Amneal Pharmaceuticals Inc (AMRX) 2024 Q1 法說會逐字稿

Good morning, and welcome to the Amneal Pharmaceuticals First Quarter 2024 Earnings Call. I will now turn the call over to Amneal's Head of Investor Relations, Tony Dimeo.

Good morning, and thank you for joining Amneal Pharmaceuticals' First Quarter 2024 earnings call. Today, we issued a press release reporting Q1 results. The earnings press release and presentation are available at amneal.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 and forward-looking statements for factors that may impact future performance. We also discuss non-GAAP measures. Information on use of these measures and reconciliation to GAAP are in the earnings release and presentation.

On the call today are Chirag and Chintu Patel, Co-Founders and Co-CEOs; Tasos Konidaris, CFO; our commercial leaders, Andy Boyer for generics, Joe Renda for specialty; and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.

Thank you, Tony. Good morning to everyone. Our first quarter performance was outstanding. Record Q1 revenues of $659 million grew 18%. For the first time, all three of our segments generated double digit growth in the same quarter.

Q1 adjusted EBITDA of $152 million grew by 31% as strong execution continues to drive sustainably higher levels of profits. As momentum builds across Amneal, we are confident in our ability to achieve our financial commitments for 2024 and beyond.

Our strategic vision for Amneal is to be a global, diversified pharmaceutical company that provides patients, providers and payers with access to high-quality, affordable and essential medicines.

In the U.S., AmnioFill is approximately $175 million prescriptions per year in retail pharmacies. We provide complex genetics medicines such as transdermals, topicals, oral solids and opthalmics. For hospitals and clinics, we supply important acute care injectables where there are chronic shortages. In biosimilars, we are expanding access to oncology therapies and adding more to our portfolio. In specialty, our innovative medicines advance the standard of care, such as in Parkinson's disease. In our healthcare distribution business, we provide military veterans with access to high-quality medicines.

Globally, we are addressing unmet healthcare needs in developing and developed countries. As we continue to grow larger, Amneal is leading new era of affordable medicines and having a significant societal impact. Nowhere in our commitment to this mission more evident than our recent approval of Naloxone.

Opioid overdose remains a US public health care emergency. We are expanding access to this critical rescue medicine as an OTC product at pharmacies, and for the public interest, through states and cities across the United States. We were pleased to finalize our partnership with the State of California with more to come. We are so proud that this essential life-saving medicine is made in America and manufacturing here in New Jersey by Amneal.

Let me now walk through our business at a high-level where we remain confident in our strategy, our ability to execute well and drive growth and the opportunity to have a tremendous impact.

First, our affordable medicines business, which is our genetics segment has consistently grown each year since 2019. We are seeing this growth accelerate in 2024, driven by our diverse portfolio of retail, injectables and biosimilars. Amneal has a track record of quality, innovation and customer service.

Those hallmarks continue to resonate in the U.S. pharmaceutical market, plagued by supply shortages with perpetual demand for high-quality medicines. The durability of our complex portfolio and regular cadence of new launches each year position Amneal well to continue expanding our leadership position in affordable medicines and driving sustainable long-term growth.

In the retail pharmaceutical market, our portfolio of around 240 medicines is complex and diversified. With industry-wide supply chain disruption due to site inspections and manufacturer discontinuations, price erosion in the United States generic industry remains lower than it has been in several years.

In injectables, we are expanding our portfolio and have a significant capacity to help address drug shortages in hospitals and clinics. Our injectable strategy focuses on providing unique ready-to-use products like our recent launch of PEMRYDI RTU for the treatment of certain lung cancers Across retail and injectables, we are on track to launch over 30 new products this year following our record 39 new launches last year.

In biosimilars, we are seeing the next wave of affordable medicines. From 2024 to 2028, an estimated $192 billion in annual branded biologics value will lose exclusivity. We expect most biosimilar markets to be less competitive, given the inherent complex IT complexities of these molecules and the investment required to bring them to market.

