Q4 2021 Amneal Pharmaceuticals Inc Earnings Call
Key capabilities through the acquisition of cashew specialty.
<unk> got healthcare and solar backlog clinic franchise that we believe will power our next chapter of growth.
Now looking forward, our 2022 guidance that reflects continued top and bottom line growth that includes investments ahead of launches in our higher growth areas of business, such as injectable specialty and Biosimilar our.
80 to continue growing while making long term investments reflects the diversity and sustainability of our growth profile.
We believe we have the right strategy to be successful and the right team to continue executing and innovating and we are well positioned in several key growth areas as.
As the core of the strategies, our focus on affordability unmet patient needs and providing excess as a global essential medicine company.
Overall, we see earnings growth profile accelerating over the next several years as we increasingly shift our business mix towards higher growth.
And higher growth end markets.
Let me now walk through our key business areas at a high level.
Where we are today.
And our strategy for growth in each.
Starting with our retail generics business, which has grown consistently over the last few years as a robust R&D engine has significantly diversified the portfolio with new complex products.
2021, we delivered $137 billion in net revenue and launched 28, new products, we see the $20 billion U S retail generics market continue to expand and grow the pipeline for the industry remains robust with approximately two <unk>.
<unk> hundred $84 billion in total brand product revenues facing loss of exclusivity in the next decade.
We are confident that our core competencies in R&D manufacturing quality and commercial excellence will drive our continued momentum in retail generics one years.
About half of our 2021 generics revenue came from non oral solids and 87% of our pipeline is non oral solid.
Which underscores our shift to more durable and complex portfolio with.
With a clear line of sight to continued innovation and the increasing complexity of our portfolio. We expect continued growth in our retail generics business going forward.
Regarding our injectable generics.
We announced the acquisitions of put initial healthcare in Q4 as a reminder, the acquisition adds key manufacturing infrastructure capabilities and capacity to support the U S and international markets building.
Building on that we were pleased to announce another tuck in transaction in January with acquisitions of solid therapeutics backlog lending franchise, which advances our strategy in a few key ways first it expands or neurologic presence into specificity.
Establishing durable institution product in Lisle yourself.
And expands our renewal is institutional injectables business to about $150 million second. It also adds the recently approved <unk> towards specialty bag with commercial launch planned in June and third it adds a specialized institutional commercial team in advance.
Florida Biosimilar launches this year, we expect strong growth in the $5 billion institutional injectable market.
As we scale the injectable business was remarkably do larger portfolio over time, and our expanded global capabilities. We expect injectable revenues will ramp up substantially in the later part of 2023.
On our way to annual revenues in excess of $300 million by 2025, as we aspire to be the top five in the United States and also become a global player.
Now in Biosimilars.
We expect to enter the market in 2022 with our initial oncology portfolio of <unk> III products.
The total addressable market for these products is $6 3 billion with $2 9 billion, representing the Biosimilar portion.
Beyond those we are also actively looking at additional partnership opportunities, where we can we are linked to market preferably Foster second.
The pipeline for the industry remains robust with approximately $148 billion in total biologics products revenue facing loss of exclusivity in the next decade.
After an initial launches gaining share and adding to the portfolio. We expect biosimilar revenues will build over time.
Our goal is to build a global business through in licensing and being vertically integrated as we look to become a meaningful player in biosimilars.
In our <unk> business, we saw solid performance in 2021 with $349 million in rent.
Net revenue we are focused on a strong commercial and operational execution as we expand across multiple channels, including the federal government healthcare market.
Distribution channel and unit dose, we expect substantial growth in this durable business going forward.
In specialty.
We see multiple growth opportunities over the next several years in 2021, our commercial organization executed very well delivering $378 million in net revenue.
Year ago, we invested to expand our endocrinology sales force, which led to significant growth this year and unit growth rate of our branded product for treating hyperthyroidism.
Victory, our branded card, we don't quantify what level of a product for Parkinsons also had a strong year, while at the same time.
Team did an excellent job advancing or IPX, two or three pipeline product.
Positive phase III data showed that this innovation has the potential to achieve more good good on time and less frequent dosing for Parkinson's patients we.
We expect high single digit growth in the $7 billion.
Brand market for our products and pipeline as.
As we execute on our existing portfolio and rich pipeline, we see the specialty business expanding meaningfully over the next several years.
And internationally.
We are advancing our global expansion plans in key several markets.
As you know in China, we have our <unk> partnership and look to be commercial starting next year.
And the second largest pharmaceutical market.
