Endo International plc (ENDP) CEO Blaise Coleman on Q4 2021 Results - Earnings Call Transcript

Endo International plc (ENDP) Q4 2021 Earnings Conference Call March 1, 2022 7:30 AM ET

Company Participants

Laure Park - Senior Vice President, Investor Relations and Corporate Affairs

Blaise Coleman - President and CEO

Mark Bradley - Executive Vice President and CFO

Patrick Barry - President, Global Commercial Operations

Conference Call Participants

David Amsellem - Piper Sandler

Balaji Prasad - Barclays

Navann Ty - Citi

Nathan Rich - Goldman Sachs

Operator

Good day, and thank you for standing by. Welcome to the Endo International Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Laure Park, Senior Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Laure Park

Good morning, and thank you for joining us to discuss our fourth quarter and full year 2021 financial results. Joining me on today's call are Blaise Coleman, Endo's President and CEO; Mark Bradley, Executive Vice President and CFO; and Patrick Barry, President, Global Commercial Operations.

We have prepared a slide presentation to accompany today's webcast, and that presentation as well as other materials are posted online in the Investors section at endo.com.

I would like to remind you that any forward-looking statements made by management are covered under the U.S. Private Securities Litigation Reform Act of 1995, and the applicable Canadian securities laws, and are subject to the changes, risks and uncertainties described in the press release and in our U.S. and Canadian securities filings.

In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo's current report on Form 8-K furnished with the SEC for Endo's reasons for including those non-GAAP financial measures in its earnings release and presentation.

The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings press release issued yesterday unless otherwise noted therein.

I would now like to turn the call over to Blaise. Blaise?

Blaise Coleman

Thank you, Laure. Good morning, everyone, and thank you for joining us. Turning to Slide 3. I want to start this morning by thanking all of our Endo team members for their hard work and unwavering commitment to our vision and helping those we serve live their best life, and the meaningful progress we made against our 3 strategic priorities in 2021.

Our first strategic priority to expand and enhance our portfolio represents our focus on investing to build a more differentiated and durable portfolio through a combination of internal and external investments. In 2021, despite the prolonged impact of COVID-19 on market conditions. We saw strong XIAFLEX growth driven by consistent commercial execution and ongoing investment. We also launched "the first injectable for the treatment of moderate to severe cellulite of the buttocks in adult women and have trained and certified greater than 1,800 aesthetic accounts. In addition, we continued investing in our sterile injectables pipeline, increasing the number of development projects by 30% with a focus on more durable and differentiated product opportunities.

Furthermore, we launched a number of new sterile and generic products during the year, including lubiprostone capsules, the authorized generic of AMITIZA, and varenicline tablets, the first and only FDA-approved CHANTIX generic.

Our second strategic priority to reinvent how we work reflects our focus on embracing the future and evolving our ways of working to better serve our customers, promote innovation and improve productivity. In 2021, we progressed the optimization of our manufacturing network with the sale of our generic manufacturing facilities in New York and California. We also advanced our strategy to ensure supply chain resilience and redundancy across multiple geographies, including our new facility in Indore India. We are firmly on track to deliver the forecasted savings from our manufacturing optimization plans announced in late 2020.

In addition, we continue to evolve our ways of working across many areas of our business, including the adoption of a flexible workplace policy that is intended to empower our team members to work at the time and the place where they are the most productive and effective in order to achieve individual, team and company goals. Our third strategic priority to be a force for good, expresses our commitment to deliver our priorities in a way that benefits all of our stakeholders. We believe operating with this priority in place is essential to our goal to create long-term sustainable value.

In 2021, we continued to take steps on our diversity, equity and inclusion journey, by implementing changes to our recruitment and hiring processes. We also focused on cultural agility and leadership training, which further demonstrates our commitment to creating a more inclusive culture at Endo. In addition, we also took steps in 2021 to advance our ESG reporting initiatives. We intend to include our Scope 1 and Scope 2 greenhouse gas emissions baseline data in our ESG report, which will be issued in the spring, and will help to inform our broader climate strategy.

