Amneal Pharmaceuticals, Inc. (AMRX) CEO Chintu Patel on Q3 2021 Results - Earnings Call Transcript

Nov. 03, 2021 3:09 PM ETAmneal Pharmaceuticals, Inc. (AMRX)
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Amneal Pharmaceuticals, Inc. (NYSE:AMRX) Q3 2021 Earnings Conference Call November 3, 2021 8:30 AM ET

Company Participants

Tony DiMeo - Head, Investor Relations

Chirag Patel - Co-Chief Executive Officer

Chintu Patel - Co-Chief Executive Officer

Tasos Konidaris - Chief Financial Officer

Conference Call Participants

David Amsellem - Piper Sandler

Nathan Rich - Goldman Sachs

Elliot Wilbur - Raymond James

Balaji Prasad - Barclays

Greg Fraser - Truist Securities


Hello everyone and a warm welcome to Amneal's Third Quarter 2021 Earnings Conference Call.

I would now like to turn the call over to Amneal's Head of Investor Relations, Tony DiMeo.

Tony DiMeo

Good morning and thank you for joining Amneal'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 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's 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 filings, 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 US GAAP may be found in our earnings release and the appendix of today's presentation.

On the call this morning are Chirag and Chintu Patel Co-CEOs; Tasos Konidaris CFO; Andy Boyer and Joe Todisco 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.

Chirag Patel

Thank you, Tony and good morning everyone. Amneal achieved a solid third quarter results with net revenue of $529 million, adjusted EBITDA of $135 million, and adjusted EPS of $0.21. 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 Generics 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 improve 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 higher levels of profitability. Notably, adjusted Generics 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 Generics business durable and different including the pace of new launches and our increasingly complex portfolio. There are two points to reiterate. First, the third of our current Generics 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 new 2.0 strategy to expand our portfolio with increasingly complex products we are so excited to announce the acquisition of Puniska Healthcare, which is a pivotal step in growing our injectable business.

Today, the overall US 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 short supply shortages for sterile injectables and need for more capacity.

Currently, Amneal is strict 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 remained 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 sales force this year. In the third quarter, we saw continued strong performance of over two largest specialty products, Rytary and Unithroid.

Second, we continue to advance our Specialty pipeline. Most notably, we are pleased with the positive Phase III data for IPX-203 and the potential this technology has to help Parkinson's patients achieve more good on time with less frequent dosing. We do not view IPX-203 as a line extension of Rytary. But rather, we believe IPX-203 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 IPX-203 represents. We continue to advance the programs across our Specialty portfolio and Chintu will discuss this 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 AvKARE 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 to 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, import highlights our ongoing efforts in driving environmental, social and governance initiatives at Amneal and provides important insights on our business and its impact on stakeholders.

For example, in terms of access and affordability, our generics medicines were responsible for saving patients nearly $10 billion in the United States last year alone. In addition, on the environmental stewardship side, we have implemented 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 Chintu.

Chintu Patel

Thank you, Chirag, and good morning everyone. First, let me thank our nearly 6,500 Amneal 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 efficiencies 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 back order in our history.

Since the inception of Amneal, we have maintained a commitment to the highest standards of quality and current good manufacturing practices. The team continues to maintain its taller 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 bioequivalence studies performed by Synchron Research Services. The FDA assigned the BX 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, North Synchron. Also, Amneal monitors and independently audit 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 rating in a timely manner.

Turning to the injectable business. As Chirag highlighted, the Puniska acquisition advances our strategy to meaningfully expand in injectables. Today, we have 25 commercial products for the US 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, as 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 Amneal is differentiated from its peers in our ability to successfully innovate and launch products in these hard to make complex areas. Definitely, NuvaRing and Sucralfate are great examples.

Our internally developed R&D and manufacturing capabilities drive this fast-to-market complex innovations. Overall, we feel great about our generic pipeline which is now over 85% non-oral solids. Currently, we have approximately 125 products in our pipeline and another 100 products with ANDA spending. 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 Zafemy, Abiraterone and TobraDex.

