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spk08: Good morning, and welcome to the Amniel Third Quarter 2023 Earnings Call. I will now turn the call over to Amniel's Head of Investor Relations, Tony DiMeo.
spk10: Good morning, and thank you for joining Amniel Pharmaceutical's Third Quarter 2023 Earnings Call. Today, we issued a press release reporting our Q3 results. We announced certain unaudited preliminary results for Q3 on October 23rd. Our earnings press release and presentation are available at amnial.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 a discussion of factors that may impact our future performance. We also discussed non-GAAP measures. Information on our use of these measures and reconciliations to U.S. GAAP are in the earnings presentation. On the call today are Chirag and Shintzu Patel, co-founders and co-CEOs, Tasos Ponideres, 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.
spk06: Thank you. Thank you, Tony. And good morning, everyone. We delivered another very strong quarter with $620 million of revenue, which is up 14%, adjusted EBITDA of $154 million, up 22%, and adjusted EPS of 19 cents, up 36%. We saw growth in all three of our business segments and reduced net leverage to 4.6 times. Given the strength of our year-to-date performance, we are pleased again to raise our full year 2023 guidance. We are excited about our continued momentum, which underscores the strength of our strategy and solid execution. As we have discussed throughout the year, We believe MNIL is at an inflection point or is to drive significant top and bottom line in 2024 and beyond. I'll start with a quick overview of our company and then walk through what we saw in each of our businesses during the third quarter. At a high level, MNIL is a world-class, global, diversified pharmaceutical company, fulfilling our mission to provide access to high-quality and affordable essential medicines. In our affordable medicines business, our generic segment, we have retail, injectables, biosimilars, and international. Our strategy continues to focus on expanding our portfolio with impactful, complex, and high-value products. For the first nine months of 2023, generics revenues were up 7% compared to last year, reflecting a meaningful acceleration from the steady 3% CAGR we delivered from 2019 to 2022. We expect high level digit, high single digit top line growth in generics to continue. driven by our diverse portfolio and cadence of over 30 new product launches every year. In injectable, our goal is to be top five in the United States institutional market. There are two key factors that we believe differentiates MNEO and will drive our success. The first is expanding capacity and capabilities. and the second is an expanding portfolio. In 2023, we have executed on both. We successfully brought online two new sites which doubled our manufacturing capacity. Currently, we have 35 commercial injectables with over 25 new launches planned by 2025 as we continue increasing production and expanding our portfolio In a market plagued by shortages, we are well positioned for higher injectables revenues in 2024 and over $300 million by 2025. In biosimilars, our three commercial products continue to see strong uptake. Our largest product, Olympsys, was at 6% market share as of September, which is remarkable in the first three quarters post-launch. We expect 60 million in biosimilar cells this year, more than double that next year, and over 200 million in 2025. In addition, we expanded our partnership with MAPScience, who we work with on Olympsis, to add two formulations of denosumab and oncology biosimilar to our pipeline. This is part of the next basket of biosimilars for MNEO. By 2024, we look to add two to three more biosimilars to the pipeline. We see biosimilars as the next wave of affordable medicines and are committed to being a leader in this space. Internationally, we're leveraging our US FDA-approved portfolio to expand our reach and drive profitable growth. In India, we have our local infrastructure and are expanding our local portfolio. In other geographies, we are working with partners to commercialize our products. For example, we now have two products approved in China. We expect international expansion will add 5200 million revenues by 2027 and scale further over time. In our affordable innovations business, our specialty segment, We are focused on neurology and endocrinology therapeutic areas. Our commercial teams continue to drive growth in our key branded products, dietary for Parkinson's and Unitroid for hypothyroidism. As you know, we received a CRL for IPX203 seeking additional data in July. I'm pleased to report that we had a successful type A meeting with FDA last month. and we are working diligently towards the 2024 approval and launch, which Chintu will discuss shortly. We expect specialty revenues to be over $500 million by 2027. Finally, in our FCA segment, we continue to see robust growth across all three channels, distribution, government, VADOD, unit dose. We expect out care revenue of five hundred million in two thousand twenty three and over six hundred million dollars by two thousand twenty five.