In India, we have a small hospital business today that came through the finished healthcare acquisition.
And we look to build our in market presence in the estimated 25 billion the Indian pharmaceutical market today projected to grow to $36 billion by 2025.
Also in other geographies.
Adverse two distribution agreements to leverage over portfolio to enter certain emerging markets.
I hope you share our excitement.
As we see several businesses that are healthy expanding and growing through innovation and new capabilities and execution.
As we progress in implementing our strategy, we expect and we will be increasingly durable diversified and differentiated with that overview I'll pass it over to Jim.
Thank you George and good morning, everyone as always I'll start by acknowledging and thanking our 7000, plus and new team members, who worked incredibly hard to make healthy, possibly but as you know at our mill, we leave our culture and core competencies every.
David we remain relentlessly focused on operational excellence.
Ensuring a resilient supply chain and driving cost efficiencies across the business.
In 2021 our team executed on these avs brilliantly driving supply chain savings and better inventory management with reduced obsolescence and the lowest level of back orders in our history at the same time, we are committed to the highest standards of quality and current.
Good manufacturing practices. We are proud that we have maintained our excellent manufacturing quality track record with an impeccable compliant phase III at all our sites. Let me now walk you through the tenets of our growth strategy and our focus on innovation across our.
Business lines and genetics, we continue to find new development opportunities across complex product categories, such as inhalation implants drug device combination and ophthalmic ROA.
Our internal R&D and manufacturing capabilities.
This path to market and hard to make complex launches possible, which we believe differentiate us.
And the industry in 2021 hour 28, new product launches.
Excellent, including generic version of SME, <unk> Torah deck Decadron in Brazil, and we expect another 20 to 30 launches in 2022 as well as every year going forward in 2022, we expect to file.
Similarly, 30, Andas of which 15 to 20 injectable importantly.
<unk> continues to maintain the highest number of CV CGT designated products in the industry.
In retail generics, we have 85 andas pending for approval and expect to launch 15 to 20 of them in 2022.
Also have clear visibility to a long runway of future launches with another 55 pipeline products of these roughly 40% are expected to be first to market our first to file.
And Injectables, we remain acutely focused on expanding our portfolio and growing our commercial business. We expect to launch five to 10 injectable in 2022 so far in Q1, we have already received approval for four new products we have.
2009, injectable andas pending and another 73 pipeline products.
But half of which are expected to be first to market first to file our 505 to as previously stated we expect over 40, new injectable launches from 'twenty to 'twenty, one through 'twenty 'twenty, five and a variety of complex areas, including drug device combination pack.
Tight long acting Injectables, LIFO XOMA and large volume parenteral bags. In addition to complex Injectables. We are focused on 505, two opportunities that target unmet patient need in hospitals, we will leverage our in house capabilities, including our expanded.
Sure.
Infrastructure to bring more products to market, including our first firefight to injectable launches expected in 2020 for the next key piece to the injectable strategy is adding global capacity and capabilities earlier in 2021, we expanded our existing manufacturing.
Ability in LBP bag and wires.
And with <unk> healthcare acquisition.
Added even more infrastructure the integration of <unk> healthcare is growing well and we expect FDA inspection and approval of the site in early 2023 altogether. We now have 16 production line twice as many as we had one year ago.
With a broad range of production capabilities across LBP bags immersion, prefilled syringes, vials and cartridges, who starve the U S and international markets. We believe there is a clear opportunity and need to better serve the global Injectables market.
With consistent supply of high demand products to award drug charted and provide a broad portfolio of high value products to meet patient needs.
In Biosimilar, we expect to enter the U S market. This year with our first three biosimilars Filgrastim backfill grass team and <unk>, our first approved biosimilar for Filgrastim valuable Relaunching quarter, three and this product will be made.
In Chicago, we are so proud of the team for this significant accomplishment as it signals.
The bright future ahead.
In Biopharmaceuticals, particularly biosimilars.
We feel good as team and be relatively web after the action date upcoming and we look forward to launching both this year upon approval by the end of 'twenty two our target is to add more biosimilar products in our portfolio, where we can be first or second to market as the <unk>.
Dynamics and economics of the Biosimilar market shift over time similar to our success in complex genetics. We believe the key to success is being vertically integrated from development to commercialization to manage margins as well.
In Biosimilars, we look to build our business in a smart way as we leverage partnerships and acquisitions to start and then develop products organically overtime. We are very excited about the future potential pipeline in biosimilars.
