Amneal Pharmaceuticals, Inc.

Hello, everyone, and a warm welcome to Amniel's Third Quarter 2021 Earnings Conference Call. I would now like to turn the call over to Amniel's Head of Investor Relations, Tony DiMeo.

Good morning, and thank you for joining Amniel's Third Quarter 2021 Earnings Call. Today, we issued a press release reporting our financial results. The press release and a presentation are available on our website at amniel.com. We are conducting a live webcast of this call, a replay of which will also be available on our website after its conclusion. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled Cautionary Statements on Forward-Looking Statements in our press release and presentation, which applies to this call. Also, please refer to our SEC Files, which can be found on our website and the SEC's website, for a discussion of numerous factors that may impact our future performance. We also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliation to U.S. GAAP may be found in our earnings release and the appendix of today's presentation. On the call this morning are Chirag and Shintu Patel, co-CEOs, Tasos Conidera, CFO, Andy Boyer and Joe Tedisco, Chief Commercial Officers for the Generics and Specialty Segments, and Steve Manzano, General Counsel and Corporate Secretary. I will now turn the call over to Chirag. Thank you, Tony, and good morning, everyone.

MNILA achieved a solid third quarter results with net revenue of 529 million, existed EBITDA of 135 million, and existed EPS of 21 cents. Our third quarter performance builds on the strong momentum we have seen these last two years, and we believe the best is yet to come. Let me provide a few updates across the business. I'll start with our genetics business, which is built on our core competencies in R&D, manufacturing, and commercial excellence. Over the last several years, our robust innovation engine has significantly strengthened our portfolio with increasingly complex products. Our extensive manufacturing and operational capabilities allows us to manufacture most of these products in-house. which accelerates our time to market and improves margins. Our commercial teams have done an excellent job working with customers to bring these impactful products to market and provide access to these affordable medicines for patients. As a result, strong execution is driving performance, including sustained high levels of profitability. Notably, adjusted GenX gross margins were 45% in 2021, year-to-date, which is a remarkable increase from 36% in 2019. Last quarter, we highlighted what makes our GenX business wearable and different, including the pace of new launches and our increasingly complex portfolio. First, a third of our current genetics revenue comes from products launched since 2019. Second, half of our current revenues and over 85% of our pipeline is non-oral solids, demonstrating how our business is increasingly diversifying with more complex products, leading to more durable revenues and a higher profitability. Aligned with our ending 2.0 strategy to expand our portfolio with increasingly complex products, we are so excited to announce the acquisition of Punishka Healthcare, which is a pivotal step in growing our injectable business. Today, the overall U.S. institutional market, from a manufacturer's perspective, is around $5 billion in size and growing. While at the same time, there's a history of supply shortages for sterile injectables and need for more capacity. Currently, Amnil is 15th in this market with about 125 million in annual revenue. We shared last quarter that our goal is to more than double by 2025 and our aspiration is to be in the top five. This acquisition allows us to accelerate our injectable strategy for the United States and the international markets. Moving to our specialty business, we are continuing to advance our strategy and expand our portfolio. We remain focused on growing the business organically, advancing our pipeline, and pursuing inorganic opportunities focused in neurology and endocrinology. First, the team is driving strong commercial execution, leveraging our expanded endocrinology cells for this year. In the third quarter, we saw continued strong performance of our two largest specialty products . Second, we continue to advance our specialty pipeline. Most notably, we are pleased with the data for IPX203 and the potential this technology has We do not view IPX203 as a line extension of writery, but rather we believe IPX203 will be a distinct innovative therapy for the treatment of Parkinson's disease that will have a broader market appeal with patients and prescribers. We are advancing our pre-market work, and we are excited about the commercial opportunity that IPX203 represents. We continue to advance the program across our specialty portfolio And Chidu will discuss these in more detail. Third, we continue to actively pursue complementary commercial stage assets and late-stage clinical programs to leverage our existing specialty infrastructure. In our healthcare distribution business, we saw continued solid performance this quarter. With healthcare, we are focused on strong commercial and operational execution, growing our presence in the large federal healthcare market, federal government healthcare market, and expanding our unit dose offerings to drive sustainable growth and profitability. Finally, as a mission-driven company focused on providing affordable essential medicines for patients, we were delighted to release our inaugural sustainability report yesterday. The report highlights our ongoing efforts in driving environmental, social, and governance initiatives at MDN, and provides important insights on our business and its impact on stakeholders. For example, in terms of access and affordability, our genetics medicines were responsible for saving patients nearly $10 billion in the United States last year alone. In addition, on the environmental stewardship side, reminded a clean, renewable geothermal energy system at our Brookhaven New York facility to reduce our environmental impact significantly. With that, I'll turn the call over to Chandu.