Finally, in 2021, we entered into an agreement to support the U.S. government Pandemic Preparedness Program. Through this agreement, we will expand the capabilities at our facility in Rochester, Michigan, in order to provide fill-finish manufacturing services if needed, to enable support of future pandemic critical medicine needs.

Moving to Slide 4. This is a snapshot of our segment and consolidated revenues and our adjusted EBITDA for the quarter and full year. Fourth quarter enterprise revenues of $789 million increased by approximately 4% compared to the prior year. This was driven by increased revenues across our branded generic and international segments and partially offset by decreased sterile injectable revenues. Reported fourth quarter adjusted EBITDA of $387 million increased by approximately 10% compared to the prior year. This increase was primarily due to higher consolidated revenues and favorable changes in product mix, and was partially offset by higher adjusted operating expenses due to increased XIAFLEX and "commercial" investments.

Turning to Slide 5. We Fourth quarter revenues from our Branded Pharmaceutical segment increased approximately 2% compared to the prior year. This increase was driven by a 4% increase in our Specialty Products portfolio compared to the same quarter last year. XIAFLEX revenues increased approximately 14% in the fourth quarter compared to the prior year driven by an increase in net price and improving patient demand. XIAFLEX' fourth quarter performance was unfavorably impacted by ongoing COVID-19-driven disruptions in the market for office-based procedures. These disruptions include medical and administrative staff shortages and physician offices, and significantly lower numbers of in-person patient office visits compared to pre-COVID levels.

Although we are optimistic market conditions will improve throughout the year, the timing and extent of the recovery is currently very difficult to estimate. Revenues from our Sterile Injectables segment decreased by approximately 4% compared to the fourth quarter of 2020. The decrease was driven by competitive pressure on certain products, and was partially offset by an increase in VASOSTRICT and general revenues compared to the prior year, primarily due to higher utilization levels.

In terms of the current vasopressin market landscape, following the generic product launch at risk in January, the market now also includes an authorized generic, a recently launched 505(b)(2) product as well as our VASOSTRICT ready-to-use bottle. We anticipate the landscape will continue to be highly dynamic throughout the year. In addition to the evolving landscape, we expect overall market volumes to begin declining as COVID-19-related hospitalizations decrease.

Moving to Slide 6. Revenues from our Generic Pharmaceuticals segment increased by an impressive 21% in the fourth quarter compared to the prior year, mainly due to the launch of varenicline and lubiprostone continued brand to generic conversion, which has approached 70%. We are pleased with the performance of varenicline, which received early FDA approval and remains the only FDA-approved CHANTIX' generic. We'll talk more about the varenicline opportunity on the next slide.

Finally, International Pharmaceuticals segment revenues for the fourth quarter were essentially flat compared to the fourth quarter of 2020.

Moving to our Varenicline product opportunity on Slide 7. We are extremely proud of the efforts of our R&D, manufacturing and supply chain teams to bring Varenicline to market. We are vertically integrated with in-house production of both the API and the final finished product. With the accelerated launch of this product late last year, we are now working to expand our current capacity to fill the unmet product demand, and expect more capacity to come online over the next several weeks.

Based on recent IQVIA data, we have approximately 65% share of the current market of the molecule. We believe Varenicline has the potential to be a significant opportunity for us this year. However, we currently have no visibility into when competition might materialize for this product. So it's difficult to estimate the full year outlook at this time. What we can say with confidence is that we will be ready to fully capitalize on the upside opportunity should it present itself over the course of the year.

Moving to Slide 8. Maximizing XIAFLEX for long-term growth is a critical element of our strategic priority to expand and enhance our portfolio. We believe that XIAFLEX has the potential to satisfy the large unmet needs that continue to exist for nonsurgical options to treat both Peyronie's Disease and Dupuytren's Contracture. Over the last several years, we've executed a commercial strategy grounded in a deep understanding of patient needs. The marketplace and market dynamics for both on-market indications. The strategy is focused on increasing diagnosis and treatment rates through increased patient awareness of nonsurgical options, coupled with physician education and training, and investment in clinical data and data analysis.

