Amneal Pharmaceuticals Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 1, 2024

There are 11 speakers on the call.

Operator

Good morning, and welcome to Amneal Pharmaceuticals' 4th Quarter and Full Year 2023 Earnings Call. I'll now turn the call over to Amneal's Head of Investor Relations, Tony D'Amneal.

Speaker 1

Good morning, and thank you for joining Amneal Pharmaceuticals' 4th quarter 2023 earnings call. Today, we issued a press release reporting Q4 and full year 2023 results. The earnings press release and presentation are available at canddeal.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions, are forward looking statements that are based solely on information that is now available to us. Please see the section entitled Cautionary Statements on forward looking statements in the earnings presentation and SEC filings for factors that may impact future performance.

Speaker 1

We also discuss non GAAP measures. Information on use of these measures in reconciliation to U. S. GAAP are in the earnings presentation. On the call today are Shiroj and Chintu Patel, Co Founders and Co CEOs Tasos Conidara, CFO our commercial leaders, Andy Boyer for Generics Joe Renda for Specialty Harshar Singh for Biosciences and Jason Daley, Chief Legal Officer.

Speaker 1

I will now hand the call over to Shiraz.

Speaker 2

Thank you, Tony. Good morning to everyone on the call. Amneal delivered solid financial performance in 2023 as revenues grew 8% and adjusted EBITDA grew 9%. We raised our guidance twice during the year and delivered on it, driven by strong execution and the robust performance across our diversified business. We expect our momentum will continue in 2024 and beyond.

Speaker 2

Amneal's core strengths lie in our broad based business platform and our team, both of which are dedicated to providing access to high quality, affordable, essential medicines. Since Chintu and I returned to the company in 2019, we have been implementing a thoughtful and deliberate strategy to transform Amneal into a leading global diversified pharmaceutical company. With a global aging population and ongoing supply challenges and shortages, our capabilities have never been more important and more in need. In our affordable medicines business, which is our generic segment, we have been building our leadership position since Amneal's inceptions. We have decades long reputation for industry leading innovation, quality and customer service levels.

Speaker 2

Our strategy focuses on expanding our portfolio and driving growth with complex high value products across retail, injectables and biosimilars. Our affordable medicines business has consistently grown each year since 2019 and we have launched more complex retail and injectable innovations in the United States than anyone else since then. In 2023, we set a new record number of 39 new retail and injectable products launched. In retail market, our commercial portfolio of over 230 medicines is complex and diversified with less price erosion and more stability. Overall, the U.

Speaker 2

S. Generics industry appears to have turned the corner after years of higher price erosion as many recognize the importance of the sector responsible for over 90% of U. S. Medicines. In injectables, we have an expanding portfolio, significant capacity and the capabilities needed to scale this business.

Speaker 2

We are helping address chronic shortages across hospitals and clinics and are providing ready to use injectables that reduce errors and improve the efficiency of care. The next wave of affordable medicines is biosimilars, which has an estimated $141,000,000,000 in branded products facing loss of exclusivity between 2023 2027. We successfully entered this new market with our 3 oncology biosimilars. Their performance exceeded our revenue expectations in 2023, driven by an exceptional commercial execution in that 1st year. In Q4, we also expanded our biosimilars portfolio by adding 2 more oncology molecules to our pipeline.

Speaker 2

Given the market growth and importance of biosimilars, this is a key area of strategic focus and investment for Amneal. We look to further build out biosimilar's pipeline over time. Internationally, we are expanding our reach. In India, are building a customized portfolio focused on key local needs. In other geographies, we are actively working with partners to register and commercialize Amneal products.

Speaker 2

In our specialty branded business, we continue to provide differentiated medicines. We are focused primarily on neurology and endocrinology with our key branded products. In Q4, we expanded with the addition of Ongentis, an adjunctive therapy for Parkinson's. Next, we are so excited about the potential approval and launch of IPX203 this year, which we believe meaningfully advances the standard care for all Parkinson's patients. In our healthcare distribution business, which we acquired in 2020, the business has about doubled in size in 4 years.