spk04: I'll now pass it to. Good morning everyone. Thank you. And thank you to the global family who work hard every day to help make healthy possible for so many. We are laser focused on executing our strategy to be an innovative and diversified global pharmaceuticals company capable of driving sustainable growth in the key areas of medicine. The successes of 2023 are clear proof points that we are on the right track. I will touch on how operational excellence, strong supply chain, and highly productive R&D engine propel our strategy. First, we remain focused on driving operational excellence and efficiency as MNIL has one of the best service levels in the industry. As part of our efforts to drive continuous cost efficiencies globally, we are transferring production for about 30 products for cost improvement and also working on many operational excellence programs for long-term savings. In addition, we have strengthened our supply chain by expanding our infrastructure, particularly in injectables. We have doubled our injectables capacity with four facilities and 19 production lines. While the injectables market continue to face supply shortages, importantly, about 30 of our commercial ANDA and pipeline injectable products are on the U.S. FDA shortage list. MNIL is very well positioned to help address drug shortages in the U.S. At the same time, we remain committed to maintaining our stellar quality track record. Since 2005, the U.S. FDA has conducted nearly 100 successful inspections with no observations or only minor 483s. Overall, our high-quality global operations are at scale to support sustainable long-term growth. Second, innovation is the lifeblood of any growing pharmaceuticals company, and that's certainly the case for MDL. In generics, we are on track for over 40 new launches in 2023, with 33 year to date. This is well above our normal cadence of 30 per year. Also, it's more than just the number of new launches. It is the complexity of these products, less competitors, and the increased value of our diversified portfolio. Our pipeline is deep, with 166 products pending approval or in development. Accordingly, we expect over 30 new launches next year and 40 years after that. In addition, while we have shifted towards complex innovations, we have also improved the efficiency of our R&D operations. We are doing more R&D with less spend which results in a better ROI on projects. Let me share some more details on R&D. Overall, we have 88 ANDAs pending with FDA, of which 64% are non-oral solid products. Behind that, we have 78 pipeline products, of which 90% are non-oral solids. We have shifted our focus to high-value complex categories with approximately 45% of pending ANDAs and over 60% of our pipeline expected to be first to market, first to file, or 55B2 products. In injectables, we have launched 10 new products year to date, including two high-value products in Q3 with potassium phosphate and calcium gluconate bags. Also, we recently received approval for methylprednisolone acetate. which is in shortage. Further, we are advancing a number of complex injectables in our pipeline. In Q3, we filed our first two 55B2 ready-to-use bags as planned. We expect to file several long-acting injectables in the near term as well. As a result, we expect a strong cadence of impactful new injectables to continue in 2024, including the launch of already approved After injectables, we see inhalation as MNIL's next key growth area in complex generics. Our pending ANDA for generic version of Narcan is under priority review, and we look to launch in the coming months upon approval. This important over-the-counter product improves access to a critical overdose treatment. In addition, we have two key metered dose inhaler ANDAs pending for generic version of QR and PROER. In biosimilars, our first three oncology products are seeing excellent uptake, and we have added two additional molecules to the pipeline. We are also evaluating opportunities to be vertically integrated over time. Please see our catalyst slide for the list of recent and upcoming launches. Turning to specialty R&D, we continue to work to advance our 55B2 pipeline. On IPX203, as Chirag highlighted, we had a successful type A meeting with FDA last month to align on the path to approval. As agreed with FDA, we are in the process of completing a small routine QT study in healthy patients. We will complete the study in the coming months. and we will resubmit our NDA in early 2024. We are working diligently towards an IPX203 launch in the second half of 2024 pending FDA approval. We continue to see IPX203 as a critical innovation that meaningfully advances the standard of care for Parkinson's patients. In summary, we are driving operational excellence and executing our innovation strategy, which together are fueling our ability to drive sustainable growth. I will now hand it over to Tasos.
