Q3 2021 Amneal Pharmaceuticals Inc Earnings Call
Thank you for your patience, everyone. The third quarter 2021 earnings conference call will begin shortly.
[music].
Okay.
Hello, everyone and a warm welcome on Neal's third quarter 2021 earnings Conference call I would now like to turn the call over to him. He was head of Investor Relations tiny demands.
Good morning, and thank you for joining <unk> third quarter 2021 earnings call today, we issued a press release reporting our financial results.
The press release and our presentation are available on our website at <unk> Dot com.
We're 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 the 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.
In the appendix of today's presentation.
On the call. This morning are sure Robinson to Patel co Ceos, Taco as Tony Darren CFO, Andy Boyer and Joe <unk>, Chief commercial officer for the generic and specialty segments and Stevens.
<unk> counsel and corporate Secretary I will now turn the call over to Sean.
Thank you Donnie and good morning, everyone.
We led to the solid third quarter results with net revenue of 529 million adjusted EBITDA of $135 million and adjusted EPS of <unk> 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.
Let me provide a few updates across the business.
I'll start with our genetics business, which is built on our core competencies in R&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 improve margins.
Our commercial teams have done an excellent job working with customers to bring these impactful products to market and provide access to the support of new medicines for patients as a result strong execution is driving performance.
Including sustained high levels of profitability, notably.
<unk> genetics gross margins were at 45% in 2021 year to date, which is a remarkable increase from 36% in 2019.
Last quarter, we highlighted what makes a generics business durable and victory.
<unk> the pace of new launches I know it increasingly complex portfolio.
There are two points to reach it first the third of our current generics revenue come from products launched since 2019.
Second half of who our current revenues.
85% of our pipeline is non oral solids.
Demonstrating how our business is increasingly diverse decline with more complex products, leading to more durable revenues at a higher profitability.
Aligned with our revenue of two point strategy to expand our portfolio with increasingly complex products.
We are so excited to announce the acquisition of police got health care, which is <unk> been growing over the injectable business today.
Overall U S institutional market from a manufacturer's perspective.
Is around 5 billion in size and growing well.
While at the same time, there's a history of short supply shortages for sterile injectables.
Need for more capacity.
Currently <unk> in this market.
With about $125 million in annual revenue.
We shared last quarter that our goal is to more than double by 2025.
Our aspiration is to be in the top five.
This acquisition allows us to exit variability injectable strategy.
The United States and international markets.
Moving to our specialty business, we are continuing to advance its strategy and expand our portfolio. We remain focused on growing the business organically advancing our pipeline and pursuing inorganic opportunities focused in urology 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 over two largest specialty products.
We've employed.
Second we continue to advance our specialty pipeline most notably we are pleased with the positive phase III data put IPX, two or three and the potential is technology patch to help <unk> patients achieve more good on time with less frequent dosing.
We do not view IPX, two or three as a line extension of Rytary, but rather we believe IPX to Z will be a distinct innovative therapy for the treatment of Parkinson's disease that we will have a broader market appeal with patients and prescribers.
We're advancing our pre market work and we are excited about the commercial opportunity that IPX two or three represents.
We continue to advance the programs across our specialty portfolio and Timna will discuss these in more detail.
Okay.
We continue to actively pursue complementary commercial stage assets.
Late stage clinical programs to leverage our existing specialty infrastructure.
You know what I would say distribution business we.
We saw continued solid performance this quarter without care, we are focused on strong commercial and operational execution growing your presence in the large federal healthcare market Federal government health care market and expanding our unit those 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 of our inaugural sustainability report yesterday. The report highlights our ongoing efforts in driving environmental social and governance initiatives at <unk>.
And provides important insights.
On our business and its impact on stakeholders.
For example in terms of access and affordability.
<unk> genetics medicines were responsible for saving patients nearly $10 billion in the United States last year alone.
In addition on the environment goes towards stewardship side, we have implemented a clean renewable geothermal energy system at our Brookhaven, New York facility to reduce or environmental impact significantly with that Ali.
I'll turn the call over to chip.
Thank you, Doug and good morning, everyone.
First let me thank our nearly 6500 team members, who work hard every day to make healthy profitable.
I think they would 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.