Speaker 2

We're launching new products across 3 channels: distribution, government and unit dose. In short, we're starting 2024 with remarkable momentum. We believe our durable, broad based top and bottom line growth profile is sustainable and accelerating. As Amnealians, we wake up every day thinking about what we can accomplish next. We have more shots on goal than ever before.

Speaker 2

This includes key medicines and new markets where success represents $100,000,000 or more in potential revenues each. Amneal is on a poor trajectory and we are so excited for what's ahead. I'll now hand it over to my younger brother, Chintu.

Speaker 3

Thank you. Good morning, everyone. Thank you, Chirag, and thank you to the Global Amneal family who work hard every day to help make healthy possible. As Chirag mentioned, we are executing well on our strategy to be an innovative global pharmaceuticals company capable of driving sustainable growth in the key areas of medicine. I will touch on how our core competencies in operations and R and D continue to drive our company's success.

Speaker 3

First, Amneal has one of the best service levels in the industry with quality at the center of everything we do. Our success is driven by our operational excellence, robust supply chain and great commercial team. We are driving operational efficiencies to lower cost and expand our margins. At Amneal, we have long been focused on global supply chain security and resilience as we work proactively to meet market needs given the dynamic and ever changing nature of our business. Over the last few years, we have invested substantial resources to triple our injectables capacity to scale our business and help address market shortages.

Speaker 3

As you know, the U. S. Pharmaceutical market is plagued by chronic drug shortages, including critical oncology therapies. There are several contributing factors, including market price being generally too low for some products to be produced and contract commitment being too short term in the retail market. As of February, the U.

Speaker 3

S. FDA listed 121 products in shortages, including 78 injectables. About 20 of our commercial and pipeline injectables products are on the U. S. FDA shortage list.

Speaker 3

We continue to work closely with the FDA to help alleviate drug shortages in the U. S. We also remain committed to maintaining our stellar quality track record. Since 2005, the U. S.

Speaker 3

FDA has conducted over 100 successful inspections with either no or only minor observations. Now all of our manufacturing locations are FDA approved for commercial products, including our inhalation plant in Ireland. As the standards of quality continue to increase, we continue to invest in quality and infrastructure. Our high quality global operations are at scale to support sustainable long term growth. 2nd, innovation is the lifeblood of any growing pharmaceuticals company, And that's certainly the case for Amneal.

Speaker 3

In 2023, we launched a record 39 new retail and injectables products. Looking forward, the pipeline is deep with 160 products pending approval or in development. We have 88 ANDS spending, of which 64% are non oral solids, primarily injectables, ophthalmics and inhalation products. Further, we have 72 pipeline products of which now 94% are non oral solids. Accordingly, we expect over 30 new launches in 2024.

Speaker 3

Also approximately 45% of pending ANDAs and over 60% of our pipeline are expected to be first to market, first to file or 505(2) products. As we shift towards complex innovations, we have also been very disciplined by doing more with less spend and have improved the efficiency of our R and D operations. This also allows us to allocate more investment towards external R and D over time. Our key area of R and D focus remains injectables. In 2023, we launched 14 new injectables, which sets up well for revenue acceleration in 2024 and beyond.

Speaker 3

We are increasingly focusing our R and D on oncology, ready to use bag and log acting injectables. We look to launch 2 to 3 high value 55B2 injectables each year going forward, starting with the upcoming launch of PAMRADI RTU in April. In addition, our filing for respiredone was recently accepted by the FDA. This MicroSphere product reflects our leading complex R and D and manufacturing capabilities. We have more products like these in the advanced stage of development.

Speaker 3

Outside injectables, another complex area we are focusing our R and D effort is inhalation. We are advancing a number of inhalation drug delivery devices, including metered dose inhalers and RASPMET products, which we believe will drive sustainable long term growth. The next key catalyst is naloxone nasal spray, which is an essential life saving drug. Our facility in Branchburg, New Jersey has been repurposed for making this product. Our goal date is soon and we are ready to go.

Speaker 3

This product will be available over the counter and to states and counties around the U. S. To help improve access to these critical overdose rescue therapies. Next, we are very excited about the future of biosimilars and pleased with the commercial success of our first three products. This is a key area of growth for us.