spk06: Thank you, Chintu. Let me first start with the four pillars of value creation from NNEL. That is diversification, strong financial performance, cost generation, and fourth, overall debt reduction. First, starting with increased diversification. Sirak and Chintu touched on this throughout their overview of MNL strategy and business highlights. Since 2019, the portfolio is remarkably more diversified with new lines of business. In 2019, oral solid generics represented 53% of total revenue. Now, in 2023, with new complex generic launches, growth in injectables and specialty, and the addition of biosimilar synaptic care, the portion of oral solid generic revenue is less than half of that, at only 26% of the total company revenues. The higher level of diversification was intentional and driven by our desire to deliver consistent financial performance despite the typical ups and downs of any business. As a result, Our diversified portfolio is driving sustainable higher levels of growth and profitability, as well as increased future visibility. Let me now move to our second pillar of strong financial performance. As an example, since 2019, our annual revenues have increased by over $800 million, or 50%. while adjusted EBITDA is up about $200 million, or 60%. Consequently, our third quarter strong financial performance is not an isolated event and reflects strong execution across our strategic choices for a number of quarters and years. Let me now go into a bit more detail of our third quarter results. Total net revenue was $620 million, growing 14%, adjusted EBITDA of 154 million, growing 22%, adjusted EPS of 19 cents, growing 36%. All three business segments grew revenues substantially this quarter. Q3 generics net revenue was 391 million, growing 12%, driven by our new biosimilars a new complex generics as new launches in 2023 and 2022 added $40 million in Q3 revenue growth. The acceleration in generics growth in 2023 reflects the continued shift towards a diverse, complex portfolio and the addition of key new products that are additive to growth. In specialty, net revenue was $97 million, growing 9% driven by Unithroid and Writory. Q3 after net revenue of $132 million grew 25%, which reflects strong execution and new product introductions by the team. Q3 adjusted EBITDA of $154 million reflects strong revenues, durable gross margins, and tight expense management. Looking at our Q3 year-to-date results, total company revenue growth is 11%, with generics up 7%, specialty growing at 5%, and Medicare growing at 28%. Combined with stable gross margins and operating expense leverage, year-to-date adjusted EBITDA grew 16%, and adjusted EPS grew 11%. Let me now move to our 2023 full year guidance, where given the continued strong performance across the business, we're raising our full year 2023 expectations again this quarter. We now expect net revenue of 2.37 to 2.42 billion, which reflects high single-digit revenue growth. Due to higher revenues, We're raising our 2023 adjusted EBITDA guidance to 540 to 550 million and adjusted EPS range between 51 cents and 58 cents. Let me now move on how strong financial performance is translating into the third pillar of value creation. That is higher cost generation. In 2023, In conjunction with higher profitability and our efforts to drive working capital improvements, our September year-to-date operating cash flow on an underlying basis has grown about 40% to $295 million, compared to $213 million for the first nine months of 2022. Going forward, we're focused on converting an increased amount of higher EBITDA to operating cash flow as a function of targeting further working capital improvements and thoughtful CAPEX investments. In addition, as you may have noticed on Form 8K we filed on October 17th, we made important progress on a key legacy item. That is transitioning from an APSE corporate structure to a more traditional C-Corp structure. This transition was highly technical in nature, but has substantial cash flow benefits to our company as it enhances investor transparency and share flow by having only one class of common stock. This leads me to the fourth pillar of value creation, and that is the leveraging. With higher cash generation and many of the historical improvements, investments to expand our portfolio and infrastructure already made, we're in a very good position to further reduce debt. From 2019 to now, net leverage has come down from 7.4 to 4.6 times in the most recent quarter. We're focused on delivering consistent debt reduction over the course of time, and we feel confident in our ability to achieve net debt to adjusted EBITDA below four times in 2025. I hope this overview of the key pillars of value creation for MNEL is helpful. Going forward, we're confident that the increased diversification of our business, strong financial performance, higher cash generation, and further deleveraging will create substantial value Let me now hand it back to Shiran. Thank you, Tasos. In summary, MNIL has never been in a better position to drive substantial, sustainable, long-term growth, and we believe the best days are ahead for our company. Let's now open it up, Toni, for Q&A.
spk08: Thank you. If you'd like to ask a question, You may do so by pressing star followed by one on your telephone keypad. When preparing for your question, please ensure your device is unlisted locally. And if you wish to revoke your question, please press star followed by two. We will now take our first question from Balaji Prasad from Berkeley. Balaji, your line is now open, please go ahead.
spk09: Operator, we can go to the next participant and put Balaji back in queue.
spk10: Thank you.
spk08: Okay, no problem. We will now take our next question from David.