Thank you, Chirag, and good morning, everyone. First, let me thank our nearly 6,500 MNIL team members who work hard every day to make healthy possible. Since our return as co-CEOs, we have been focused on operational excellence and cost efficiency, and we have seen tremendous progress with sustained high levels of profitability. Today, we see the result of nearly 20 years of that continuous improvement mindset as we are constantly improving our execution, whether that's process improvement, gaining supply chain efficiencies, or better inventory management, including reducing obsolescence and the lowest level of backorder in our history. Since the inception of MNIL, we have maintained a commitment to the highest standards of quality and current good manufacturing practices. The team continues to maintain its stellar manufacturing quality track record with currently no open or pending issues with the FDA and an impeccable compliance history at all our sites. I'm incredibly proud of our team. As you are aware, The FDA issued an untitled letter raising concerns around bioequivalent studies performed by Synchron Research Services. The FDA assigned a DX code for applicable products, which impacted several manufacturers. For our handful of impacted products, The bioanalytical data and statistical analysis for most was completed by a different CRO, not Synchron. Also, MNIL monitors and independently audits all CRO studies as part of our normal process and validated these results. We completed our responses to the FDA as we want to restore AB ratings in a timely manner. Turning to the injectable business, as Chirag highlighted, the Punishka acquisition advances our strategy to meaningfully expand in injectables. Today, we have 25 commercial products for the U.S. institutional market with more approved and a rich pipeline of over 40 injectable launches planned. This acquisition accelerates our deep R&D pipeline with enhanced R&D capabilities and speed. By acquiring the state-of-the-art facility and adding five sterile injectable production lines, we are also expanding our capacity, which will provide more supply, add redundancy, and allow us to be more opportunistic in pursuing business. We expect FDA inspection and approval of the site by the end of 2022. We believe this acquisition is the cornerstone of our plan to be a leading player in the global injectable market. Let me now walk through our company's innovation agenda and provide an update on our progress. First, in generics, our strategy prioritizes innovating across complex product categories, such as inhalation, injectables, implants, drug-device combinations, and ophthalmics. We believe MNULU is differentiated from its peers in our ability to successfully innovate and launch products in these hard-to-make complex areas. Zephyrme, Nuwaring, and Sucralfit are great examples. Our internally developed R&D and manufacturing capabilities drive these fast-to-market complex innovations. Overall, we feel great about our generic pipeline, which is now over 85% non-horal solids. Currently, we have approximately 125 products in our pipeline and another 100 products with ANDAs pending. We expect to file 25 to 30 ANDAs and launch 20 to 30 new products each year. We are very pleased with the new product launches in 2021, such as Zephymi, Abiratron, and Tobradex. Last week, we announced the approval of dexamethasone, an important steroid used for a number of medical conditions, including treatment of respiratory symptoms associated with COVID-19. This represents another CGT-designated approval which provides 180-day exclusivity. AMNI has the highest number of CGT-designated products in the industry. In short, the wheel of innovation constantly turns at any and we see a long runway for our R&D engine to drive growth and sustain high level of profitability. Second, we remain focused and excited about global expansion as we pursue opportunities to leverage our portfolio and outlicensing certain products in select markets. With our partner Fosun, we are filing 10 products in China near-term and look to start commercializing in 2023. Outside of China, we are actively working to partner in other geographies, and we will share more as we progress. We see global expansion as another vector for sustainable growth. Third, we look to enter the biosimilar market in 2022. We have three oncology biosimilars, Nipogen, Nulasca, and Avastin, all filed and under review with the FDA. We expect to receive our initial approvals next year. Beyond this, we are evaluating additional opportunities with partners where MNIL can be first or second to market in biosimilars. Fourth, we continue to advance our specialty pipeline. as we look to launch at least one new specialty product per year starting in 2022, starting with the biggest one, IPX203. Recent Phase 3 results showed IPX203 met its primary endpoint by demonstrating superior good on time from baseline in hours per day. when dosed on average three times per day compared to immediate release DDLD dosed on average five times per day. In a post hoc analysis, IPX203 resulted in 1.55 hours of increased good on time per dose compared to IIS DDLD. And we believe IPX203 has the potential to help Parkinson's disease patients achieve more good on time with less frequent dosing than IR CDLD. We see a broader market opportunity for IPX203 as compared to RITERI, which represents only 5% of the broader CDLD space, and we expect to submit our NDA in mid-2022. In addition to IPX203, We continue to advance the rest of our specialty pipeline. First, our NDA for the DHE auto-injector for migraine and cluster headache is pending FDA approval, with launch expected in mid-2022. Second, we expect to file our NDA for K127 for myasthenia gravis in the second half of 2022. Third, we plan to file our IMD application for K114, a modified release T3 product for hypothyroidism in the middle of next year. These are all 505 programs for which the risk level is relatively lower than the new molecular NTT programs. We look to share additional programs in the near future as we further expand our pipeline utilizing our proprietary drug delivery technology platforms, Grande and Chronotech. We expect these technologies will provide a wellspring of new opportunities. Now I will turn the call over to Tasos.

