Q1 2022 Organon & Co Earnings Call
Terrible GAAP measures is included in the press release and conference call presentation, I would now like to turn the call over to our CEO Kevin Ali.
Good morning, everyone and thank you John welcome to today's call, where we will talk about our first quarter 2022 results for the first quarter of 2022 revenue came in at $1 6 billion up 8% at constant currency and adjusted EBITDA was 647 million.
<unk>.
Representing a 41 three adjusted EBITA margin.
We had a strong first quarter the year is off to a great start.
And we are reaffirming the full year guidance ranges, we provided back in February .
Now since our launch almost a year ago, all three of our franchises women's health Biosimilars and established brands had been delivering on their objectives, each playing their important role in creating a sustainable company driving forward, our vision of improving the health of women.
Let's start with fertility and Biosimilars two of our growth pillars. They continued to grow double digits in the quarter and we expect both to deliver double digit performance for the full year. We're also very confident in the demand trends, we are seeing for nexplanon that support our view that for the full year 2022 <unk>.
<unk> will perform at least as strongly as the 12% growth at constant currency that we saw in 2021.
As we've said in prior calls some of our products, especially in women's health and Biosimilars are subject to the buying patterns of our institutional customers and will vary quarter to quarter. This was evidenced in the first quarter with nexplanon in the U S. We had a price increase go into effect in December 2021.
And as you May recall, we had a very strong Q4 of last year and some volume was pulled forward ahead of that price increase.
But demand exiting the first quarter was very strong in Nexplanon is off to a healthy start in the second quarter and on track to deliver our expected full year performance.
More of an on us continuing to bring renewed focus to next phenomenon. This includes our digital marketing efforts aimed at raising awareness among consumers and motivating conversations with health care providers, all of which are gaining traction and resulting in increased product demand. Other initiatives include unique social media project.
And the recent ability to have a telehealth conversations where women can connect with an independent health care provider to discuss nexplanon and other contraception options.
We also continue to evolve our clinical training program offering in the first quarter. We trained 6700, new health care professionals to perform the one minute insertion in two minute removal next phenomenon. This is more than triple the number trade in the first quarter of last year and well ahead of our pre pandemic activity. We're also very.
We're encouraged about net loan growth outside of the U S.
Next one on grew over 30% ex FX outside the U S driven by performance in Latin America, which benefited from tender phasing, but also increased demand. We are seeing very strong demand in important markets like Brazil, which had a record month in March of this year.
<unk>, our discussion on women's health fertility, both in China, and the US two very important markets grew double digits in the quarter with women waiting until later in life to have children. They use of assisted reproductive technologies like in vitro fertilization or growing about 5% to 10% annually and is a large market.
Impacting an estimated 190 million people. It is also an industry with significant brand loyalty our products polished them or the lutron and along there are well established and foundational to the patient friendly gnrh antagonist treatment protocol, which requires fewer injections and his favorite in conjunction with egg and embryo free.
<unk>.
Now, let's turn to Biosimilars another growth engine for the company with about half of our Biosimilar business outside of the U S and subject to tenders, we will see growth rates vary quarter to quarter, but we expect biosimilars to continue to deliver double digit performance on an annualized basis.
In the U S. Our two offerings already brand flexes, our infliximab Biosimilar and <unk>, our <unk> Biosimilar Infliximab market continues to grow every year and then flex. This has benefited from that tailwind with sales still growing even five years after launch.
<unk> is in that market has some of the highest adoption rates about 70% among biosimilars and the uptake of <unk> in the U S continues to show growth since its launch in 2020.
We remain very well positioned as a commercial collaborator with Samsung and we are particularly encouraged by the planned U S launch of our Humira Biosimilar in mid 2023 for which we will be undertaking and interchange ability study, we remain committed to pursuing the sizeable biosimilar opportunity presented by an estimated 100 billion.
Plus a blockbuster biologics going off patent over the next decade, we will evaluate these pipeline opportunities with Samsung as well as other biosimilar developers equal.
Equally important to our growth pillars is the stabilization that we are seeing in our established brands business. This is a basket of 49 important medicines with significant brand loyalty covering multiple therapeutic areas globally.
The potential for this sizable part of organized business to stabilize was evident to us well before the spin and that's what we're seeing now.
