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spk05: Hello, everyone, and thank you for standing by. The M&E Pharmaceuticals Second Quarter 2023 conference call will begin shortly. Our host for today will be Anthony DeMell, Head of Investor Relations, and you'll have the opportunity to register for a question by pressing star 1 on your telephone. Thank you for your patience. The conference call will begin shortly. Please stand by. Hello everyone and welcome to the MNIL Pharmaceuticals Second Quarter 2023 Earnings Conference Call. My name is Bruno and I'll be operating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. Please also limit to one question, one follow-up. I will now hand over to your host, Anthony Demeo, Head of Investor Relations. Please go ahead.
spk02: Good morning. And thank you for joining Annual Pharmaceutical's second quarter 2023 earnings call. Our Q2 earnings press release and presentation are available at annual.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 our SEC filings for discussion of factors that may impact our future performance. We also discuss non-GAAP measures. Information on our use of these measures in reconciliation US GAAP are in the earnings presentation. On the call today are Chirag and Shintzu Patel, co-founders and co-CEOs, Tasos Konideris, CFO, our commercial leaders, Andy Boyer for Generics, Joe Renda for Specialty, Harsher Singh for Biosciences, and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.
spk12: Thank you, Tony, and good morning, everyone. Q2 was another strong quarter with $599 million of revenue, growing 7%, adjusted EBITDA of $146 million, growing 9%, and net leverage at 4.9 times. As a result of our solid momentum in the first half, we are pleased to be raising our full year 2023 guidance. On a personal note, this earnings call marks four years since Shindu and I returned to MNIL as co-CEOs. At that time, we stated our goal was to return MNIL to growth and build a world-class diversified pharmaceutical company driven by our purpose to provide access to high-quality and affordable essential medicines. Since then, we have methodically executed our long-term strategy to expand into high-growth and high-impact areas. Today, MNIL has a diversified portfolio of approximately 270 marketed products. and industry-leading R&D engine, excellent commercial capabilities, a foothold in key global markets, and significant growth catalyst ahead. We have delivered strong financial performance each year since 2019, as revenues have grown 10% and adjusted EBITDA has grown 12% on a CAGR basis. We have reduced net leverage from 7.4 times in 2019 to 4.9 times currently, well on our way to below four times by the year 2025. Based on the strength of our diversified portfolio, robust capabilities, and opportunities ahead, MNIL is well positioned to drive sustainable long-term growth accelerate profitability, and continue deleveraging. Let me now walk through how we are executing our strategy across the business. In the generic segment, we have retail generics, injectables, biosimilar, and international business. We expect generics revenue growth will accelerate over the next several years, driven by complex products. Approximately 55% of our genetics revenue is expected to come from complex products in 2023, compared to 35% in 2019. And we expect that mixed shift will continue. So, first in retail genetics, we're expanding our portfolio of approximately 230 products to move up the value chain of complexity. As we have discussed, complex generics tend to have less competitors and drive more durable growth, revenues, and profit. As shown on the catalyst slide, we expect to advance over a dozen high-value complex generics to the finish line by 2024. Second, in injectables, our goal is to be a top five U.S. business and a global player. Our strategy centers on being a key supplier of an expanding portfolio and offering a resilient supply chain in a market plagued by product shortages. Currently, we have about 30 injectables with over 30 new launches planned by 2025. With our recently added sites, we now have four injectable facilities to produce at scale across multiple formulations. As we ramp up production at our new facilities and launch new products, we expect the next inflection of injectables revenue in 2024, building to over 300 million by 2025. Third, in biosimilars, our first three oncology products are seeing strong uptake, particularly Alemsys, which is running ahead of our expectations. Olympus and Duluco launched in Q4 2022, and PhilNitra launched in May. Our biosimilars team has done an excellent job building the commercial infrastructure and establishing a market presence in the first year. Through June, we have continued to add customers, and we now have 400 infusion locations, particularly oncology clinics. Most notably, Olympsis market share based on dollar value is at 4% as of June, only two quarters after having Q code. We now expect about 60 million in biosimilar cells this year. We are well on our way to achieving over $200 million in peak cells by 2025. Also, we look to add two to four additional biosimilars to the pipeline in 2023 and 2024, which have the potential to commercialize starting in 2025. We are