We've invested in this strategy in order to realize the long-term potential of these 2 indications. As a result, we've seen consistent and meaningful demand growth over that same period. For the Peyronie's indication, our branded direct-to-consumer campaign has been running with good success. We know that our market research that when a patient specifically request XIAFLEX, their physician honored to request nearly 70% of the time.

We are seeing strong consumer activity on our physician locator sites, which is a good indicator of potential future patient demand. The Bent Carrot campaign is a friendly, tasteful and visual approach to a condition that often causes embarrassment and may feel too intimate to discuss. Our overall objectives with the campaign are to medicalize the condition and empower men to have a branded XIAFLEX conversation with a trained urologist.

Moving to Dupuytren's Contracture. We've initiated a new disease awareness campaign, featuring real patients. Patients are often told to wait and watch without clarity on when to return for treatment. This new campaign is designed to create further condition awareness and give clear direction regarding the appropriate time to treat while informing patients that nonsurgical options are available. To realize the potential of these indications and drive meaningful adoption and sustainable long-term growth, we are committed to consistent investment in condition awareness and consumer activation.

In addition to optimizing our own market indications, our XIAFLEX maximization plan also includes continued investment in the development of potential future new indications. The current XIAFLEX indications in clinical development include plantar fibromatosis and adhesive capsulitis. We believe these both orthopedic-focused indications represent a potential opportunity to bring an innovative treatment option to address a large unmet need for patients who are seeking a nonsurgical approach.

In addition, these potential indications represent attractive market opportunities, are highly synergistic with our current orthopedic selling footprint and commercial capabilities, and represent highly efficient adjacencies for our XIAFLEX franchise.

From a time line perspective, we recently initiated our Phase II study for plantar fibromatosis, and we expect our adhesive capsulitis final Phase II study results in the third quarter of this year.

Turning to Slide 9. As we approach the 1-year anniversary of the launch of QWO, we are pleased with our overall commercial launch execution in creating brand awareness and driving QWO trial utilization. Our PR and media planning efforts have resulted in over 7.3 billion media impressions, with more than 220 media placements, and we have received 5 best-in-beauty awards. This coverage has helped build broader brand and condition awareness, and we believe demonstrates that there is market enthusiasm for innovation to address the condition of moderate to severe cellulite of the buttocks. In terms of driving QWO trial utilization, we have made very good progress with greater than 1,800 aesthetic customer accounts, trained and certified in 2021. The reaction from the Medical Aesthetics Community regarding our overall launch execution has generally been positive, and women who have been successfully treated with QWO have expressed satisfaction with the results.

However, as we've broadened our base of utilization, we've seen an emerging perception among some customers that skin discoloration may be more prevalent than 8% in our Phase III clinical study results. This perception has created some hesitancy, and represents a potential barrier to wide-scale adoption.

We are very focused on listening and learning from the Medical Aesthetics Community. In response to their feedback, we are currently designing additional clinical studies focused on the potential prevention, mitigation and treatment of skin discoloration should it occur. We are taking into account real-world learnings observations and feedback in designing these additional studies. We look forward to initiating these studies later this year, and sharing the results of our work as data become available.

As we progress our clinical work, our commercial efforts will continue to be focused on product and condition education, emphasizing the importance of patient selection and driving successful practice integration. As we continue building a new treatment category, we will also focus on targeted consumer activation, including the launch of our direct-to-consumer campaign titled Butt First.

As the first and only FDA-approved injectable treatment for moderate to severe cellulite of the buttocks that addresses its underlying causes, we believe QWO can be a cornerstone treatment for cellulite and are committed to doing the work required to achieve this.

