Q1 2024 Amneal Pharmaceuticals Inc Earnings Call
Participants
Tony Dimeo; Head of IR; Amneal Pharmaceuticals Inc
Chirag Patel; President, Co-CEO, Co-Founder, & Director; Amneal Pharmaceuticals Inc
Chintu Patel; Co-CEO, Co-Founder, & Director; Amneal Pharmaceuticals Inc
Tasos Konidaris; CFO & EVP; Amneal Pharmaceuticals Inc
Joe Renda; SVP & Chief Commercial Officer - Specialty; Amneal Pharmaceuticals Inc
Nathan Rich; Analyst; The Goldman Sachs Group, Inc.
Les Sulewski; Analyst; Truist Securities
David Amsellem; Analyst; Piper Sandler Companies
Balaji Prasad; Analyst; Barclays Bank
Chris Schott; Analyst; JPMorgan Chase & Co.
Presentation
Operator
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.
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 annual.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to, management's outlook or predictions are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled Cautionary statements 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 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.
Chirag Patel
Thank you, Tony. Good morning to everyone from 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 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. And Neil is a 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 Innolux 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 look, 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. And Neil 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 today, 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 with injectable strategy focuses on providing unique ready to use products like our recent launch of Van Brady 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 and 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 only 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 24 with $90 million in biosimilars revenue over the last 12 months. We look we 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 on Genta's and 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 seventh. Carbidopa levodopa has been the main therapy for Parkinson's disease for over five decades. We believe IPX-203 meaningfully advances that standard of care with a broad application for all patients. You know what our care distribution business. We have more than doubled revenues and profits since our acquisition in 2020. We are expanding all three channels. Distribution in government and unit does driven by new products from suppliers, including Emil. We now expect or $650 million revenue next year as we expect this to remain a high-growth business. In short, we're starting 2024 with very strong momentum or diversified growth profile is sustainable, and our financial performance is accelerating. Remarkably, I'll now hand it to Chintu.
Chintu Patel
Good morning, everyone. Thank you to thank you, Chirag, and thank you to the global and new 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 three Rs, redundancy, resiliency and reliability, in particular, drug shortages are an ongoing challenge in the market. The US FDA list 114 drug shortages, including 75 injectables. And I mean we 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, no logs on nasal sprays and with the RDU. card with a lot of ERFML. eyedrops and genetic CiproDex. We currently have 86 new products ANDAs 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 the logs on 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 to retail pharmacies as an OTC product and two 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 be 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 YFIV. two injectable impairment at DIDU. 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 three five five b. two injectables each year with approximately 15 in development.
Next biosimilar continue to be a key area of strategic focus, building on the success of our first three commercial products. We in-licensed to denosumab biosimilar candidate for Prolia and XGEVA in Q4. Those programs continue to progress with our development partner, XmAb science. In addition, we are pleased to share that in Q1, we in-licensed two additional pegfilgrastim 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 IPX. two three complete response submission is under review. Also, we are advancing our DAT 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 key one one four 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 managing complex generics, injectables, biosimilars, International Distribution and Specialty Brands. 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.
Tasos Konidaris
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 our basis, 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 $805 million grew 15%, driven by double digit growth of our key branded products, plus the recent launch of Agensys in March, Q1 of your 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 locks 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.
Chirag Patel
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.
Question and Answer Session
Operator
(Operator Instructions) Nathan Rich, Goldman Sachs.
Nathan Rich
Yes, hi, good morning. Congratulations on a strong quarter. And thanks for the questions. Maybe wanted to start with the lock zone 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 Steve made and have you gotten additional interest from? Are there states sort of on the back of that and any comments on the margin profile of the lockdown maybe relative to the corporate average would be helpful.
Chirag Patel
And Nathan, good morning job. 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 then ramp it up as they go source somewhere between We expect $2 million to 3 million units in the State of California. The remaining contractual terms are confidential. We it was a great win for us and we're very proud of the agreement with the State of California and trusting us to supply valuing the made in United States product. So we really appreciate it.
In terms of the margin profile, it is going to be a higher and accretive than the current gross margin.
Tasos Konidaris
Obviously, the issues that the State of California, so this is impacting and it's an issue across all of our states. And our commercial teams are actively engaged with other internal devices, 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.
