Amneal Pharmaceuticals - Earnings Call - Q3 2021

Transcript

Speaker 0

Hello, everyone, and a warm welcome to Amneal's Third Quarter twenty twenty one Earnings Conference Call. I would now like to turn the call over to Amneal's Head of Investor Relations, Tony DeMoeo.

Speaker 1

Good morning, and thank you for joining Amneal's third quarter twenty twenty one earnings call. Today, we issued a press release reporting our financial results. The press release and a presentation are available on our website at amneal.com. We are conducting a live webcast of this call, a replay of which will also be available on our website after its conclusion. Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to management's outlook or predictions for future periods are forward looking statements.

These statements are based solely on information that is now available to us. We encourage you to review the section entitled Cautionary Statements on Forward Looking Statements in our press release and presentation, which applies to this call. Also, please refer to our SEC filings, which can be found on our website and SEC's website for a discussion of numerous factors that may impact our future performance. We also discuss certain non GAAP measures. Important information on our use of these measures and reconciliation to U.

S. GAAP may be found in our earnings release and the appendix of today's presentation. On the call this morning are Sharag and Shintu Patel, Co CEOs Tatas Konendera, CFO Andy Boyer and Joe Todisco, Chief Commercial Officers for the Generics and Specialty segments and Steve Mantano, General Counsel and Corporate Secretary. I will now turn the call over to Sharad.

Speaker 2

Thank you, Tony, and good morning, everyone. Amneal achieved a solid third quarter results with net revenue of $529,000,000 adjusted EBITDA of $135,000,000 and adjusted EPS of $0.21 Our third quarter performance builds on the strong momentum we have seen these last two years, and we believe the best is yet to come. Let me provide a few updates across the business. I'll start with our generics business, which is built on our core competencies in R and D, manufacturing and commercial excellence. Over the last several years, our robust innovation engine has significantly strengthened our portfolio with increasingly complex products.

Our extensive manufacturing and operational capabilities allows us to manufacture most of these products in house, which accelerates our time to market and improves margins. Our commercial teams have done an excellent job working with customers to bring these impactful products to market and provide access to these affordable medicines for patients. As a result, strong execution is driving performance, including sustained high levels of profitability. Notably, adjusted Generics gross margins were 45% in 2021 year to date, which is a remarkable increase from 36% in 2019. Last quarter, we highlighted what makes our generics business durable and different, including the pace of new launches and our increasingly complex portfolio.

There are two points to reiterate. First, a third of our current generics revenue comes from products launched since 2019. Second, half of our current revenues and over 85% of our pipeline is non oral solids, demonstrating how our business is increasingly diversifying with more complex products, leading to more durable revenues and higher profitability. Aligned with our revenue two point zero strategy to expand portfolio with increasingly complex products, we are so excited to announce the acquisition of Panishka Healthcare, which is a pivotal step in growing our injectable business. Today, the overall US institutional market from a manufacturer's perspective is around $5,000,000,000 in size and growing, while at the same time, there's a history of supply shortages for sterile injectables and need for more capacity.

Currently, Amneal is fifteenth in this market with about 125,000,000 in annual revenue. We shared last quarter that our goal is to more than double by 2025, and our aspiration is to be in the top five. This acquisition allows us to accelerate our injectable strategy for The United States and the international markets. Moving to our specialty business, we are continuing to advance our strategy and expand our portfolio. We remain focused on growing the business organically, advancing our pipeline and pursuing inorganic opportunities focused in neurology and endocrinology.

First, the team is driving strong commercial execution, leveraging our expanded endocrinology sales force this year. In the third quarter, we saw continued strong performance of our two largest specialty products, Cryterin and Uneithoid. Second, we continue to advance our specialty pipeline. Most notably, we are pleased with the positive Phase three data for IPH-two zero three and the potential this technology has to help Parkinson's patients achieve more good on time with less frequent dosing. We do not view IPX-two zero three as a line extension of Rytary, but rather we believe IPX-two zero three will be a distinct innovative therapy for the treatment of Parkinson's disease that will have a broader market appeal with patients and prescribers.

We are advancing our pre market work and we are excited about the commercial opportunity that IPX-two zero three represents. We continue to advance the programs across our specialty portfolio and Chendu will discuss these in more detail. Third, we continue to actively pursue complementary commercial stage assets and late stage clinical programs to leverage our existing specialty infrastructure. In our healthcare distribution business, we saw continued solid performance this quarter. With Healthcare, we are focused on strong commercial and operational execution, growing our presence in the large federal healthcare market, the federal government healthcare market and expanding our unit dose offerings to drive sustainable growth and profitability.