Turning to Slide 10. We continue to evolve our R&D pipeline and manufacturing capabilities to support the introduction of an increasing number of sterile products that focus on customers' evolving needs. At the end of 2021, we had approximately 40 projects in our product pipeline, representing an increase of more than 30% since the beginning of the year. Overall, greater than 85% of our R&D pipeline consists of projects across the sterile injectable product continuum, with approximately 2/3 in ready-to-use and other more differentiated products. Year-to-date, we've launched 2 products, and expect to launch a total of approximately 10 new products during 2022 across our Sterile Injectables and Generic Pharmaceutical segments.

In addition to our organic efforts to expand and enhance our portfolio, we intend to remain active on the business development front. We are focused on opportunities in our core areas of growth, aimed at enabling us to further leverage our existing capabilities. We have taken, and will continue to take a disciplined approach to deploying capital and business development opportunities that align with our strategy.

Moving to Slide 11. As part of our VASOSTRICT life cycle management and commercial strategy, we recently launched our VASOSTRICT ready-to-use pre-mix bottle. Over the last several years, we've invested time and resources to deeply understand the needs of hospitals and health systems, and to develop products to address these needs. Hospitals are looking for solutions that simplify their processes, especially considering current hospital labor concerns, and we believe our VASOSTRICT ready-to-use bottle directly addresses their needs. The new presentation reduces the number of steps required to treat a patient with VASOSTRICT from as many as 5 steps to just 1.

Additionally, the ready-to-use bottle has a room temperature shelf life of 12 months compared to the 24 to 48 hours shelf life of compounded VASOSTRICT products. While still early days, we are pleased with the initial response of our bottle launch. With the ease of use and decreased labor and preparation time requirements, we believe our ready-to-use bottle offers our customers a differentiated product offering.

With that, let me turn the call over to Mark to further discuss the company's financial results and our financial guidance. Mark?

Mark Bradley

Thank you, Blaise, and good morning, everyone. First, on Slide 12, you will see a snapshot of our fourth quarter GAAP and non-GAAP financial results. Blaise covered consolidated and segment revenues earlier, so I will not review that again. On a GAAP basis, loss from continuing operations was approximately $557 million or $2.38 per share on a diluted basis in the fourth quarter of 2021 compared to income from continuing operations of approximately $141 million or $0.60 per share on a diluted basis in the fourth quarter of 2020.

This decrease was primarily due to increased asset impairment charges, opioid settlement and litigation-related costs and income tax expense due to a noncash income tax benefit recorded in the fourth quarter 2020. These increased expenses were partially offset by increased revenues and favorable changes in product mix.

On an adjusted basis, income from continuing operations was $200 million or $0.84 per share on a diluted basis in the fourth quarter of 2021 compared to income from continuing operations of $176 million or $0.75 per share on a diluted basis in the fourth quarter of 2020. This increase was primarily due to higher revenues and favorable changes in product mix in the fourth quarter of 2021 compared to the prior year, and was partially offset by an increase in operating expenses due to increased XIAFLEX and QWO commercial investments.

Turning to Slide 13. We are only providing financial guidance for the first quarter of 2022 at this time due to uncertainties in certain key assumptions that are expected to impact the full year, including, among other things, the level and rate of end rate of VASOSTRICT erosion, the rate and extent to which the market for office space procedures recovers from COVID-19-related challenges and the market and competitive dynamics for Varenicline.

For the first quarter of 2022, we expect total revenues to be between $595 million and $635 million, adjusted EBITDA to be between $240 million and $260 million and adjusted income from continuing operations to be between $0.35 and $0.45 per share on a diluted basis.

With respect to first quarter 2022 total revenues, our guidance range primarily reflects the expected impact of VASOSTRICT competition, the expected unfavorable impact on our branded specialty products due to ongoing COVID-19 related market disruptions and the impact of competitive events in our Generics business.

Our first quarter 2022 guidance assumes an adjusted gross margin of approximately 71.5% and which is slightly lower than the first quarter of 2021 due to product mix. We further assume that the first quarter 2022 adjusted operating expenses as a percentage of revenue will be approximately 33%. This assumption reflects our continued commitment to invest in our core areas of growth. This includes investing in both on-market and potential future new XIAFLEX indications, continuing to fund QWO and investing in the development of new sterile injectable products and capabilities.