CLO risk in this portfolio is now behind US in addition by maximizing commercial and lifecycle management opportunities often at a country level. We believe we can manage this business at a sustained very low single digit erosion rate over the intermediate term, Matt will walk you through some of the favorable one time items that.
Tribute to the double digit growth with established brands in the first quarter.
The need the one time favorability the underlying business performed well and in light of the outperformance in the first quarter. We expect established brands to deliver close to flat performance for the full year 2022 on a constant currency basis.
Critical to our success and established brands is our approach to managing our business in China. Since 2017, we've been focusing our growth strategies on the retail channel, which has been growing double digits and now represents about half of our established brands business in China. There's also strong demand for our products in the hospital channel for product for <unk>.
Product not yet subject to volume based procurement and both products have been growing double digits as well China represents a very important market for us and we're well positioned there with a solid retail strategy and good revenue diversification.
Overall, there was very solid operating performance from the franchises in the quarter and I'd like to now provide an update on our external growth initiatives.
And with our stated commitment to deliver health care interventions that address unmet and under met needs in women's health. We continue to be active on the business development front, expanding our women's health portfolio beyond contraception and fertility.
Today, we have been active in clinical stage assets like our licensing of the investigational <unk> for preterm labor and our collaboration with our collaboration partner of fever, and the acquisition of <unk> with assets in development for endometriosis and Pcos. This is balanced against our new commercial stage products like data for Ppas.
Marvin on <unk> and most recently, our global licensing agreement with <unk> Bioscience.
Now bacterial vaginosis is the most common cause of vaginitis worldwide. It is estimated to affect 'twenty 1 million women in the U S and can have disruptive symptoms and potentially pose serious health risks today approximately half of the women treated for bacterial vaginosis experienced multiple episodes of BV within 12 months of treatment.
Evidence of our commitment to the unmet and under that needs of women. We are licensing Dara Zasyadko, which is an FDA approved medication for the treatment of bacterial vaginosis and women 12 years of age and older and a phase III clinical trial, Zasyadko demonstrated improved clinical cure rates as compared to placebo.
One time dose we're looking forward to potential Q4 launch of this product in the U S.
The opportunity with Dara is emblematic of our approach to business development. Our goal is to assemble a suite of options that advanced women's health with assets that address unmet needs, including those that may have been overlooked because of patient populations or therapeutic area. Further we're looking to build a portfolio of assets in various phases of development.
From clinical stage with blockbuster potential to already commercialized products. Overall 2022 is off to a very solid start and at this point I'd like to turn it over to Matt to review the quarter in more detail. Thank.
Thank you Kevin as I've done in previous quarters, I'll remind you that our results prior to spin off are presented on the carve out basis of accounting, which is a GAAP convention is not intended to present results as if organon worth Standalone company.
So I want to be clear as we discuss our results that because our spin date was June 2nd it won't be until the third quarter of 2022 that we can draw a true apples to apples comparisons to prior year results were all P&L line items represent post spin standalone financials for Oregon.
Till that time revenue is where we will have the best comparability to prior year periods, and Thats, where we will start the financial discussion.
Turning to slide seven revenue for the third quarter was $1 $6 billion.
Up 4% as reported and up 8% at constant currency exchange rates when compared to the first quarter of last year.
And this graphic we break out the change in revenue according to key drivers and I'll highlight some of the more significant impacts.
The impact of loss of exclusivity or low during the first quarter was approximately $30 million and it's primarily related to new <unk> law in the United States, We didn't have any low impact and established brands this quarter.
The most significant luis facing the portfolio washed out in 2021, we expect only modest new low exposure going forward.
Since December of 2020, we have been expecting a generic entrant in the U S for Dulera that did not happen in 2021 and has not happened thus far in 2022 or.
Our current expectation is that any potential low for <unk> should it happen. This year will have a limited impact on 2022 results and that view is currently incorporated into our full year guidance.
Continuing to read across the waterfall chart in the first quarter of last year the impacts from volume based procurement in China was significant due to the December 2020 implementation of the third round of GBP netback.
That back then that was the largest round to that point and included four of organized products singular pediatrics pro scar Propecia and our Cox here.
That compares with the first quarter of this year when there was no new low impact for DVT an organized products.
Moving to volume now, which grew significantly in the first quarter. The increase in volume came from our growth pillars fertility biosimilars nexplanon outside the U S. This quarter and China retail, but also from volume growth in our base business and established brands, particularly demand in China for non VP brand.