Adoption rates for early biosimilars are now 80%, particularly in oncology where we operate. Our excellent commercial team is driving strong adoption at both community oncology and hospital-integrated delivery networks. That, coupled with our pipeline and with trusted partners, gives us confidence in continued momentum. We are well on our way to achieving over $125 million of revenue in 2024 with $90 million in biosimilars revenue over the last 12 months. We look to in-license one to two biosimilars each year or more and to be vertically integrated over time.

Internationally, we continue to expand our reach and build a strong foundation. This is happening most notably in India, where we are building a customized portfolio of therapies for unmet needs like critical care, ophthalmology, oncology and diagnostics. In other geographies, we are working with partners to register and commercialize select and new products. We expect international expansion will add $50 million to $100 million in revenues by 2027 and rapidly scale up to that.

Next, in our specialty business, we continued to make good progress with our key neurology and endocrinology branded products as revenues are growing double digits. In Q1, we successfully launched ONGENTYS - an adjunctive therapy for Parkinson's disease, which we recently in-licensed to our specialty portfolio.

Next up is IPX203 with our action date is on August 7th. Carbidopa Levodopa has been the main therapy for Parkinson's disease for over five decades. We believe IPX203 meaningfully advances that standard of care with a broad application for all patients.

In our AvKARE distribution business, we have more than doubled revenues and profits since our acquisition in 2020. We are expanding all three channels: distribution, government and unit dose. Driven by new products from suppliers, including Amneal, we now expect over $650 million in AvKARE revenue next year as we expect this to remain a high-growth business. In short, we're starting 2024 with very strong momentum, our diversified growth profile is sustainable, and our financial performance is accelerating remarkably. I'll now hand it to Chintu.

Good morning, everyone. Thank you to -- thank you, Chirag, and thank you to the global Amneal family who work hard every day to help make healthy possible. I will discuss how our core strengths in both operations and innovation provides us with a long runway for sustainable top- and bottom-line growth.

First, quality has been at the center of everything we do since our founding in 2002. We continue to invest in quality through automation and AI technologies to advance our global infrastructure. Our success is also driven by our commitment to operational excellence, ongoing efficiency programs and a robust supply chain.

All of our plants are FDA-approved. In each plant, we are driving optimization and efficiency programs to maintain our exceptional customer service levels and gain cost efficiencies. Across our supply chain, we are focused on what we call the 3Rs: redundancy, resiliency and reliability.

In particular, drug shortages are an ongoing challenge in the market. The US FDA lists 114 drug shortages, including 75 injectables, and Amneal will look to be part of the solution. We have about 20 commercial and pipeline injectables that are on the shortage list, including oncology medicines. We have also tripled our injectables manufacturing capacity in recent years at multiple plants. We continue to prioritize efforts to help alleviate shortages in the market, particularly for injectables.

Second, our track record in innovation is very strong, and we are off to a great start in 2024 with five key complex product launches: Naloxone nasal spray, PEMRYDI RTU, Carvedilol ER, FML eye drops, and generic Ciprodex. We currently have 86 new products, ANDA's pending, of which 63 are non -oral solids. In addition, we have 67 pipeline products, 94% of which are non-oral solid.

With our ongoing shift towards complex innovations, we have improved our R&D efficiencies and are spending less internally, which allows us to allocate more investment towards external R&D over time. We were so proud of last week's approval of Naloxone nasal spray, a life-saving treatment for drug overdoses. This is a tremendous milestone for the entire team at Amneal. The product is now available through retail pharmacies as an OTC product, and through states and counties across the U.S., we have built robust manufacturing capacity to make up to 10 million to pack starting next year.

We are significantly expanding access to help address the opioid crisis that impacts so many Americans. In injectables, we expect to launch over 10 new products this year following the 14 new injectables we launched in 2023. Our R&D focus is on oncology, ready-to-use bags and long acting injectables. For the years, we have been meeting with clinicians to understand their needs. This emphasis on the voice of the customer has allowed us to develop unique presentations of existing products.

Last month, we launched our first 505(b)(2) injectable in PEMRYDI RTU. These new ready-to-use presentation of a frequently used oncology magazine can improve efficiency and reduce medication errors. We look to launch 2 to 3 505(b)(2) injectables each year, with approximately 15 in development.