Speaker 3

And to build on that initial success, we added 2 more biosimilars to our pipeline in 2023, and we look to add 2 to 3 more to our pipeline in 2024. In international, we filed about 60 those years in emerging markets in 2023, and we plan to file 150 to 200 more in Europe and the rest of the world in 2024. In Specialty, we are continuously evolving our R and D effort to move up the value chain just like in generics. On IPX203, we have completed one additional study with very good results and made our complete response resubmission in early February. We look forward to launching IPX203 in Q3 pending FDA approval.

Speaker 3

We seek to provide access to IPX203 for the over 10,000,000 global Parkinson's patients and are pleased to recently sign licensing agreements to bring IPX203 to Europe, Canada and Latin America. Next, our DHE auto injector for migraine and cluster headache is set for Q1 2025 launch as site transfer to M and A manufacturing is underway now. We continue to look to add to our specialty pipeline, particularly in new key areas of neurology and endocrinology. As Chirag mentioned, our hard work continues in 2024 as we build on the success of 2023 to bring Amneal to new heights. As founders and CEOs, we are extremely passionate about our company's mission and the shared value we can create for all our stakeholders.

Speaker 3

I will now pass it over to Tasos.

Speaker 4

Thank you, Chintu, and good morning, everyone. As a reminder, the 4 pillars of value creation at 10.0 4 pillars in 2023 and excited about 2024 and beyond. Let me first start with diversification, where Amneal has made remarkable and expanding in new areas such as biosimilars. As a tangible result, our oral solid generics now account for 25 percent of total revenues compared to 53% in 2019. Also, our generics account for 61% of total revenue compared to 80% in 2019.

Speaker 4

We expect our diversification to grow over time, which bodes well for consistent financial performance. Let me now discuss our second and third pillars of value creation, where financial performance and cash generation was undoubtedly exceptional in 2023. All business units grew their respective businesses to deliver record levels of financial results and substantially exceeded every guidance metric we shared with you over the course of last year. Let me first start with our Q4 results, where we recorded strong revenue of 6 $17,000,000. Cinerics net revenue was 363,000,000 dollars down 9% due to year end timing of orders.

Speaker 4

Products launched in 2022, 2023 and biosimilars continue to perform very well and added $34,000,000 in Q4. Q4 Specialty net revenue of $104,000,000 grew 2%, driven by key brand products, while AvCare net revenues of $149,000,000 grew 38%, reflecting strong growth across all of their 3 customer channels. Q4 adjusted EBITDA of $142,000,000 compares to $154,000,000 in the prior year quarter, driven by investments in R and D and commercial to drive future growth. Adjusted EBITDA in Q4 was ahead of our average quarterly 2023 level as well as our expectations, which is why we exceeded our annual adjusted EBITDA guidance. Q4 EPS of $0.14 compares to $0.23 in the prior year quarter, mostly driven by higher interest costs.

Speaker 4

From an operating cash flow perspective, in the Q4 of 2023, we generated BRL136,000,000 compared to negative $23,000,000 in the prior year quarter. This strong growth was well ahead of our expectations and reflects both the strength of our underlying business as well as timing benefits related to collections of our accounts receivable. Let me now discuss our full year 2023 performance, where total net revenue grew to a record level of CAD 2,400,000,000, up CAD 181,000,000 or 8%. Generics net revenue of CAD 1,471,000,000 dollars grew 3%. Products launched in 2022, 2023 and biosimilars added $113,000,000 or 9% of growth.

Speaker 4

The remaining product portfolio continues to perform well due to the relevancy of our products, strong market demand and NEML's high quality supply chain. Specialty net revenue for the year was $390,000,000 and grew 4% driven by key branded products. AltCare net revenue for the year was $532,000,000 and grew 31%, driven by new product launches and strong commercial execution across all its 3 customer channels. Full year adjusted EBITDA was $558,000,000 and grew 9%, well ahead of our original 2023 guidance of $500,000,000 to $530,000,000 as well as the guidance we provided in November, which was between $440,000,000 $550,000,000 Our growth was driven by strong operating leverage, favorable R and D spend and growth in our commercial expenses. Full year 2023 adjusted EPS of $0.64 declined 6% as higher interest expense offset adjusted EBITDA growth.