In specialty we continue to advance our pipeline and expect to launch two new branded products. This year. The recently acquired an approved <unk> product for spasticity is expected to launch in June .
In addition, we are hopeful that the <unk> auto injector for migraine and cluster headache, we launched in Q4 pending inspection of the CMO site and FDA approval.
<unk> IPX towards the.
It remains on track for NDA submission in Q2 with expected launched in the middle of 2023.
Our market development work.
Continues to validate the view that 155 hours of increased crude oil in time for those with IPX towards three.
As compared to <unk> <unk> LD is very meaningful and the commercial opportunity is broader as we see the potential for $300 million to $500 million in peak sales or IPX towards III Fort gave us two seven for myasthenia gravis, we expect.
To file our NDA by end of 'twenty, two and we are pursuing multiple other indications for.
Okay, one for a modified release deeply product for hypothyroidism.
And to file our IND application in the middle of this year. These 500 <unk> two program utilize our proprietary drug delivery technology platforms grounded and Chrono Tech going forward, we expect to launch at least one new specialty product per year.
While our full specialty pipeline, we see between $500 million to $1 billion in potential peak sales.
In international we are pursuing expansion in several key markets in China. We currently have five products find with 10% to 15 expected by the end of 2022 and 20 to 30 over time in the last year, we have strengthened our team.
And infrastructure to enable us to register our products in select markets around the world. Our overall our strategy for growth is built on the strong foundation established over the last few years.
Clear plan in place for each area of our business as a company we are leveraging our core <unk>.
Comprehensive and innovation support quality and manufacturing to position us for sustainable long term growth. Our team is squarely focused on execution with that I will hand, it over to Tassos.
Good morning, everybody I'll discuss our fourth quarter full year results and then I'll move on to our 2022 guidance.
For the fourth quarter of 2021, we reported total net revenue of $537 million.
Up 5% adjusted gross margin of 43, 3%, a 270 basis points extension adjusted EBITDA of $126 million up 18% and adjusted EPS of <unk> <unk>.
Which grew at 29%.
As has been the case throughout the year Q4 performance was driven by our revenue growth and higher gross margins across all of our three business segments.
Q4, generics net revenue of $346 million grew 1%.
Our growth was driven by the strength of new product launches, particularly the etame abiraterone and the runoff period.
Which contributed $35 million in incremental revenue in the quarter.
Awesome.
Update on secret from last quarter. The team has been working very closely with the FDA.
And we're happy to report that we expect resolution during the first half of 2022 for our key products.
Q4 specialty net revenue of 181 million.
18% driven by unit, ROIC up, 38% and Rytary up 6% or.
Our Q4 after net revenue of $90 million was up 9%.
Our Q4 adjusted gross margin of 43, 3% was driven by all three segments with generic expanding 130 basis points.
Specialty.
For 100 basis points, and after expanding 280 basis points as.
As you may recall in our second quarter call, we said that our first.
After a strong first half we expect some moderation in the second half gross margins due to the mix of products and timing of overhead absorption and thats exactly how.
We played up.
Our Q4, adjusted EBITDA of $126 million was up $19 million growing at 18% gross profit growth added $25 million and was partially offset by higher operating expenses, which included the expansion of our endocrinology sales force earlier in the year.
Q4, adjusted diluted EPS of <unk> 18 cents was driven by the strong EBITDA performance.
Let me now summarize our full year 2021 performance for the full year, we reported total net revenue of $2 1 billion growing 5% to.
<unk> net revenue of about 137 billion grew 2% driven by the strength of new product launches.
Specialty net revenue of $378 million was up 6% driven by unit growth up 24% and reiterate.
7%, partially offset by declines in our non promoted brands.
<unk> net revenue of $349 million was up 19% and 9% organically.
Moving down the P&L full year 2021, adjusted gross margin was 45, 7% slightly ahead of our expectations. This reflects 530 basis point of expansion in generics driven by successful new product launches.
Renegotiation of a third party agreement and a number of other operational efficiencies.
370 basis points of expansion in our specialty business was driven by favorable mix and a 150 basis points of expansion not care reflects a number of operational improvements.
2021, adjusted EBITDA of $538 million was up $82 million and growing at 18%.
2021, adjusted diluted EPS of <unk> 85.
Grew 35%.
And our 2021 operating cash flow was $242 million in line with prior years.
And we finished the year with $257 million and costs and cash equivalents, which reflects the penis catch healthcare acquisition closing in Q4.
Finally.
We're pleased to finish 2021 with net debt to adjusted EBITDA of four six times compared to $5 three times, a year ago and seven times two years ago.