spk07: A couple. So first, I wanted to ask you about AvCare and its role in the organization going forward. I mean, is that a business that you think might be non-core over time? How do you think about it strategically? That's number one. Number two, regarding injectables and all the launches that you cite, Are these mostly shortage products? Is it a mix of shortage products and complex products? I'm just trying to understand how to think about the product mix here in injectables and what the margin structure for injectables is going to look like over time, margin structure, vis-a-vis your corporate margin structure. Thanks.
spk06: Hey, David. How are you? Good morning. On Evcare, as you know, we are very few remaining U.S. manufacturers. That is where most of the business is driven through TA-compliant products. So it is strategic business for us. It grows, as you can see, the number of products for VADOD, plus we have a niche unit dose as well. And as you know, we have a partner who is expert in this area is running the business. So I would, I mean, exact definition of core non-core, but it is very strategic at this point for us, but we're open to evaluate options in the future. It is a strong business, highly profitable, and we're very committed to it. The second part, I'm going to pass it to two gentlemen since we have everybody today in the conference room.
spk04: We're going to start with my brother, and he'll pass it to Harsha. Hi, David. Good morning. On injectable, we have a very big portfolio and we invested for the last two years on expanding our R&D capabilities and also infrastructure. So, we have a very wide variety of dosage form capabilities, BFS, large bags, auto injectors, liposomal peptides, microspheres. These are complex categories, and some are also volume. So we have now capabilities to play value and volume game, both in the injectable space going forward, where our current capacity was around 20, 25 million. Wiles or PFS combination of different products has gone up to about 70 million. So that's a big shift. So second question on shortages, we have about 30 products. That's pending approvals. or already approved, and the shortage product scores keep in and out. But MNIL is very much passionate about addressing this shortage issue, and as soon as we have product, we try to help alleviate the shortages. And some of the launches, your question was, it's a mix. Some are first-to-market products. Some are complex products like MPA multi-dose. So it's a combination of both, and that's what we'll see in coming years. And we are confident to launch, you know, 20 new products also in injectable in 2024. So very strong pipeline, which will expand to about 80 products by 2025. Arshad, anything to add?
spk05: David, I'll just build one thing to frame your comment, right, which is, I think shortages and complex products are not mutually exclusive. Often the biggest shortages are on complex products. As you see us launch our last six months are pretty good proxy for the portfolio, which is premixed bags, electrolytes, which are a structurally short category where there are structural issues in the market over the long term that we hope to address. And single product opportunities, where we have structural strengths, like the cortical steroids and methamphetamine store and others, but you should expect us to continue to proceed along a pathway like that.
spk06: And David, don't be on.
spk05: Yeah. Yeah.
spk06: That's okay. Your last point was impact to the margin. So, you know, injectables in general and the areas we play are just going to be accretive to the overall gross margin of the company. So this is one of the reasons why, as we think about the future, you know, we feel confident about enhancing and increasing our financial, not only top line profitability and, you know, adjusted EBITDA and cash growth.
spk07: Okay, got it. Back out to my last question.
spk09: Thank you.
spk06: Thanks, David.
spk08: Thank you, David. As a reminder, please ensure you have the webcast live whilst asking your question to prevent any audience interference. We will now take our next question from Les Belowski from Truist.
spk02: Good morning. Thank you for taking my questions. Just first, on the RITERI front, the script growth has been good. I thought the sales figure was a bit light. So, just perhaps walk us through some of the pricing dynamics in 3.2. Was there any discounting in the GTN front? And then, secondarily, on the IPX203, can you provide a little bit more details around the feedback from the FDA regarding your Type A meeting? in the study design that you expect for that? And then also, how are you thinking about commercial launch in the second half?
spk06: Great. Thank you, Les. I'm going to have our chief commercial officer, Joe Renda, answer the RITARI question, and then we'll move to my brother for IPX203 more details. Please.
spk00: Yeah, so your question on RITARI, nothing has changed with our contracting strategy. We're still fortunate enough with RITARI to have the best coverage of any prescription product in the Parkinson space. We have about seventy or so percent commercial coverage and about sixty or so percent Part D coverage. We actually, the growth we've seen has been in the latter part of the year. If you look at Q3 and Q4 as an example, our NBRX growth is at around twenty to twenty-two percent, which is significantly higher than what we saw at the same time last year. So we are seeing both NBRX growth with RITARI as well as TRX growth. So we've been really pleased with the pattern that we're seeing as we round out this year. And overall this year, it looks like our growth will be higher than what we've seen in previous years with RITARI.