As well as for products in Europe , and the La Metro region.
As Kevin mentioned some of the favorability and established brands. This quarter was due to onetime items. If we think about the 15% ex FX revenue growth in the quarter for established brands, 18% of that was volume growth offset by 3% pricing pressure is in that 18% volume growth. It was about even.
Split between one time items and underlying growth in the base business.
Given the product and geographic diversity in the established brands franchise taken alone none of the onetime items would be needle moving but just to give you. An example of the kinds of things that we're talking about the largest among them was a temporary supply issue currently impacting several competitors in the Japanese market.
That drove outperformance in Japan, this quarter, which compares to a weaker performance in Japan in the first quarter of last year when demand was lower due to the expectation that the government was preparing to take action to lower prices.
The supply other bucket, primarily represent supply sales to Merck and other third parties, which consist of lower margin sales of pharmaceutical products under contract manufacturing arrangements.
For the quarter supply sales were down about $30 million year over year, and that's consistent with our view that we expect volume was under these arrangements to decline.
Finally, foreign exchange translation represented about 400 basis points of headwind for this quarter, which is not surprising given the fluctuations in global currency markets and also understanding that approximately 80% of our revenues were derived outside the United States during the first quarter.
Briefly on slide eight this is where we show geographic distribution of revenue.
All of our ex U S regions were nicely ahead of prior year at constant currency and following up on my earlier comment here you can see the favor ability we had in Japan showing up in the <unk> region. The good growth in Nexplanon in an established brand in Latin America, and the solid performance in China in both established brands and for <unk>.
<unk>.
So now let's take a look at performance by franchise, we will start with women's health on slide nine.
Our women's health business was down 5% as reported and 3% at constant currency in the first quarter versus prior year, driven by a 5% constant currency decline in Nexplanon and a 6% decline in nuvaring.
Those declines were partially offset by continued strength in fertility led by <unk>, which grew 20% ex FX in the quarter.
As Kevin mentioned and as we've explained in prior quarters next finance performance can vary quarter to quarter based on customer buying patterns and tenders, but we saw good trends exiting the first quarter second quarter is off to a solid start we continue to expect nexplanon to deliver double digit revenue growth on a constant currency basis.
For the full year of 2022.
Turning to Biosimilars on slide 10.
Biosimilars grew 22% as reported and 25% ex FX, we have five products in the portfolio three in immunology and two in oncology.
Ren Flex us an entre is on our two largest offerings and both are offered in the U S.
Globally, <unk> grew 21% ex FX in the quarter driven by continued strong performance in the U S. <unk> was up 5% driven by continued uptake in the U S. Since its launch in 2020.
July of 2020, and partially offset by competitive pressures in Europe .
Turning to established brands now on slide 11 revenue for established brands was up 10% as reported and 15% ex FX in the first quarter and while we did have volume growth in the base business. This should be taken in the context of first there was no <unk> impact this quarter.
There was no low and established brands this quarter and third and final. If you look at slide five the Kevin showed earlier, our established brands revenue in the first quarter of 2021 shows the dip, which made Q1 of last year, a favorable comparison point.
Some of the prior year dynamic was related to buying patterns of consumers.
So as good as the double digit year on year performance looks.
The more important comparison point really is have it established brands do.
Versus our expectations embedded in the guidance, we provided in February and the answer there is quite well and nicely ahead of our expectations established brands getting out of the gate. This well in the first quarter is what underpins Kevin's comment that we now believe revenue growth in this franchise can get close to flat for 2022 accounts.
And currency, which is better than our estimated longer term trajectory of low single digit erosion.
Now turning to our income statement on slide 12.
Our GAAP income statement for the first quarter is available in our earnings release and I encourage investors to look at that important information here.
Here on slide 12, we will be counting amortization and onetime items related to the spin off.
Making these straightforward adjustment.
In the first quarter of 2022 non-GAAP adjusted gross profit was $1 billion, representing gross margin of 66, 5% compared with 62, 2% in the first quarter of.
2021, and again I'll remind you that at this point in the company's history, it's hard to draw meaningful comparisons because there were pre spin allocated costs in the first quarter of 2021, which were not incurred this year.