Next, biosimilars continue to be a key area of strategic focus. Building on the success of our first three commercial products, we in-licensed 2 denosumab biosimilar candidate for Prolia and XGEVA in Q4. Those programs continue to progress with our development partner, mAbxience. In addition, we are pleased to share that in Q1, we in-licensed two additional peg-filgrastim pipeline programs: on-body injector and prefilled auto-injector.

Today, approximately 30% to 40% of the backfill existing market is on-body and fewer competitors are expected in this space. In total, we have three commercial biosimilars and four more under development, all in oncology. As we establish Amneal as a key biosimilar player, we look to add more opportunistic biosimilar molecules to our pipeline over time. Internationally, we have distribution partners in place for approximately 40 emerging markets -- market countries, including strong markets like Saudi Arabia, Mexico, South Africa and the Philippines. We are registering products globally, including in Europe, Canada, China and emerging markets.

In specialty, we are continuously evolving our R&D efforts to move up the value chain.

First, our IPX203 complete response submission is under review. Also, we are advancing our DHE auto-injector program for migraine and cluster headache. We transfer production internally and excited to complete our application later this year, which puts us in a good position to launch in the first half of next year once approved.

In addition, we continue to advance our pipeline with K-114 for endocrinology and other programs. We look to launch one to two specialty products each year going forward.

Overall, Amneal is expanding and growing in the key areas of medicine, complex generics, injectables, biosimilars, international, distribution, and specialty branding. We are so deeply passionate about our company's mission and purpose. and the good work that remains ahead.

I will now pass it over to Tassos.

Thank you Chintu, and good morning. At a high level, our diversified business is driving sustainable, higher levels of revenues and profits and continued deleveraging. Our first quarter results were excellent, with total net revenue of $659 million, up 18%.

Q1 generics net revenue of $391 million grew 14%, driven by our diverse portfolio of complex products. Biosimilars generated $27 million in revenue, driven by (inaudible). New products launched in 2023 and 2024 added $19 million to Q1 revenue growth. In addition, the remaining base portfolio continued to grow due to the relevancy of our products, strong market demand, less pricing pressure and Amneal's high-quality supply chain.

Q1 specialty net revenues of $105 million grew 15%, driven by double digit growth of our key branded products, plus the recent launch of ONGENTYS in March.

Q1 AvKARE net revenues of $163 million grew 33%, reflecting continued strong growth across all three customer channels driven by new products. Our Q1 adjusted gross margins of 42% increased 250 basis points year over year, and were ahead of our expectations. Strong gross margins were driven by the favorable mix of revenues that reflected the complexity of our portfolio combined with higher fixed overhead absorption.

Q1 adjusted EBITDA of $152 million grew 31% reflecting robust revenue growth, higher gross margins, tight management of operating expenses and a favorable comparison to prior year. Our leverage growth profile in Q1 is the blueprint for sustainable, higher P&L results for the company going forward.

Q1 adjusted EPS of $0.14 grew 17%, driven by higher adjusted EBITDA, partially offset by interest costs. As a reminder, we have made substantial progress over the last four years, driving accelerated top- and bottom-line growth, reducing leverage and resolve legacy matters. As a result, our annual adjusted EBITDA has increased from $339 million in 2019 to $594 million over the last 12 months ended Q1 2024. Also, net leverage has declined from 7.4 times in 2019 to 4.6 times.

Now, as I mentioned earlier, settling legacy -- legal matters has been a priority of ours. Two years ago, we settled Opana ER litigation, and we just made a final payment in Q1. In addition, today we announced that we reached agreement in principle for a nationwide opioid settlement payable over 10 years that resolves substantially all opioids litigation.

Accordingly, in the first quarter, we recorded a pretax charge of $94 million, which reflects cash payments in the supply of logs and nasal spray, both over the next 10 years. As a result, we have now substantially resolved these two legacy legal matters, which removes this overhang from the company.

Given the strong start of the year and our improved visibility, including the recent outlooks and approval for targeting the higher end of our full year outlook. As a reminder, we expect total net revenue of $2,550 million to $2,650 million and adjusted EBITDA of $580 million to $620 million, which reflects high single digit growth on both top and bottom line.