committed to being a leader in biosimilars for long-term. Internationally, we are utilizing our USFTA-approved portfolio to expand globally. In India, we are leveraging our local infrastructure and expanding our portfolio. In other geographies, such as Europe, we are working with partners to commercialize our products. Based on our initial progress, we expect international expansion will add $5,200 million in revenue by 2027 and scale further over time. Next, in the specialty segment, we are continuing to drive growth in our key branded products, Rytary for Parkinson's and Unithroid for hypothyroidism. Touching on IPX203, we shared last month that we received a CRL requesting additional data. We plan to meet with the FDA soon to align on the pathway to approval, which Shintu will discuss further. With 1 million US Parkinson's patients, 5 million annual scripts, and an unmet need for this degenerative disease, there is a much broader opportunity for IPX203. Overall, we are focused on growing specialty to over $500 million revenue by 2027. In our third segment, AvCare, we see continued momentum across multiple channels, distribution, government, and unit dose. We expect Avcare will deliver around $500 million in revenue in 2023, building to over $600 million by 2025. Overall, we see strong momentum across our diversified global pharmaceuticals company. Our business does not rely on any one product. Each quarter, we are adding new, complex therapies to expand our reach and impact on patients. As we execute and build on our sustainable growth profile, we expect to drive revenue growth and meaningfully higher levels of adjusted EBITDA.
spk09: I will now pass it to Chintu. Good morning. Thank you, Chirag, and thank you to the global MNIL family who work hard every day to advance our mission of making healthy possible for patients. As Chirag discussed, we have been focused these last four years on building an innovative, well diversified and differentiated global pharmaceuticals company capable of driving sustainable growth in key areas of medicine. We are very excited about our strong performance in the first half of 2023 and the outlook ahead. I will touch on how our operational excellence, highly productive R&D engine, resilient supply chain, and expanded capabilities continue to propel our success. First, we remain focused on driving operational excellence and efficiency. As an example, we are in the process of moving production for about 30 products to lower cost locations, and we are continuously evaluating opportunities to bring cost down. In addition, we have strengthened our global supply chain by expanding our infrastructures in key areas, adding redundancy and resiliency of our operations. Importantly, our global operations are at scale to support long-term growth. Most notably, we see the benefit in injectables, where today we have four facilities with 19 production lines. Over the last few years, we have doubled our injectables capacity. At the same time, the overall injectables market continue to face chronic supply shortages. As we look at our commercial portfolio and pending ANDAs, 16 products are on the US FDA shortage list with additional 12 in our pipeline. MNIL is well positioned with our expanded supply chain and capacity to help address drug shortages in the United States. In addition, we expand our footprint and build our capabilities. We are committed to maintaining our quality track record. Since 2005, the US FDA has conducted 95 successful inspections, including four this year, with no observations or minor Fourier decrease. Moving to genetics R and D, we have made tremendous progress, diversifying our portfolio with new complex medicines. We have launched eighteen new products so far this year, and we are on track to launch over thirty new products in twenty, twenty three. Overall, we have ninety two and spending after the approval with sixty one percent representing non oral solid products. This includes 29 injectables, 11 ophthalmics, 9 topicals, and 4 inhalation products. Behind that, we have 67 pipeline products with 90% being non-oral solids. With our well-established and diversified portfolio, we have incrementally shifted our focus to high-value complex categories. In fact, 40% of pending ANDAs and 70% of our pipeline are expected to be first to market, first to file, or 505 opportunities. Most recently, we announced the ANDA filing of three complex generics, including generic ProAir in inhalation, Bimartoprost in ophthalmics, and Propofol emulsion in injectables. These products are indicative of the high-value R&D programs we are most focused on. In injectables, we have launched six new products year-to-date. In July, we launched our first LVP bag, magnesium sulfate, from one of our two new injectable facilities, and and oncology injectables. We are advancing a number of other complex injectables and expect to file our first two 55B2 ready-to-use bags in Q3. we expect a strong cadence of new injectables in 2023 and 2024, including the launch of PEMRID RTU in January 2024. We are very excited about the opportunity ahead in injectables for Mnil. After injectables, we see inhalation as Mnil's next key growth area in complex generics. We have two key metered-dose