Speaker 4

Nevertheless, our EPS performance again substantially exceeded all prior guidance we have provided. Operating cash flow in 2023 was $346,000,000 compared to $65,000,000 in 2022. Our 2023 performance was well ahead of our expectations and benefited from strong collections in December. It is worth noting that our 2023 operating cash flow of $346,000,000 also includes $86,000,000 in legal costs, mostly related to the settlement of the Oppana ER case. At the end of 2023, we only had one last remaining payment related to OPAN IER for approximately $52,000,000 which bodes well for future cash generation.

Speaker 4

Let me now turn to our 2024 guidance, where we expect another year of strong growth. On the top line, we expect total company net revenue of $2,550,000,000 to 2 $615,000,000,000 reflecting high single digit growth driven by robust growth in all of our 3 segments. First, in generics, we expect high single digit growth compared to 3% in 2023 due to 3 key dynamics. Number 1, biosimilars should more than double to over EUR 125,000,000 in 2024 compared to 66,000,000 in 2023. Our 3 oncology focused products continue to drive substantial value to both payers and patients.

Speaker 4

Number 2, new product launches, many of which have already been approved in launch should add over 100,000,000. Dollars In addition, we're optimistic on the potential FDA approval of naloxone, which could add over $30,000,000 in 2024. 3, as we always do, we expect the competitive nature of generics to persist and the strength of Amneal's R and D, superb quality and reliable supply chain to be competitive advantages. 2nd, on the specialty business, we expect low double digit growth compared to 4% in 2023, driven by our key branded products. And in addition, AgenTis in our Parkinson's franchise.

Speaker 4

We look forward to the potential approval of IPX203, but we have not included any revenues at this point as to ensure proper conservatism. Finally, on healthcare, we expect double digit top line growth, albeit some slowdown from the 31% growth in 2023, driven by continued broad based trend across all channels and a number of new launches. Moving down the P and L, we expect 2024 adjusted EBITDA of $580,000,000 to $620,000,000 reflecting continued high single digit growth and higher investments in R and D to drive the numerous projects in our pipeline. From an adjusted EPS perspective, we expect a range between $0.53 $0.63 driven by higher interest costs, partially offset by higher adjusted EBITDA. On the cash side, we expect operating cash flow excluding legal settlements between $260,000,000 $300,000,000 The strong cash generation reflects higher EBITDA, typical accounts receivable collection patterns and higher interest expense.

Speaker 4

From a capital expenditure perspective, we expect $60,000,000 to $70,000,000 a year. Finally, we continue to make solid progress on our 4th pillar of value creation, deleveraging. Net leverage has come down remarkably from 7.4 times in 2019 to 4.8 times at the end of 2023. 8 times at the end of 2023. For 2024, we expect to pay down between $100,000,000 $200,000,000 of gross debt and reduce net leverage closer to 4 times by the end of 2024, below 4x in 2025 and then below 3x soon thereafter.

Speaker 4

With that, let me turn the call over to Shirag.

Speaker 2

Thank you, Tasos. In summary, 2023 was a very good year across the board for Amneal. Looking forward, we believe 2024 will be even better as our future is so bright. Let's now open the call for Q and A.

Operator

Thank First question comes from Nathan Rich with Goldman Sachs. Your line is open. Please go ahead.

Speaker 5

Great. Good morning and congrats on the strong year and for all the details that you showed on the call this morning. I wanted to start with the guidance for the Specialty segment in 2024. It seems like you're expecting a nice acceleration in growth. I think TASOS, if I heard you correctly, it doesn't include IPX203.

Speaker 5

So could you maybe just talk about what's driving the growth there? How much is maybe coming from Ongentus and adding that into the portfolio? And then bigger picture, could you maybe just talk about the initial feedback of adding Ongentus in? And can you talk about what the commercial strategy will be assuming IPX203 gets approved later in the year? And how that will help your market position relative to what the experience has been with Rytary?

Speaker 4

Hi, Nate. I'll take the first part as to kind of what's driving the accelerated growth. And I think it's just really comes across Unitro, it just continues to be doing incredibly well, growing at double digit rates, number 1. Right, Ari, we realigned our Filfar commercial, our Filforces last year. We have a new leader in that market and just continues to drive high single digit prescription growth.