Finally, as a mission driven company focused on providing affordable essential medicines for patients, we were delighted to release our inaugural sustainability report yesterday. The report highlights our ongoing efforts in driving environmental, social and governance initiatives at MEA and provide important insights on our business and its impact on stakeholders. For example, in terms of access and affordability, our generics medicines were responsible for saving patient nearly $10,000,000,000 in The United States last year alone. In addition, on the environmental stewards stewardship side, we have implemented a clean renewable geothermal energy system at our Brookhaven, New York facility to reduce our environmental impact significantly. With that, I'll turn the call over to Chintu.

Speaker 3

Thank you, Chirag, and good morning, everyone. First, let me thank our nearly 6,500 Amneal team members who work hard every day to make healthy possible. Since our return as co CEOs, we have been focused on operational excellence and cost efficiencies and we have seen tremendous progress with sustained high levels of profitability. Today, we see the result of nearly twenty years of that continuous improvement mindset as we are constantly improving our execution, whether that's process improvement, gaining supply chain efficiencies or better inventory management, including reducing obsolescence and the lowest level of backorder in our history. Since the inception of Amneal, we have maintained a commitment to the highest standards of quality and current good manufacturing practices.

The team continues to maintain its stellar manufacturing quality track record with currently no open or pending issues with the FDA and an impeccable compliant history at all our sites. I'm incredibly proud of our team. As you are aware, the FDA issued an untitled letter raising concerns around bicovalence studies performed by Synchron Research Services. The FDA assigned a BX code for applicable products which impacted several manufacturers. For our handful of impacted products, the bioanalytical data

Speaker 0

with working the The has

Speaker 3

process and validated these results. We completed our responses to the FDA as we want to restore AB rating in a timely manner. Turning to the injectable business, as Shirag highlighted, the Punishka acquisition advances our strategy to meaningfully expand in injectables. Today, we have 25 commercial products for the market with more approved and a rich pipeline of over 40 injectable launches planned. This acquisition accelerates our deep R and D pipeline with enhanced R and D capabilities and speed.

By acquiring the state of the art facility and adding five sterile injectable production lines, we are also expanding our capacity which will provide more supply, add redundancy and allow us to be more opportunistic in pursuing business. We expect that the inspection and approval of the site by the end of twenty twenty two. We believe this acquisition is the cornerstone of our plan to be a leading player in the global injectable market. Let me now walk through our company's innovation agenda and provide an update on our progress. First, in generics, our strategy prioritizes innovating across complex product categories such as inhalation, injectables, implants, drug device combination and ophthalmics.

We believe Amneal is differentiated from its peers in our ability to successfully innovate and launch products in these hard to make complex areas. Dapamy, NuvaRing and Sucralfate are great examples. Our internally developed R and D and manufacturing capabilities drive these fast to market complex innovations. Overall, we feel great about our generic pipeline, which is now over 85% non oral solids. Currently, we have approximately 125 products in our pipeline and another 100 products with ANDA spending.

We expect to file 25 to 30 ANDAs and launch 20 to 30 new products each year. We are very pleased with the new product launches in 2021 such as Zafami, Abiretron and Tobradex. Last week, we announced the approval of dexamethasone, an important steroid use for a number of medical conditions including treatment of respiratory symptoms associated with COVID nineteen. This represents another CGT designated approval, which provide hundred eighty day exclusivity. Amneal has the highest number of CGT designated products in the industry.

In short, the wheel of innovation constantly turns at Amneal and we see a long runway for our R and D engine to drive growth and sustain high level of profitability. Second, we remain focused and excited about global expansion as we pursue opportunities to leverage our portfolio and out licensing certain products in select markets. With our partner Fosun, we are filing 10 products in China near term and look to start commercializing in 2023. Outside of China, we are actively working to partner in other geographies and we will share more as we progress. We see global expansion as another vector for sustainable growth.

Third, we look to enter the biosimilar market in 2022. We have three oncology biosimilars, Neupogen, Neulasta and Avastin, all filed and under review with the FDA. We expect to receive our initial approvals next year. Beyond these, we are evaluating additional opportunities with partners where Amneal can be first or second to marketing biosimilars. Fourth, we continue to advance our specialty pipeline as we look to launch at least one new specialty product per year starting in 2022, starting with the biggest one IPX-two zero three.