inhaler ANDAs pending with generic QR and generic ProAir. Both are expected to launch in 2024 upon approval. Other high-value MDI programs are in development as well. Further, we are developing several recipe-made inhalation devices utilizing the SoftMIS technology platform. Let me now highlight key launches currently underway. First, we launched an authorized generic version of Xyrem in July. Second, we are set to launch lisdexamphetamine, a key ADHD medicine, in Q3. Third, our pending ANDA for generic Narcan is under priority review. We are very passionate about this over-the-counter product, which will improve access to a critical life-saving opioid overdose treatment. A broader list of our notable plant launches is included on our catalyst slide. Next, in biosimilar, we are very excited about the potential for Mnil in this space. Our first oncology biosimilars are seeing excellent uptake, and there is a compelling opportunity to expand our portfolio through partnerships for further molecules. We see biosimilar as a key long-term growth driver. Turning to specialty R&D, we continue to work to advance our 505 pipeline. As we disclosed, the CRL we received for IPX203 requested additional data related to the scientific reach for the safety of carbidopa. We expect to have a type A meeting with FDA in the next few weeks. We look to provide data necessary to address the comments and launch IPX203 following approval. We continue to see IPX203 as an innovation that advances the standard of care with a broad appeal for Parkinson's patients. In summary, we are driving operational excellence and executing on our innovation strategy, which together are fueling our ability to drive sustainable growth. I will now hand it over to Tasos.
spk11: Thank you, Chintu. Good morning. I'll start first with our Q2 results, move on to our year-to-date strength, and then raising our full year 2023 guidance. First, we're very pleased with the performance of all our business segments in driving strong financial performance for another quarter. In the second quarter, total net revenue of $599 million grew 7%. Adjusted EBITDA of $146 million grew 9%, and adjusted diluted EPS of $0.19 was in line with prior year. Our Q2 generic SNAC revenue of $374 million was up 9% sequentially and up 2% versus prior year. Growth was driven by AdrenaClick, Zafemi, multiple new product launches, and strong commercial execution by our biosimilars team. New products launched in 2022 and 2023 added 24 million to Q2 revenue growth. As the year develops, we expect robust performance across our generic segment as new product launches ramp up, biosimilars become a larger part of our business, and our global supply and commercial teams work hard to ensure continuity of supply and market share growth. As we have said in the past, MNL is now a much more diversified company than ever before, which allows us to deliver consistent financial outcomes despite the typical ups and downs. Furthermore, As our portfolio continues to shift toward more complex products, our ability to deliver increased levels of growth and profitability grows substantially. Moving on to our specialty business, we're in the second quarter net revenue of 97 million was up 6% sequentially and flat with the prior year. Growth was driven by Unitheroid, which grew 17% sequentially and 24% versus prior year. Ritory revenue was impacted by timing and was down 2% sequentially and down 4% versus prior year. Having said that, Ritory total prescriptions are up 4% versus prior year, which bodes well for revenue growth in the back half of the year. Our upkeep business continues to perform exceedingly well, with Q2 net revenue of 128 million, up 5% sequentially, and 32% compared to the prior year. Growth was driven across all lines of business, which includes distribution, government, and unit dose. Improved product flow, pricing, and strong execution have led to a substantial increase in profitability. We expect that the strong momentum in Upcare will continue to reach about $500 million in revenue in 2023, up from $406 million in 2022. As expected, Q2 2023 adjusted gross margin of 43% was substantially higher than the 39% of the first quarter of 2023, albeit 1% below prior year. It is also worth noting that consistent with our earnings call in May, generics adjusted gross margin grew substantially to 43% in the second quarter compared to 37% in the first quarter, a 600 basis point sequential improvement. Q2 adjusted EBITDA of 146 million increased sequentially by 30 million, or 26%, and 12 million or 9% compared to prior year. Performance reflects strong revenue growth, solid gross margins, and operating expense leverage. As we have said in the past, our overall business is pretty much at scale, which provides strong operational leverage and bodes well for increased levels of profitability as revenue grows over time. Due to adjusted diluted EPS of 19 cents, was up $0.07 sequentially and flat the prior year, reflecting our adjusted EBITDA growth along with higher interest expense. Let me now spend a moment on our Q2 year-to-date performance, where our teams are delivering strong performance across all our business segments. Year-to-date, top line is up 9%, as generics grew 