Speaker 4

And then finally, as you correctly pointed out, AgenTis, So next this year in 2024, we have a full year of revenues that should contribute between $25,000,000 to $30,000,000 of incremental revenue. So it's really kind of driven across all of those 3 key branded products. And as you mentioned correctly, we don't have we have not built the IP any potential IPX revenues in our guidance. Hopefully, we'll get approval later on this year, and we should be in a position to add those in the latter part of the year.

Speaker 2

Yes. And Nate, this is Chirag. Just taking it further, why how Ongentis has worked out really well for us. It's a comp inhibitor. It's complementary with CDLD.

Speaker 2

It improves the off time for the certain patients. So excellent start of transitioning the product from Neurocrine to us and great partnership with Biar, the Portuguese innovative company. And the sales force already relaunched it at Amneal last week and very excited to complement Ongentis with currently Rytrary and going forward with IPX203. IPX203, we're also ready to launch. And as you know, that's completely differentiated product than the Rytary and obviously much better than the IR with 1.55 hours of good on time per dose, which is significant.

Speaker 2

And 95% of Parkinson's patients still take IR product, only 5% are on regulatory. So we're going on a broad based strategy to general neurologists. We have target list. We've been in context with payers for a while now and we're ready to have a successful launch with all the learnings of last 7 years with Rytary. Our teams are very excited and we expect the conversion of these IR to IPX203 and complementing with Onyentis to be a much higher percentages than Rytray.

Speaker 2

And globally also, as my brother mentioned, we have licensed out the products in Europe, in South America, in Canada, soon to be in China, Japan, India. India will be marketing by ourselves. So Parkinson's patient globally should be using latest and greatest formulation and technology and have a better life every day than use 35, 40 years old technology of IR and go through the ups and downs of daily life and it helps their caretakers as well. So very excited on specialty growth. And then it continues in 2025 with BHE auto injector launch and more to come after

Speaker 5

that. Great. And then maybe just a kind of higher level question. Looking at the guidance for this year, top line came in stronger. I think margins are going to be pretty consistent year over year, maybe down slightly.

Speaker 5

I guess I'd just be curious, as we think about the view kind of 3 to 5 years out, how do you see the margin profile of the business evolving as you bring a lot of these new products to market? And once we start to see that, especially on the specialty side, do you I would just be curious to get your view on where you think margins for the business can go longer term? Thank you.

Speaker 4

Yes, I can take that. As you said, margins have been pretty consistent, number 1, the last few years. So and what we've been able to do is really focus on incremental revenues, on incremental EBITDA, right, and transition the business to a more complex, more durable, cash generating business. So our focus has been primarily on driving incremental top line, bottom line and cash. Over the course of time, our profitability profile should increase.

Speaker 4

It will increase for a couple of reasons. Number 1 is, as our generic portfolio continues to evolve into the more world of more complex businesses, right, Those businesses have higher levels of profitability, number 1. The same thing over the last couple of years in 2024 On the specialty side, we continue to build out those infrastructures, those costs will be behind us. So over the course of time, when you look at the EBITDA profile and the gross margin profile, this will continue to grow over time.

Speaker 3

And just to add, Nathan, our injectable plants are underutilized as we are launching new products. So in coming years, both our new injectable facilities will be totally utilized, plus our inhalation plant in Europe, where we don't have a commercial product, we expect to have a launch by end of the year or early next year. I think that will also improve the margin. So I think as Tasos mentioned, many, many complex product and the planned utilization in certain complex area will improve the margins in coming years.

Speaker 2

Yes. And more specialty revenues as well.

Speaker 5

Great. That's helpful. Thanks very much.

Operator

We now turn to David Amsellem with Piper Sandler. Your line is open. Please go ahead.

Speaker 6

Hey, thanks. Good morning. So couple of questions. First on 203, can you just talk about the payer landscape and how that is going to evolve, bearing in mind that we'll see, generics for Rytary. So just talk about what you think are going to be the challenges here regarding access?

Speaker 6

That's number 1. Then secondly, on injectables, can you just talk about how much contribution, from shortage products you're going to be getting, not just this year, but longer term? And how big of a priority is it to focus on the range of different shortage products that we're seeing? And what is the priority visavis more complex injectable products that you're developing? So if you could talk to that, that would be helpful.