We see the result of nearly 20 years of that continuous improvement mindset.
We are constantly improving our execution, whether that's process improvement gaining supply chain efficiencies are better inventory management, including reducing obsolescence and the lowest level of Backorder you know whether it be street since the inception of our I mean, we have maintained our commitment to the highest.
Hundreds of quality in current good manufacturing practices.
Team continues to maintain its stellar manufacturing quality track record with currently no open our pending issues with the FDA and then in fact cable compliant with street at all of our sites.
Clearly very proud of our team.
As you are aware the equity issued an untitled letter raising concerns around bioequivalence studies performed by think Rone research services that can be assigned a bx code for applicable products, which impacted several manufacturers.
There were a handful of impacted products the bioanalytical data and statistical analysis for moist was completed by our defense Theato Nordson grown also amnion monitors and independently.
It's all Seattle study as part of our normal process and validated results. We completed our responses to the FDA as we work to restore E b ratings in a timely manner.
Turning to the injectable business as Doug highlighted the bullish Guy acquisition advances our strategy to meaningfully expand in Injectables today, we have 25 commercial products for the U S institutional market.
More accrued and reach pipeline of over 40 injectable launches flag. This acquisition accelerates, our deep R&D pipeline with enhanced R&D capabilities and speed.
Acquiring a 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 equity inspection and approval of the.
Site by the end of 2022 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.
Cost in genetics.
Our strategy prioritizing innovating across complex product categories, such as insulation, Injectables implants drug device combination and ophthalmic.
We believe emulates differentiated from its peers in our ability to successfully innovate and launch products in these hard to make complex they've yet.
For me no wording and Sucralfate are great examples of our internally developed R&D and manufacturing capability drive this fast to market complex integrations.
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 and expanding <unk>.
Expect to file 25, 30, Andas and launch 20 to 30 new products each year.
We are really pleased with the new product launches in 2021.
Is that for me Abiraterone and probiotics last week, we announced the approval of dexamethasone and important steroid use for a number of medical conditions.
<unk> treatment of respiratory symptoms associated with COVID-19. This represents another CGT designated approval, which put a wide 180 day exclusivity and he has the highest number of CTD designated products in the industry in short the velocity.
Innovation constantly torn said I mean, and we see a long runway for our R&D engine to drive growth and sustained 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 postpone we're filing 10 products in China in 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 is another vector for sustainable growth.
Card, we look to enter the biosimilar market in 2022 rehab three oncology Biosimilars Neupogen, Neulasta and Avastin, all filed and under review with the FDA, We expect to see what were the initial approvals next year beyond this we are evaluating additional.
Fortunately with partners and they can be first or second to market in biosimilars.
Fourth we continue to advance the workspace shouldn't be pipeline as we look to launch at least one new specialty products part of your starting in 2022.
Starting with the biggest one IPX two or three at.
The recent phase three results showed IPX two or 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 <unk> dosed on average.
Five times per day.
Post hoc analyses IPX toward three D printed in 1.55 hours of increased good on time part dose compared to our U S. D. D. L D and we believe IPX two or three has the potential to have Parkinson's disease patients achieved.
More good on time.
Less frequent dosing than our U R E. L. D. We see a broader market. Unfortunately before IPX towards three as compared to rightly reached represents only 5% of the broader TD LTE speeds and we expect to submit our NDA in mid 2022.
In addition to IPX two or three we continue to advance the rest of our specialty pipeline.
Our NDA for the <unk> auto injector for migraine and cluster headache is pending FDA approval with launch expected in mid 2022.
We expect to file our NDA for <unk> 127 for myasthenia gravis in the second half of 'twenty 'twenty to HUD.
Third we plan to file our IND application for <unk>, one for Marty prior to relieve the three product quite hypothyroidism in the middle of next year.
All five of our two programs quite reach the risk level is relatively lower than the new molecular N. P. D programs, we look to shed additional programs in the near future as we further expand our pipeline utilizing our proprietary drug delivery technologic platforms Grant.
And Corona outbreak, we expect these technologies will provide a red screen golf new opportunities.
Now I will turn the call over to <unk>.
Thank you for.
For the third quarter, we reported total net revenue of $529 million up 2%.