Thank you, Chedu. For the third quarter, we reported total net revenue 529 million, up 2%. Adjusted gross margins of 45.4%, up 570 basis points. Adjusted EBITDA of 135 million, up 19%. And adjusted EPS of 21 cents, up 31% all year over year. Our growth is primarily driven by new product launches, operating efficiencies, and it also includes substantial investments in R&D and our specialty commercial presence to drive long-term growth. From a balanced perspective, I'm happy to report that both gross and net debt continue to decline, with net debt to adjust the dividend of 4.6 times compared to 5.3 times December 2020 and 7 times December 2019. In addition, our improved operational performance and lower levels of debt were cited as key reasons for the recent upgrade for our long-term debt by the rating agency movies. Let me now start with our generic segment, where third quarter net revenue of $347 million was up $5 million or 1.5% year-over-year. Growth was driven by the strength of new product launches and the diversity of our increasingly complex portfolio. New products launched in 2020 and 2021 accounted for $45 million of growth this quarter. From a product perspective, Zafemi and Avira Deron, which were launched earlier this year, were strong contributors to growth. From the year-to-date basis, generics recorded $1 billion in net revenue, up 2%. Adjusted gross margin for generics was 43.6% in the third quarter, substantially higher than the 37.4% in the prior year. Gross margin expansion was driven by bringing substantial value to our customers, bringing in product launches, as well as operating efficiencies, including in-source manufacturing and procurement savings. Moving to the specialty segment, net revenue of $93 million for the third quarter was up $5 million, or 5.6% year-over-year. As a reminder, specialty centers in urology and endocrinology with writer and jury throwing. Both brands continued to grow nicely, and in the aggregate recorded $57 million in net revenue, up 13% year-over-year. As expected, this growth was partially offset by declines in non-promoted brands. We expect continued strength in writer and unit drawing as Q3 total scripts for both were up high single digits and new scripts were up double digits. Adjusted gross margin for specialty was 78.7% in the third quarter, representing a 440 basis point improvement year over year due to the favorable product mix. On a year-to-date basis, specialty recorded $277 million in net revenue, up 3% year-over-year, with right-of-way unit growing up 10% combined. In the active distribution segment, third quarter net revenue of $89 million was down a million for about 1% year-over-year. Growth was impacted by a tough prior year comparison due to a timing issue. Adjusted gross margin for out-care was 17.2% in the third quarter, which was 270 basis points higher year-over-year. Total company adjusted EBITDA of $135 million for the third quarter was $21 million higher than the prior year quarter. Gross profit growth added $33 million. It was partially offset by $8 million in higher R&D as we incorporated and $10 million in high-risk G&A due to our sales force expansion and higher expenses as the economy opens. Adjusted diluted third quarter EVS of $0.21 was driven by the strong EBITDA performance, partially offset by higher taxes. From a cash perspective, operating cash flow was $82 million in the third quarter and $179 million year-to-date, as we continue to expect $220 to $250 million for the full year. In addition, we closed the third quarter with $311 million in cash and cash equivalent, and our intent is to utilize a portion of that to fund the $93 million purchase price of the PDSK acquisition. From the timing perspective, approximately $73 million of the purchase price is funded in November, with the remaining $20 million to be funded mid-2022. As Shirai and Situ mentioned earlier, we're very excited about the capabilities this acquisition gives us, and we expect it to begin adding meaningful revenue in EBITDA starting in 2023 and accelerating substantially after that. as we're nine months through the year, and most of our 2021 new product classes are behind us for updating our full year guidance. On the top line, we're tightening our expected net revenue to about $2.1 billion, which represents mid-single-digit year-over-year revenue growth. We're very pleased with this organic level of growth, which reflects the depth of our R&D pipeline, the resiliency of our commercial portfolio, and upset headwinds driven by the lack of flu season and lingering COVID-19 impact. At the same time, we're raising our adjusted 2021 EBITDA full-year range between $530 and $550 million, compared to $500 and $500 million range, which reflects high double-digit growth versus 2020. We're also raising our EPS guidance range to $0.78 and $0.88 compared to $0.70 and $0.85. Our operating cash flow guidance remains the same at between $220 and $250 million, and we're slightly lowering our capex expectations to $50 and $60 million compared to the range of $60 and $70 million. In summary, we feel great about our quarterly and year-to-date performance of solid top-line, double-digit adjusted EBITDA growth, and our ongoing positive trajectory. Let me now hand it over back to Shiran.