<unk> and operating lines, though we can point to reduce supply sales, which are lower margin compared with product sales as a driver of the year over year improvement in gross margin.
Adjusted EBIT margins were 41, 3% in the first quarter and benefited from the higher gross margin.
As well as operating expenses that due to timing were at their lowest expected point in this year.
Speak more about adjusted margins in a moment when we discuss the outlook for the full year.
As we look at debt capitalization and leverage on slide 13 as of March 31, we have bank debt of $9 $1 billion netted against cash and cash equivalents of $694 million.
Using an LTM EBIT number that does not adjust for acquired in process R&D expense per the SEC's recent guidance. Our net leverage ratio was approximately three six times as of March 31.
Our capital allocation priorities remain consistent with capacity indications. Our first priority of course is servicing the dividend, which we're targeting at 20% of free cash flow before onetime items, and which we believe strikes an appropriate balance between reinvesting for growth and delivering near term value for shareholders or.
Our second priority is organic growth, which would include lifecycle management opportunities for existing products within our portfolio supported by capital deployed in our manufacturing plants.
On the latter we expect to see annual capital expenditures in the range of 3% to 4% of revenue on an ongoing basis, excluding separation costs.
Now because these first two priorities are not big absorbers of capital at least significant self generated cash flow for our third capital allocation priority, which I would really say is a tie between execution of external growth plans to develop a new pipeline of new product opportunities, we will balance that against discretionary debt.
<unk> just like we did in the fourth quarter of last year.
We're committed to maintaining our double BBA to parent rating and we will continue to make progress towards a net debt to adjusted EBITDA ratio sustained below three five times once again balancing debt reduction with capital deployed for externally source growth initiatives.
Turning now to guidance on slide 14.
Here, we bridge, our expected revenue change year on year.
Biggest difference on this slide from the version that we showed you in February is the FX translation impact, which has gone from an approximate $100 million to $200 million.
Were a headwind of two to 300 basis points to an approximate $200 million to $300 million impact or 300 to 475 basis point headwind based on where spot rates are today.
Operationally at constant currency the year is unfolding, mostly aligned with our expectation no significant net changes to the business and most of the drivers on this page are identical or even slightly better than our original 2022 guidance.
With the data that we have at present, we continue to see 2022 revenue within the original guidance range, although with exchange rates don't improve from where they are today, we would likely be at the lower end of our six one to $6 $4 billion revenue range.
For low we still expect.
An approximate impact of $100 million as we communicated last quarter coming from Nuvaring and a possible generic competitor for <unk> in the U S.
As both Kevin and I have reiterated today 2021 was the last year for which we expected significant low revenue impact within our product portfolio.
We continue to manage Pvp in China, and based on our assumption that GBP round seven and eight will be implemented later this year, we think that DVT will be an approximate $100 million impact just also the same message we communicated last quarter.
We expect about $200 million of price erosion in 2022, and that's in line with the historical pricing trends for the global markets that organized has been selling into for many years.
And for volume, we're tracking to $600 million to $700 million of growth for the full year. This important component of our guidance remains unchanged and it is supported by our first quarter actual performance the.
The majority of that volume increase is expected to come from multiple growth pillars, Nexplanon biosimilars fertility, China retail and to a lesser extent recent business development activity, we do expect volume growth in our base business and established brands as well once again supported by our first quarter actual results.
And by the way, we estimate that less than 20% of the volume growth that we're projecting can be attributed to COVID-19 recovery.
Turning to other guidance metrics on slide 15, all of which we are affirming today with.
With regard to adjusted EBIT margins looking forward in 2022, the margin favorability, we saw in the first quarter will be absorbed and balanced downward over the remaining.
And in quarters of 2022 with expected increases in operating expenses related to execution of business development initiatives that will drive future revenue growth as well as increased supply chain costs, driven by higher energy costs as well as inflation.
We expect the impact of increased supply chain cost inflation will impact all operating expense line item, although mainly the Cogs line.
Incremental operating expense for completed business development deals will show up primarily in R&D. <unk> is an example of that and SG&A were an examples would be launch costs for that shadow and promotional spending around the re acquisition of Marvelon Mercil on marketing rights and certain Asian countries.
As operating expenses build throughout the year the fourth quarter is expected to be the lowest point for adjusted EBITDA margins.