Adjusted gross margins from 45, 4% up 570 basis points.
And EBITDA of $175 million up 19% and adjusted EPS of <unk> 21.
31% all year over year.
Our growth was primarily driven by new product launches operating efficiencies and it also includes substantial investments in R&D and our specialty commercial presence to drive long term growth.
From a balance sheet perspective, I'm happy to report that both gross and net debt continued to decline with net debt to adjusted EBITDA of four six times compared to five three times at December 2020, and.
<unk> seven times in December 2019.
In addition, our improved operational performance and lower levels of debt were cited as key reasons for the recent upgrades for our long term debt by the.
Rating agency mortgage.
Let me now start with our generic segment, where third quarter net revenue of $347 million was up $5 million or one 5% year over year.
Growth was driven by the strength of new product launches and the diversity of our increasingly our increasingly complex portfolio.
New products launched in 2020 in 2021 accounted for $45 million of growth this quarter.
From a product perspective zelle.
And abiraterone, which were last early this year were strong contributors to growth.
On a year to date basis basis generics recorded $1 billion 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.
New product launches as well as operating efficiencies, including in source manufacturing and procurement savings.
Moving to the specialty segment net revenue of 93 million for the third quarter was up $5 million or five 6% year over year.
As a reminder, specialties set person, who Rollins endocrinology with proprietary unit growing both brands continued to grow nicely and in the aggregate recorded $57 million in net revenue up 13% year over year.
As expected this growth was partially offset by declines should not promoted brands.
We expect continued strength in writer and Union drawing a SKU threep total scripts for both were up high single digits English scripts were up double digits adjust.
Adjusted gross margin for specialty was 78, 7% in the third quarter, representing a 440 basis point improvement year over year due to the favorable product mix.
Year to date basis specialty recorded $277 million in net revenue up 6% year over year with proprietary unit throwing up 10% combined.
Can be active distribution segment third quarter net revenue of $89 million was down.
Yes.
About 1% year over year growth was impacted by a tough prior year comparison due to a timing issue.
Adjusted gross margin for <unk> was.
<unk> two.
2% in the third quarter, which was 270 basis points higher year over year.
Total company adjusted EBITDA of 175 million for the third quarter was $21 million higher than the prior year quarter.
Gross profit growth added 33 million and was partially offset by $8 million and higher R&D Ashwin incorporated into cash ship specialty acquisition and $10 million and higher SG&A due to our sales force expansion and higher expenses as the economy opens.
Adjusted diluted second quarter.
Adjusted diluted third quarter EPS of <unk> 21.
It's driven by the strong EBITDA performance, partially offset by higher taxes.
From a cash perspective operating cash flow was $82 million in the third quarter and $179 million year to date as we continue to expect $220 million to $250 million for the full year.
In addition, we closed the third quarter with $311 million in cash and cash equivalents and our intent is to utilize a portion of that two 5% to $93 million purchase price of the <unk> acquisition.
From a timing perspective, approximately $73 million of the purchase price funded in November while the remaining $20 million to be funded mid 2022.
Sure I can chip 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 2020 fleet and accelerating substantially after that.
As for the nine months through the year and most of our 2021, new product launches are behind us.
Our full year guidance.
On the top line, we're tightening our expected net revenue to about $2 1 billion, 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&D pipeline, the resiliency of our commercial portfolio and offset headwinds driven by.
The lack of flu season, and lingering COVID-19 impact.
At the same time, we're raising our adjusted 2021 EBITDA full year range between 500 therapy and $550 million.
<unk> 500, and $500 million range, which reflects high double digit growth versus 2020.
We're also raising our EPS guidance range to 78 and 88.
Compared to 78% <unk>.
Our operating cash flow guidance remains the same.
20%.
We entered into $150 million and we are slightly lowering our capex expectations to 50 and $60 million compared to the range of $60 million to $70 million.
In summary, we feel great about our quarterly and year to date performance of solid top line and double digit adjusted EBITDA growth and our ongoing positive trajectory, let me now hand, it over back to shock.
Thank you to ourselves.
In summary, Emil is executing well in all fronts solid performance across the business and sustained high profitability reflects the diversity durability and increasing complexity zelle bulletproof.