Last week, we announced the approval of dexamethasone an important steroid use 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. Amneal has the highest number of CGT designated products in the industry. In short, the wheel of innovation constantly turns at Amneal 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 out-licensing in 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 partners in our geographies and we will share more as we progress. We see global expansion as another vector for sustain growth. Third, we look to enter the biosimilar market in 2022. We have three oncology biosimilars Neupogen, Neulasta and Avastin all filed an under review with the FDA.

We expect to receive our initial approvals next year. Beyond this, we are evaluating additional opportunities with partners where Amneal 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 IPX-203. Recent Phase 3 results showed IPX-203 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 CD/LD dosed on average five times per day. In a post-hoc analysis, IPX-203 resulted in 1.55 hours of increased Good On time per dose compared to IR CD/LD and we believe IPX 203 has the potential to help Parkinson's disease patients achieve more good on time with less frequent dosing than IR CD/LD. We see a broader market appreciate for IPX-203 as compared to Rytary, which represents only 5% of the broader CD/LD space and we expect to submit our ANDA in mid-2022.

In addition to IPX-203, we continue to advance the rest of our Specialty pipeline. First, our ANDA for the DHE autoinjector for migraine and cluster headache is pending FDA approval with launch expected in mid-2022. Second, we expect to file our ANDA for K127 for Myasthenia Gravis in the second half of 2022. Third. we plan to file our IND application for K114 a modified release T3 product for hypothyroidism in the middle of next year. These are all 505(b)(2) programs for which the risk level is relatively lower. than the new molecular entity 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 KRONOTEC. We expect these technologies will provide a wellspring of new opportunities.

Now I will turn the call over to Tasos.

Tasos Konidaris

Thank you, Chintu. For the third quarter we reported total net revenue of $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 $0.21 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 balance perspective, I'm happy to report that both gross and net debt continued to decline with net debt to adjusted EBITDA of 4.6 times compared to 5.3 times, December 2020 and 7 times December 2019. The 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 Moody's.

Let me now start with our Generics segment. For the 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 increasingly -- of our increasingly complex portfolio. New products launched in 2020 and 2021 accounted for $45 million of growth this quarter.

From a product perspective Zafemy and Abiraterone, which were last early this year were strong contributors to growth. On a year-to-date basis Generics recorded $1 million 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 paying new 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 neurology and endocrinology with Rytary and Unithroid. Both brands continue 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 our promoted brands. We expect continued strength in Rytary and Unithroid as Q3 total scripts from 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 Rytary and Unithroid growing up 10% combined.

In the AvKARE distribution segment third quarter net revenue of $89 million was down $1 million or about 1% year-over-year. Growth was impacted by the prior year comparison due to timing issues. Adjusted gross margin for AvKARE 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 was partially offset by $8 million in higher R&D as we incorporated the Kashiv specialty acquisition and $10 million in higher SG&A due to our sales force expansion and higher expenses as the economy opens. Adjusted diluted second quarter -- adjusted diluted third quarter EPS 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 million to $250 million for the full year. In addition, we closed the third quarter with $311 million in cash and cash equivalents and our intend is to utilize a portion of that to fund the $93 million purchase price of the Kashiv acquisition.

From a timing perspective, approximately $73 million of the purchase price is funded in November, while the remaining $20 million to be funded in mid-2022. As Chirag and Chintu mentioned earlier we're very excited about the capabilities this acquisition gives us and we expect it to begin adding meaningful revenue and EBITDA starting in 2023 and accelerating substantially after that.

As for nine months through the year and most of our 2021 new product launches are behind us, we're 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 Amneal pipeline to resilience our commercial portfolio and asset headwinds driven by the lack of flu season and lingering COVID-19 impact.

At the same time we are raising investment 2021 EBITDA full year range between $530 million and $550 million compared to $500 million 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 220 -- between $220 million and $250 million and we're slightly lowering our CapEx expectation to $50 million and $60 million compared to the range of $60 million and $70 million. In summary, we feel great about our quarterly and year-to-date performance of solid topline and double-digit adjusted EBITDA growth and our ongoing positive trajectory.

Let me now hand it over back to Dr. Chirag.