5%, specialty grew 4%, and after grew 30%. Strong operating expense focus has allowed us to invest in new areas like biosimilars while delivering year-to-date adjusted EBITDA growth of 12% and adjusted EPS growth of 3%. Furthermore, we feel really good about our cash generation as we generated operating cash flow of 128 million year-to-date compared to minus 5 million last year an increase of $134 million. As we shared with you in the past, with the company's increased profitability and many of the investments to expand our portfolio and infrastructure already in our place, puts us in a good position to further reduce debt. At the end of Q2, our net leverage was 4.9 times, which is substantially below the 5.5 times at the end of Q2 of last year, and 5.3 times at the end of 2022. In addition, in July, we paid down an additional $30 million in gross debt, and we're targeting net leverage below four times by the end of 2025. Let me now turn to our full year guidance. And as you may have seen in our press release this morning, we are raising our full year 2023 expectations to reflect the strength of our year-to-date performance across all segments of our business. From a revenue perspective, we now expect net revenue of 2.3 to 2.4 billion in 2023, up 50 million from the prior range. Our accelerated revenue growth outlook reflects mid- to high-single-digit revenue growth for 2023. Due to the strength of revenue, we're raising our 2023 adjusted EBITDA guidance range from 525 to 540, up about 20 million from the prior range of 500 to 530 million. We're also raising 2023 adjusted EPS guidance to 45 to 55 cents, up 5 cents from the prior range of 40 to 50 cents. We're also raising our 2023 operating cash flow guidance to 220 to 250 million, which is an improvement of $20 million compared to the prior range of $200 to $230 million. This range includes interest expense and excludes legal settlement costs of about $90 million, mostly related to the Opana ER case. I think it is also important to note that we expect continued momentum in 2024 and beyond. And with that, let me turn it over back to Chirag.
spk12: Thank you, Tasos. Our diversified portfolio of essential medicines is driving strong results. We expect our momentum and profitability acceleration will build in 2024 and beyond, driven by catalysts happening now, including biosimilars and new complex genetics launches on the horizon. We said it would be a long-term journey to strategically reposition the company for sustainable long-term growth. That journey is at an inflection point as MNIL 2.0 is heading its strides now. We will now open the call for Q&A.
spk05: Ladies and gentlemen, if you'd like to ask a question, please press star followed by 1 on your telephone keypad. That's star followed by 1 on your telephone keypad. To withdraw your question, press star followed by 2. And please do also remember to unmute your microphone when it is your turn to speak.
spk03: Our first question comes from Nathan Ridge from Goldman Sachs.
spk05: Nathan, your line is now open. Please proceed.
spk00: Great. Good morning, and thanks for the questions. Maybe starting with biosimilars, you talked about olinsys running ahead of expectations. Can you talk about maybe where you've been kind of successful in the market in terms of picking up that early share? And then, you know, when it comes to future biosimilar opportunities, you know, are you looking to stay in the oncology and kind of provider administered space? Or do you see yourself kind of looking at some of the, you know, self-administered products that go through the pharmacy channel? And just be curious to get your thoughts on, you know, relative attractiveness between the two.
spk12: Thanks, Nathan. So biosimilars is a long-term journey and long-term play. As you know, more than 70 biologics products will become biosimilars in over the next 10 years. And it's not just U.S. play, it's also global play, providing more access and affordability. The number one reason why we have been successful is we have built a solid commercial team. And I have Mr. Harsher Singh here who leads our team, which will provide more details without giving any confidential information to competitors how we did it. And your second, I'll pass it on to you Harsher, hold on. The Onco, so your second question was where do we play? Right now we are in oncology and we'll continue to add more products. and add related products within oncology as well but we are evaluating the pharmacy benefit products in immunology and other categories because to play biosimilars for the long term we would have obviously the like to have leadership in oncology but also have additional products as we mature or buy a similar portfolio. So, thank you, Nathan. I'll pass it on to Harsha on commercial success.
spk10: Nathan, thank you for your question. The short answer here is we've done disproportionately well in the oncology segment, largely because they are more likely to change and more able to change their prescription behavior over a shorter timeframe. We expect to continue that success both in oncology and in the hospital segment in the coming quarters. We like buy and build, and we hope to remain winners in that segment. Thank you, Rishabh.