spk06: And unless just on your point about the quarterly gross to net. Yeah, we had about 5, 6Million dollars of over unfavorable kind of timing gross to net adjustment related to Medicare rebates. So that's why probably the quarterly net revenue growth is that a little less of the kind of volume growth, but that's behind us and was more of a 1 time 1 time event.
spk04: On IPX203, we had a very successful type A meeting to align our path forward with FDA. So the question was mainly on the safety breach for carbidopa. And we have addressed that for the major as we had a one year of safety data on carbidopa. And FDA is aligned on our data and what we had presented. And it leads to only one remaining question, because any time carbidopa has been an old molecule, the certain amount of carbidopa, we had to do a QT bridging study. So we are doing a small routine QT study in a 36 healthy patient, which we are starting very shortly in a week's time. And we plan to complete that study and file in first half of 2024. and launch product in second half of 2024. We are ready to launch the product from the commercial end also, and from the manufacturing, and the product is ready to go. We are very excited on IPX203 and what value it brings to the patient.
spk06: Yeah, it's a much broader value, less than dietary. We're going after entire 1 million patient population, and 90,000 new patients come on every year, unfortunately. So it's a large market, and we want to change the habits of prescription, of prescribing IR to start with. Why not IPX203? It's much better formulation. It gives a good on time, longer good on time every day. Meaningful or huge impact on their daily lives. So and we have lots of Obviously data to go with and and we never marketed to the broader audience of broader broader patient population So that is we are ready for the marketing strategy. We have learned a lot from right early launch and obviously the the there's a lot of support for this product as the clinicians have seen the results of this product so extremely exciting launch coming up and not only in the United States where the final negotiation in Europe, because Europe only has IR. And that'd be much needed for Parkinson's patients there and globally. We're going to push it out to our mission to provide high-quality, life-changing medications to affordable access to global population. Very exciting. And we're filing the response only. That's great. Thank you for all that. Yeah.
spk02: Got it.
spk09: Thank you for that caller. One. Go ahead, Les. Do you have a follow-up?
spk08: Sorry. I muted his line. Let me open his line back up.
spk09: Yes, there's a lot of feedback on the line.
spk02: Can you hear me now?
spk08: Can you hear me now?
spk02: Yes, we can, Les. Go ahead.
spk08: Yes, we can hear you now.
spk02: Okay. There seems to be a lot of feedback online. My follow-up question was regarding your recent refinancing agreement. So can you just perhaps walk us through some of the key aspects and changes in the covenants and things of that nature. Thank you.
spk06: Yeah, thanks, Nate. So we're pleased to report that after, as you know, refinancing our term loan B, which was due May of 2025, was one of our key priorities of this year. And I think we're very pleased with the outcome so far. So after just a lot of very positive support from our existing lenders and a number of new lenders we successfully priced and allocated, about $2.3 billion, which is about 90% of our term loan B. And with that, the key thing was we extended the maturity by three years to May of 2028. So, essentially, a couple hundred million dollars are due in May of 2025. and $2.3 billion have been pushed out to May 2028, which is essentially four and a half years from now, which gives us a substantial amount of additional runway for the company to continue the diversification path that we began a few years ago, increasing our cash generation that I spoke of and reducing both absolute debt and net debt to adjusted EBITDA. As we expected, the pricing was pretty much in line with our expectations, so you may have seen on Bloomberg, Nate, it was SOFR plus 550 basis points. That's a couple hundred, 200 basis points over the existing loan, so that was within our expectations. So that leads to about $50 million of increase in interest expense. which the unwinding of the I spoke about will more than offset that increase. So, from an overall cost perspective, that increase in interest expense, which we fully expect, it will be more than offset by our change in corporate structure, which will save us about 60 million dollars plus year over year. You know, in terms of covenants and so forth, you know, there is nothing kind of big material changes that I can fully recall. And the final thing I would mention is also, you know, we need to keep in mind that our interest expense growth is limited partially because a billion three of our debt is fixed. So with a swap in place, we were able to amend that swap to kind of reduce our interest expense associated with this refinancing. So great outcome from our perspective. I want to thank both our existing lenders. into our term loan for being supportive and working with us over the last few months. Because as we know, the capital markets, he'll be pretty happy.