Full year looking forward, we see continued growth and strong profitability, we will now open the call to questions.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad now.
Preparing to ask your question. Please ensure that you'll find on mute it likely.
Our first question comes from David <unk> of Piper Sandler David Your line is open. Please go ahead.
Okay. Thanks, So just a high level question as a starting point given today's acquisition.
And where you're taking the business.
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.
Youre going to look to strategically.
Strategically exit or pare down over time, just how are you thinking about that lately, particularly given the acquisition today.
And then secondly.
And regarding Biosimilars can you just talk about.
The potential for inter Changeability of anything you have in the queue and how important interchange ability.
Getting that.
Is for your business or really for any Biosimilar just get your philosophical thoughts given that we saw.
Recent interchangeability designation for one of the Humira by herself 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 can say on that would be helpful. Thanks.
David Good morning, good to hear from you.
So on your first question Neil two point strategy is.
We had clearly laid out that we are diversifying our business away from oral solid not does not mean, we are getting out of it is solid because we have fantastic.
The extended release more delays.
Oncology all of 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 cash flow, which allows us to utilize in.
Allocate the capital to a proper.
Is that we are growing so we're diversifying emerge sold reliant on retail business into injectable business, which is today 125 are with aspirations to being top five this acquisition provides us with accelerated R&D development and accelerated launches.
<unk> Flyer excellent lines, all European lines state of domestic <unk> Injectables in India. So we are really excited to be now meaningfully adding contributions on injectable.
The total pieces the international markets. This.
And other facilities also allows us to go to China, which we have a partner for soon.
We're really excited we havent shared any details yet, but we are very excited what we see on those products and a <unk> 23 onward and building very good business with <unk> in China as well as Africa.
The port is.
Here's the Biosimilars and I'll take my shot on Biosimilars first and passes on Plas are drawn to Chengdu wanting to change your ability.
So my view remains biosimilars is evolving market much needed. It will play it is going to be highly competitive do some more of.
Great.
And pbms driven market developing.
<unk> for the buy and bill would be a separate.
Economics.
The payers will still still drive it so inter changeability and any intervention by CMS.
Coding all Biosimilars would be really helpful for penetrating more than 2030 40, 50% market share to go do Moreover, 70, 80%.
Volume penetration and that will be fantastic news for biosimilars and with or without into Changeability thing it needs to get to realize for the country.
Savings on Biosimilars, which is a huge potential.
Jim do you want to comment on inter changeability.
Sure Hi, David Good morning.
Before Biosimilar I just wanted to add also you heard a question about spreads should be so we are.
<unk> three pathway interchange ability or the other it yet I think it's going to evolve and be more acceptable enormous going forward and your last question on Copaxone.
Copaxone are due to the delays of Kobe resonated with BMO.
Not forecasting in our 2022 launch it most likely be twenty-three launch first half.
Okay. Thanks, so much.
Thank you.
Thank you David.
Our next question comes from Nathan Rich Goldman Sachs. Your line is open Nathan. Please proceed.
Hi, good morning, Thanks for the questions I'm sure you kind of highlighted the gross margin performance in the generic segment you know.
I know the goal for a while had been to get back to 40% margins you know solidly there. So you know as.
As we think about the opportunity going forward could you maybe give us an updated view on where you think gross margins for that segment could go I guess, especially you know as you do shift the portfolio to more.
Complex products, and then maybe tell us as a follow up for you could you maybe just talk through the updated revenue outlook.
Moving now towards the lower end of the range is kind of what changed relative to your prior expectations. Thank you.
Thank you Nate and good to hear from you good morning.
So 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 that we addressed two of operational efficiencies that plant utilization back orders are virtually non existing which takes care of the failure to supply. The returns we are working on algorithms to reduce and working.
Proactively with the customer so all these levers are pooling margins in the right direction. The more relaunch complex products, one injectable products and we see the margins improving now it may not be right in in one year, but what 12345 years of a goal.
Would be two to have a higher gross margins because of the complexities of the product portfolio mix, we have in house manufacturing and very few products. Our partners. So we're not sharing economics for most of our products. So that is on a gross margin on genetics.
Tassos would you like to shop.
Good morning Nathan.