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

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure that your phone is unmuted locally. Our first question comes from David Amsalem of Piper Sandler. David, your line is open. Please go ahead.

Okay, thanks. So just a high-level question as a starting point, given today's acquisition and where you're taking the business in terms of the mix of specialty brands, biosimilars, and complex generics, I can't help but wonder how you're thinking about your base oral solids business, and is that a business that you're going to look to strategically exit or pare down over time? Just how are you thinking about that lately, particularly given the acquisition today? And then secondly, regarding biosimilars, can you just talk about the potential for interchangeability of anything you have in the queue and how important interchangeability, getting that – is for your business, or really for any biosimilar, just get your philosophical thoughts, given that we saw a recent interchangeability designation for one of the Humira biosimilars recently. And then lastly, any thoughts on the Copaxone generic? Just wanted to make sure I didn't miss anything on that product in your prepared remarks, but anything you can say on that would be helpful. Thanks.

Very good morning. Good to hear from you. So on your first question, the MNIL 2.0 strategy, as we had clearly laid out, that we are diversifying our business away from oral solids. That does not mean we're getting out of oral solids because we have fantastic extended release, multi-layers, oncology, we're pretty much very less on to the commodity overall solid products and that we are reducing further but it still produces the cash flow which allows us to utilize and allocate that capital to a proper areas that we are growing so we're diversifying average so relying on retail business A125, our aspirations to be in the top five. This acquisition provides us with accelerated R&D development and accelerated launches, five excellent lines, all European lines, state of the art, the best facility in injectables in India. So we are very excited to be now meaningfully adding contributions on injectables. The third piece is the international markets. This which we have a partner for soon. And we're very excited. We haven't shared any details yet, but we're very excited what we see on those products and opportunity 23 onward and building a very good business, unfortunately, in China as well as Africa. The fourth is the biosimilars. And I'll take my shot on biosimilar first and pass it on to Chintu for interchangeability. So my view remains about as evolving market, much needed. It would play, it is going to be highly competitive, so more of a payer driven and PBM driven market developing. Yes, for the buy and build would be a separate economics, but the payers will still drive it. So interchangeability and any intervention by CMS Covering all biosimilars would be really helpful for penetrating more than 20%, 30%, 40%, 50% market share to go to more of a 70%, 80% volume penetration. And that would be fantastic news for biosimilars. And with or without interchangeability, I think it needs to get there to realize for our country true savings on biosimilars, which is a huge potential. Do you want to comment on interchangeability?