Chirag Patel

Thank you Tasos. In summary, Amneal is executing well in all fronts. Solid performance across the business and sustained higher 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.

Question-and-Answer Session


[Operator Instructions] Our first question comes from David Amsellem of Piper Sandler. David, your line is open. Please go ahead.

David Amsellem

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 pair 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 could add on that would be helpful? Thanks.

Chirag Patel

David, good morning. Good to hear from you. So on your first question, the Amneal 2.0 strategy as we had clearly laid out that we are diversifying our business away from oral solids. Not does not mean we're getting out of oral solids, because we have fantastic extended release multi-layers oncology, all those complex oral solid products as well. We're pretty much very less onto the commodity oral solid cortex 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 our sole relying on the retail business into injectable business, which is today 125 our aspiration is to be in top five. This acquisition provides us with accelerated R&D development and accelerated launches, fire 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 injectable.

The third piece is the international markets. This and other facilities also allows us to go to China, which we have to pursue and we're very excited. We haven't shared any details yet, but we are very excited to what we see on those products and opportunity 2023 onward and building a very good business of course in China as well as Africa.

The fourth is the biosimilars, and I'll take my shot on biosimilars first and pass it on to Chintu for interchangeability. So my view remains biosimilars as evolving market much needed, it will 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 intervention by CMS covering all biosimilars would be really helpful for penetrating 20%, 30%, 40%, 50% market share to go to more of a 70%, 80% volume penetration and that will be fantastic needs 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. Chintu, do you want to comment on interchangeability?

Chintu Patel

Sure. Hi, David. Good morning. Before biosimilar, 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 products, 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 building our pipeline.

Coming to the biosimilar interchangeability, David, I think from time side is very good and exciting. That gives comfort to the physicians and the patient that when the products were interchange between -- from the immunogenicity or efficacy perspective the statistical differences were not significant to raise any concerns. But the main driver would be, as Chirag mentioned, would be the payer and have 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 a regulatory pathway, interchangeability or the other areas, I think it's going to evolve and be more acceptable norm going forward.

And your last question on COPAXONE. COPAXONE, due to the delays of COVID and adverse CMO, we are not forecasting in our 2022 launch. It is most likely be 2023 launch first half.

David Amsellem

Okay. Thanks so much.

Chintu Patel

Thank you.


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

Nathan Rich

Hi. Good morning. Thanks for the question. Chirag, you highlighted the gross margin performance in the Generics segment. I know the goal for a while had been to get back to 40% margins. You're now solidly there.

So as we think about the opportunity going forward, could you maybe give us an updated view on where you think gross margins for that segment could go I guess especially as you do shift the portfolio to more complex products?

And then, maybe Tasos a follow-up for you, could you maybe just talk through the updated revenue outlook moving that towards the lower end of the range is kind of what changed relative to your prior expectations? Thank you.

Chirag Patel

Thank you, Nathan. Good morning. So gross margin as we said we are bringing -- 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, back orders 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 Generics. Tasos would you like to.

Tasos Konidaris

Sure. Hi. Good morning Nathan. So from a top line perspective as you recall our range was $2.1 billion to $2.2 billion and right now we're guiding at $2.1 billion which still is up 5% organically from prior year. So we feel -- first we feel great about this.

It's a couple of puts and takes. Number one is our new product introductions have performed better than we thought. First, they got -- they were launched earlier in the year that was 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 the 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 a complete lack of flu season. So that essentially costs us $40 million, just so not selling any tamiflu as well as some other products that caused us -- that was the biggest negative barrier from a top line perspective.

Also sitting -- trying to give guidance earlier on this year trying to anticipate what the COVID-19 impact was but continue to have some lingering effects, I think that impacted everything. So those were 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 bit of the EBITDA and the raise of the EBITDA guidance. Do that helps?

Nathan Rich

Great. Yeah. Thanks very much.


Thank you, Nathan. Our next question is from Balaji Prasad of Barclays. Balaji, please go ahead. Unfortunately, we're not receiving any audio from Balaji's line at the moment.