Recent Phase three results showed IPX-two zero three met its primary endpoint by demonstrating superior good on time from baseline in hours per day when dosed on average three times per day compared to immediate release CDLD dosed on average five times per day. In a post hoc analysis, IPX-two zero three resulted in one point five five hours of increased good on time per dose compared to IR CDL D. And we believe IPX two zero three has the potential to help Parkinson's disease patients achieve more good on time with less frequent dosing than IR CDLD. We see a broader market opportunity for IPX-two zero three as compared to Rytally, which represents only 5% of the broader PDLD space and we expect to submit our NDA in mid-twenty twenty two. In addition to IPX-two zero three, we continue to advance the rest of our specialty pipeline.

First, our NDA for the DHE auto injector for migraine and cluster headache is pending FDA approval with launch expected in mid-twenty twenty two. Second, we expect to file our NDA for K127 for myasthenia gravis in the second half of twenty twenty two. Third, we plan to file our IND application for K114, a modified release T3 product for hypothyroidism in the middle of next year. These are all five zero five(two) programs for which the risk level is relatively lower than the new molecular NTT programs. We look to share additional programs in the near future as we further expand our pipeline utilizing our proprietary drug delivery technology platforms, Grande and Chrono Tech.

We expect these technologies will provide a wellspring of new opportunities. Now I will turn the call over to Tassos.

Speaker 4

Thank you, Chengdu. For the third quarter, we reported total net revenue of $529,000,000 up 2%. Adjusted gross margins of 45.4%, up five seventy basis points. Adjusted EBITDA of $135,000,000 up 19% and adjusted EPS of $0.21 up 31% all year over year. Our growth was primarily driven by new product launches, operating efficiencies and it also includes substantial investments in R specialty commercial presence to drive long term growth.

From a balance perspective, I'm happy to report that both gross and net debt continue to decline with net debt to adjusted EBITDA of 4.6 times compared to 5.3 times December 2020 and seven times December 2019. In addition, our improved operational performance and lower levels of debt were cited as key reasons for the recent upgrade for our long term debt by the rating agency Moody's. Let me now start with our Generics segment, where third quarter net revenue of $347,000,000 was up $5,000,000 or 1.5% year over year. Growth was driven by the strength of new product launches and the diversity of our increasingly complex portfolio. New products launched in 2020 and 2021 accounted for $45,000,000 of growth this quarter.

From a product perspective, Zafemi and abiraterone, which were launched early this year, were strong contributors to growth. On a year to date basis, Generics recorded 1,000,000,000 in net revenue, up 2%. Adjusted gross margin for Generics was 43.6% in the third quarter, substantially higher than the 37.4% in the prior year. Gross margin expansion was driven by bringing substantial value to our customers, bringing new product launches as well as operating efficiencies, including in source manufacturing and procurement savings. Moving to the Specialty segment, net revenue of $93,000,000 for the third quarter was up $5,000,000 or 5.6% year over year.

As a reminder, Specialty Centers in Urology and Endocrinology was right over in urine growing. Both brands continued to grow nicely and in the aggregate recorded $57,000,000 in net revenue, up 13% year over year. As expected, this growth was partially offset by declines in Unpromoted Brands. We expect continued strength in Writer and unit growing as Q3 total scripts for both were up high single digits and new scripts were up double digits. Adjusted gross margin for Specialty was 78.7% in the third quarter, representing a four forty basis point improvement year over year due to the favorable product mix.

On a year to date basis, Specialty recorded €277,000,000 in net revenue, up 3% year over year with right of review unit volume up 10% combined. In the Outdoor Distribution segment, third quarter net revenue of $89,000,000 was down $1,000,000 for about 1% year over year. Growth was impacted by a tough prior year comparison due to the timing issue. Adjusted gross margin for AvKARE was 17.2% in the third quarter, which was two seventy basis points higher year over year. Total company adjusted EBITDA of $135,000,000 for the third quarter was $21,000,000 higher than the prior year quarter.