Let me turn to our 2022 expectations now.
From a top line perspective, we expect 2022 total company net revenue between $2, one five and 225 billion, which.
Next mid single digit growth.
In regards to generics, we expect mid single digit growth, which is an acceleration from the 2% growth in 2021.
Our growth will be led by our retail generics.
As we introduce new products and the strength of the recent launches.
Enabled to offset low double digit price erosion similar to what we saw in 2021.
This consistent growth profile reflects the depth of our R&D pipeline cumulative impact of years of innovation and a transition to a more complex resilient portfolio.
In addition, we expect strong growth in Injectables.
Driven by new product launches.
Vision of La wrestle and some initial revenue from Biosimilars in the latter part of the year.
In specialty we expect 2022 revenue to be in line with 2021 with continued strong reiterated unit rate growth offset by the exclusivity loss or something.
The launch timing of largest pump will have limited impact due to the time of launch.
And in regards to <unk>, we expect mid single digit growth for 2022.
Moving down the P&L.
We expect 2022 adjusted gross margins to be broadly in line with 2021. This includes the benefit of higher margin new product launches continued operating efficiencies, partially offset by inflation pressures.
Keep in mind, a big piece of the gross margin improvement last year came from supplier efficiencies that did not repeat this year to the same extent.
Next we expect 2022, adjusted EBITDA of $540 million to $560 million.
Our outlook includes approximately $40 million in incremental investments as we look to scale the higher growth areas of our business with new launches.
In 2022, we're making those key investments, particularly in sales and marketing and R&D to support upcoming launches across injectable specialty and Biosimilars.
Our outlook also includes approximately $20 billion from inflation in materials and other costs beyond normal merit.
On the bottom line, we expect 2020 to adjusted EPS of 80% to 85, which.
Which reflects solid EBITDA growth as well as slightly higher interest expense and growth in minority interest related to <unk>.
On the cost side, we expect 2022 operating cash flow.
$225 million to $250 million.
And a slight increase in capex between $75 million to $85 million.
In terms of quarterly phasing in 2022, we expect our financial performance to accelerate over the course of the year for regions.
First we expect to successfully resolve the majority of the synchrony issue over the next coming months.
The timing of new product launches as they build throughout the year, particularly the second half.
Third timing of manufacturing fixed overhead absorption and finally, our investments to support our multiple upcoming product launches as they are more front end loaded.
From a dollars perspective, we're targeting Q1 revenues of about $500 million and adjusted EBITDA was about $100 million.
With that overview of Q4 full year 2021, and 22 expectations, Let me hand, it back to Sheila Thank you doses.
In summary, 2021 was very successful year for <unk> as the team executed well on all elements of our strategy across the business.
We entered 2022 with strong momentum as a result of our focus in higher growth areas and strong pipeline in large effective markets, we expect our top and bottom line growth to accelerate over the next several years.
With that let's open the call to questions Tony.
Yes.
Thank you we will now begin the Q&A as a reminder, if you'd like to ask a question you compress star one on your telephone keypad if.
If you would like to withdraw your question you can press star, saying.
Please ensure you're on mute likely when asking your question.
Our first question for today comes from David <unk> of Piper Sandler David Your line is now open.
Okay. Thank you good morning.
So couple of questions.
<unk>.
High level question about.
Business development and you recently acquired tobacco for an asset.
And with that in mind with the expansion of the specialty brand portfolio can you talk about your appetite.
Really your capacity.
For additional acquisition.
Assets.
Brand assets and ultimately what do you see as being the mix between brands and generics.
Over the next few years for the business and I guess, that's number one number two regarding the biosimilars.
The portfolio full grasp pegfilgrastim bevacizumab.
These are.
Fairly crowded market not very crowded markets, but I guess, how are you thinking of that contribution.
How are you thinking about pricing erosion in these specific markets.
And ultimately.
Your penetration.
For those screening.
And then lastly, I wanted to pick your brain on the DHT injector product.
The.
The question here is how do you see it coexisting with the with.
What the intranasal product that Impella is launched recently thanks.
David Good morning.
We'll start with one eight attack.
First a high level BD.
Is.
On especially as you know.
In acquisitions really can't speak to.
Sure.
Pipeline, which we have an excellent organic pipeline. So we're not in a dire need to do some deal. If there is a good deal. We always are looking and if we can afford it because the same time, we are very mindful of deleveraging.
We are at $4 six of our stated goal to be between three to four.
So what we can afford.