We continue to believe that these strategic investments in our portfolio will generate long-term value for Endo. Finally, for the first quarter of 2022, we are assuming interest expense of approximately $140 million and an adjusted effective tax rate of approximately 1%.

Switching to Slide 14. This is a summary of first quarter 2022 segment revenue assumptions as well as product-specific assumptions for XIAFLEX and VASOSTRICT.

Advancing to Slide 15, and wrapping up the financial discussion. Unrestricted cash flow prior to debt payments was $367 million for 2021 compared to a cash use of $149 million in the prior year. This increase was primarily due to higher adjusted EBITDA in 2021 and the 2020 impact of the BioSpecifics acquisition, and was partially offset by an increase in opioid-related legal expenses and settlements.

We ended 2021 with approximately $1.5 billion of unrestricted cash and a net debt to adjusted EBITDA ratio of approximately 4.6x. We expect first quarter 2022 unrestricted cash use prior to debt payments to be between approximately $215 million and $235 million. This range reflects payments of approximately $285 million for opioid-related legal expenses and accrued liabilities.

In addition, we repaid approximately $180 million of maturing debt in January.

Let me now turn the call back over to Blaise. Blaise?

Blaise Coleman

Thank you, Mark. Prior to turning the call over to Laure, I want to provide a brief update regarding the opioid litigation. With respect to the opioid litigation as a whole, we continue to be focused on our primary goal of achieving a broad-based resolution of the remaining opioid claims. At the same time, we will continue to actively defend the company in court when necessary, and we will pursue individual settlements when we believe they are in the best interest of the company.

Additionally, we are actively exploring other strategic alternatives, both in support of achieving a broad-based resolution and the event we are unable to achieve such resolution.

As with any thorough analysis of a complex situation, the path to resolution will continue to take time, and we cannot speculate on the likelihood nature or timing of any outcome. More importantly, while we continue to address the opioid litigation, our Endo team members remain highly focused on our day-to-day business execution, advancing our strategic priorities and delivering our portfolio of life-enhancing products to our customers and the patients they serve. I want to thank each of our team members for their strong execution during the past year and continued commitment, as we move forward in 2022 to helping us continue to transform the company.

Let me turn it back over to Laure. Laure?

Laure Park

Thank you, Blaise. Can we please have our first question. Operator, please?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from David Amsellem with Piper Sandler.

David Amsellem

So just a couple on VASOSTRICT regarding your expectation for mid-20s to low 30s decline for 1Q. Is that primarily price? Or is that a mix of price and volume? So could you just talk about some of your assumptions there? And I know you're not providing guidance on the full year. But can you talk to just your general thoughts on how crowded the market could get as the year progresses?

There's the Amphastar tentative approval. They look like they'll be in the market later this year. We may or may not see others. What's your general view on how crowded the market will get? And then just lastly on CHANTIX. I know Blaise, you said that you don't really have visibility on when you could see more competition. But maybe just comment on capacity, and how much of demand -- overall market demand you can satisfy?

And to the extent there is competition, and considering you're vertically integrated on that product, how are you thinking about how much share you could hold on to in case there is a competitor that emerges or even more than 1 competitor?

Blaise Coleman

Okay. Thanks, David. I appreciate that. So a couple on the VASOSTRICT questions. First, I would just say in terms of our guidance, what does that represent? It represents a combination of both price and volume. I'm not going to break out for you what that exactly looks like because I really don't want to comment on our pricing strategy, but it will be a combination of pricing and volume that you're seeing there in decline, in terms of our guidance for Q1.

In terms of how we think about the competitive landscape going forward, as you know, as of now, we have Eagle that's on the market that there's also an authorized Generic on the market, and there's the 505(b)(2) product. As I said in my opening remarks, we would -- we are preparing for a market that would include additional market entrants as the year progresses. I can't be much more specific than that, but we are preparing to see additional competition as we move through the year.