Gross profit growth added $33,000,000 and was partially offset by $8,000,000 in higher R and D as we incorporated the Kasif Specialty acquisition and $10,000,000 in higher SG and A due to our sales force expansion and higher expenses as the economy opens. Adjusted diluted third quarter EPS of $0.21 was driven by the strong EBITDA performance partially offset by higher taxes. From a cash perspective, operating cash flow was $82,000,000 in the third quarter and $179,000,000 year to date as we continue to expect $2.20 to $250,000,000 for the full year. In addition, we closed the third quarter with three eleven million dollars in cash and cash equivalent and our intent is to utilize a portion of that to fund the 93,000,000 purchase price of the Puninska acquisition. From a timing perspective, approximately $73,000,000 of the purchase price is funded in November with the remaining $20,000,000 to be funded in May 2022.

As Shirai and Chitu mentioned earlier, we're very excited about the capabilities this acquisition gives us and we expect it to begin adding meaningful revenue and EBITDA starting in 2023 and accelerating substantially after that. As we're nine months through the year and most of our 2021 new product launches are behind us, we're updating our full year guidance. On the top line, we're tightening our expected net revenue to about 2,100,000,000.0 which represents mid single digit year over year revenue growth. We're very pleased with this organic level of growth, which reflects the depth of our R and D pipeline, the resiliency of our commercial portfolio and offset headwinds driven by the lack of flu season and lingering COVID-nineteen impact. At the same time, we're raising our adjusted 2021 EBITDA full year range between $5.30 and $550,000,000 compared to 500,000,000 and $500,000,000 range, which reflects high double digit growth versus 2020.

We're also raising our EPS guidance range to 0.78 and $0.88 compared to $0.70 and $0.85 Our operating cash flow guidance remains the same at between $220,000,000 and $250,000,000 and we're slightly lowering our CapEx expectation to 50,000,000 and $60,000,000 compared to the range of 60,000,000 and $70,000,000 In summary, we feel great about our quarterly and year to date performance of solid top line, double digit adjusted EBITDA growth and our ongoing positive trajectory. Let me now hand it over back to Shuayan.

Speaker 2

Thank you, Ghazal. In summary, Amneal is executing well in all fronts, Solid performance across the business and sustained higher profitability reflects the diversity, durability and increasing complexities of our portfolio. Looking forward, we see continued growth and strong profitability. We'll now open the call to questions.

Speaker 0

Thank you. Our first question comes from David Amsellem of Piper Sandler. David, your line is open. Please go ahead.

Speaker 5

Okay, thanks. So just a high level question as a starting point. Given today's acquisition and where you're taking the business in terms of the mix of specialty brands, biosimilars and complex generics, I can't help but wonder how you're thinking about your base oral solids business. And is that a business that you're going to look to strategically exit or pare down over time? Just how are you thinking about that lately, particularly given the acquisition today?

And then secondly, regarding biosimilars, can you just talk about the potential for inter interchangeability of anything you have in the queue and how important interchangeability, getting that, is, for your business or really for any biosimilar? Just get your philosophical thoughts given that we saw a recent interchangeability designation for one of the Humira biosimilars recently. And then lastly, any thoughts on the Copaxone generic? Just wanted to make sure I didn't miss anything on that product in your prepared remarks, but anything you could say on that would be helpful. Thanks.

Speaker 2

David, good morning. Good to hear from you. So on your first question, the Amneal two point zero strategy, as we had clearly laid out that we are diversifying our business away from oral solid. Not does not mean we are getting out of oral solids because we have fantastic extended release, multi layers, the oncology, all those complex oral solid products as well. We're pretty much very less on to the commodity oral solid products and that we are reducing further.

But it still produces the cash flow which allows us to utilize allocate that capital to a proper areas that we are growing. So we're diversifying our sole relying on the retail business into injectable business, is today 125 with aspirations to be in top five. This acquisition provides us with accelerated R and D development and accelerated launches, five excellent lines, all European lines, state of the art, the best facility in injectables in India. So we are very excited to be now meaningfully adding contributions on injectable. The third piece is the international markets.

This and other facilities also allows us to go to China, which we have partnered with And we're very excited. We haven't shared any details yet, but we are very excited what we see on those products and opportunity 23 onward and building the very good business with pursuing in China as well as Africa. The fourth is the biosimilars, and I'll take my shot on biosimilars first and pass it on pass it on to changing for interchangeability. So my view remains biosimilars as evolving market, much needed. It would play it is going to be highly competitive, so more of a payer driven and PBM driven market developing.

Yes. For the buy and build would be a separate economics, but the payers will still still drive it. So interchangeability and any intervention by CMS covering all biosimilars would be really helpful for penetrating more than 20%, 30%, 40%, 50% market share to go to more of a 70%, 80% volume penetration. And that will be fantastic news for biosimilars. And with or without interchangeability, I think it needs to get there to realize for our country true savings on biosimilars, which is a huge potential.