Chirag Patel
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.
Nathan Rich
That's great. And maybe just a follow-up on the cadence of earnings this year. And you know, taxes. 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?
Tasos Konidaris
Al, it's it's a you know, you take one quarter. We can never annualize annualize the. So if you think about we finished the year last year with EBITDA was $554 million, right? So we added Q1 run rate.
The last run rate of the first four of the last 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 So great, great improvement. So now we are targeting the high end of the range, and we are saying is there more right to have a fab 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 over the next, call it, nine months, primarily in R&D and then also depending how things play out with IPX. two or three kind of making sure we we cannot make the right investments there to drive that growth as quickly as possible.
Nathan Rich
Okay. That's helpful. Thank you.
Operator
Les Sulewski, Truist Securities.
Les Sulewski
Good morning. Thank you for taking my questions. Can you just provide some initial update commentary on the Genta's given the new ownership structure and perhaps some feedback from prescribers and then also on perimetry and I have a follow-up.
Chirag Patel
Yes, let me turn it over to Mr. Joe Renda here.
Joe Renda
Yes. I think, so far, we've been very pleased with our Genta's as well as the partnership with BR. It's been a great partnership, and we've been working very closely with them and their global team executing upon the strategies that we 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 on Genta's 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 Genta's 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 as what our NBRx. Our performance has been new new patients to brand and were up some 20% NBRx is from a performance standpoint. So so far, we're very pleased and it's been a great partnership. And it's also been a really good augmentation to Rytary unless you had a question on prem Reddy, RTU.
Chirag Patel
Yes, the way to think about that for annual rate is another complex innovation. On the injectable side, it's our first five or five b. to 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 it's a new vector of growth for the Company.
Les Sulewski
Great. Appreciate that extra color. Now on moving on to IPX two or three and your action date circled for August seventh, can you just talk about perhaps your launch readiness on your plans with the sales force than just overall impact potential guidance, if any? Thank you.
Tasos Konidaris
Yes. Go ahead
Joe Renda
Yes. So let's say that 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? Hari 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 um, 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 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 agenda that I just spoke to has enabled us to actually increase our prescriber base that would go. 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 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 IPX. two or three comparable to what we have with Rytary.
And then finally, I would say that the novel formulation that is IPX. two or three 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 IPX. two or three is coming to market.
Tasos Konidaris
So we're very ready and eager to get the OPX two or three to the hands of the patients that needed out there and less in terms of potential peak revenues, assuming approval, how good do feel great about it is the number that we know Rytary right now. There's a couple of hundred million dollars in annual revenues, right of the guidance we have given about IPF. two three is our peak revenues of $300 million to $500 million. We think based on the product profile and the fact that IPX. two or three 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 I'd just well within what the team is capable.
Les Sulewski
Yes. Great. Appreciate it. Thanks.
Operator
David Amsellem, Piper Sandler.
David Amsellem
Yes, and 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, and 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 And switching gears to our MRs or the bevacizumab and biosimilar, can you just talk about the dynamics here that are driving the strong sales. Is it limited competition in the market? Or are there other things at play here? And just talk about your expectations for and for that product and what informs your $100 million plus in sales by 2025? Thank you.
Chirag Patel
Great, David. No, good. Good morning, Al. So let me it's a new product launches let's just go back a little bit the 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 every node, the entire biggest market for the affordable medicines is United States, and we now expect the next 40 years. So if you annualize our revenue of next four years from 28, that that would be additional $800 million to $1 billion added to the new 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 are 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. Tasos can provide appropriate color.
Tasos Konidaris
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 is pretty much almost split 50 50, 60 40 between. So it's evenly split of retail products like naproxen right on one on one side, injectable products of like per the and there are many of the other smaller injectable products. So it's pretty evenly split between retail and injectables.
Chirag Patel
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 we've been expanding the market. So demand is coming our way because we 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 Olympus is we have a very strong team. I mean that the commercial team has done a superb job and reputation and meals 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. And those alliances you will see even higher market share coming coming up as well as fill Nitro. And we add OBI. You will start seeing the uptake on the market share as well.
David Amsellem
That's helpful. Just to clarify, the $100 million does not include the locks on. 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.
