Amneal Intermediate Inc

NASDAQ:AMRX

Earnings Call Analysis

Amneal Pharmaceuticals' Strong Growth and Future Outlook

Amneal Pharmaceuticals reported strong growth in Q2 2024, with revenues rising 17% to $702 million, driven by generics and specialty medicines. The company’s 2024 revenue guidance was increased to $2.7 - $2.8 billion, reflecting a 13% to 17% year-over-year growth. Amneal is also launching CREXONT for Parkinson's disease, expected to contribute $300-$500 million in U.S. peak sales, aiding their specialty segment to exceed $500 million in revenue by 2027. Additionally, the company continues to expand its biosimilars portfolio, anticipating over $125 million in 2024 revenue from this segment.

Strong Financial Performance in Q2 2024

Amneal Pharmaceuticals showcased impressive financial results in the second quarter of 2024, achieving total revenues of $702 million, a substantial increase of 17% year-over-year. This growth was driven across all three business segments: Generics, Specialty, and Healthcare. The Generics segment alone reported net revenue of $427 million, growing 14%, thanks to a diverse portfolio of complex products. Notably, the company also launched several products that contributed $36 million to this quarter’s revenue. The overall adjusted gross margin stood strong at 41%, reflecting robust operational management.

Raising Guidance for 2024

Following this strong performance, Amneal boosted its full-year guidance for 2024. The company now anticipates net revenue between $2.7 billion and $2.8 billion, up $150 million from previous estimates, indicating a year-over-year growth rate of 13% to 17%. Additionally, the adjusted EBITDA guidance was revised to range from $610 million to $630 million, marking an increase from earlier projections of $580 million to $620 million. This reflects an expected growth of 9% to 13% for the year.

Growth Drivers: New Product Launches and Specialty Portfolio

Amneal is particularly excited about the launch of CREXONT, a Parkinson’s disease treatment that holds great promise to reshape care standards. Anticipated to generate U.S. peak sales of $300 million to $500 million, it will significantly contribute to Amneal's specialty revenues, projected to exceed $500 million by 2027. The Specialty segment also recorded a revenue increase of 7%, further emphasizing the overall solid performance of Amneal’s diverse offerings.

Expansion of Biosimilars and Complex Generics

Amneal is firmly positioned to capitalize on the growing biosimilars market. The company created a reliable stream of revenue, expecting over $125 million in 2024 from biosimilars alone. The strategic expansion includes the addition of more pipeline candidates aimed for launch between 2025 and 2027. In the Generics sector, Amneal’s focus on the launch of 30 new products annually sustains its strong growth trajectory. The firm remains a leader in gelatin, injectable products while addressing critical market shortages.

Improving Financial Health Through Debt Reduction

A focus on improving its balance sheet is evident. Amneal has successfully reduced its net leverage from 7.4x in 2019 to 4.4x as of Q2 2024. The company plans to pay down over $100 million in debt in the latter half of 2024, including an initial payment of $40 million made in July. This continued focus is part of a broader strategy aiming for a net leverage ratio of around 4x by year-end and to reduce leverage below 3x in subsequent years, enhancing financial stability and investor confidence.

Commitment to Research and Development

Amneal is not only focused on expanding its product portfolio but is also investing substantially in R&D, especially in biosimilars and specialized products. With a robust pipeline that includes 80 pending new products and significant investments in automation and AI, the company is poised for sustainable, long-term growth. Their comprehensive development strategy underscores a commitment to enhancing patient access to affordable medications.

Exciting Growth Prospects in International Markets

The company is aggressively pursuing international markets, expecting revenue contributions to increase significantly from $20 million to $30 million in 2025 and scaling to about $100 million by 2027. This renewed focus on global distribution represents an exciting growth avenue for Amneal, indicating a strong commitment to expanding its footprint beyond the U.S. market.