While our range for the full year is being maintained at <unk>, 34% to 36% just as I discussed for revenue if exchange rates remain where they currently are we need to be looking at the low end of that range as well for the full year 2022.
Important to our guidance practices going forward and along with other companies in our sector. Beginning in 2022 Organon will no longer exclude expenses for in process R&D from our non-GAAP results. These changes are being made to align with views expressed by the SEC.
There were no such expenses in the first quarter of this year or last year, the third and fourth quarters of last year along of course with the full year 2021 have been recast to reflect these changes in full detail of that recasting can be found in table seven and eight of our press release as well as in the appendix slides to this earnings presentation.
Yeah.
We're not incorporating an estimate of future in process R&D into our guidance for any business development transactions not yet executed our criteria for inclusion will be to have a signed contract.
Business development is a strategic priority for us as future business development activity that involves upfront and milestone payments would impact our non-GAAP results and will also impact any guidance we might provide.
And while we will work to provide details on those relevant payments when we announced the transaction, we do not plan to update our guidance between quarters based solely on those associated payments alone.
Wrapping up the financial discussion, we're off to a solid start to the year operationally the business is performing well with strong demand trends in nexplanon structural tailwind in fertility double digit growth in biosimilars and the stabilization of the established brands business that we have been signaling for some time.
At this point I will turn the call back to the operator for questions.
Thanks.
As a reminder, at this conference.
Can you just ask the star one on your telephone.
Gary a question for Tom.
I want to ask a question.
One on your telephone.
Our first question comes from the line of Joe.
Turbine.
Your line is open.
Hey, guys. Thanks for taking my questions.
Just on Biosimilar Humira can you confirm if you have a target action date, yet for the high concentration.
Version of the product and then what do you hope to benefit from an interchange ability study I mean in terms of timing, presumably youre not going to be first and by the time you have a big chunk of the volume will be in buyout biosimilars. So.
Just curious sort of what you see as the value of that running that study.
Yes, Jason so Kevin So good question. So in regards to head Lima, our Humira Biosimilar, we are planning to launch in July of next year. So it's rapidly approaching we've got exciting plans for head Lima and <unk>.
In regards to and we think it is going to be a very important contributor to our future growth, but in regards to.
Interchange ability.
And the importance of interchange ability.
Clearly I think thats one of the many variables that that various pbms are looking at.
In terms of the fact that those variables being interchange ability I believe real world evidence do you have.
Does this product as asset been launch in other markets and how they're doing and what the issue was the safety and regulatory issues around it.
Okay.
Innovative applicator high concentration.
High concentration dose is being actually being being launched and we have all of that.
Nobody is going to be coming to the market Jason at the time of launch or at the time of low of Humira with a perfect profile of what Youre looking for some may have interchange ability.
Hi, constant high citrate free high citrate free concentration.
But others may not have real world evidence may not have the type of backbone that we have with with Samsung in terms of their production capabilities and excellence and being able to manufacture. So we feel very good about the fact that interchange ability will be one of many variables that pbms are looking for and by the way probably most important the people are not considering.
In terms of the Biosimilar segment as your relationships with the Pbms.
Do you have long term relationships is there a lot of trust built up there are there are there long history of being able to work with it and develop credibility with these with these folks and we do back to the fact that many of these people that we have in the Biosimilar group in the U S have been working on these assets since before.
The days of the spin for almost a decade now and have really good relationships with payers in order to be able to get formulary access which is a key variable in terms of how well you do in the business.
Okay.
Our next question comes from the line of Terence from Morgan Stanley . Your line is open.
Great. Thanks, so much maybe two questions for me one follow up on Lima.
I'm, assuming you've already had some preliminary discussions regarding contracting in 2023. So just wondering if you're confident you'll be able to secure a decent piece of the volume.
Half of the year as I think some investors are assuming that biosimilars now really won't be able to participate until 2024 and in a meaningful way. So that's kind of the first question and then as you think about the rest of the year for China, and maybe Matt just remind us what's embedded in your guidance for the outlook there.
<unk> given some of the rolling Lockdowns on the Covid side, just help us think about any impact or is that already baked into your guidance. Thank you.
Yes, so I'll start with the first part of your question regards to had Lima as a follow on.
We believe 2023 is going to be very busy theres no doubt theres quite a few assets coming to the market quite a few players will be essentially second to market, we do believe that.