And when we find that ideal we'll do more of a tuck in deals where the specialty brand side.
And we expect to.
Have a good opportunities this year and next year as well.
Connection's happening in the biotech field.
We may acquire pipeline assets as well on our specialty side, so very excited about the growth.
Specialty your question, how do we see the breakdown. So we see that as we said we're really excited about all growth areas. So let's talk about our retail genetics, we said we would be.
Maintaining stabilizing how stable stabilize the business growing 2%, which would be the probably the only company that can save them growing my retail generics business because of both very volatile pipeline and we're not we don't expect that to be a higher growth, but we do.
Specced at to maintain where it is and it grows slowly.
The distribution falls under the same umbrella now ill take that.
On our specialty side.
Various launches <unk> auto injector guard IPX, two or three next year potentially.
127% in 2004 and every year, we have lined up these as you know it takes time to ramp up but it adds a meaningful contribution and we expect that to become almost 25% of acquired business.
From a revenue perspective.
Contribution perspective would be higher on a specialty and then just finishing it off where another powerful growth area as Biosimilars, where do we see.
Three launches for this year, we're really excited that the first of <unk>.
This reminded us of.
Paul I guess at approval in 2005.
Neil when we launched in the label and then right now today, we sit on 350 approvals.
Some of those do not have that many products out by.
We expect that.
1% to three to keep going every year and we are actively looking at.
Various options on how do we.
How do we vertically integrate how do we add to them or Biosimilar pipeline and commercially we are investing to set the already have done it and doing it more to set the infrastructure to completely support the providers and patient support.
I will pass the in the market the markets would be.
No.
Lois to pool the pass through.
G CSF, which is look you because we would be the.
New Biosimilar.
Sure.
We would use the word collect two relationship between from the retail injectable specialty.
To launch these in the newly built Biosimilar team to penetrate as much as we can.
It's going to be competitive and then same thing with back to <unk> and then avastin. So all very very excited for this year.
Ill pass it onto Joe.
Okay. Thanks Rod.
Hi, David for competitive reasons, I don't want to disclose too much about.
Our planned marketing strategy, but I want to point to a couple of things.
First I do think we're going to have a little bit different of a labeled indication from from the.
The <unk> product.
We see it as a differentiated product different.
Mechanism of action and a different target patient profile. So from that standpoint, I don't see us really competing for the same patient I think we're going to be competing in a little bit different.
Segment of the migraine market, a different niche segment and as we get closer to launch we'll talk more about our.
Our launch strategy.
Okay.
Alright, Thank you question.
Thank you.
Thank you. Our next question comes from <unk> Prasad of Barclays. Your.
Your line is now open.
Hi, good morning, and congratulation.
Couple of questions from me firstly on the Biosimilar side.
Charlie I just want to understand your comments bolt on the need for being vertically integrated and also your focus on future Biosimilars coming from partnered on lessons products. How do these two comp against each other and it can also give an update on the FDA inspection of the manufacturing site for bias in the last 10.
And.
Okay great.
And on the guidance part of thanks Chuck.
Two <unk>, one 5 billion at the lower end of the range implies.
Incremental $60 million of revenue.
At the lower end EBITDA is flat versus 2021.
Indeed, you called out that you launch you are investing into the business, but considering all the posturing traction across each of those segments.
Just trying to think about how conservative is that guidance. Thanks.
Thank you biology and good morning.
Biosimilars.
On the strategy front as we discussed several times on the call.
Look this market is becoming better and better from all four undecided regulatory.
<unk>.
Much easier compared to when we started in 2015 16.
The understanding our understanding.
Requirements for the clinical is all that is is reasonable it still has room to improve and there are various actors working on it to make it much better.
Because this is one of the key area to bring more access and affordability is biologics as you know.
So we remain.
Yes.
On the strategy side, we have disclosed III pipeline assets from the partners.
We may have more pipeline from the in licensing and why vertically integrate vertical integration is important as we.
And a small molecule same thing.
You can't have two players the margins are not enough to be shared between two players.
So thats the first thing we wanted to maximize we're doing all these hardwood we just do not go into that outlook.
Commercial X, where do we want to have the development expertise and a tighter.
Our integrated chain that allows us the quality controls, which we're best known for which is going to be even more important in biologics than any other form.
Allows us our cost controls allows us to go global.
Products for global markets.
And.
We see higher growth opportunities and higher margins.
And it's a serious investment in Biosimilars is we have made since last few years and going forward. We're really excited and this is why I believe <unk> vertically integrated company.