Strategic Positioning in Competitive Landscape

With CREXONT's launch and an expanding portfolio of products, Amneal is well-positioned to navigate the competitive landscape of pharmaceuticals. Their established experience in the Parkinson's treatment space and readiness to tackle the complexities of biosimilars gives them a competitive edge over industry rivals. Moreover, their strategic pricing approach aims to secure a substantial market share while also improving accessibility for patients.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, and welcome to the Amneal Pharmaceuticals Second Quarter 2024 Earnings Call. I'd now like to turn the call over to Amneal's Head of Investor Relations, Tony DiMeohDemand

[Anthony DiMeo, executive]

Good morning, and thank you for joining Amneal Pharmaceuticals Second Quarter 2024 Earnings Call. Today, we issued a press release reporting Q2 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 on forward-looking statements for factors that may impact future performance.

We also discuss non-GAAP measures. Information on use of these measures and reconciliations 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 Dale, Chief Legal Officer. I will now hand the call over to Sharath.

[Chirag Patel, executive]

Thank you, Tony. Good morning to everyone. We are delighted to report strong Q2 results, raised 2024 guidance and share the recent approval of CREXONT for Parkinson's disease. Today, Amneal is a global diversified pharmaceutical company that provides access to high-quality affordable and essential medicines for patients, providers and payers. We're deeply purpose-driven company on a remarkable journey of expanding in key areas of medicine and delivering sustainable long-term growth.

Amneal has grown consistently each of last 5 years. Revenues are up from $1.6 billion in 2019 to over $2.7 billion expected in 2024. Adjusted EBITDA is up from $339 million in 2019 to about $620 million expected in 2024. We could not be more prouder of this progress and the strong foundation we have built.

Let me now discuss how well we are positioned for sustainable growth -- long-term growth in each of our business. Starting with Specialty business, we continue to grow our key branded products in neurology and endocrinology. This week's U.S. approval of CREXONT formerly known as IPX203 is a watershed moment for Amneal. We are excited to launch CREXONT in September.

Our launch plan and market access strategy leverages 10 years of Rytary commercial experience and our deep market understanding of patients, providers and payers. We expect $300 million to $500 million in U.S. peak sales. In total, with the addition of CREXONT, we expect specialty revenues of over $500 million in 2027. We continue to evaluate branded opportunities to add to our pipeline, and we are excited about the future of this segment.

Next, our affordable medicines business, which is our generic segment, has grown consistently every year since 2019. This durable growth profile is driven by ever-expanding portfolio of retail, injectable and biosimilar products. For the first half of 2024, revenue growth has accelerated to 14% in due to our diverse portfolio of complex and high-demand medicines, robust supply chain and regular cadence to 30 new launches each year.

We're #1 in quality, complex new product portfolio and customer fulfillment in the United States. In Injectables, we have expanded our portfolio to over 40 products for the hospital market with a deep pipeline. We have now tripled our manufacturing capacity to 60 million units to drive growth at scale. Importantly, we are helping to address market shortages in hospitals and clinics as we provide 12 commercial injectables currently on the shortage list.

We are also focused on providing unique ready-to-use 5b2 products that can improve hospital pharmacy efficiency by eliminating medication preparation steps. We have launched our 355(b)(2) ready-to-use injectables with more to come.

Turning to biosimilars. We have built a strong business with the successful launch of our first 3 products, and we are on track for over $125 million in revenue in 2024. The next phase of biosimilar growth will come from 5 additional pipeline products we have added in the past few quarters. They're all expected to launch between 2025 to 2027.

With our most recent addition, omalizumab, we have now expanded beyond Onco and to allergy. This product represents $2.6 billion of U.S. market today, and we see a significant biosimilar opportunity for this molecule with less competition. Overall, the U.S. biosimilar market is estimated to grow from $4 billion to $5 billion today to $20 billion to $30 billion by 2030 from a manufacturer's perspective.

We see biosimilars as the next wave of affordable medicines with adoption rates over 80%, biosimilars are increasing access and driving affordability to important biologic therapy for patients. We look to build a significant biosimilar portfolio through in-licensing and vertical integration over time to be one of the top global biosimilar players.