The way that Pbms are going to approach. This business is not going to be a full wholesale like a small molecule segment of a shift, but rather there's going to be probably I would guess two to three it.
It depends on it depends on the PVM two to three.
Biosimilars on any given formulary, probably obviously the originator will be there as well as a few others and so I think the others being all the variables that I talked about the citrate free high concentration does the ultimate interchangeable indication coming down the line the real world evidence the unique.
Cater and so on and so forth and so I do believe that probably.
Pbms currently as we speak are working on the 2023 contracts and so there will be some volume, but clearly point to start to increase and then in 2024 and beyond Youll see much more of a penetration, but ultimately getting on formulary is going to be critical in the near term as we start to come online and we're very happy that we've got.
All of <unk> excellent asset had Lima, we've got good relationships with the payers and various pbms across the country and we're ready to go.
I'll hand, it over to Matt to talk about the your question regarding second half a business in China.
So for China, we did not see much of an impact in our business related to Covid Lockdowns, we have factored those into our forecast.
For the rest of the year.
An impact in Q2.
Recovery in the latter half of the of the year. So we feel like we've incorporated.
Appropriate consideration for Covid Lockdowns.
In China that can be absorbed within the affirmation of guidance and we see really on a constant currency basis, China will grow this year.
Mhm.
Our next question comes from the line of Omega pharma.
From Evercore ISI your line is open.
Hi, This is erik calling in for Jeff.
A quick question on the next one on R&D.
Our recruitment drove into the finding of the study has COVID-19 slowdown any timelines are.
And separately.
On planning any trials in other indications like dysmenorrhea arm in Asia.
Hi, Eric Thanks for the question with regards to the enrollment for the five year indication.
Generally on track, we saw about a month's slowdown based on the Covid impact that we're not concerned that we're not going to bring that then on the previously shared timeline and with regards to additional indications. The team is taking a look at the additional indications right now and formulating our development strategy around our.
<unk>.
Our key asset of next month.
Got it.
And just a last one on biosimilar growth.
You mentioned drivers before in Australia, and Brazil.
More detail on what kind of trends youre seeing there maybe on uptake or upcoming tender offers.
Yes, so Eric in regards to.
So there's two parts of that I look at in that question first of all as I mentioned U S. Obviously is going to be the key market. The key market for our had Lima of our Humira biosimilar.
You start to look at overall biosimilar business footprint across the world but.
Part of that is the real world evidence and as you said, we have Canada, we have Australia as two countries that have been doing very well with ultimately and growing double digit strong double digit with both with those products.
And the uptake has been really nicely.
Cross all 20.
<unk> 20 of late 2021, and 2022, we see great movement in those two countries now having said that back to the real world evidence aspect of it Biogen, which is the partner Samsung <unk> had Lima in Europe has had long term experience with had Lima and Europe .
Everything is looking really well in terms of gaining a sense of confidence.
<unk> in the U S. For this product that we do have quite a bit of experience with this product.
Got it thank you.
Our next question comes from the line of Craig Huber.
Thomas from Goldman Sachs. Your line is open.
Thank you good morning, I wanted to ask two questions relating to the women's health business, particularly to the contraception focus area can you comment about the market in general what Youre seeing in terms of U S growth, perhaps the share of the market in general and any color as well on contraception broadly.
About gaining further approvals outside the U S. And then within that specific to Nexplanon can you talk about some of the metrics. Further I think you provided about the U S. International mix has been shifting from $75 25 to more of a two thirds, how do you see that trending and then maybe more.
Quantification further that you've also previously provided on what the engagement has been like.
With your digital marketing and direct to consumer thank you.
Hi, Chris Thanks for the question, let me address that first part in terms of the large movement in terms of growth larks had been largely been growing worldwide as well as in the U S and I think that the.
A shift a lot of times from the daily pill business segment into large both in terms of long acting reversible contraceptive by the way as well as short acting reversible contraceptive as well like for example, nuvaring and others.
And in regards to how is it going with Nexplanon as I mentioned, we had a fantastic Q4 of last year was our all time high there was a bit of pull forward because we had a price increase in the end of last year, there's a bit of pulling pulling forward in terms of the overall business, but and so thats why we saw a relatively slow.
No.
Slow January but when I start to look at the February and March and April data. It clearly shows that there is sequential growth month over month strong signals in terms of sales from distributors to physicians as we a lot of the business is buy and bill.