Would lead.
And become.
Being a top five in the United States are globally.
Your your own system.
So how you budgeted ginger.
So regarding the arresting inspection.
The inflection was conducted we don't have a feedback from FDA overall inspections when granted but at this point, we are not able to make any.
Outcome comments, so, we'll wait and see that where golar duties sometime in April so eager and ready near term about being vertically integrated.
It is.
Very important.
Non Florida innovation science and cost effective execution that we have some development to commercialization capabilities in house plus it's a global.
Our market reach for US Biosimilars are a very good market I would start off heroes. So giving all of these reasons. We are working with partners right now, but we firmly believe is to have vertical integration yes.
And <unk> on your question on the guidance as you know last two years.
<unk>.
We do our guidance and regular guidance.
We like to be like that.
The across the segment investments are the $40 million and net subs.
Sales and marketing expenses, which.
Builds up our teams in the specialty and biologics biosimilars.
That revenue.
As you know the uptake is slow on like the small molecule to convert.
Patients and providers to use a biosimilar so its slowly ramps up.
And then also we got hit by $20 million inflation.
<unk> related costs, which unfortunately, we cannot pass this on.
On the retail side.
At all because as you know I don't how to say it again.
On the <unk> side with the three big buying groups completely controlling.
The buying power with the suppliers.
Many times it becomes a sustainability issue is really concerning.
Is that hope it doesn't cause future shortages and other weather issues.
And that is why the guidance.
The way it is.
Hey, look we still have a growth and very excited about how 'twenty three 'twenty four 'twenty five and lines up.
Thank you that's helpful.
Thank you our next.
Our next question comes from Gary Nachman of BMO capital markets. Terry Your line is now open.
Thanks, Good morning.
Firstly on the injectable business.
Looking to more than double that over the next few years I think you said greater than $300 million of the target how much of that will be organic with your own pipeline versus going out and doing more tuck in deals in that space and the four new approvals in the first quarter just talk about those and how much you expect they will contribute this year.
And then in generics.
Dosage forms. We currently don't have strong capabilities that you want to get into or perhaps an area that you want to get into in a more meaningful way or are you happy on that front.
Low double digit price erosion in generic is that a normalized rate at this point that we should be thinking about thank you.
Hey, good morning, how are you.
So on your injectable growth is mostly organic.
Pretty much organic because we do have the capabilities as we say that capacity two and RMB.
My brother mentioned all.
The technology capabilities, we have.
The Florida approvals, we expect even more approvals, we do not give us with product specific guidance, but.
They're good products and an injectable.
There is always some products that are in shortage.
So we expect that.
Good good contributions from those launches.
On the generic side.
What we haven't launched an inhalation product and we're excited that emulation.
Can be coming this year and definitely for the next generation tool to expand sure hi, Gary So I think on and just to expand on Injectables. Our forecast is based on our current capabilities and pipeline, where historically, we used to file prior to fixed product with expanded capacity and <unk> acquisition.
It gives us the manufacturing plus R&D increase capacity. So we're starting with this year, we will be filing 15 to 20 new products in there.
What do you offer a differentiated products.
So we have already good diversified manufacturing and R&D capability that provide our injectables are concerned one of the area, where you're expanding as inhalation is my birthday, but also are there is the implant products and more drug device combination products.
As our COO.
Complex products reached required device and formulation different capabilities, we have some but.
Year over year Interestingly.
More going forward give us added they are ready high barriers to entry areas.
Yes.
A question on the double low double digit Gary yes. It is for now its a norm for the base business, we don't expect any changes.
Okay, great. Thank you.
Thank you. Thank you.
Our next question comes from Chris Schott of Jpmorgan, Chris Your line is now open.
Great. Thanks, so much for the questions. Just a couple from me I guess first on the <unk> results I think you said you're targeting.
<unk> million dollars of EBITDA.
Let me understand the dynamics there a bit as it seems like that is a step down from recent performance. So is that just kind of expense timing issue or something else, we should be keeping in mind with the one key number.
And then the second one to me was maybe a broader biosimilar kind of pipeline question can you just talk a bit about the approach you're taking as youre thinking about adding further asset so are.
Are you looking to stay kind of hospital focus of the portfolio would you look more broadly are there any therapeutic areas that are particularly attractive to you just a bit more color.
When you envision kind of extending this out what kind of criteria are you looking at I guess as you think about the products you are targeting thanks, so much.
Acreage is <unk> good morning, I'll take the first question.
Yes, so just a couple of things so.