spk09: Great. Thank you.
spk08: Thank you, Les. We will now take our next question from Nathan Rich from Goldman Sachs. Your line is now open. Please go ahead.
spk01: Hi, good morning. This is Sarah on Vernet. Thank you so much for taking our questions. I first wanted to start on the new corporate structure and the cash flow implications. Can you just talk about the peak expected restructuring savings and also the timeline to realize these synergies?
spk06: Good morning, Sarah. So, as people know in this room, it took us a couple of years to kind of fully get our arms around the legacy structure and really finding the best way that works for all our shareholders. So, number one is we expect to effectuate the change essentially tonight. So as of tonight, we'll have that new corporate structure and the savings will become immediate, number one. Our expected savings per year is about $60 million of cash every year. Those historic levels of cash was exiting the company as cash from financing that was in that specific cash flow line. So, those, those savings will be materialized and will be a critic to the company essentially immediately as those kind of tax distribution payments as of tonight. A great outcome, you know, some companies, I don't know how much, you know, about that. Some companies given 1, those structures by paying hundreds of millions of dollars out. We did not we, it cost us 0211. the structure. We feel great about the outcome.
spk01: That's really helpful. Thank you. And then I just wanted to dive into the strong app care growth and the segments operating margin improvement. So, can you talk about what drove the significant margin uplift in the quarter? And then also, I know GLP-1s have been a big area of focus. Is this also contributing to the strength in this segment?
spk06: Let me take the show. So, Avicare, as you may know, we acquired 65% of Avicare in January 30th of 2020. And since then, even in periods of COVID and et cetera, that business has been proven incredibly resilient and growing. And that's point number one. Point number two is part of our strategic rationale was how do we leverage MDL's pipeline of products to accelerate the historic growth of Adcare? And that has played exactly as we thought. There's been a tremendous amount of product flow from AdCare to, from, excuse me, from MDL to AdCare that has created a tremendous amount of value to the patients and the buyers, right, and the ultimate customers of AdCare. So that growth has been driven by a couple of different reasons. Number one is the overall demand in the marketplace as population ages, right? And we have a natural, what I will call a tailwind, number one. Number 2, there is simply kind of coming out of Kobe. There is simply more product availability, both from as well as the 3rd party providers that ad care works with. So, new product introductions here fuel that number 3, we've talked about shortages in the marketplace associated not only with injectables, but in general complex products. So after was able to kind of tactically take advantage of certain shortages in the marketplace this year and price accordingly. So that's what why you see some of the increased gross margin in our performance. This work and actually gear to date versus versus prior years. So overall, those were the reasons why the growth of AvCare has been strong. And, you know, we continue to expect, you know, I'm not sure that the business will continue to be growing 25, 30% upline every year, but definitely we expect strong double-digit growth for the next few years to follow. Does that help, Sarah? Yeah. So, Sarah, I just want to clarify that AvCare is a niche government distribution business for VADOD. where you have to invest in a product development, product partnership way in advance. So it's a value added distribution, not just simple distribution. We do not distribute GLP-1s or anything. So the growth is from value added generics products from MNIL as well as other suppliers that Abcare is set to do government contracting for long-term national contracts, as well as FSS schedules, and their unit dose business with the hospitals is growing as well.
spk08: That's really helpful. Thank you. Thank you. We will now take our next question from Balaji Prasad from Barclays. Balaji, your line is now open. Please go ahead.
spk03: Thank you. Hi, good morning, everyone, and apologies for missing the previous opportunity, so thanks again for that. A couple of questions from me. Firstly, it's great to see the developments of the company over the past couple of years, and especially the last two quarters, the transformation has been pretty solid. As I look out over the next one or two years, I would love to understand the pushes and pulls that we can expect for the cash flow outflow for 2024-2025. See how we can think about the cash flow trends for the next couple of years. Two, you definitely flipped around the traditional generic model in looking on going after the markets in India and China. I'd love to get a sense of how large these markets can be considering that both of these markets are a difference in the spectrum. India seems to be on a very strong growth platform, whereas China seems to have stalled. And how would you approach these markets differently? Thank you.