Chintu, do want to comment on interchangeability?

Speaker 3

Sure. Hi, David. Good morning. Before biosimilar, just wanted to add also you had a question So we are equally focused on building our specialty pipeline organically and inorganically.

As I mentioned in my opening remarks, we have a good pipeline products, which shows good promise going forward, and we are also looking at inorganic assets to acquire. So along with the injectable complex generic specialty also remains the focus, and we are very happy and excited where we are in the building of our pipeline. Coming to the biosimilar, Interchange Mobility, David, I think from science side, it's very good and exciting. That gives comfort to the physicians and the patient that when the products were interchanged between from the immunogenicity or efficacy perspective, you know, the statistical differences were not significant to raise any concerns. But the main driver would be, as Chirag mentioned, would be the payer and how the reimbursement occurs to have a lot more growth on the biosimilar industry.

But we see biosimilar as a must. And I think over a period of time, whether it's the regulatory pathway, interchangeability or the other areas, I think it's going to evolve and be more acceptable and normal going forward. And your last question on Copaxone. Copaxone, due to the delays of COVID and it was PMO, we are not forecasting in our 2022 launch. It most likely be '23 launch first half.

Speaker 5

K. Thanks so much.

Speaker 3

Thank you.

Speaker 0

Thank you, David. Our next question comes from Nathan Rich of Goldman Sachs. Your line is open, Nathan. Please proceed.

Speaker 6

Hi, good morning. Thanks for the questions. Shar, you highlighted the gross margin performance in the generic segment. I know the goal for a while had been to get back to 40% margin, you're now solidly there. So as we think about the opportunity going forward, can you maybe give us an updated view on where you think gross margins for that segment could go, I guess, as you do shift the portfolio to more complex products?

And then maybe Tassos, as a follow-up for you, could you maybe just talk through the updated revenue outlook, moving that towards the lower end of the range is kind of what changed relative to your prior expectations? Thank you.

Speaker 2

Thank you, Nathan. Good to hear from you. Good morning. Gross margin, as we said, we are bringing we brought in house all the manufacturing from CMO, most of it in house, which is helping the margins. We addressed our operational efficiencies, the plant utilization, back orders are virtually not existing, which takes care of the failure to supply.

The returns we are working on algorithm to reduce and working proactively with the customer. So all these levers are pulling margins in the right direction. The more we launch complex products, more injectable products, we see the margins improving. Now it may not be right in one year, but over one, two, three, four, five years, our goal would be to have a higher gross margins because of the complexities of the product with the portfolio mix we have, in house manufacturing and very few products are partners. So we're not sharing economics for most of our products.

So that is on a gross margin on generics. Tasos, would you like to Sure.

Speaker 4

Good morning, Nathan. So from a top line perspective, you recall, our range was 2,100,000,000.0 to $2,200,000,000 And right now, we're guiding at 2.1%, which still is up 5% organically from prior year. So first we feel great about this. What changed it's a couple of puts and takes. Number one is our new product introductions have performed better than we thought.

First, they got they were launched much earlier in the year than what anticipated. And so that has done much better than we thought, which actually was a key reason why our gross margin improvement was better and a key reason why our EBITDA we increased our EBITDA guidance. So that's a good thing. Two things we did not anticipate as much was, as we spoke earlier on this year, was the complete lack of flu season. So that essentially cost us $40,000,000 just so not selling any type of flu as well as some other products.

That was the biggest negative variance from a top line perspective. Also, you know, sitting trying to give guidance earlier on this year, trying to anticipate what the COVID-nineteen impact was, that continued to have some lingering effects. Think that impacted everything. So those are the two reasons why the three reasons. So some of the legacy products doing a little worse than we thought, primarily around lack of flu season.

New products doing better than we thought. That also drove the bit of the EBITDA and the raise of the EBITDA guidance. Does that help?

Speaker 6

Great. Yes. Thanks very much.

Speaker 0

Thank you, Nathan. Our next question is from Balaji Prasad of Barclays. Balaji, please go ahead. Balaji, your line is open. Please ensure you're unmuted.

Unfortunately, we're not receiving any audio from Bellagy's line at the moment, so we will move on to our next question, which is from Elliot Wilbur of Raymond James. Elliot, please go ahead.