Next, internationally, we are just beginning to gain traction. In India, we are building a customized portfolio of specialty products. In other geographies, we are working with partners to commercialize select meal products in key markets, and we'll start supplying products in the fourth quarter. We expect international revenues will add $20 million to $30 million in 2025 build to $50 million, $100 million by 2027 and rapidly scale after that. This represents the new growth vector for Amneal in the long term.

Finally, our [indiscernible] distribution business has more than doubled since we acquired it in 2020. This robust growth is driven by ongoing expansion across all 3 of [indiscernible] channels, distribution, government and unit dose. We are especially proud to serve military veterans through [indiscernible] government channel. Now we expect over $675 million in [indiscernible] revenue in 2025.

Overall, as we continue to grow and further diversify, we are providing more patient providers and payers with access to high-quality, affordable and essential medicines as we are having a profoundly positive societal impact. We have demonstrated that our growth is durable and sustainable over the long term. We believe the true potential and value of Amneal is yet to be realized. I will now hand it to my brother, Chintu.

[Chintu Patel, executive]

Good morning, everyone. Thank you, Chirag, and thank you to the global Amneal family, who helped make Amneal possible with their deep passion, great talents and hard work. I will begin with CREXONT and then discuss our core strength in innovation and operations which we were long runway for sustainable growth.

We're very excited and delighted to receive the U.S. FDA approval of CREXONT that has the potential to change the treatment paradigm for Parkinson's disease. IPX203 has been our #1 R&D program for years and its successful approval this week is a remarkable accomplishment by our team. As a background, Parkinson's disease is a degenerative neurological disorder that severely impacts everyday life. Over 90% of Parkinson's patients today are on carbidopa, levodopa therapy.

However, over 40% experience wearing off symptoms leading 2.5 years after diagnosis. Some patients take up to 10 immediate-release doses per day and still experience motor fluctuations. CREXONT promises to ease this burden for patients and improve their daily living.

CREXONT is an innovative formulation consisting of IR granuals for rapid onset and ER pallets for long-lasting efficacy. CREXONT delivers more good on time with less frequent dosing. Both Phase III post-honalysis, CREXONT showed 1.6 hours more good on time per dose that IR. As a leader in the Parkinson space, we are proud to advance the standard of care for patients.

In specialty, we are continually evolving our R&D efforts to move up the value chain. Next up is the DIG auto injector for migraine and cluster headache. We are on target to complete our NDA response in quarter 4, which would put us in a good position to launch in the second quarter of next year once approved.

Let me touch on our industry-leading complex generics portfolio. We have launched 15 new products year-to-date and are on track to launch over 30 again this year. Our pipeline remains deep with 80 new product [indiscernible] pending, 63% of which are non-oral solids. In addition, we have 65 pipeline products, 94% of which are non-oral solids.

Our world-class global infrastructure is optimized and ready to support the commercialization of our pipeline. Within our R&D organization, we have enhanced our efficiency execution and scientific capabilities to develop complex products on shorter time lines and a lot less cost. As a result, we are allocating more investment towards external R&D, especially in biosimilar and specialty. I will now touch on a few key programs.

First, our recent launch of naloxone nasal spray is going well. With this product, we are expanding access to a critical rescue medicine for treating drug overdoses. We started distribution to retail pharmacies and the state of California in the second quarter. Next, our first major integration product, Albrosulfate has FDA goal date in the fourth quarter. This is the first in a series of inhalation launches we have planned over the next several years.

We are also on target to file our first SMA product by the end of 2025. Inhalation is a new vector of growth for our business. In Injectables, we launched 9 new products so far this year, including our first 55(b)2 products, Pemready and Fosen and recently approved Potash Postbank. We have developed our 505(b)2 inject our strategy very uniquely based on feedback from many stakeholders. As a result, we have built a curated pipeline of unique injectable product presentations.

We look to launch 22355(b)(2 injectables each year with about 6 currently in development. our other complex injectable R&D programs in microspheres, liposomes and the drug device combinations are also advancing nicely in our pipeline. Next, in biosimilar, we are thoughtfully expanding our portfolio.