You said, if you look at our quarterly performance of the last three years.
Companies not on autopilot right. So there just happens to be a policy on the DFW EBIT quarter. So.
So if we look at it more in terms of kind of a full year number.
So thats number one number two is and as we look at Q1.
<unk> not exactly how we're planning it for in regards to our 2020 towards internal budget and what this accounts for is number one is the kind of a substantial amount of investments that we're making to the business, which we're not going to sacrifice right. So we're delivering growth in 2022, but also position the company for sustainable.
So we're not going to sacrifice.
The required investments so we kept it front loaded of the investments and then you have the product launch it should be incremental revenue in the backend of the year. So.
That's a key driver number one number two is Q1, you always have some seasonality.
To be one of our lower quarters.
Just between Q4 and Q1, some seasonality and the number of <unk> in any given quarter, primarily Q1, we'll just give it a little bit more fixed overhead less overhead absorption.
Between the two.
Timing the way, we run our manufacturing lines and some of the lesser impact of cope with the changes in our workforce. So you put all these three things together that's why.
We're targeting about a $100 million and that we see a substantial amount of ramp up from there for the rest of the year.
With that let me just turn it over to Ginger, Yeah, Hi, Chris regarding your second question on Biosimilar pipeline and product selection.
Our approach is that we wanted to be first or second to market. That's our key criteria. We are not looking from the therapeutic perspective.
Looking broadly as a global player for Biosimilars and we are also looking from acute to chronic so we are taking our approach from the interchange ability non interchange ability product as you know.
You are aware there is a.
A lot more adoption and acceptance of biosimilar from the provider and payer perspective, So I think as the markets that are opening up and more we are looking at opportunistic approach on biosimilar.
Turning to development cost of development and again the stated goal is to be first and second.
And our targeted pipeline puts us in that position through her highest number of first to market Biosimilar. So I think it's a very holistic view, keeping IP and other nuance in mind, but not focused on pedigree to gave you.
Great. Thanks, so much.
Thank you next.
Our next question comes from Greg Fraser of Clarus Securities. Greg. Your line is now open.
Hey, good morning, and thanks for taking the questions a couple of follow ups on the guidance how much of the anticipated revenue growth for generics will depend on approvals that are pending and is based on <unk>. One of the launches that you expect this year.
And on your comment about gross margin being grocery online does that apply to both generics and specialty.
And then on Biosimilars clearly.
Expanding the pipeline is a priority for the next wave of Biosimilar launches over the next few years are there assets available that could be among the first one or two to get to the market or deals for biosimilars that will get to market later in the decade more likely thanks, so much.
Hey, Greg I'll take the first two so when we look at the growth of the generic business is I would say 50, 50, so 50% of the growth.
Is coming for brands that we launched late last year right. So those are growing at 50% of the growth should come from new product launches.
And I guess, we talked about it is we're never reliant on any one product whether or not that special pricing or anything else. So we think of it as it bundles of 20 to 30, new product launches and some of them are larger than others. So we're not overly reliant on Andy.
One, which kind of helps with a durability.
Predictability of our business that's number one in terms of gross margin.
At a high level I think we feel.
We feel great about the progress the company has had over the last few years right. So in.
In 2020, right. Our overall gross margin was about 42%. We finished last year at about 46% and we expect to stabilize this year at this level over the course of time industrial farther improve us.
We push more and more of the specialty business Biosimilars and complex generics. So we feel good about it the more specific question about this year I think generics I think theyre going to be relatively flat.
Or take a point I think Oscar is just going to be down a little bit just because of that mix of business, where that's coming from.
We should see sub specialty gross margin growth.
Just to get mix of products and Kathy Gregory unit growing fueling the growth that are higher margin.
<unk>.
And with that let me just kind of turn it over to Eric. Thank you Thomas.
Good morning, Greg.
Biosimilars next wave.
You probably know we have.
Our partnership with two partners.
Very deeply and a few others we are evaluating.
So.
As we said, it's going to be a mix and the mix will be more of we're looking at it.
Radius <unk> house to bring them in house.
And Neil becoming vertically integrated.
Along with continued opportunistic pipe.
Partnership the licensee so if I see the next.
Next 345 years, it will be pretty pretty much 75% in house products, 25%.
In license products that saw the next wave will come it will come from 2020.
445 launches and then it continues to build up.
Our internal plans that we have and.
When we have more information.
Really excited to disclose.
But neil.
Three growth.
Growth area for us.
It's part of our growth strategy as I mentioned, there were key growth specialty Biosimilars Injectables in international markets. This board will drive us out of the <unk>.