Sure. Hi, David. Good morning. Before passing it, I just wanted to add also you had a question on specialty. So we are equally focused on building our specialty pipeline organically and inorganically. As I mentioned in my opening remarks, we have a good pipeline product which shows good promise going forward, and we are also looking at inorganic assets to acquire. So along with the injectable complex generic specialty also remains the focus, and we are very happy and excited where we are in the building of a pipeline. Coming to the biosimilar interchangeability, David, I think from science side it's very good. and exciting that gives the comfort to the physicians and the patient that when the products were interchanged between from the immunity immunogenicity or efficacy perspective uh you know the statistical differences were not significant to raise any concerns But the main driver would be, as Chirag mentioned, would be the payer and how the reimbursement occurs to have a lot more growth on a biosimilar industry. But we see biosimilar as a must, and I think over a period of time, whether it's the regulatory pathway interchangeability or the other areas, I think it's going to evolve and be more acceptable and normal going forward. And your last question on Kapakstone. Kapakstone, due to the delays of COVID and our CMO, we are not forecasting in our 2022 launch. It's most likely to be 2023 launch first half.

Okay. Thanks so much.

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

Hi, good morning. Thanks for the questions. Sharag, you highlighted the gross margin performance in the generic segment. You know, I know the goal for a while had been to get back to 40% margins. You're now solidly there. So, you know, as we think about the opportunity going forward, can you maybe give us an updated view on where you think gross margins for that segment could go, I guess, especially, you know, as you do shift the portfolio to more complex products. And then maybe, Tassos, a follow-up for you. Could you maybe just talk through the updated revenue outlook, you know, moving that towards the lower end of the range and kind of what changed relative to your prior expectations? Thank you.

Thank you, Nathan. Good to hear from you. Good morning. So gross margin, as we said, we brought in-house all the manufacturing from CMO, most of it in-house, which is helping the margins. We addressed our operational efficiencies, the plant utilization. Backorders are virtually not existing, which takes care of the failure to supply. The returns we're working on algorithm to reduce and working proactively with the customer. So all these levers are pulling margins in the right direction. The more we launch complex products, more injectable products, we see the margins improving. Now, it may not be right in one year, but over one, two, three, four, five years, our goal would be to have a higher gross margins because of the complexities of the product with the portfolio mix we have. in-house manufacturing, and very few products are partners, so we're not sharing economics for most of our products. So that is on a gross margin on genetics. Tassos, would you like to?

Sure. Good morning, Nathan. as you recall, you know, our range was 2.1 to 2.2 billion. And, you know, right now we're guiding at 2.1, which still is up 5% organically from prior year. So, we feel first, we feel great about this. It's a couple of points and things. Number one is our new product introductions have performed better than we thought. first. They were launched much earlier in the year than anticipated. And so that has done much better than we thought, which actually was a key reason why our gross margin improvement was better and a key reason why our EBITDA, we increased our EBITDA guidance. So that's a good thing. The two things we did not anticipate as much was, as we spoke earlier on this year, was the complete lack of flu season. So that essentially cost us $40 million just to, you know, not selling any type of flu as well as some other, you know, products. That cost us, that was the biggest negative variance from an upline perspective. Also, you know, sitting trying to give guidance earlier on this year, trying to anticipate what the COVID-19 impact was, that continued to have some lingering effects, I think, that impacted everything. So those are the two reasons why – the three reasons. So some of the legacy products doing a little worse than we thought, primarily around lack of flu season. New products doing better than we thought that also drove the beat of the EBITDA and the raise of the EBITDA guidance. Does that help?