From a varenicline standpoint, yes, David, I mean, this is an opportunity that we are working hard to make sure that we'll be able to realize the upside opportunity should it be there. And the way that we'll be able to realize that is really by increasing our capacity. And so as of today, we're roughly able to supply about 50% of the market, and we would expect to be able to supply 100% of the market sometime in the middle of the second quarter.

Laure Park

Next question, please.

Operator

Our next question is from Balaji Prasad with Barclays.

Balaji Prasad

A couple of questions for me. Firstly, on QWO, you called out seeing customizer then with regard to discoloration. Can you quantify that a bit more and compare it versus what you saw in Phase III?

And if you could throw any color on how the commercial launch has been until now. That will be great. One. Two, secondly, on the Generic side of the business with the guide for a decline in Q1, I'm slightly surprised between varenicline and AMITIZA to see a decline guidance. Could you just help us understand this better? And also on the pipeline, I wanted to confirm that as of now, you have only 5 generic products in development.

Blaise Coleman

Sorry, we were on mute there. Okay. So on the QWO question, just to help you dimensionalize the -- what we saw in our clinical trials. What we saw in our Phase III studies is that there was an incidence rate of about 8% for skin discoloration. So what we're seeing in the marketplace from a perception standpoint, feels higher than that. And that's why we're taking the steps necessary to address that. And as I mentioned in the prepared remarks, we are actively developing and putting in place a clinical plan to really address the perception and the feedback that we received from our aesthetic customers.

I'll turn it over to Patrick to comment on the -- from a commercial launch standpoint, and then we'll come back on your questions on the Generic side.

Patrick Barry

Thanks, Balaji, for the question. Yes, I would say on the QWO front, our launch has been largely positively received by the Medical Aesthetics Community. I mean we hit on some of the key points in the call. We've done a terrific job of onboarding almost 2,000 accounts. We're over 1,800 accounts. And as we speak today, approaching the 2,000 account number. So we've gotten really good trial. That's a really good litmus for us in terms of if there is an unmet need.

We have also done a really terrific job of establishing Endo Aesthetics as a new player. And complementing the charge of building out a new category with lots of good media pickup and lots of good media impressions. Where we turn our intentions going forward is really working on those 1,800 to 2,000 accounts and really focusing in on adoption and practice integration. So moving from trial and initial ordering to actually getting them to integrate it and adopt within their practice.

And so that's really going to be our focus moving forward. We want to wrap around some very targeted, geo-targeted and geo-centered direct-to-consumer activation so that there's a surround sound around those accounts, and doing events and partnering within the offices to drive enthusiasm within those physician practices and drawing patients in.

But Blaise did mention this perception in the marketplace. That is something that we're dealing with individually with each account. When there's questions that come up, we certainly have the ability to reactively defer them over to medical affairs, and we are doing that. But commercially, we're going to be focusing in on product adoption and pulling through some of the initial trialing. And we obviously, as Blaise mentioned, have some data generation efforts to really address head on, the perceptions in the marketplace.

Blaise Coleman

And then to address your generic question in terms of our guidance. The guidance does reflect the impact of competition on a number of products in the first quarter, with only 1 really small new product launch in the quarter, and that's what you're seeing in terms of the assumptions behind the guidance.

And then in terms of the pipeline question, as we've talked about, what you're seeing is an evolution of our pipeline to more Sterile Injectable products, more differentiated products, products that we think individually have a higher individual value than maybe what our portfolio consisted of a number of years ago. And so that's the evolution you're seeing in terms of the mix between sort of classic retail generic products versus more differentiated Sterile Injectable products.

Laure Park

Next question, please.

Operator

Our next question comes from Navann Ty with Citi.

Navann Ty

Just a few follow-ups on VASOSTRICT. Could you detail further your assumptions for Q1? So how many generic competitors do you include in the Q1 outlook?