spk00: Great. Thanks for the comment. If I could just ask a quick follow-up on the guidance. The EBITDA increase, I think, was a little bit lower than we would have expected, just given the 2Q results and the updated revenue guide. So, Tassos, I just wanted to see if there was anything to call out there as we think about EBITDA cadence, or is that kind of just embedded conservatism over the balance of the year?
spk11: Yeah, we try to be as conservative as we can. That's number one, so that way we're put in a position to make decisions meet all our commitments and hopefully exceed. So I wouldn't read anything more than that. There's still six months to play. We feel great about the growth so far, which as I mentioned before, record revenues, record EBITDA up 9% and 12%. We'll see how the rest of the year plays, but we feel really good about exiting the year in a very strong position in a really great trajectory for 2024 and 2025.
spk00: Great. Thank you.
spk03: Our next question comes from David Amslim from Piper Sandler. David, your line is now open. Please go ahead. David, your line is now open. Please go ahead with your question. Okay, I think we lost connection with David.
spk05: Our next question in line comes from Balaji from Barclays. Balaji, your line's not open. Please proceed.
spk07: Good morning, everyone. This is Michaela on for Balaji. Thanks for taking our questions. I'm just wondering what your latest thinking on generic pricing trends is, and can you specifically talk about price erosion for the injectables business?
spk08: Thanks so much.
spk11: Hey, Michael. Good morning. This is Tasos. So, overall, we're seeing an improved pricing environment. So, still, prices continue to decline. Just the rate of decline is less so than prior year. And that obviously creates less of a headwind for us and a good thing for an industry that is trying to be helpful with shortages and increase kind of compliance requirements from a regulatory perspective. So, that's kind of the high-level pricing comment. On injectables, and that's an area that we like, you know, we see less of a pricing pressure than the oral solids. And as a result, the profitability of that segment is higher than the typical orals. So this is why that's an area of focus for us, and that's why our pipeline disproportionately favors injectable products, which, you know, will help drive increased level of profitability for the next few years.
spk08: Great. And just one follow-up, if I can. I guess we just see the stabilization continuing for some time.
spk11: Nobody really knows, right? Our expectation is as the industry just kind of consolidates, as the industry has to deal with increased investments in their plants and the quality control processes, and people are dealing with improved access to high-quality medicines. I mean, this industry has to focus on improved profitability, which requires price stability at some point in time.
spk12: Yes, and I'll add on to that, that the shortages you've been hearing about, it's not the major reason, as we know, for the shortages is the generic industry sustainability. It's the pricing. When pricing are driven down so low, the demand gets concentrated within one or two suppliers, any issues with that one or two suppliers causing the shortages. That's the number one reason I would rank it as 90% why shortages are happening. The buying groups are well aware of this, both on the retail side as well as hospital sides, and they're being very responsible, because at the end of the day, we cannot have patience. without products and doctors without using chemotherapy products. So we as American company always have led the efforts to what can we do to alleviate shortages and also what can we do to make the genetics industry sustainable. It just would be very prudent to do and time is now. We cannot wait because we'll see more and more shortages if we do not address this. So I do see stabilization or further improvements.
spk05: Our next question comes from Chris Scott from JP Morgan. Chris, your line is now open. Please proceed.
spk01: Hi, this is Ekaterina on for Chris from JPMorgan. Thank you so much for taking our questions. So first on injectables, and you've kind of touched upon this, but thoughts specifically on the Pfizer Rocky Mountain facility and what impact that could potentially have on the sterile injectables market. And as we think about, you know, potential shortages there, is that something that Emil can help with and benefit kind of given some of the capacity that you've been building? And then the second question is on the CRL for IPX203. Can you just elaborate a little bit more as to what could be required to address some of the FDA concerns and basically what the path forward could look like and timelines for that? And then building on that, you have the Raitari IP, I think, going away sometime in 2025. Does having less time, I guess, between the IPX203 launch and the Raitari OE change your approach to that launch at all? Thank you so much.