Speaker 4

Thanks. Good morning.

Speaker 7

Question I wanted to ask was around the injectable segment, obviously expected to be a key driver of growth going forward. Question is outside of some of the more differentiated complex filings that you have in your pipeline, can you win business in the injectable market on molecule basis? Or do you really need a much larger, more representative portfolio enabled to be considered attractive to the GPO buyers, which have very different needs than those of your traditional big three retail purchasers? That's the first question. Second question is just in terms of new product performance.

Obviously, very strong year to date. Looks like it was at least 15% of the total top line, at least nine months ended September. Just trying to get a sense from you what you're seeing in terms of the actual base erosion. Certainly, other players have talked about accelerated erosion volume plus price and that definitely seems to be sort of borne out and looking at industry metrics. You guys have been able to offset that, but I'm wondering if you're seeing some accelerated pressure on the base.

Speaker 2

Great. Thank you, Elliot. Good morning to you. So your first question, we've been in the institutional market since 2016, 2017. We started launching our products.

Today, we have 25 products in the institutional market doing $125,000,000

Speaker 3

or a little bit

Speaker 2

better this year. So we are already there and we have the relationship with GPOs and it's a different sales force led by different commercial head to actively build a relationship with institutional buyers. And yes, the portfolio matters, the redundancy matters, and this is why we acquired ReadyMade site and not waited to build our own, which would have costed three, four years and a few $100,000,000. So it's exactly because we got the R and D pipeline. We needed the capacity.

And today, if we have to order even new injectable line takes couple of years because of the utilizing the COVID vaccines, most of these and under DPA. So we're really excited of how we're going to enter it. And yes, we will have a larger portfolio, multiple products, many for us to launch, complex products, all kind of technologies. Just like what we did in retail, we're committed with the highest quality, highest R and D and we are here to stay in the injectable market. So we will grow from 1.5% to much higher.

Our aspiration is to be in top 5%. And also allows us to market those injectable products into international markets, which further diversifies it. On the I've been answering the base and all these answers since 2017. I'll give it to Dassault with the same behavior from the three buyers that they constantly look for opportunities and driving the as much cost down, which is I think not healthy for the industry as manufacturers would have to rationalize that portfolio if this pressure continues on, which is totally irrational on the part of if you look at these commodity products and how low it has gone, it is very concerning. But I'll have Shat Haasele explain the details.

Morning.

Speaker 3

Can I take

Speaker 4

your Sure,

Speaker 2

Shatra, go ahead?

Speaker 3

I just wanted to add on the injectable side. The value is very exciting because it tripled our capacity overnight with acquisitions, and we become a value volume player. Plus, it uses added and very huge capacity for large parental bags and there is a very little competition when it comes to the bag. So it gives us differentiated dosage form to enter and we are very strong and robust pipeline into that segment. So in injectable, we are working on a lot of complex products, including microspheres, liposomal, large parental bag, and lot of lot of auto injectors.

And also we have a lot of vial product and others. Missing is even bigger player than what we are today and we are very excited. Is that ideal at right price, right time? Go ahead, Tassos.

Speaker 4

So I think the other part of your question was around the base business. Do you see an acceleration of the decline or not? So for us, it's been fairly steady decline. So and that is at the kind of high I'm sorry, low double digits. So think of it as the base business declining approximately 12%.

That's what we saw last year. That's what we're expecting this year. The other differentiating factor perhaps of us, if you look at business and you see what percentage of our generic portfolio that accounted for. Back in 2019, the base business was 93% of our revenue of our generic revenue. This year that part of the business will be about 64% of the business.

So we have substantially decreased, right, the year over year headwind represented by this kind of continued downward pressure. And on the other side as the portfolio, the rest of the business evolves to more complex, yes, that will become older, but because it's more complex, it's not going to be subject to the same headwinds as the traditional oral salads. So hopefully, I think that should answer the question.

Speaker 0

Thank you, Anja.

Speaker 2

Next question, please.

Speaker 0

Our next question comes from Balaji Prasad of Barclays. Balaji, please go ahead. Your line is open.

Speaker 8

Hi, good morning everyone and my apologies for missing the call earlier, juggling a couple. Firstly on Punishka Chirag, can you describe the facility that you're getting capacity? And also any particular products in the pipeline side that you would like to call out? You mentioned that you're expecting FDA site inspection and approval by the end of twenty twenty two. Is it linked to any specific products at all or is it, overall site inspection?