Tasos Konidaris

Sorry, we can move on?


Balaji, please make sure you are un-muted. Unfortunately, we're not receiving any audio from Balaji'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.

Elliot Wilbur

Thanks. Good morning. First question I wanted to ask was around the injectables segment, obviously expected to be a key driver of growth going forward. Question is, 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 very different needs than those of your traditional 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 at least 15% of the total top line, at least nine months ended September. Just trying to get a sense from you, what you're seeing in terms of the actual space erosion? Certainly some other players have talked about accelerated erosion volume plus price and that definitely seems to be sort of borne out and looking at industries metrics. You guys have been able to offset that. But I'm wondering if you're seeing some accelerated pressure on the base.

Chirag Patel

Thank you, Elliot. Good morning to you. To your first question, we've been in the institutional market since 2016. 2017 we started launching our products. Today, we have 25 products in the institutional market 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 it exactly, because we've got the R&D pipeline, we needed the capacity. And today, if we have to order even new injectable line, takes a couple of years because of the neutralizing the COVID vaccines most of these and then the EPA.

So, we're very excited of how we are going to enter in. And yes, we will have a larger portfolio, multiple products, many first-to-launch complex products all kind of technologies, just like what we did in retail. We are committed with the highest quality highest R&D and we are here to stay in injectable market. So we will grow from $125 million 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 is -- which further diversifies it.

On the -- I've been answering the base and all these answers since 2017. I'll give it to Tasos is the same behavior from the three buyers that they constantly look for opportunities and driving the, as much cost down, which is I think not healthy for the industry as the manufacturers would have to rationalize that portfolio if this pressure continues on, which is totally irrational on the part of -- if you look at these commodity products and how low it has gone, it is very concerning. But I'll have Tasos, explain the details.

Tasos Konidaris

Hey, Elliot. Good morning.

Chintu Patel

Can I take a…

Tasos Konidaris

Sure. Chintu, go ahead.

Chintu Patel

I just wanted to add on the injectable side. That earlier it's very exciting, because it triples our capacity overnight with acquisitions and we become a value volume player, plus it gives us added and a very huge capacity called large parenteral bags, and there is a very little competition when it comes to the bag. So it gives us differentiated dosage form to enter and we have very strong and robust pipeline into that segment.

So in injectable, we are working on a lot of complex products, including microspheres, liposomal large parental bag and a lot of autoinjectors and also we have a lot of wild products and others. That capacity missing, we are even bigger player than what we are today and we are very excited. It's the right deal at the right price, right time, go ahead Tasos.

Tasos Konidaris

Sure. 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. So – and that is at the kind of high – 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 the base business and you see what percentage of our Generic portfolio that I 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, 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.

Tony DiMeo

Next question, please.


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

Balaji Prasad

Hi, good morning, everyone and my apologies for missing the call earlier. Firstly on Puniska, Chirag, can you describe the facility that you're getting and the capacity and also any particular products on the pipeline side that you would like to call out. You mentioned that you're expecting FDA had inspection and approval by the end of 2022. Is it linked to any specific products at all or is it overall side 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 in the first 180-days? Thank you.

Chirag Patel

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

Chintu Patel

Yes. Hi, Balaji. Good morning. Puniska side is around 293,000 square feet state-of-the-art recently built in the last two years as a five European made vial and immersion and the large bag lines. So it gives us capacity of around 30 million 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 side from the FDA perspective, they do have a product pending. We are not revealing the name of the product. They have a two product bending one vial and the one bag 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 very trained manpower for injectible. So overall it's riding our strategic move to expand our injectable. So we are very excited and it just overnight gives us that needed capacity.

Chirag Patel

Yes. And Balaji this is a fourth facility. So this is -- we already have three facilities one focusing on oncology on injections and then two others and this is fourth one. On dexamethasone as -- we do not provide specific product revenue guidance, but we love these products.

These are the niche products that is we are alone for a while or two of us it's a -- 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 reliant on any one big launch in year, but multiple new launches coming up. And we're also excited about the potential launch of vaccine as well as we have filed -- we responded to our CRL and we expect that in the first half of 2022.