spk09: Thanks, Katerina. So regarding Pfizer, I think it's unfortunate what has happened, not expected. It was a plant that manufactured a lot of sterile injectable products and supplied in the U.S. As I mentioned that we, as MNIL, we have expanded our injectable capacity. We have four FDA-approved facilities with 19 injectable lines. There are certain products that MNIL would be able to help. in the supply chain in near future to avoid the shortages and we are ready. We have the available resources and we are also working with FDA on some of the pending products that might be on Pfizer issues or other short at least. So as a company, we are very driven and passionate about bringing many, many of these shortage products and alleviate shortage situation in U.S., which is absolutely not acceptable for the American patient. Regarding on IPX203, the CRL, we conducted a very robust clinical study as per our SPA agreement with FDA. And with totality all, with all the data across our clinical study, we are very confident in the safety profile of IPX203 and able to provide the necessary data on a carbidopa safety bridge. So that's the only question we received on our CRL. There was no question about the efficacy, safety of levodopa on a CMC or the manufacturing. So it's one question about the safety bridge of carbidopa. We expect to meet with FDA as part of our Taipei meeting in coming weeks. And after the meeting, we'll have more clarity as on to the timeline. Regarding the launch, we don't expect more than six to nine months delay. And I will pass it over to Chicago on the market potential.
spk12: Yeah. So, thank you, Katrina. So, your question, we have been very clear from the beginning that this is nothing to do with rightary switching over. As you may be aware, that rightary has 235,000 approximate prescriptions out of 5 million. So, majority, 95%, is with old product, immediate release, which has all kind of issues, is very well known. So that represents almost 4.5 million plus descriptions we can go after. IPX is an excellent product, clear differentiator. So we believe we would tap into much more bigger market share with general neurologists than even RITERI. Yes, we would have loved to launch it in June, but it didn't happen. But we are very hopeful that we will get it through and launch the product as soon as possible.
spk08: Thank you so much.
spk03: Our next question comes from Les Sulasky from .
spk05: Les, your line is now open. Please proceed.
spk13: Good morning. Thank you for taking my questions, and congrats on the progress, guys. So first, just quickly, has a Type A meeting been scheduled on the CRL for IPX203 with the FDA? And secondarily, do you see any opportunities to trim any existing low-margin lines within generics? And as a follow-up, what opportunities are you seeing in the generics market given the disruptions that we're seeing? Are you looking to pursue any additional deals in which verticals? and perhaps just kind of walk us through how you think about VD plans in general.
spk12: Les, thank you very much. Taipei meetings will be scheduled as soon as possible, but in the very near future. So the interesting question on a trend on low margin products. So the low margin products have reached very, very bottom. It cannot go any further. It has to go up. It doesn't matter where it is supplied from. The cost, even in manufacturing in India, is going up. So is in Europe. So is in Israel. So we don't expect the companies cannot survive. Charlie Munger would say that no businesses can be successful when they lose money. So that has to change the low-margin trends. On the deals and the consolidation, as you know, the industry had faced tremendous unfair treatment from FTC compared with what they allowed the buying groups and vertical integrations with PBM insurance company retails, and they do not allow the genetics manufacturers to consolidate. That has to change. It's so obvious. strong genetics industry in order to alleviate shortages, in order to have invest in further automation, continuous manufacturing, next generation technologies. It fills 92% of prescriptions. So we hope FTC allows consolidation going forward, and we would love to play a major role in consolidating the genetics industry if we are allowed to do so, but at the right time. Right now, we are completely focused on deleveraging. We would want to substantially reduce our debt, which we can do it from our operating cash flow, and it does not compromise any of our investments. We still have somewhere between 160 to, in the future, it could be 180, 200 million dollars every year, R&D investments, which is very efficient R&D engines we have, we have right capacity already built. So we would, we spend 50, 60 million in capex. And then we also do tuck-in deals. So we don't stop doing tuck-in deals. And we have reallocated our R&D with the simple genetics getting very low. And then more complex, more biosimilars, more specialty is getting the allocation now. So that's the larger deals would have to wait, and we see how the environment will work out. But we absolutely remain very optimistic that at some point the genetics consolidation, especially in the U.S., could happen.
spk13: Great. Thank you for that caller. And just on the manufacturing footprint and capacity that you've added, any concerns around FDA inspections? Maybe just walk us through what the latest status is, specifically in regards to your overseas facilities. Thank you.