Great. Yeah, thanks very much.

Thank you, Nathan. Our next question is from Balaji Prasad of Barclays. Balaji, please go ahead. Balaji, your line is up. Please ensure you're unmuted. Unfortunately, we're not receiving any audio from Bellagio's line at the moment, so we will move on to our next question, which is from Elliot Wilbur of Raymond James. Elliot, please go ahead.

Thanks. Good morning. First question I wanted to ask was around the injectable segment, obviously expected to be a key driver of growth going forward. The question is, you know, outside of some of the more differentiated, complex filings that you have in your pipeline, Can you win business in the injectable market on a molecule basis, or do you really need a much larger, more representative portfolio and able to be considered attractive to the GPO buyers, which have, you know, very different needs than those of, you know, your traditional, you know, big three retail purchasers? That's the first question. Second question is just in terms of new product performance, obviously very strong year-to-date. Looks like it was, you know, at least 15% of the total top line at least nine months into September. Just trying to – get a sense from you what you're seeing in terms of the actual base erosion. Certainly some other players have talked about accelerated erosion, volume plus price, and that definitely seems to be sort of borne out. Looking at industry metrics, you guys have been able to offset that, but I'm wondering if you're seeing some accelerated pressure on the bases.

Great. Thank you, Elliot. Good morning to you. So your first question, we've been in the institutional market since 2016, 17. We started launching our products today. We have 25 products in the doing 125 million or a little bit better this year. So we are already there and we have the relationship with GPOs and there's a different sales force and led by different commercial head to actively build a relationship with institutional buyers. And yes, the portfolio matters, the redundancy matters, and this is why we acquired ready-made site and not waited to build our own, which would have costed three, four years and a few hundred million dollars. So exactly because we got the R&D pipeline, we needed the capacity. And today, if we have to order you a new injectable line, that most of these are under DPA. So we're really excited of how we're going to enter in. And yes, we will have a larger portfolio, multiple products, many for us to launch, complex products, all kinds of technologies, just like what we did in retail, highest R&D, and we're here to stay in injectable markets. So we will grow from 1.5 to much higher. Our aspiration is to be in top five. And it also allows us to market those injectable products into international markets, which further diversifies it. I've been answering the bays and all these answers since 2017. I'll give it to Tasos. It's the same behavior from the three buyers that they constantly look for opportunities and driving as much cost down, which is, I think, not healthy for the industry as manufacturers would have to rationalize their portfolio if this pressure continues on, which low it has gone, it is very concerning. But I'll have Shadassah to explain the details.

Shadassah Khan I just wanted to add on the injectable side. that earlier it's very exciting because it triples our capacity overnight, these acquisitions, and we become a value volume player. Plus, it gives us added and a very huge capacity for large parental bags, and there is very little competition when it comes to the bag. So it gives us differentiated dosage form to enter, and we are very strong at robust pipeline into that segment. So in injectable, we are working on a lot of complex products, including microspheres, liposomal, large parental bags, and a lot of auto-injectors, and also we have a lot of wild products and others. We are even bigger players than what we are today, and we are very excited. It's the right deal at the right price, at the right time. Go ahead, Tasos.

So I think the other part of your question was around the base business. Do you see an acceleration of the decline or not? So for us, it's been a fairly steady decline. And that is at the kind of high, I'm sorry, low double digits. So think of it as the base business declining approximately 12%. That's what we saw last year. That's what we're expecting this year. The other differentiating factor perhaps of us, if you look at that base business and you see what percentage of our generic portfolio that accounted for. Back in 2019, the base business was 93% of our revenue, of our generic revenue. This year, that part of the business will be about 64% of the business. So we have substantially decreased, right, the year-over-year headwind represented by this kind of continued downward pressure. And on the other side, as the portfolio of the rest of the business evolves to more complex, right, yes, that will become older, but because it's more complex, it's not going to be subject to the same headwinds as the traditional oral solids. So hopefully I think that does answer the question.