So from it from a top line perspective as you recall our range was $2 <unk> two 2 billion.
Right now we're guiding at 2.1, which still is up 5% organically from prior year. So so first we feel great about this.
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 much earlier in the year than wed anticipated.
And so that has done much better than we thought which actually was a key reason why our gross margin.
Proven was better and a key reason why our EBITDA, we increase our EBITDA guidance. So that's a good thing.
The things you did not anticipate as much was as we spoke earlier on this year was the complete lack of flu season. So that's essentially cost us $40 million just so.
Not selling any tamiflu.
As well as.
Some other products that cost us that was a biggest negative variance from a topline perspective also you know sitting try and give guidance earlier on this year and try to anticipate what the COVID-19 impact was that continue to have some lingering effects I think that impacts 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, and your products being better than we thought that also drove the.
The EBITDA and the raise of the EBITDA guidance is that helps.
Great. Thanks very much.
Yes.
Thank you Nathan.
Our next question is from Bellagio Prasad of Barclays.
Please go ahead.
Yeah.
<unk> your line.
<unk>.
Yeah.
Unfortunately, not receiving any O J from Ballard <unk> line at the moment. So we will move on to our next question, which is from Elliot Wilbur of Raymond James Please.
Please go ahead.
Thanks, Good morning.
First question I wanted to ask was around the injectable segment, obviously expect it 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 a on a molecule basis or do you really need a much larger more rare.
Presentative portfolio enable to be.
<unk> attractive to the GPO buyers, which have very different needs than those of your traditional.
Big three.
Retail purchasers.
First question.
Second question is just in terms of new product performance, obviously very strong year to date it looks like it was at least 15% of of the.
Of the total top line at least.
The nine months ended September just trying to.
Get a sense for muni of what Youre seeing in terms of the actual base erosion.
Certainly some other players have talked about accelerated erosion volume plus price.
And that definitely seems to be sort of borne out and look at it industry metrics you guys have been able to offset that but im wondering if youre seeing some accelerated.
Pressure.
On the base.
Yeah.
Great. Thank you Elliot and good morning to you.
So your first question we've been.
In the institutional market since 2016 and 17, we started the launch of your products today, we have 25 products.
In the institutional market doing.
$25 million or a little bit better this year.
So we're already there and we have the relationship with Gpus in the different cell scores.
Led by different commercial head too.
Actively build a relationship with institutional buyers and yes. The portfolio matters that had been density matters and this is why we acquired ready made site and not waiting to build our own which would have cost us three four years and $200 million.
So it exactly because we got the R&D pipeline, we need we needed the capacity and today. If you go to ordering new injectable line takes couple of years because of the utilizing the COVID-19 vaccines more siblings and under DPA.
So we're really excited.
Now we're going to end today and yes, we will have a larger portfolio multiple products. Many for us to launch complex products all kinds of technologies just like what we did in retail we're committed with the highest quality highest RMB and we're here to stay and inject to a market. So we will grow from 1.5 were much higher.
Iron ore aspiration is to be in top client.
<unk> also allows us to market those injectable products into international markets, which which is which are which further diversifies. It.
On the <unk>.
I've been answering the bays and all of these answers since 2017, all Gary Ddos or is it the same behavior from the three buyers that they constantly look for.
<unk> and driving as much cost down which is I think not healthy for the industry as manufacturers would have to rationalize their portfolio.
<unk> continues on which is totally irrational.
On that.
Part of it if you look at these commodity products and how low it has gone.
It is very concerning but ill have shut off sort of explaining the.
Details.
Hey, good morning.
Yes.
Sure Jim.
I just wanted to add on the injectable side.
Right.
Very exciting we've tripled our capacity over night, these acquisitions and we become a value volume player.
Give me the added in there already.
Capacity for lives.
Back then there is very little competition when it comes to go back so it gives them differentiate their.
Those edge form to enter and we are already strong and robust pipeline into that segment. So an injectable you are working on a lot of complex broader including microspheres like what are some of the large printer bag.
Not a lot of auto injectors and also we have a lot of wild product than others.
Goodbye.
You wouldn't be good player than what we ought to be and we are very excited that ideal it right right.
Alright time warehouses.
Sure.