spk09: Yeah, hi. So, you know, MNIL has a standard quality track records. We have been inspected globally. More than half of our 95 inspections been in India. And so far, we have no FDA concerns. Most of our inspections are without 483s or minor 483s. This year alone, we had three of our sites inspected in India. and we had no 483 observations. Over the many, many years, we have built a solid quality culture, and we continue to grow and cultivate that culture of quality. So whether the plants are in India and U.S., our systems are so robust and so strong that we don't anticipate issues coming out of those plants during the FD inspections.
spk05: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Our next question comes from David Amslim from Piper Sandler. David, your line's now open. Please proceed.
spk06: Thanks, and sorry for the tech issues earlier, and thanks for fitting me in. So just a couple. So with... the lean into injectables and the shortage situation and giving you commentary, does that in any way change how you're thinking about tuck-ins and specifically the extent to which you're going to continue to add to the brand business through BizDev and M&A? How should we think about that as it's becoming clear that the generics business is performing better and you see in particular starting to reap the fruits of your investment in injectables. So that's number one. Then number two, you talk about continued momentum into 2024. Just wondering if you can provide some more color on that in terms of how many launches, how much of those will be injectables, how much of those will be injectables that benefit from shortages and and how we should just think about any specific products that might have outsized importance for next year. Thanks.
spk12: Thank you, David. So injectables is all organic, homegrown story. It does not require any tuck-in acquisitions. And again, my comments on generic industry is a broader comment, not that MNIL is looking to do anything at this point. And as far as the investment in brand business, which is our number one priority, because that is where we have invested since 2018, acquiring Impax, Rytory, Unitroid, KSP we acquired. So we continue to focus there. And we're probably one of the few companies that can do both really good. And if you look at the overall, let's say in four years, we're going to spend 700, 800 million or 900 million in R&D, half of that money will go into or more than half would be on a branded side, which we constantly look for the either partnership deals and may go, some of them may go on a biosimilar side. So totally focus on the specialty, biosimilars, and then injectables and generics is more organic story for us. Second question, Gaurachan.
spk09: Yeah. Hi, David. Regarding the 2024 outlook for new launches, we still expect to continue to launch about 30 or so new products next year. We have about 92 ANDAs pending with FDA. And as we have shifted and focused heavily on diversifying our portfolio into non-oral solid, obviously, we will have many more injectable products being launched next year. Plus, with our expanded capabilities and our Pippin and Palli plant and our Onco plant and all other plants are FDA approved, we expect at least close to half of those products to be launched in injectable. But same time, we are also excited about some of the other complex product launches that is coming in 2024. Hopefully, in relation, we expect to launch two products. So I think we are well positioned over 24 and even beyond continue to launch 30 or so generic products and continue to be more in the complex area. So 2024, including the biosimilar uptake, our new launches, we have growth across our portfolio, David.
spk06: That's helpful, thanks. And if I may just take in a follow-up, with all the new launches, is it fair to expect some degree of margin expansion, particularly given that there seems to be a lean into more complex product launches next year. I know it's a little early to talk about guidance or anything, but just directionally, how should we think about margins?
spk11: Hey, David, this is Stas. Directionally, things should be kind of flat to up, right? So we agree with you that that's where our expectation would be, to be flat or up. And whether or not it's flat or up, I think it's really kind of, number one, the cadence, number two is kind of the size of the opportunity, and number three, the price deflation, right? So in a world where the price deflation kind of continues to come down and the cadence of new products kind of ramps up, that's what's going to drive the kind of the margin expansion over the course of time.
spk06: Okay, that's helpful. Thank you.
spk05: We currently have no further questions, so I would like to hand over back to the management team for closing remarks.
spk12: Thank you. As we shared on our second quarter call today, very good first half with momentum across our businesses and pleased to raise the 2023 guidance. MNIL in 2023 is a fundamentally different company than 2019 when Chintu and I returned. We have properly diversified our essential medicines portfolio and have expanded in a number of key areas, such as biosimilars, more specialty pipeline, and complex GX products, and international operation. We are well positioned for sustainable growth and meaningful EBITDA acceleration in near term, with key catalysts adding to our growth profile, all of them now. Thank you very much and have a great day.
spk05: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.
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