So I'm trying to assess whether we can annualize one true your guidance -- or whether the guidance is conservative. And I know the settlement agreement with Dr. Reddy is confidential, but can we expect Endo to retain most profit that's been in typical AG settlement?

Blaise Coleman

Yes. Thank you for your question. So in terms of our assumptions for Q1 guidance, what we've assumed is the current market landscape in terms of the number of players in there. Obviously, some of those players are coming in at -- they have come in at different times. So there's a number of market dynamics happening currently as we speak. And so we have the range around that really reflects the uncertainty we have currently around how those dynamics may play out in the quarter. .

In terms of your question on the authorized generic, I really can't comment on that other than to say, traditionally, the branded manufacturer retains the majority of the value.

Laure Park

Next question, please.

Operator

Our next question comes from Gary Nachman with BMO Capital Markets.

Unidentified Analyst

This is Dennis on for Gary. The first, just about the global supply chain issues that companies have been facing in the past couple of months. Have you guys been affected by that at all? And can you talk about some of the steps you're taking to mitigate that risk? And then just another one on the 10 product launches in 2022. Will they be spaced out throughout the year or clumped together in the back half?

Blaise Coleman

Dennis, thank you for your questions. From a supply chain standpoint. In terms of our supply, we're in very good shape, both in terms of our internal supply chain as well as working with our vendors. I would say the one thing, if we thought about macro events that are impacting us, the cost of fuel is probably the place where we're seeing some pressure from a cost standpoint just with what's happening from a geopolitical standpoint, and some of the pressures that we're seeing on that front.

In terms of your question on the new launches, those new launches will be more weighted to the second half of the year versus the first half.

Laure Park

Next question, please.

Operator

Our next question comes from Nathan Rich with Goldman Sachs.

Nathan Rich

On VASOSTRICT, do you have an estimate of how much revenue in 2021 was related to COVID? And I guess I'm just trying to get a sense of kind of what the baseline maybe is for VASOSTRICT as we enter the year kind of ahead of the impact of competition? And have you gotten any feedback on the ready-to-use formulation from the market, and just in terms of how we should be thinking about potential adoption there?

Blaise Coleman

Yes. Thanks, Nathan, for the question. In terms of how much demand was related to COVID, probably the way I -- we can't say for certain how much of the strict demand is related to COVID-19. There was approximately 5 million 1 ml equivalent vials sold in 2021. And we would estimate that normal market annual volumes will be much closer to that 4 million. So that's our rough estimate of what might have been driven by COVID-19.

Let me turn it over to Patrick to provide you the feedback we're receiving to date with the launch of our ready-to-use VASOSTRICT product.

Patrick Barry

Thank you for the question. Yes, it's very early days on the ready-to-use VASOSTRICT presentation, but we are really pleased with the response that we've gotten. We think the ready-to-use VASOSTRICT is a really strong value proposition within the hospital segment. Whether it's a system or an individual hospital itself, they're under, as you know, a lot of pressure in regards to labor cost and just dealing with patient volume, patient census.

And yet, they still are focused in on improving patient outcomes and patient quality. So with the VASOSTRICT ready-to-use presentation, there's a number of advantages that we're hearing back from our customers.

Number one, there's the decreased prep time. VASOSTRICT is a really high velocity product -- and so the benefits that we can provide to pharmacy, mixing rooms and just bringing some efficiencies to their systems is being recognized. That has some knockdown impact on reduced labor cost. There's also a nuance in terms of quality and safety that we think is important. And I think the other thing that customers are recognizing the presentation is preservative free. That's something that we've heard as a real benefit, and the fact that there's some unique cold storage advantages being out of the fridge at the site of care really presents some really interesting opportunities for hospitals to be able to provide quality of care with really a great product like VASOSTRICT.

Laure Park

Next question, please.

Operator

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Blaise Coleman for closing remarks.

Blaise Coleman

Great. Thank you, everyone, for joining us this morning. We look forward to providing you with updates as we move forward. And I hope everyone has a great rest of your day. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.