In clinics that is clearly showing a very strong.
Kind of receptivity to some of them.
Hi in terms of what we've been able to do.
Versus previous previous the previous two years in terms of the clinical training programs.
In terms of all the vacations that we're doing we are seeing tremendous.
Improvement offerings.
Dot com, our Internet site. So we have a physician physician locator exceeded benchmark almost 32000 searches out of 58000 total visitors in the first in the first quarter as I mentioned in my initial statement. So we started a new telehealth capability at <unk> Dot com and in April 2022.
To enable women to immediately talk to a healthcare professional about next one on her and her contraception offer. So we're doing quite a bit in terms of tactically. When you talk about rep visits being back to pre pandemic level. When you talk about clinical training program certification on the one minute insertion in tumor removal being really at all time highs since the <unk>.
Pre pandemic phase when you talk about our digital digital strategies in regards to the things that we're doing on <unk> dot com as well as our social media campaigns, we have really really great and I'm very confident that for the year. We will see the same type of double digit growth as we saw in last year in 2021.
And to follow on you had commented previously that there was about a 20% decline in wellness business as a proxy perhaps for patients returning to.
The engagement with practitioners on the wellness front that has bearing for <unk> any update on what youre seeing trends there.
Yes.
Great point, Chris Let me say this that.
That number continues to stay.
Kind of lingering at around 20% in terms of a reduction of a women seeking health health visits health checks, we're hoping that that.
Does better over time that people are able to move forward because remember, though that theres been an increase in telemedicine. So telemedicine increase and I think that would probably taking the place of some of these some.
Some of these women who are not going to seek help directly in terms of their health checks.
And we think that that kind of stabilizing to the point as the fact that the pandemic has kind of changed the market dynamics are better and I think that there are some women, especially who are going to getting new new forms of health care that is non traditional as opposed to what they used to do before in terms of going to the office for those health.
<unk> health visits, but having said that Nexplanon continues to do I think extremely well because of all the activities that we do there. So for example for the whole market you might see a 20% reduction but for next fall, we see double digit growth because we have all time highs in a number of areas because of the fact that the promise.
Oregon was really about putting emphasis.
Port Resourcing senior management attention into an excellent one and we're starting to see some of the dividends pay off in that in the early phases.
I appreciate the commentary thank you.
Talk to you Chris.
Our next question comes from the line of Steven answer line from Piper Sandler Your line is open.
Hey, Thanks, So just had a couple of questions.
First.
We wanted to get your overall thoughts on.
Vertical integration in Biosimilars, obviously, yet shared economics.
Here in light of that.
Bill.
I wanted to just pick your brain on.
That model.
Thats vertically integrated versus what you are.
Trying to accomplish with.
We are a distribution model and how are you.
C.
I guess, the wisdom of what Youre doing in terms of your shared economic model and Biosimilars. So that's number one and then number two can you just remind us how youre thinking.
Longer term about the direction of the established brand portfolio ex U S. How you'd think about.
Sort of a natural rate of growth.
Again.
If you will in terms of price or.
How competitive dynamics come into play.
And what's a good way of thinking about where we're at.
And longer term.
That business. Thank you.
Thanks for the question David.
Thanks for the question David Let me, let me just answer to address the first question regards with regards to.
Around Biosimilars and doing a vertical play there we're very comfortable both in terms of our relationship with Samsung, which is going almost now almost a decade long.
In terms of the way there.
The way, we perceive are part of the overall business.
The business process going forward look I mean, our focus right now.
You don't know what really is going to happen to biosimilars in a decade from now.
Things could things could change in terms of the overall ERO.
Erosion of price being more aggressive and there are a number of variables out there. We do see this as a very strong opportunistic play at least for the next six to 10 years.
And beyond that we'll have to see so as a result of where we put our capital allocation, it's really better for us to really focus on our vision of better and healthier everyday for every woman, which is to grow our women's health portfolio, we see opportunities. There. We see we see kind of what I would call responsible valuations in the space and.
That's what we've done five deals we've done before even being a year old in the market. So we see biosimilars as a very important contributor to growth.
But we also see the opportunity of being very smart in terms of capital allocation and putting it where we see the long term viability of women's health as being a real strong growth player going over time.
