient R&D engines we have. So we have right capacity already built, so we would, we spend $50 million-$60 million in CapEx, and then we also do tuck-in deals. We don't stop doing tuck-in deals, and we have reallocated our R&D, with the simple generics getting very low dollars, and then more complex, more biosimilars, more specialty is getting the allocation now.

That's the larger deals would have to wait, and we, we see how the environment will work out, but we absolutely remain very optimistic that at some point, the generics consolidation, especially in the U.S., could happen.

Leszek Sulewski (VP of Spec Pharma and Biotech Equity Research)

Great. Thank you for that color. Just on the manufacturing footprint and capacity that you've added, any concerns around FDA inspections? Maybe just walk us through, what the latest status is, specifically in regards to your overseas facilities. Thank you.

Chintu Patel (Co-CEO)

Yeah, hi. You know, Amneal has a stellar quality track records. We have been inspected, globally, more than half of our 95 inspections being, in India, and so far, we have no FDA concerns. Most of our inspections are without 483s or minor 483s. This year alone, we had, three of our sites inspected in India, and we had, no 483 observations. Over the, many, many years, we have built a solid quality culture, and we continues to grow and cultivate that culture of quality. Whether the plants are in India and U.S., our systems are so robust and so strong that we don't anticipate, issues coming out of, those plants, during the FDA inspections.

Operator (participant)

Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Our next question comes from David Amsellem from Piper Sandler. David, your line is now open. Please proceed.

David Amsellem (Managing Director and Biotechnology Senior Research Analyst)

Thanks, sorry for the tech issues earlier, and thanks for fitting me in. Just a couple. With the lean into injectables, the shortage situation, and given your commentary, does that in any way change how you're thinking about tuck-ins and specifically the extent to which you're going to continue to add to the brand business through biz dev and M&A? How should we think about that as it's becoming clear that the generics business is performing better, and you seem in particular starting to reap the fruits of your investment in injectables. That's, that's number one.

Number two, you talked about continued momentum into 2024. Just wondering if you can provide some more color on, on that in terms of how many launches, how much of those will be injectables, how much of those will be injectables that benefit from shortages, and how we should just think about the any specific products that, that might have outsized importance for next year? Thanks.

Chirag Patel (Co-founder and Co-CEO)

Thank you, David. Injectables is all organic, homegrown story, does not require any tuck-in acquisitions. Again, my comments on generic industry is a broader comment, not that Amneal is looking to do anything at this point. As far as the investment in brand business, which is our number one priority, because that is where we have invested since 2018, acquiring Impax, RYTARY, UNITHROID, KSP we acquired, we continue to focus there, and probably one of the few companies that can do both really good.

If you look at the overall, let's say in four years, we're going to spend $700 million-$800 million or $900 million in R&D, half of that money will go into or more than half, would be on a branded side, which we constantly look for the, the either partnership deals, and, and may go, some of them may go on the biosimilar side. Totally focused on the specialty biosimilars, and then injectables and generics is more organic story for us. Second question, go ahead Chintu.

Chintu Patel (Co-CEO)

Yeah, hi, David. Regarding the 2024 outlook for new launches, we still expect to continue to launch about 30 or so new products next year.

We have about 92 ANDAs pending with FDA. As we have shifted and focused heavily on diversifying our portfolio into non or oral solid, obviously, we will have many more injectable products being launched next year. With our expanded capabilities and our Pepin and Pulley plant and our Onco plant and all other plants are FDA-approved, we expect at least close to half of those products to be launched in injectable. Same time, we are also excited about some of the other complex product launches that is coming in 2024. Hopefully in the inhalation, we expect to launch two products.

I think we are well positioned over 2024 and even beyond, continue to launch 30 or so generic products and continue to be more in the complex area. 2024, including the biosimilar uptake, our new launches, we have growth across our portfolio, David.

David Amsellem (Managing Director and Biotechnology Senior Research Analyst)

That's helpful. Thanks. If I may just make in a follow-up: with all the new launches, is it fair to expect some degree of margin expansion, particularly given that there seems to be a lean into more complex product launches next year? I know, I know it's a little early to talk about, you know, guidance or anything, but just directionally, how should we think about margins?

Tasos Konidaris (CFO)

Yeah. Hey, David, this is Tasos. Directionally, things will be kind of flat to up, right? It's, we agree with you that, that that's where our expectation would be, to be flat or, or up. Whether or not it's flat or up, that I think it's really kind of, number one, the cadence. Number two is kind of the size of the opportunity, and number three, the price deflation, right? In a world where the price deflation kind of continues to come down, and the cadence of new products kind of ramps up, that's what's gonna drive the kind of the margin expansion over the course of time.

David Amsellem (Managing Director and Biotechnology Senior Research Analyst)

Okay, that's helpful. Thank you.

Operator (participant)

We currently have no further questions, so I would like to hand over back to the management team for closing remarks.

Chirag Patel (Co-founder and Co-CEO)

Thank you. As we shared on our second quarter call today, very good first half with momentum across our businesses, and pleased to raise the 2023 guidance. Amneal in 2023, is a fundamentally different company than 2019, when Chintu and I returned. We have properly diversified our essential medicines portfolio and have expanded in a number of key areas such as biosimilars, more specialty pipeline, and complex Gx products, and international operation. We are well positioned for sustainable growth and meaningful EBITDA acceleration in near term, with key catalysts adding to our growth profile, all of them now. Thank you very much and have a great day.

Operator (participant)

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.