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

Hi, good morning, everyone, and my apologies for missing the call earlier, juggling a couple. Firstly, on Kunishka Chirag, can you describe the facility that you're getting and the capacity, and also any particular products in the pipeline side that you would like to call out? You mentioned that you're expecting FDA site inspection and approval by the end of 2022. Is it linked to any specific products at all, or is it oral site inspection? Second question on dexamethasone, I think you, if I heard you correctly, you stated that this was a CGT-designated opportunity. So can you also provide some context around revenue expectations at least the first 180 days? Thank you.

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

Yeah. Hi, Balaji. Good morning. Puniska side is around 293,000 square feet, state of the art, recently built in last two years as a five, you know, European-made while and immersion and the large bag lines. So it gives us capacity of around 30 to 35 million dosage forms out of that site. And that caters to our requirements all the way up to 27 as per our internal volume forecast. So that site, from the FDA perspective, they do have a product pending. We are not revealing the name of the product. They have two product pending, one while and one back product. So that gives us, it comes with 560 great people, and the R&D infrastructure is separate. So it also gives us added R&D manpower and a very trained manpower for in general. uh so overall it's right in our uh strategic move to expand our injectable so we are very excited uh and it just overnight gives us that needed capacity yeah and margin this is a fourth facility so this is we already have

focusing on oncology, on injectables, and then two others, and this is the fourth one. On dexmethadone, as you know, we do not provide specific product revenue guidance, but we love these products. These are the niche products that we are alone for a while, or two of us, or three of us, where we have a chance to make better gross margins than the other products. So it's a good product, and every year we expect many of these products to be launched. So this is why we're not relying on any one big launch in a year, but multiple new launches coming up. And we're also excited about the potential launch of the rest of this, and as well as we have filed, we responded to our CRL, and we expect that in the first half of 2022.

Thank you.

Thank you, Balaji. As a final reminder, if you wish to ask any further questions on the call, please press star followed by one on your telephone keypad now. Our next question is from Gary Nachman of BMO Capital Markets. Please go ahead, Gary.

Hi, good morning. This is Dennis on for Gary. Thank you for taking my question. Just a couple from me. Lately, in the news, we've been hearing all about supply chain issues. Is there anything that you've kind of seen that you believe that supply chain issues could affect your fourth quarter or next year? And then another question on debt. You guys have been clearly lowering it. It was seven times in 2019, 5.3 times in 2020. Now we're at 4.6 times. Just curious, is there a number that you're looking to get into or you're achieving towards? Thank you.

Thank you, Gary. Very interesting question on supply chain. We have a very robust pre-planning, and our team is excellent, which is planning pretty much a year out. But it's concerning, and what's concerning is the more of an inflation associated with supply chain. So there are Drastic steps have been taken by China to shut down certain KSM, key starting material, input material, certain API facilities, and that is going to cause, and already we have API suppliers, pretty much all of them are asking for higher prices because of these increase in cost, the inflation. year. So that is concerning on supply chain issues and certain KSM. And obviously our teams are proactively working with our partners to make sure we don't get into this. On a debt, we've been saying it's under 4X is our target. And as low as we can go, that's how we like to allocate our capital, be smart about it, go on at the right time, right deal and right price. So certain times we don't win the deals right now in the seller's market because we're not ready to pay up extraordinary prices which are in the market at this point. And we're very confident in our own organic pipeline and patiently will wait to do the right deals. But we are constantly looking for deals. So it's a very fine balance to keep going down in a leverage and still keep adding the new capacity and diversifying our business. And that's exactly what we are doing. Thank you. Thank you.

Thank you, Gary. Thank you, Gary. As another quick reminder, if you have any further questions, please press star followed by one on your telephone keypad now. We have a follow-up question from Elliot Wilber of Raymond James. Please go ahead, Elliot.