Melting ice cube business retail genetics, which by the way that we do really well there as well.
Thank you.
Thank you our final question for today comes from Elliot Wilbur of Raymond James.
Your line is now open.
Thanks.
Maybe just two high level questions sure going back to your commentary earlier with respect to the biopharma environment, presenting or potentially presenting some unique opportunities in terms of funding assets or acquiring companies arent can be raised capital one source of potential.
New assets or <unk>.
Revenue of the other of course being the more traditional generic market I mean the.
That asset market looks to be getting a little bit more momentum a lot more properties coming to market that we've seen I think in some time and probably going to see more of those not traditionally been your focus but just wondering how you're sort of viewing the ongoing dynamics there in terms of larger companies continuing to scale back.
Up larger properties for sale.
Are you thinking about potentially advancing some of your ambition that some of these areas injectables and some of the more complex dosage forms.
An immediate acquisition that might give you assets that could go.
Could it be in the company's pipeline already or shortly.
On the radar screen, just given their availability and pricing and then I have a follow up for <unk>, but maybe ill ask you to respond to that.
Okay.
Thank you Andrea.
So that is what I mentioned is the biotech companies as so many.
And.
Some of them could be injectable companies as well with the platform technology. So we're looking at all of them right.
We would like to do a deal there.
The retail genetics is going to be very tough for us because we do have 350 approved products 140, <unk> pipeline 110 pending at FDA. The FTC divestiture process would not allow us to to go through a successful transaction.
I know with Sandoz out.
The.
Private equity being active.
A few other assets category.
So it is gone. So we're excited we do need consolidation in generics just unsustainable how do we blame that that's entirely different.
Again, rich, we do not know exactly when that gets played out.
But.
Let's put it this way at this point, it's interesting that it is moving in that.
That.
Side, because there is a sustainability for many players on the gx retailer side.
And if they don't consolidate they won't be able to.
To compete well.
But we stay really excited about the biotech and injectable site to look at all the tuck in opportunities and bolster our work obviously the vertical integration portola.
Biosimilars capabilities.
Okay. Thanks, and then just one last question for Sanjay just thinking about the competitive environment and the overall injectable space.
That market still remains much more concentrated obviously than most areas of the.
Generic market and.
I guess, we've seen sort of the larger entrenched players just seem to sort of concede shares to some of the.
Upstart.
And still seems to have sort of protected new product launch dynamics in margins, but if you look at the.
Competitive environment at least in terms of the companies who want to get into the space are certainly a lot of companies out there with a lot of it.
And in our filings so.
Obviously, any new approvals or incremental revenue for you, but just how do you think about this and chevron.
Big picture perspective in terms of all.
All of these new entrants looking to get in this space, how does that impact sort of new launch contribution.
Turn on investment and margins or do you think we're going to see just kind of continuation of what we have for the past couple of years. We're just certain large incumbents just kind of continue to back away from the market. So you don't really show any change in any of those key dynamics. Thanks.
Yeah, Great question. So first of all yes, there is capacity and Thats may be new capacity coming in the market for injectable, but always if you see historically still days on an average 100 plus product in short. It is so I think the key to success in the Injectables space is not just the accrual but consistent.
Quality supply and that's what and mitigates differentiator because we have one of the best quality track record.
And Thats, what we are focused also we are doing redundancy in our supply chain.
And trying to be a consistent long term suppliers. So thats over one key differentiator second we have so much further diversification in our pipeline as we have a long acting injectable injectables. We have these large but antral bagged large volume bags, we have the PFS, we have a drug device combinations, we have the <unk>.
<unk> products, so plus we have a separate site part of our on core product. So we are well positioned and fluctuating truck sector is also pretty new brand new so we are so well positioned to kind of cater multiple areas of growth and solid acquisition. We have the front then commit.
Commercial team also where we are looking at ready unique reach we already hedged them, but we are bolstering our <unk> pipeline and injected, but where we are bringing unmet through the hospital unmet needs through the hospital. So I think looking at our broader pipeline, what we have invested in our people in R&D infrastructure and now manufacturing in prestige.
We are ready uniquely position to be.
Consistent supplier and also being high end value products, the combination of that definitely where margin expansion then.
Typical products.
Yes.
Thank you we have no further questions for today, so I'll hand back to <unk> Patel for any closing remarks.
Well. Thank you everyone for joining today have a great day. Thank you everyone.
Thanks, everyone.
Thank you for joining you may now disconnect.