Speaker 6

Thank you.

Speaker 2

Thank you, David. I'll take the first one and hand it off to Harshair, who is Head of our Institutional Business and Biosimilars Business to answer the injectable product question. So IPX203 coverage, the initial discussions, which is going back to last year, has been very positive. Entire strategy on pricing with keeping the excess in mind because we want to reach more neurologists, more patients, it has been extremely positive. I do not know if you know, but Rytary has the best fare coverage among the class.

Speaker 2

It's 80% is covered, which we expect the similar coverage for IPX203. So we're very positive on the coverage, which we're in the under initial discussions, and we should be it should be coming online upon approval as well as few months after that.

Speaker 3

Just to add on IPX, that Rytary only covers 5% the patient and IPX is a very unique formulation, which will have a broader reach. So I think when the generics of Rytary comes, we don't believe that we'll have much of a bearing on IPX adoption because it's very unique, much more stable formulation in a way that it provides long term blood concentration, good on time, 1.55 hours. So I think it's distinctly different product than Rytary. So we are very excited on the offering for the Parkinson's patient.

Speaker 2

And we'll continue to conduct further studies. So as soon as approval comes, we're conducting more studies on IPX203. I'll pass it on to injectables and then David, if you have any follow-up will.

Speaker 7

David, with regard to injectables, this is Harshal. Look, it's hard to give you an actual number that breaks up steady products versus shortage products. What I will say is the strategy here is to support the market in areas where the market fails in order to build franchises that are sustainable. And you can see in our history, there is a product readily available called metal prednisone acetate, where we effectively did that, where we went from about 2% share to a 50% share and then retained that share even after other competitors return to market by creating a franchise. And I think that's what we look to do with our diversified manufacturing base that allows us to rapidly scale up and support markets where there are structural failures.

Speaker 7

We expect to see more of those failures in the coming months, and I think the market is ripe for solutions like those that we provide.

Speaker 2

And our capacity has been tripled from 20,000,000 to 60,000,000 units per year. So that allows us to address more shortages. And what we are building out is especially addressing oncology shortages and how can we be helpful for the clinics and the hospitals to bring more of those products and consistently provide them. Based on a priority

Speaker 3

and development, our priority is always the complex injectable product. So we are continuing to focus on complex because those are much more higher barriers to entry. But we do have shortage products and with expanded capacity, we can cater to the market and provide those products.

Speaker 6

Okay. That's very helpful color. Just a quick follow-up, and I'm sorry if I missed this. Are you right sized on injectable capacity?

Speaker 2

Right now we have what we need.

Speaker 4

Okay, helpful. Thank you.

Operator

We now turn to Balaji Prasad with Barclays. Your line is open. Please go ahead.

Speaker 8

Good morning, everyone, and congratulations on the performance and also the strong guidance that you have provided. So starting on the guidance, on the key launches that you're expecting for 2024 or at least some of the ones immediately look like they said contribute $100,000,000 to $130,000,000 I want to see if there are any gating factors like inspections that are to be concluded for any of these launches and are not? So kind of trying to adjust the risk levels for these launches. And maybe secondly on the launch time frame for both denizumab, naloxone, I heard that you have launched recently. Can you also comment on the pushes and pulls towards the market share and the total number of units that are potentially there in this market?

Speaker 8

That's 1. 2, on guidance, again, 2024, strong EBITDA guidance, extension of the previous question, how would these new launches impact the guidance in either direction? Or is this current guidance based mostly on products that you launched in 2023 and would gain traction in 2024? Thanks.

Speaker 3

Yes. Hi, Balaji. This is Chintu. So I'll answer the first one. Amneal has a stellar quality track record, over 100 inspections over last 20 years.

Speaker 3

And all of our plants are FDA approved, including our inhalation. So for all the launches that we are expecting in 2024, we don't anticipate any PAI as of now because we had recent inspections of all the plant like our naloxone facility, our injectable plant. So I don't think there is any gating factor that's going to prevent approval of those products in 2024. On danezumab, our launch is 25, 26.

Speaker 2

Yes. So guidance, the key launches that we launched 39 products, about 20 plus was launched in the 4th quarter, 24%. So those get annualized. So revenues already there approved. We feel good.