Time now in regards to the second question of established brands, specifically X U S business look we saw a phenomenal quarter, but that was predicated on a number of one time events that were very positive in our favor.
I look at the long term view I've had a lot of experience with these products I've worked with these product for well over 25 years, I know them, well and I knew coming into this spin that with the right type of attention the right type of Resourcing. The right type of focus entrepreneurial focus country by country. Because there is no single country is doing.
What region that has the same level of opportunities. They all vary from one to the other that this business could go from a very strong erosion pattern almost double digit erosion to actually being flat and now over the last quarters or three quarters. We've proven that now given the fact that we've had strong double digit growth of istar.
Airbus brands, two thirds of our overall company in the first quarter that I want to temper that because of the fact that there was again, some very favorable onetime events, but we see some headwinds coming over in the next in the second half of the year that we expected we plan for things like volume based procurement round seven round eight things like for example pricing.
<unk>, our second biggest product.
Europe things like for example, our annual review that you get in Japan for some of these product. These are some of the pricing headwinds and we factored in but overall I am very very confident that this year, we will see.
Flat.
Business overall and potentially if things go our way it could be slightly better. So for the long term I would say it would be very very low single digit erosion, but for the short term I would say flat.
Yes.
Okay.
Alright, that's very helpful. Thank you.
Thanks, David.
<unk>.
Our next question comes from the line of Greg Fraser with Suntrust.
Your line is open.
Great. Thanks for taking the question I apologize if you covered this already but on established brands how much of that strong growth in Q1 was related to easy comps and the one time items that you called out versus fundamental drivers that could be more sustainable.
And then our next demand do you expect new patient share to be driven primarily by patients switch containing products or is there an opportunity to take share from ieds and I'm curious if in IEA something that might make sense for your portfolio. Thank you.
So for the first part of your question established brands for the first quarter we had.
About half and half really I would say half would be attributable to one time items and the other half is just underlying volume growth in the base business.
And in regards to the second question.
With regards to Nexplanon, and where ultimately where we're going to get our business for the future we're really focused.
A couple of things.
Unintended pregnancies for the last decade has been hovering around 50% worldwide just south of that in the U S and the high Forty's, that's clearly an unmet need that needs to be addressed and we do feel that for.
For example, the biggest opportunity we have is from women, who are not very happy with pill and ultimately the daily compliance issues that continue to lead to unintended pregnancy as being way way too high and that could be one area that is definitely going to be the key area of moving over but I don't think that we're going to be fighting against other large.
I do believe though the big the big opportunities because we've only got about 10% share worldwide in terms of value and a much lower number in terms of volume and so there's a huge runway for us and clearly up POC or pills are the number one preschool.
Prescribed product out there and Theres clearly a lot of dissatisfaction and a number of communities.
In terms of women really wanting to have something thats convenient much higher efficacy rate.
And so simple and easy to administer so I think thats really the way that we look at the future of Nexplanon.
Our next question comes from the line of Mike Webber.
From Cowen Your line is open.
Thank you for the question another arm had even if you don't mind are there any external circumstances that would inhibit organized from launching <unk> in 2023 for instance on the reasonably certain that other IP, maybe not contemplated by the contract blocks such a launch.
So Michael I don't see any issues right now I think we're late in the game right now and all of those issues have been worked out.
In regards to the IP challenges and all the things of that nature, So I don't see anything.
Right now in my view that would inhibit us from launching in July .
Of next year.
Great. Thank you.
There are no further questions at this time.
We will continue.
So I'd like to just some concluding remarks look in Oregon on short history as an independent company. We've made tremendous progress executing on our stated business objectives from the outset, we have known that the right level of investment and management focus would enable all three of our franchises too.
Reveal their true potential.
That is what we are now seeing a particular significance as a stabilization of our established brands.
I am delighted with our efforts to unlock the full potential of these brands and to deliver sustained significant cash flows to fund our vision of a better and healthier everyday for every woman.
Well on our way to building a suite of products that address important unmet medical needs in women's health and our ability to deliver on what we say.
And we remain focused on making a difference for women is what sets Oregon apart.
You for your time and attention today, and we do look forward to speaking with you throughout the quarter. Thank you very much.
This concludes today's conference call. Thank you everyone for participating you may now disconnect.
Yeah.
Yes.
Yes.
Yes.
Yeah.