With that, let me turn the call over to Chirag.

Well, thank you, Tassos. Amneal's Q1 performance was excellent, across the board and reflects our continued upward trajectory in driving higher financial results over the years. We are so excited about the opportunities ahead.

Let's now open the call for Q&A.

(Operator Instructions) Nathan Rich, Goldman Sachs.

Yes, hi, good morning. Congratulations on a strong quarter, and thanks for the questions. Maybe, I wanted to start with Naloxone and specifically the California contract. Can you talk about when that contract starts and how long it is, and any details you can share, maybe, on the type of volume commitment that the state made and have you gotten additional interest from other states sort of on the back of that? And any comments on the margin profile of the Naloxone maybe relative to the corporate average would be helpful.

Nathan, good morning. So, California supplies starts now, and we will see the increased demand as they ramp up our label. And according to the state's press release, they could buy up to $3.2 million units per year. We don't expect them to buy that in the 1st year, but they'll ramp it up as they go, somewhere between, we expect, $2 million to 3 million units in the State of California.

The remaining contractual terms are confidential. It was a great win for us, and we're very proud of the agreement with the State of California in trusting us to supply and valuing the 'Made in United States' product. So, we really appreciate it.

In terms of the margin profile, it is going to be higher and accretive than the current gross margin.

(multiple speakers)

It's obviously not just the (inaudible) issue, just the State of California, so this is impacting -- it's an issue across all of our states, and our commercial teams are actively engaged with other internal parties, both on the state and federal level. So really excited to kind of fill the incremental need that's going to provide for many years.

Yes. And we have built the capacity to supply 10 million units, up to 10 million units starting early next year. This year, we're producing somewhere between 2.5 million to 3 million units.

That's great. Maybe just a follow-up on the cadence of earnings this year. You know, Tasos, I know you kind of pointed to the high end of the range, but I think looking at the historical EBITDA cadence, I think 20% comes in the first quarter typically based on what you did this year, that would imply a number well above that kind of high end of the range. So, is there anything to kind of note on just earnings cadence this year that would be different than normal?

It's, you know, you take one quarter, we can never annualize this, so if you think about we finished the year last year with EBITDA of, what, $554 million, right?

So, we added Q1 run rate, right? The last run rate of the four quarters now, it's almost $600 million - $594 million. So, the year is playing out how we were hoping it, which is acceleration of top- and bottom-line growth, right?

So, we have a so -- great, great improvement. So, now we are targeting the high end of the range, and we are saying is 'there more', right? And, you can count on us and tried to maximize the performance, but at the same time, right, we are also focused on driving and making investments primarily in our R&D, primarily in kind of tuck-in licensing deals in the biosimilar and complex drugs to not just maximize this year or the next, but build a long-term growth for 2026, 2027.

So, you're not missing anything. The only thing I want to be mindful is I want to make sure we have room in our operating expenses to make investments over the next nine months, primarily in R&D and then also, depending how things play out with IPX203, kind of making sure we cannot make the right investments there to drive that growth as quickly as possible.

Okay. That's helpful. Thank you.

Les Sulewski, Truist Securities.

Good morning. Thank you for taking my questions. Can you just provide some initial update commentary on the ONGENTYS, given the new ownership structure, and perhaps some feedback from prescribers? And then, also on PEMRYDI, and I have a follow-up.

Yes, let me turn it over to Mr. Joe Renda here.

Yes, thanks Les. So far, we've been very pleased with ONGENTYS, as well as the partnership with BIAL. It's been a great partnership, and we've been working very closely with them and their global team, executing upon the strategies that they've learned from over the years. I would say probably the three pieces of feedback that would be significant would be: one, we are hearing very positive feedback from prescribers; there was a concern that fit ONGENTYS would not be remaining in the market, so prescribers were very pleased when they heard we were going to be taking over this brand and we've been able to sign on a few more contracts from an access standpoint, so our goal there is to increase the access -- the market access that is for ONGENTYS and the market beyond what it was, and so far, we've been very pleased with that; performance and progress; and, finally, I would say one of the things we're looking at closely to kind of determine the uptick is what our NBRx performance has been new, new patients to brand, and were up some 20% in NBRxs from a performance standpoint.