Speaker 2

Naloxone is the new FML was we just launched in January. Naloxone is coming soon with a potential of quite a bit this year and a lot more in 2024 I mean 2025, 2016. Plus we expect a couple of big GX launches as well, which we haven't disclosed, which is coming up in May, June timeframe, July timeframe. So very excited on the complex product launches, obviously, the naloxone annualizing the last year launches, which includes injectable launches. So several injectable launches would be annualized as well.

Speaker 2

So that is how the launches shape up, and we feel very comfortable with push and pulls. And since having multiple launches, that should not be any problem.

Speaker 8

That was in the guidance?

Speaker 4

I figured that was you guys did a pretty good job addressing it. There is nothing inherently risk here in our guidance this year than last year, Balazs. So in prior years, our EBITDA tended to be more back end loaded, which typically investors don't love. Our guidance this year is more evenly split throughout the year. So we're not planning any huge ramp ups towards the back end of the year.

Speaker 4

And there are just different levels, different products. And it's not just their revenue we're accounting at, it's also the operating expenses. So we continue to drive a number of operating expense efficiencies here. So if something were to happen on any product, which always happens by the way, right? Something were to happen on the revenue side, we're just looking to pull other levers in the operating expense side to protect the bottom line.

Speaker 4

So hopefully this kind of gives you enough insight.

Speaker 2

Yes, Balaji. We feel much better this year than we felt same time last year.

Speaker 8

Great. Thank you. Maybe a quick follow-up. Chirag, in your comments, you spoke about the U. S.

Speaker 8

Generic industry having turned the corner after years of price erosion. It's a call we've been making and good to see that being validated across the board. I want to understand if there's going to be additional competitive maneuver from the buy side or is there an equilibrium that is being reached now between the manufacturers and the buy side? Thanks.

Speaker 2

Balaji, it's still work in progress. We are seeing good signs. And most importantly, it is causing shortages and it could cause further shortages. So FDA is really worried. As you can see, the Congress constantly putting out hearings and White House meetings, which our team attends as well.

Speaker 2

This is a real problem. If we it has to get better. 6 years of massive price erosion, nobody can invest in quality, nobody can invest in a proper infrastructure, new machineries. So all these constant dialogues and us being a leading company, obviously, we're forefront of those dialogues with our esteemed partners. And it's been a good change.

Speaker 2

We're in a more on a long term stability programs with our one of our largest buyers, another big retailers moving in the same direction. So we're very hopeful for what we are seeing because it is just not right to have prices from manufacturers, invest and it will cause quality issues and shortages. And I'm afraid that if consumer starts knowing that the pill they're taking is being made or sold for 1p, it may have a very negative placebo impact.

Operator

We now turn to Chris Scott with JPMorgan. Your line is open. Please go ahead.

Speaker 9

Great. Thanks so much. Just a couple here. I guess first on the generic Avastin dynamics. Just elaborate a little bit more in terms of what you think has allowed Amneal to take share and succeed in this market the way you have?

Speaker 9

And just any learnings, I guess, from these first three launches that's informing, I guess, the type of assets that you're considering and how aggressively you're kind of looking at the biosimilar market as a whole? And then my second question was just a follow-up on IPX203. I know you're not including sales in the guidance this year for conservatism, but it does sounds like you expect coverage to come on board fairly quickly post approval. So my question is, do you expect payer dynamics will be a limiting factor at all early in the launch? Or is this a product that we should expect could roll up and ramp pretty quickly post approval?

Speaker 9

Thanks so much.

Speaker 3

Great.

Speaker 2

So, Chris, how are you? Let me turn over to Harshair first for Avastin and how we are building the Onco franchise and then I'll take on the overall biosimilar markets as well as IPX.

Speaker 7

Chris, thank you for your question. As we look at Fabastian and our oncologymyosimilar franchise as a whole, what we recognize is that the marketplace is challenged by what by pricing dynamics that are not consistent with their expectations. And what we were able to deliver was a solution that effectively met the needs of the market in a marketplace that had become challenging for some of those particularly providers, but also payers. And by learning a little bit from the dynamics that we've seen in the past and putting forward a solution that we felt addressed those, we were able to create what is a fairly stable pricing dynamic and fairly stable uplift that looks like it improves q over q. We think that, that is a repeatable business model, and we think that is a business model where our relationships and our longevity and our ability to do it time and again is going to differentiate us, which is why we continue to look at oncology and you'll see us launching products like PEMREADY, which we expect to launch next quarter.