Balaji Prasad

Understood. Thank you.


Thank you, Balaji. [Operator Instructions] Our next question is from Gary Nachman of BMO Capital Markets. Please go ahead, Gary.

Unidentified Analyst

Hi. Good morning. This is Dennis on for Gary. Thank you for taking my question. Just a couple from me. Lately and as we've been hearing all the supply chain issues is there anything that you've kind of seen that you believe the 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 7 time 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.

Chirag Patel

Thank you, Gary. Two very interesting question on supply chain issues. Yes, they are happening. We fortunately 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 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 the certain API facilities and that is going to cause and already we have the API suppliers pretty much all of them are asking for higher prices because of this increase in cost the inflation is here. So that is concerning on supply chain issues and these certain KSM. And obviously our teams are proactively working with our partners to make sure we don't get into this.

On a day, 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. We're smart about it go on at a right time, right deal, and right price. So certain times we don't win the deals right now in the sellers market because we are 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 we will wait to do the right deals. But we are constantly looking for deals. And like -- so it's a very fine balance to keep going down in a level and still keep adding the new capacity and diversify our business and that's exactly what we are doing. Thank you.

Unidentified Analyst

Thank you.


Thank you, Gary. [Operator Instructions] We have a follow-up question from Elliot Wilbur of Raymond James. Please go ahead Elliot.

Elliot Wilbur

Thanks. Just two quick follow-ups. I guess first for Chintu. 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 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 the time lines seem to get extended more and more every year.

So, that can both be a competitive advantage or a disadvantage. But just wanted to get maybe your perspective in terms of what may be happening to FDA with some of these more complex filings. Why we're not seeing more of them?

And 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.

Chintu Patel

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 Amneal audit and we are very optimistic that we have done a 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 Zafemy, but we have not seen any material impact at this time or a patient concern or the customer concern.

Regarding the approvals Amneal has the highest first review cycle approvals I can say in last three or so years or four years we have received more than 41st recycle approvals that's in around 10 months.

And COVID did impact many companies from receiving approval earlier. But Amneal because of its stellar quality track records we never had any delay associated with pre-approvals or anything else. Even our inhalation plant in Ireland, we had an online auditing and our plant from a pre-approval perspective is approved by FDA.

Complex generics, yes, 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. So, I think depending on the product it may take longer. But like on a transdermal and many other doses form as we have been working with FDA and ophthalmic that Amneal has a very good understanding of what FDA expectations are.

So, we have that only mover advantage on the complex product also in the areas where we have already received approval, which is like of ophthalmic TobraDex was our recent approval, which is a very complex ophthalmic suspension product, that gives us the pass 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 Amneal, we are getting 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, Amneal 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.

Greg Fraser

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 outsized portion of the growth or will the growth be diversified across a broad portfolio of injectables? Thanks.

Chirag Patel

Hi, Greg. Good morning. I'll take your second question first. So 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, autoinjectors, 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 product like Colistin is in higher demand and prices than United States. So really excited on injectable business growth side.

The NPL has been strong, as Tasos mentioned, for the whole year. So we just launched a couple of small products, but they add up really good on contributions from the margins perspective. So we'll continually launch every quarter new products, whether they're five, six every quarter we're launching.

Tasos Konidaris

Just even more specific. So Q3, I think, we said it was about $45 million of growth, should expect about the same level of growth versus prior year in Q4.

Chirag Patel

Thank you, Greg.

Greg Fraser

Thank you.


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

Chirag Patel

Yes. Thank you very much, everyone, for joining today's call. As it is -- this is our multiple calls, 8th or 9th and we're pleased with the progress and we're continuing -- we're steadfastly focused in disciplinely growing the company and we see excellent opportunities as part of Amneal 2.0 strategy with diversifying with our Generics business, which I like to call it affordable medicine business, along with the Specialty products which is, we are in a freeze one-off our branded strategy at this point and executing well on Phase I of our which our 505(b)(2) products and then it will move up the value chain as we become really good at executing Specialty 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 patient worldwide in select markets and select partners and some markets where we maybe entering 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.

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