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 a fairly steady decline.
And that is that the kind of.
Hi.
Low double digits, so think of it as the base business declined 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 that base business and you see what percentage of our generic portfolio that accounted for that.
Back in 2019 that base business was 93% of our revenue or generic revenue.
This year that part of the business will be about 64% of the business. So we have substantially decrease right the year over year headwind represented by these kind of continue downward pressure.
And on the other side as the portfolio of the rest of the business evolves to more complex right, yes that will become older and because its more complex is that going to be subject to the same headwinds as the traditional oral solids. So hopefully I think that sort of answer the question.
Okay.
Thank you our next question please.
Our next question.
From <unk> of Barclays.
Please go ahead your line is open.
Hi, Good morning, everyone and my apologies for missing Colonia juggling a couple.
Firstly on finished.
Can you can you describe the facility that youre getting in the capacity and also any particular products in the pipeline side that you'd like to call out.
<unk> that youre expecting FDA inspection and approval by the end of 'twenty two is it linked to any specific products.
Is it.
I'll take the site inspection.
Second question on Dexamethasone I think.
I heard you correctly you are.
Stated that there's all the CGT designated opportunity.
Can you also provide an extra foundry revenue expectations at least.
Thank you.
Thank you Rajeev Chengdu would you like to explain the punish does set a large facility.
Yeah, Hi, <unk>. Good morning, when you stress diet is around 293000 square feet.
It's simply been last two years is it five.
And made.
Ireland emotion in the large bank lines.
So it gives us capacity to grow by around 30 to 35 million.
Millions of dosage forms out of that site.
And that caters to a requirements all the way up to 27 that's forever.
And then Oh.
Volume forecast.
So that site.
From the FDA perspective, they do have a product branding.
We are not revealing the name of the product.
They have two products pending one while into one bag product. So that gave us that it comes with 560, great people and R&D infrastructure. These factories. So it also gives us added.
R&D manpower and already trained.
Powerpoint.
So all it's riding our strategic move to expand already injectable. So we are very excited.
And he just overnight gives them the needed capacity.
Yeah and margins is this is the fourth facility. So this is we already have three facility one focusing on oncology on Injectables.
There is and this is the fourth one on <unk>.
You know, we do not provide specific product revenue guidance would reload these products that visa.
Niche product that is there.
<unk> alone for a while or to offer a subsidiary of ours, 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 year, but multiple new launches coming up.
And we're also excited about the.
Potential launch of the rest of this and as well as we applied responded to his GNL.
And do you expect that in the first half of 2022.
Understood. Thank you.
Thank you <unk>.
As a final reminder, if you wish to ask any further questions on the call. Please press star followed by one on your telephone keypad now.
Our next question is from Gary Nachman of BMO capital markets. Please go ahead sorry.
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 that you guys have been clearly lowering it was seven times in 2018 five.
Three times in 2020 now at four six times.
Just curious is there a number that you were looking to get into.
She even towards thank you.
Thank you Gary.
Interesting question on supply chain issues, yes, they are happening.
Literally.
Really robust pre planning I know her team.
Excellent.
As Len and pretty much a year out.
But there it is concerning and what's concerning is that more of an inflation associated with supply chain.
There are.
<unk> steps being taken by China to shut down certain TSM key starting materials.
Input.
Material.
So to an API facilities and that is going to cause and already we have API suppliers pretty much all of them, but asking for higher prices.
Of this increase.
Cost inflation is here so that is concerning on supply chain issues in certain case and obviously our teams are proactively working with our partners to make sure we don't get into this.
On a day.
We've been saying, it's under Forex is our target and that's it.
So as we can go.
That's how we like to allocate our capital will be smart about it.
Go on.
And the right time, right deal and Reg 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 wait to do it I deals, but we are constantly looking for it to use and like so it's a very fine balance to keep going down and elaborated and still keep adding the new capacity and diversifying the business and that's exactly what we are doing thank you.
Thank you.
Thank you Gary.
Another quick reminder, if you have any further questions. Please press star followed by one on your telephone keypad now we have a follow up question from Elliot Wilbur of Raymond James. Please go ahead.
Thanks, just two quick follow ups I guess first for center.
Talked about.