Speaker 2

Thank you, Harshad. And overall biosimilar market is going to be large over next several years and becomes more healthier and healthier as new launches come in. It is going to be competitive. So you have to be mindful on the investments and you have to select which product you want to enter in. Our strategy has been more buy and bill or combination of buy and bill and PBM driven.

Speaker 2

And we'll continue to invest in those assets. Currently, we are only front end commercial for United States. As over time we can integrate potentially or partner more strategically. So all those avenues are open for us, but we are committed to biosimilar business. We believe it will be a size of global size of about $80,000,000,000 to $100,000,000,000 by 2031, 30 2 for the manufacturers.

Speaker 2

So that is a fantastic market for a company like us, who is completely focused on affordable medicines as we lead the retail segments, pretty soon to be leading injectable segments. And now here comes the biosimilars segments, and we intend to lead and especially in the United States. IPH203, that's a good news. We expect the coverage to be right away as well as the uptake to be right away because of our experience with Rytary, the relationship with KOLs, relationship with foundations, the patients, the patients' caretakers have started building relationship with 700 neurologists, which we never reached out before and a purpose of IPX203, having a great market access team, MSL teams, the sales team, which have relationship over last 7 to 8 years, we're very excited. It's a strong uptake and shouldn't take it's not a new molecule that should take a longer time for going to the peak cells.

Speaker 2

So excited about IPX203. Thank you.

Speaker 4

Thank you.

Operator

Our final question comes from Lesley Zulevsky with Truist Securities. Your line is open. Please go ahead.

Speaker 10

Good morning. Thank you for taking my questions. I have 2. Just a quick follow-up on AgenTus. So taking the early performance trends of AgenTus into consideration, do you envision treating this product as a essential product relaunch?

Speaker 10

And how do you think does this peak sales potential is for the product now that it's on your platform? And then second, you highlighted focus on neurology and endocrinology to grow your branded portfolio. What opportunities do you see out there within these 2 therapeutic areas and potentially outside to add to your specialty segment? And also, I guess, high level, how are you thinking about other chunkier BD plans? Thank you.

Speaker 2

Yes. Hi, Les. So on Gentis, Neurocrine had done a good job. We're taking that continuous platform and it has been a smooth transition. So we thank Neurocrine team as well.

Speaker 2

And we are now expanding the reach and the message on a complementary outcome between the on Gentis, which is a comp inhibitor, which extends the life of levodopa, therefore reducing the off time. So it's a classic complementary products between the soon to be IPX203, currently Rytry and then with COMP inhibitor, which is on Gentis. So we expect the peak cells to keep going up. We haven't been public, but it should cross the 50,000,000 dollars and keep going. And then on the pipeline for in the neurology, we are looking at different assets, whether they are in Phase II, Phase III, and we'll be probably announcing certain deals this year.

Speaker 2

We're hopeful. And that would be more expanded pipeline. We are now going after the products that can generate similar to IPX203, dollars 3,000,000 to $500,000,000 in revenue. So we're not looking at smaller assets anymore. And on endocrinology, we have over K114, which we're very excited if we can get through the regulatory hurdles.

Speaker 2

It's the much needed products in the market with a combination with T3 and T4. We believe that product also can be a pretty large contributor and also looking at couple of pipeline assets in their Phase II and III in Endo as well.

Operator

This concludes our Q and A. I'll now hand back to Chirag Patel for final remarks.

Speaker 2

Well, first, thank you to the global Amneal family for very strong performance in 2023. And our mission is clear and it hasn't changed since our founding, provide access to high quality, affordable and essential medicines. With building momentum across our diversified pharma business, we believe 2024 will be even better as we continue to grow, expand our reach and impact more patients than even before. Thank you very much.

Operator

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

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Earnings Conference Call
Amneal Pharmaceuticals Q4 2023
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