Thanks. Just two quick follow-ups, I guess, first for Shinju. You talked about the Synchron issue and the alteration of the TE code to BX from AB. I guess in looking at those products, we came away with the conclusion that they were all relatively commoditized and somewhat small in terms of the markets, but if you could just maybe give us a sense of, you know, what the current revenue base of the affected products is within your portfolio. And then bigger picture question, there's been a very noticeable slowdown in the rate of new ANDAs coming out of the FDA, and it seems to be even more difficult to pull out complex generics. as obviously these timelines seem to get extended more and more every year. So that can both be a competitive advantage or a disadvantage. But again, just, you know, wanted to get maybe your perspective in terms of, you know, what may be happening to the FDA with some of these more complex filings, why we're not seeing more of them, and, you know, whether or not you think that has led to or you have sort of kind of adjusted longer-term expectations in terms of the timelines in which you expect some of these key products to be approved.

Yeah, hi, Elliot. Thank you. So on Synchron, as I mentioned, that we have responded to all of the FDA queries and responded. We have used bioanalytical lab outside of Synchron. We have third-party independent audits and MNIL audit, and we are Very optimistic that we have done very thorough job that would have a positive outcome, hopefully from FDA. I don't have a timeline that we can talk about as and when, but we are working very diligently with FDA to resolve the AB ratings. We have about eight or so products. We do have one product which is important, but we have not seen any material impact. at this time, which is Baphomet, but we have not seen any material impact at this time or a patient concern or the customer concern. Regarding the approvals, MNIL has the highest first review cycle approvals. I can say in the last three or so years or four years, we have received more than 40 first review cycle approvals. That's in around 10 months. And COVID did impact many companies from receiving approval earlier. But MNILS, because of its standard quality track record, we never had any delay associated with pre-approvals or, you know, anything else. Even our emulation plant in Ireland, we had an online audit and our plant, from a pre-approval perspective, is approved by FDA. Complex scenarios, it's a challenge depending on where you are. FDA is also learning many times with you as they are looking into the science and various ways of bringing these complex products. I think depending on the product, it may take longer, but like on a trans thermal and many other dosage formats, we have been working with FDA and Ophthalmics that MNIL has a very good understanding of what FDA expectations are. So we have that early mover advantage on the complex product also in the areas where we have already received approval, which is like Ophthalmics, Toradex was our recent approval, which is a very complex ophthalmic suspension product. That gives us the pathway for many more, and we'll be able to overcome FDA questions proactively. So I think you are right. There are delays. There are less approvals than the prior year. But as far as MNIL, we are getting, you know, 30 or so plus approvals every year. We expect the same next year. Few complex. There has been certain delays due to certain change in requirement or FDA's expectation. But overall, MNIL is in a better position than its competitors. Thank you.

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

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

Good morning. I'll take your second question first. Injectable is a similar strategy that we applied in the retail side lately, which is more complex, more diversified. the bags as well as vials, the auto-injectors, the PFS, right? So it's a mix of products. Oncology is also added. So four different plants. Redundancy is there now. So it would be more diversified and more lasting, and as well as some of those products would be good in international market, especially – when it comes to products like coolers in higher demand and prices than the United States. So, really excited on the injectable business growth side. The NPL has been strong. small products, but they add up really good on contributions for the margins perspective. So we'll continually launch every quarter new products, whether they're five or six every quarter we're launching.

Just to be even more specific, so Q3, I think we said it was about $45 million of growth. You shouldn't expect about the same level of growth versus prior year in Q4.

Thank you, Greg. Thank you.

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

Yeah, thank you very much, everyone, for joining today's call. As it is, you know, this is our multiple now calls, 8th or 9th, and we're pleased with the progress, and we'll continue. We're steadfastly focused in disciplinary growing the company, and we see excellent opportunities as part of MNIL 2.0 strategy with diversifying our genetics business, which I like to call it affordable medicine business, along with the specialty products, which is we are in a phase one of our branded strategy at this point and executing well on phase one of our, which are 505B2 products, and then we'll move up the value chain as we become really good at executing, especially the side of business. So we're excited on both, and the international expansion on affordable medicine is very purpose-driven as well, and we will keep bringing more complex products and access to patients worldwide in select markets and select partners, and some markets will be on our own very selectively. So very excited overall, and thank you very much. Have a great day. Thank you.

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