I think Ron issue and the alteration of the T code Bx from Amy 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 Theres been a very noticeable slowdown in the rate of new and is coming out of the FDA and it seems to be.
Even more difficult to pull out complex generics as obviously these timelines thinking get extended more and more every year. So that can both be a competitive advantage or a disadvantage, but just wanted to get maybe your perspective in terms of you know what maybe happening to 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 and what you expect some of these key products to be approved.
Yeah, Hi, Thank you so on synchrony.
Mentioned that we have responded to all of the FDA granting and disappointed we have used by analytical lab outside of <unk> grown.
We have a third party independent audits and Ami lauded and yards.
Where are you optimistic that you haven't been ready total job that you know.
I have a positive outcome hopefully from FDA I don't have a timeline that you can talk about isn't really what we are working really diligently with the FDA.
To resolve the <unk> three or about eight or so products.
We do have one product.
Important, but we have not seen any material impact at this thing.
Which is there for me, but we have not seen any material impact at this time order.
A patient consent order customer concerns regarding the approvals MTN has the highest supports the review cycle approval. They can see the <unk>.
Three years or four years, we have received more than 44th review cycle approval was actually not out.
10 months.
And Colby did impact many companies formed receiving approval earlier.
But anyway because of its better quality track record, we never had any delayed associate there was.
It was or.
Anything as you went our emulation plant in Ireland.
The online already been planned from a pre approval perspective is approved by FDA complex United.
Challenge depending.
On where you are and forgive US also learning many times with you.
They are looking into the science and regulatory is opening in these complex products. So I think depending on the product.
It may take longer but like on a constant like many other good news for me is we have been working with FDA and autonomy and he has a very good understanding of what equity expectation back. So we have that already more than one page.
On the complex product also in the areas of Yoga, we have already received approval, which is like ophthalmic starwood IDEXX or has already signed up which is a very complex ophthalmic suspension product that gives us the pathway for many more than we need to be able to go back to your questions proactively. So I think you're right that I believe there are less.
Before then the value, but that's why it's better than it would be getting you know its hard to your store plus approvals every year. We expect the theme next year few complex that he's been there had been delays due to certain changing before I remain broad equity its expectation, but overall I am maybe you'd be in a better position than its competitors. Thank you.
Yeah.
Thank you Elliot.
Our final question comes from Greg Fraser of curious Securities. Greg. Your line is open. Please go ahead.
Great. Thanks for taking the question sorry, if I missed this earlier, but did you comment on the outlook for new launches in the fourth quarter.
And then on the Injectables business Youre out in your outlook you ought to be 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 that growth or will the growth be diversified across a broad portfolio of injectables.
Yeah.
Hey, great. Good morning, I'll take your second question first injectable is similar strategy that we applied in the retail side lately, which is more complex more diversified.
The bag.
Well as while the auto injector the PFS right. So it's a mix of products oncology has also added support 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 drug like coolest as higher demand and prices than the United States.
So really excited on injectable business growth side. The NPL has been strong as <unk> mentioned for the whole year. So we just launched a couple of small products, but they add up.
Really good on contributions for the margins perspective, so we're continually launch every quarter new products.
<unk> six every quarter we're launching.
And just be more of an even more even more specific so Q3 I think we said it was about $45 million of growth you should expect about the same level of growth versus versus prior year in Q4.
Thank you Greg Thank you.
<unk>.
Thank you Greg.
Currently have no further questions. So I would like to hand, you back to chair at Macau.
Yes. Thank you very much everyone for joining today's call as it is.
There were multiple now called eighth or ninth and we're pleased with the progress and we continue we're steadfastly focused.
The Sip literally growing the company and we see excellent opportunities as part of a new two point strategy.
Lewis define your generics.
Business, which I like to call it affordable medicine business, along with the specialty products, which is that we are in a phase one of our branded strategy at this point and executing well on phase one off or.
Firefly redo 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 internationally expansion on that affordable medicine as it was very good was due and as well as we will keep bringing more complex products and access to base.
<unk> worldwide.
In select markets with select partners in some markets will be.
May be entering an era, where we selectively so really excited overall and thank you very much have a great day. Thank you.
Sure.
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.
Okay.
[music].