Second question on dexamethasone, I think you, if I heard you correctly, you stated that this was a CGT, designated opportunity. So can you also provide some context around revenue expectations at least in

Speaker 4

the first one hundred days? Thank you.

Speaker 2

Thank you, Balaji. Chintu, would you like to explain the Punishtha's state of the art facility?

Speaker 3

Yeah. Hi, Balaji. Good morning. Punishka's site is around 293,000 square feet, state of the art, recently built in last two years as a five European made vial and emulsion and the large bag lines. So it gives us capacity of around 30 to 35,000,000 dosage forms out of that site and that caters to our requirements all the way up to 27 as per our internal volume forecast.

So that side from the FDA perspective, they do have a product pending.

Speaker 4

Mhmm.

Speaker 3

We are not revealing the name of the product. They have a two product pending, one vial and the one bad product. So that gives us it comes with 560 great people, and the r and d infrastructure is separate. So it also gives us added R and D manpower and and the very trained manpower for injectables. Overall, it's it's right in our strategic move to expand our injectable.

So we are very excited and it just overnight gives us that needed capacity.

Speaker 2

Yes. And Balaji, this is a fourth facility. So this is we already have three facilities, one focusing on oncology, on injectables, and then two others, and this is the fourth one. On dexamethasone, as we do not provide specific product revenue guidance, but we love these products, right? These are the niche products that we are alone for a while or two of us or three of us where we have a chance to make better gross margins than the other products.

So it's a good product and we every year we expect many of these products to be launched. So this is why we're not reliant on any one big launch in the year, but multiple new launches coming up. And we're also excited about the potential launch of rovesopressin as well as we have filed we responded to our CRL, and we expect that in the first half of twenty twenty two.

Speaker 8

Understood. Thank you.

Speaker 0

Thank you, Our next question is from Gary Nachman of BMO Capital Markets. Please go ahead, Gary.

Speaker 5

Hi, good morning. This is Dennis on for Gary. Thank you for taking my question. Just a couple from me. Lately, in the news we've been hearing all the supply chain issues, is there anything that you've kind of seen that you believe the supply chain issues could affect your fourth quarter or next year?

And then another question on debt. You guys have been clearly lowering it. It was 7x in 2019, 5.3x in 2020. Now we're at 4.6x. Just curious, is there a number that you're looking to get into or you're choosing towards?

Thank you.

Speaker 2

Thank you, Gary. Very interesting question on supply chain issues. Yes, they are happening. We fortunately have a very robust preplanning and our team is excellent, which is planning pretty much a year out. But there is concerning, and what's concerning is the more of an inflation associated with supply chain.

So there are drastic steps have been taken by China to shut down certain KSM key starting material, input material, certain API facilities, and that is going to cause and already we have API suppliers, pretty much all of them are asking for higher prices because of these increase in cost, the inflation is here. So that is concerning on supply chain issues and this certain case. And obviously, our teams are proactively working with our partners to make sure we don't get into this. On a debt, we've been saying it's under 4x is our target and as low as we can go that's how we like to allocate our capital, be smart about it, go on at the right time, right deal and right price. So certain times, we don't win the deals right now in the seller's market because we're not ready to pay up extraordinary prices which are in the market at this point.

And we're very confident in our own organic pipeline and patiently will wait to do the right deals. But we are constantly looking for deals. And like so it's a very fine balance to keep going down in a leverage and still keep adding the new capacity and diversifying our business, and that's exactly what we are doing. Thank you.

Speaker 1

Thank you.

Speaker 0

Thank you, Gary. We have a follow-up question from Elliot Wilbur of Raymond James. Please go ahead, Elliot.

Speaker 7

Thanks. Just two quick follow ups. I guess, first for Shinta. You talked about the Synchron issue and the alteration of the TE code to BX from AV. I guess in looking at those products, we came away with the conclusion that they were all relatively commoditized and somewhat small in terms of the markets.

But if you could just maybe give us a sense of what the current revenue base of the affected products is within your portfolio? And then bigger picture question, there's been a very noticeable slowdown in the rate of new ANDAs coming out of the FDA, and it seems to be even more difficult to pull out complex generics as obviously these timelines seem to get extended more and more every year. So that can both be a competitive advantage and or a disadvantage. But just, you know, wanted to get maybe your perspective in terms of, you know, what may be happening to the FDA with some of these more complex filings, why we're not seeing more of them, and whether or not you think that has led to or you have sort of kind of adjusted longer term expectations in terms of the timelines in which you expect some of these key products to be approved?