So far, we're very pleased and it's been a great partnership, and it's also been a really good augmentation to Rytary.

And Les, you had a question on PEMRYDI RTU. The way to think about that for annual rate is another complex innovation on the injectable side; it's our first 505(b)(2) launch. We'll do two to three years going forward, and it's a ready-to-use oncology therapy that reduces steps. So, think of it as a new vector of growth for the company.

Great. Appreciate that extra color. Now, moving on to IPX203 and your action date circled for August 7th - can you just talk about perhaps your launch readiness, your plans with the sales force and just overall impact potential guidance, if any? Thank you.

Yes. Go ahead

Yes. So, first of all, I would say one of the things that is significant for us is we've really become a leader in the Parkinson's space, right? Rytary has enabled us to develop and deepen relationships with key prescribers and movement disorder specialists across the country, really in and around the world for that matter. And that also is coupled with the fact that we've developed a market access capability that has created an access stream for Rytary - that's the best in the in the Parkinson's community.

So, we enjoy some 70% commercial coverage in about 60 or so percent of the Part D coverage. And then the ONGENTYS that I just spoke to has enabled us to actually increase our prescriber base; we're going deeper now into general neurologists.

So, when you look at our go-to-market strategy with IPX, the three components there are: one, leveraging and working off of those deep relationships that we've built over the last decade in the Parkinson's community. And then second is to leverage that market access capability that we have; we'll use that same strategy to gain access for IPX203, comparable to what we have with Rytary.

And then finally, I would say that the novel formulation that is IPX203 really offers greater efficacy, better on-time, fewer dosing. So, the Parkinson's community itself is very excited. In fact, just last night, we were at a Parkinson's Foundation Gala, and there's a lot of buzz and talk about when IPX203 is coming to market.

So we're very ready and eager to get the IPX203 to the hands of the patients that needed out there.

And Les, in terms of potential peak revenues, assuming approval, we feel so great about it. Rytary right now, there's a couple of hundred million dollars in annual revenues, right? The guidance we have given about IPX203 is peak revenues of $300 million to $500 million. We think, based on the product profile and the fact that IPX203 is only being used by about 5% of the available patients, right -- right away, I'm sorry -- So, there is a tremendous market opportunity out there for the remaining 95% of the market that's not been utilizing Rytary, and I think a bit here revenues three to 500. I think it's just well within what the team is capable.

Great. Appreciate it. Thank you.

David Amsellem, Piper Sandler.

Thank you; just have a few questions. I wanted to drill down on the $100 million plus in new product revenue in 2024. Can you talk about the mix between retail and injectable contribution in that $100 million that's number one.

Number two is, how much of the injectable contribution is coming from shortage products? Ours is a complex product. And so that's another question.

And then also, switching gears to our ALYMSYS or the bevacizumab, biosimilar - can you just talk about the dynamics here that are driving the strong sales? Is it limited competition in the market? Are there other things at play here? And just talk about your expectations for that product and what informs your $100 million plus in sales by 2025? Thank you.

Great, David. Good morning. So, let me -- it's a new product launches - let's just go back a little bit last five years, if you go by the NPLs and you total that to this year's revenue is about $765 million we have added in new product launches.

And what we see going forward, and this is just within generics, injectables and biosimilars, we can break it down for you later on but stay on a bigger picture, is that why we are able to grow this, and why in the United States; this business, this is just US number. International is separate.

Why this is a big deal? Because I think it's for over time because people have been focused on price erosion and have ignored the entire biggest market for the affordable medicines is United States, and we now expect the next 4 years, if you annualize our revenue of next four years from 28, that would be additional $800 million to $1 billion added to the new -- to NPLs. So, this is, you know, we've been working on such a strong pipeline and in-licensing strong products.

On page 7 of our presentation, we have listed out many of them - like 60 products being launched in 24 and 25, 15 of them are high value. So you can see it in more and more high values that happening as you go year out.