Tasos Konidaris
And the lockdown, David, that's correct that we have the estimate we had on the Q4 call and reiterated $30 million plus for Lawson, $100 million is for the rest of the NPLs this year.
David Amsellem
Great. Okay, helpful. Thank you.
Chirag Patel
And you can see the file with my brother mentioned five already launched, which are good value products complex in queue.
Operator
Balaji Prasad, Barclays.
Balaji Prasad
Hi, good morning, everyone, and congratulations on the results. A couple of questions from me. I was starting to be a generic side, a slightly surprised to see Amneal Spire for on Xifaxan. Bausch has been Raymond defending this from years versus a host of generic companies settled there, how differentiated is a buyer for versus others who are realistic of an opportunity? Is this versus any other generic company?
And a similar question on Restasis to own for years. Generic companies are flagging this as an opportunity and struggled to get approval for the merger and how should we think about it?
And 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 six $50 million. What drove that increase in revenue guidance and what is the EBITDA impact of it? Thank you.
Chirag Patel
Go ahead, Chintu.
Chintu Patel
Yes, hi, Balaji. Good morning and thank you saw 95. I mean, we always work on very unique and key products, and we do have a position a day, 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 the Stasi. Yes, it is a very complex product. We are advancing our NDA and we are expected to launch at least as it next year in 2025.
Chirag Patel
We are very hopeful on that approaching our annual health care question, Balaji is yes, it is growing really well and a lot of government product where 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 our cat and it would continue to grow.
And Balaji, can you just repeat your other question?
Balaji Prasad
So yes, the impact of our debt on EBITDA, I what I'm also trying to figure out is with the last 12 months revenue or EBITDA already being close to $590 million and 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 have care long-term guidance raise and what's the impact of AdCare guidance raise on the EBITDA.
Tasos Konidaris
So what happens of care of Gilead has been growing along with the rest of the business. So we're not relying on any specific segment, whether or not this generic of care specialty biosimilars are going to carry the day. So growth continues to be across all our all our businesses.
Point number one point 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 and to kind of carry the day so we're not always in control of that. So that depends, as you know, with the on the regulatory authority source some years maybe is ahead of plan some some years we may be a little delayed, but all of those will come. But the cadence of it right, is not is not totally in our control. So that's something we just want to be mindful of number one. And number two is IPX two or three. So as we discussed, the vast majority of the potential launch expenses of IPX two or three year 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 I cannot incremental top and bottom line contribution of that of that of that revenue. So the The downside is protected. The upside has not been has not been built in and after 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, who may choose to make some additional investments, if the year is playing a little tighter than we thought we made just yet kind of pushed bucket couple of potential deals.
Balaji Prasad
Got it. Thanks.
Chirag Patel
But momentum has been strong as you can see the six key products have been approved already. So we feel very good on that. How the momentum is great and the pipeline is delivery and isolation.
Balaji Prasad
Thank you.
Operator
Chris Schott, JPMorgan.
Chris Schott
Great. Thanks so much for the questions. And 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 time lines in light of the recent Sandoz settlement and 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, the war zone 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 finally on AdCare, obviously great performance here, but just your latest thoughts on potential to monetize that business and how you're thinking about that. Thank you.
Chirag Patel
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 26, maybe a bit early, and we'll see how the 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 Aloxi zone, the retail side is slow. The government is where most of the the demand is state-wise. Retail is probably 10%, 20%. We are already have contracts with CVS and Walgreens to supply them, and they already have supplied them both of them and government deserves 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, little of products, which we have $10 million capacity. So no issue whatsoever and have care. Now, 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 delever massively or pay down the gross debt in a huge amount, which and it's been a great acquisition for us and either way we're fine with it.
Chris Schott
Okay, great. Thanks so much.
Chirag Patel
Thank you, Chris.
Operator
Thank you. We have no further questions, so I will hand back over to Chirag.
Chirag Patel
Thank you. So Q1 was an outstanding start to 2024 as the momentum builds across all areas of our diversified business and the reason I love some launches later, this 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, everybody, everyone, and have a great day.
Operator
Thank you, Chirag. This concludes today's call. Thank you for joining. You may now disconnect your line.