Speaker 3

Yeah. Hi, Elliot. Thank you. So on Synchron, as I as I mentioned that we have responded to all of the FDA queries and responded. We have used bioanalytical lab outside of Synchron.

We have a third party independent audits and Amneal audit, and we are very optimistic that we have done very thorough job that, you know, would have a positive outcome, hopefully from FDA. I don't have a timeline that we can talk about as and when, but we are working very diligently with FDA to resolve the AB ratings. We have about eight or so products. We do have one product which is important, but we have not seen any material impact at this time, which is Zephony, but we have not seen any material impact at this time or a patient concern or the customer concern. Regarding the approval, Amneal has the highest cost review cycle approval.

I can say last three or so years or four years, we have received more than forty first review cycle approval. That's in around ten months. And COVID did impact many companies from receiving approval earlier. But Amneal is because of its standard quality track records. We never had any delay associated with pre approvals or, you know, anything else.

Even our inhalation plant in Ireland, we had online audit and our client from a pre approval perspective is approved by FDA. Complex scenarios, it's a challenge depending on where you are. FDA is also learning many times with you as they are looking into the science and various ways of bringing these complex products. So I think depending on the product, it may take longer, but like on a transdermal and many other dosage formulas, we have been working with FDA and ophthalmic that Amneal has a very good understanding of what FDA expectations are. So we have that only more advantage on the complex product also in the areas where we have already received approval, which is like ophthalmic Storadix was our recent approval, which is a very complex ophthalmic suspension product that gives us the pathway for many more and we'll be able to overcome FDA questions proactively.

So I think you are right. There are delays, are less approvals than the prior year, But as far as the annual, we are getting 30 or so plus approvals every year. We expect the same next year. Few complex, there has been certain delays due to certain change in requirement or FDA's expectation. But overall, annual is in a better position than its competitors.

Thank you.

Speaker 0

Thank you, Elliot. Our final question comes from Greg Fraser of Truist Securities. Greg, your line is open. Please go ahead.

Speaker 1

Great. Thanks for taking the question. Sorry if I missed this earlier, but could you comment on the outlook for new launches in the fourth quarter? And then on the injectables business, you're out in your outlook, you're obviously expecting a lot of launches over the next few years and rapid sales growth. I'm curious if you expect some standout products to drive an outsized portion of

Speaker 5

the growth?

Speaker 1

Or will the growth be diversified across a broad portfolio of injectables?

Speaker 2

Great. Good morning. I'll take your second question first. So injectable is a similar strategy that we applied in the retail side lately, which is more complex, more diversified, the bags as well as vials, auto injectors, EFS, right? So it's a mix of products.

Oncology is also added. So four different plans, redundancy is there now. So it would be more diversified and more lasting and as well as some of those products would be good in international market, especially when it comes to product like Culver's terms and higher demand and prices than United States. So very excited on injectable business growth side. The NPL has been strong as Tasha mentioned for the whole year.

So we just launched a couple of small products, but they add up really good on contributions from the margins perspective. So we'll continually launch every quarter new products, whether there are five, six, every quarter we're launching.

Speaker 4

Just even more specific, so Q3, I think we said it was about $45,000,000 of growth. We should expect about the same level of growth versus prior year in Q4.

Speaker 1

Thank you, Greg. Thank you.

Speaker 0

Thank you, Greg. We currently have no further questions. So I would like to hand you back to Chirag Patel.

Speaker 2

Yes. Thank you very much, everyone, for joining today's call. As it is, this is over multiple now calls, eighth or ninth, and we're pleased with the progress and we're continuing we're steadfastly focused and disciplinely growing the company and we see excellent opportunities as part of Amneal two point zero strategy with diversifying our generics business, which I like to call it affordable medicine business along with the specialty products, which is we are in a Phase one of our branded strategy at this point and executing well on Phase one of our which are five zero five(two) products. And then we'll move up the value chain as we become really good at executing especially side of business. So we're excited on both.

And the international expansion on affordable medicine is very purpose driven as well as we will keep bringing more complex products and access to patient worldwide in select markets and select partners and some markets will be maybe entering on our own very selectively. So very excited overall, and thank you very much. Have a great day. Thank you.

Speaker 0

This concludes today's call. Thank you all for joining. We hope you have a great rest of your day. You may now disconnect your lines.