And, we have not disclosed certain pipeline assets for competitive reasons, as well as we have not disclosed some of the in-licensing products that we are have or working on it for competitive reasons. So, very excited to, and these are risk-adjusted number I gave you. So, this $100 million is -- the breakdown we can provide you later on between the --

Organic and providing. (multiple speakers)

So, the $100 million, it's combination of a couple of things: combination of products, if you remember last year towards the at the end of Q4, quite a number of new products close to, I think ,13 or so products that were approved in Q4 of last year. So, that's kind of the annualization of those revenues, right? As well as new product launches this year.

So that $100 million number, it's not a certainty, but a high degree of confidence - point number one.

When you break it out between retail and injectable, it's pretty much almost split 50-50, 60-40 between. So, it's evenly split retail products like Naloxone, right, on one side, injectable products of like PEMRYDI, and there are many of the other smaller injectable products. So, it's pretty evenly split between retail and injectables.

And next, your next question on the shortages versus regular, where shortages make very small numbers at this point. It's our regular products that we've been expanding the market. So, demand is coming our way because we are the best quality and consistent supplier out in the market. So, our customers are trusting us, and more and more trust has been established.

Your question regarding ALYMSYS, we have a very strong team. I mean that the commercial team has done a superb job; Amneal's reputation, Amneal's basket of 300 products - we bring a lot more to the table for our customers than if you are a pure play biosimilar.

So, this is why I believe that for the future you will see that companies being more successful, who have a broader portfolio and who are working closely, whether it's the oncologist, the community oncologist, all the hospitals, all the PBMs because we provide tremendous value to them. So, we have a better negotiating power with them or advantages versus the pure play biosimilars, and we're going to keep improving in those.

ALMSYS, you will see even higher market share coming up, as well as FYLNETRA when we add OBI, you will start seeing the uptake on the market share as well.

That's helpful. Just to clarify, the $100 million does not include Naloxone - I think I saw a footnote for that in the slides, but I just want to make sure that's correct. $100 million did not include Naloxone?

David, that's correct that the estimate we had on the Q4 call and reiterated $30 million plus for Naloxone, $100 million is for the rest of the NPLs this year.

Great. Okay, helpful. Thank you.

And you can see the file with my brother mentioned - five already launched, which are good value products complex.

Balaji Prasad, Barclays.

Hi, good morning, everyone, and congratulations on the results. A couple of questions from me. I was --starting on the generic side, I was slightly surprised to see Amneal's (inaudible) on Xifaxan. Bausch has been vehemently defending this from years, versus a host of generic companies, settled there, so how differentiated is (inaudible) versus others? How realistic of an opportunity is this versus any other generic company?

And similar question on Restasis, too. For years, generic companies have flagged this as an opportunity and struggled to get approval for the (inaudible) and how should we think about it?

Secondly, on health care I saw that versus last quarter's presentation, where you have a long-term guidance, $600 million, you raised it to $650 million. What drove that increase in revenue guidance and what is the EBITDA impact of it? Thank you.

(multiple speakers)

Go ahead, Chintu.

Yes, hi, Balaji. Good morning and thank you. (inaudible) we always work on very unique and key products, and we do have a position based on something confidential - I don't want to get into the details.

We are excited about the $5 billion opportunity, but it remains to be seen how it develops and multiple things that is involved. So, we cannot comment at this time and any of the details.

On Restasis, yes, it is a very complex product. We are advancing our NDA, and we are expected to launch at the start of next year in 2025. We are very hopeful on that.

Go ahead, Chirag.

Yes, and your health care question, Balaji, it is growing really well, and a lot of government product, (inaudible) DOD, as this is the advantage for -- you get some advantage being the biggest being American company and having manufacturing capacity in America. So, we're taking full advantage of that, and this is why you see the growth in healthcare and it would continue to grow.

And Balaji, can you just repeat your other question?

So yes, the impact of healthcare on EBITDA - what I'm also trying to figure out is, with the last 12 months revenue, EBITDA already being close to $590 million, with a stronger revenue trajectory, looking that much clearer for us now, what are the upside/downside risks towards the higher end of your EBITDA guidance? And if the healthcare long-term guidance raise? And what's the impact of AvKARE guidance raised on the EBITDA too?