spk06: Thank you. Abalaj, good morning. I'll take the first one. So as we think the next few years, you know, we continue to drive incremental revenue, incremental EBITDA, and incremental cash. No, no, no question about it and the incremental cost. So, if you look at our costs to EBITDA this year, it was over 50% much more favorable than prior years, because we intentionally focused on certain working capital improvements again. our expectation is that will continue to grow. So as EBITDA grows, operating costs will continue to grow. That's point number one. Point number two, in terms of, you know, you also know that CapEx, we're pretty much at scale. So we typically spend between 50, $60 million, you know, maybe it goes a little higher, maybe it goes a little lower, but because we are at scale, we don't expect CapEx to substantially change, okay? We talked about an increase of interest expense, so maybe that goes up, call it $50 million year-over-year, okay? But also we will save year-over-year over $60 million of cash distributions related to the APSE unwound. So the net of the two is a positive, call it $10 to $15 million. Um, so, and the other thing is, in terms of settling 1 of the other things, you know, about us is, is who've been very focused on kind of cleaning up legacy issues. Okay. So, back in 2019, you know, we really not only us, but the whole industry was facing substantial amount of liabilities and not a lot of clarity around it. Okay. So as you know, a couple of years ago, we settled the OPANA ER. So last year, we had $130-some million payment related to that. This year, we had an $86 million payment. And there is only one payment of $50 million remaining in January of 2024. So, you know, 2024 versus 2023, right, it's $30 million less of a headwind. Regarding the right, so that's going to be a positive and then after that right is behind us. There are certain other liabilities. We talked about opioids. Our team is working really hard. We've put a placeholder, a pretty well-educated estimate of about $22 million in our balance sheet for that potential liability. It may be a little bit more, it may be a little less. And as you know, usually those liabilities get settled over a long period of time of multiple years. So we don't believe that's going to give a material impact. at any given year. So overall, I think when you look at all of those pieces, I think there is more cost that stays in the company over the next few years in growing than in prior years. Thank you, Dr. Susan. International biology, we are two strategies we have. One is using MNIL's own portfolio, which is very huge on injectables and uh the retail side as well as in the future could be biosimilars we are partnering in europe we have orion 100 years old finland company as our partner so we're working through the their sales channel to sell the product mnil's products uh middle east we just signed up multiple partnerships so we'll be selling mnil's product in middle east And US FDA approved sites, approved products, obviously has more premium than the other products. We have finalized our term sheets on Southeast Asia as well, and going now to South America, Canada. So we'll cover pretty much the entire world, some parts of Africa as well. Basically, it'd be an incremental revenue of MNIL's product, which are sold in the United States. So that's the first strategy, which we expect to go to $1,500 million. Plus, it will keep growing because we have more and more products that we are launching. And again, complex products in international markets are very good. We're not taking every product out there. It has to obviously make certain margins for us. And the second strategy is India strategy. That is a standalone strategy. That we are, we have direct marketing. We have spent quite a bit of time understanding the market. And we have launched ourselves forces in hospital, several products, including diagnostic in hospitals. And now we are just expanded ophthalmology, the eye care products portfolio in India. and we will be entering oncology and CNS as well. So pretty broad strategy because we believe India, it's growing at a 14, 15% every year for our market and it has even more room to grow. So we want to be part of that growth journey and we have the science, we have the company's reputation and set up in India. So we believe India can become a substantial market. It's very small today, like $10 million will keep growing, but it has, it can go a pretty long way in India.
spk04: So that's the international strategy we have. Just to add one thing in India, we are looking at beyond our current portfolio, especially in the red disease and some other unmet areas in India because there is a huge unmet needs on many, many products. So we are looking at certain branded aspect of product development and launching India specifics. And that looks pretty exciting that space because, you know, there is a lot more awareness, affordability, and people are, you know, are talking about health and prevention than the previous time. So entire India market is shaping up very differently than what we have seen before. So we want to be there and we want to be a value-added something that is unique and new.
spk03: Thank you all. Thank you all.
spk08: Thank you, Balaji. We have no further questions registered today. So with that, I will hand over to Chirag Patel for final remarks.
spk06: Well, thank you very much, everybody, and have a nice day.
spk08: This concludes today's call. Thank you all for your participation. You may now disconnect your lines.
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