So, what happens, AvKARE has been growing along with the rest of the business. So, we're not relying on any specific segment, whether or not this is generic, AvKARE, specialty, biosimilars - we're going to carry the day, so growth continues to be across all our businesses. Point number one.

Point number two is the upside to the downside of the businesses will continue to rely on new product launches, right? A robust, new product approvals and launches to kind of carry the day, so we're not always in control of that. So, that depends, as you know, with the regulatory authority, so some years maybe is ahead of plan, some years we may be a little delayed, but all of those will come.

But the cadence of it, right, is not totally in our control. So that's something we just want to be mindful of number one.

Number two is IPX203. So as we discussed, the vast majority of the potential launch expenses of IPX203 are kind of built into our existing guidance, right? So that we worked on. We are conservative. If we get approval, then we will have to look at, I think, a kind of incremental top and bottom-line contribution of that revenue. So, the downside is protected, the upside has not been built in. And healthcare, it just continues to grow nicely. So hopefully, that gives you a sense.

And then the final thing I would say is the type of investments we choose to make, right, to kind of drive, so that a lot of it is variable. It's within our control. So, if we think the year plays out of incredibly well, we may choose to make some additional investments; if the year is playing a little tighter than we thought, we may just kind of push back a couple of potential deals.

Got it. Thanks.

But momentum, Balaji, has been strong as you can see the six key products have been approved already. So, we feel very good on that. The momentum is great, and the pipeline is delivering.

Congratulations. Thank you.

Chris Schott, JPMorgan.

Great. Thanks so much for the questions. Just a couple for me - maybe first on biosimilar Prolia and XGEVA. Just elaborate a little bit more on the opportunity for these two, and maybe just specifically launch timelines in light of the recent Sandoz settlement, and of the two brands, is it either more interesting to you than the other just given obviously different market dynamics between the two of them?

Second question, Naloxone, between the public market and retail channel - what are you seeing as the bigger opportunity, and does the opioid settlement at all impact how you think about that? And then maybe just, AvKARE, obviously great performance here, but just your latest thoughts on potential to monetize that business and how you're thinking about that. Thank you.

Good morning, Chris. So, let's start with biosimilars, Prolia and XGEVA. We are equipped to sell in both channel, the Oncor Encore channel as well as PBM. We expect the launch in 2026, maybe a bit early, and we'll see how the filing -- I think one is early, one is going to be a little bit later.

And we expect the market penetration to be very good, because we already have established relationship and by then we'll have more established relationship with the community oncologists, oncology groups, as well as at the hospital groups and contracting PBMs relationship overall. So, we expect to generate a good -- peak sales should go well above $100 million for these products.

On your second question on Naloxone, the retail side is slow. The government is where most of the demand is, state-wise. Retail is probably 10%, 20%. We already have contracts with CVS and Walgreens to supply them, and they already have supplied them, both of them, and government, state of California - biggest state we get; we are working with other major states, obviously, our home state, and we should be getting more business from government, and this this opportunity will become really big and our settlement does not really impact if you do the maths, which Tony can follow-up with you later on as well. (inaudible) prodcuts as we have $10 million capacity.

So, no issue whatsoever, and AvKARE, as we have said it earlier, strategic options are open. The business is performing really well. We're not in a rush to do anything - if we get the right price, we will transact and de-lever massively or pay down the gross debt in a huge amount, which, it's been a great acquisition for us and either way we're fine with AvKARE.

Okay, great. Thanks so much.

Thank you, Chris.

Thank you. We have no further questions, so I will hand back over to Chirag.

Thank you. So Q1 was an outstanding start to 2024 as the momentum builds across all areas of our diversified business. The recent Naloxone launch is the latest example, and at Amneal, we love what we do. And our teams are fired up - a high momentum across the company and in all over United States, Ireland, all over India, and we just could not be more excited for overall the health and the performance of our company. So thank you, everyone, and have a great day.

Thank you, Chirag. This concludes today's call. Thank you for joining. You may now disconnect your line.