Building on the success of our first 3 commercial products, we have enlicensed 5 additional biosimilar pipeline candidates since December of 2023. First, we expect to file our 2 danosimumab biosimilar for Prolia and XGEVA in Q4 this year. After that, we expect to file our backfill gas team, onboard injector and prefilled auto-injector products.

In addition, we are excited to add Omalizumab of biosimilar for ZOLED to our pipeline. Our partner recently completed Phase III trial enrollment with expected BLA filing by quarter 4 of 2025. This marks our expansion in biosimilars beyond oncology to immunology and our commitment to be a leader in this space. We will opportunistically add more molecules, particularly in less crowded categories to our pipeline and look to be vertically integrated over time.

Internationally, we have distribution partners in place for key developed and emerging markets. Our team has completed over 150 product registration filings since last year through the first half of this year. We are registering products globally, including in Europe, Canada, China and emerging markets. International expansion is a key area of focus for us at Amneal.

Moving to operations. Quality remains at the center of everything we do. We make continuous investment in automation, digitization and AI technologies to support quality and advance our global infrastructure. This year, we had several successful equity inspections at our sights and success is grounded in our deep commitment to operational excellence, exceptional customer service, driving efficiencies and maintaining a robust supply chain. Across our supply chain, we are focused on what we call the 3 Rs, redundancy, resiliency and reliability.

We are focused on long-term cost savings by validating secondary sourcing operational excellence and moving production in-house. In addition, truck strategies remain a challenge for the U.S. supply chain, and we are doing our part to address shortages especially for injectable.

We have expanded our injection manufacturing capacity in recent years to 19 production lines, which will allow us to drive long-term growth in injectables. Overall, Amneal is expanding and growing in the key areas of medicine, specialty brands, biosimilars, injectables, complex generics, international and distribution, we are so deeply passionate about our company's mission and purpose and the good work that remain ahead. Amneal is part of the solution in addressing several of the critical health care challenges in the U.S. today. I will now pass it over to Anastasios Konidaris.

[Anastasios Konidaris, executive]

Thank you, Sinding. I'll start with our strong second quarter results, then move to our first half and then discuss our higher 2024 guidance expectations. 5 months ago, during our March 1 earnings call, we outlined how our growth will meaningfully accelerate in 2024. We laid out an array of growth drivers, including biosimilars, new products, our specialty portfolio, continued after expansion and strong execution across our business. What we said we would do, we are doing.

With strong momentum across our diversified business, we're driving accelerated top and bottom line growth and continuing reducing our debt levels. Let me now turn to our second quarter results. Q2 revenues of $702 million grew 17% with growth across our 3 business segments. Q2 Generics net revenue of $427 million grew 14%, driven by our diverse portfolio of complex products. Biosimilars generated $30 million in revenue driven by alliances.

New products launched in 2023 and 2024 added $36 million to Q2 revenue growth. Additionally, our base portfolio continued to perform very well, driven by robust demand for our complex portfolio and our strong execution by our supply chain and commercial teams. We're working incredibly hard to ensure the needs of our partners and patients are being met on a daily basis.

Our second quarter specialty net revenue of $104 million grew 7% driven by our key branded products, including the recent addition of Agentes. Q2 Abcur net revenue of $170 million grew 33% reflecting continued strong growth across all 3 sales channels. Our overall second quarter adjusted gross margins of 41% continue to be very robust and in line with expectations.

Our second quarter adjusted EBITDA of $162 million grew 11%, reflecting robust revenue growth and operating expense leverage. Our second quarter adjusted EPS of $0.16 declined $0.03 as higher EBITDA was offset by interest expense and higher sales outstanding. Looking at our first half financial performance, total company revenues grew 18%, with double-digit revenue growth across all 3 segments: Generics, up 14%, Specialty up 11% and health care up 33%.

Our first half adjusted EBITDA of $350 million is up 20% year-over-year. With continued broad-based strength across our business and operating expense leverage, we are pleased to raise our full year 2021 guidance. We now expect 2024 full year net revenue between $2.7 billion and $2.8 billion, up about $150 million from prior guidance which reflects 13% to 17% year-over-year growth.

Due t higher revenues, we now expect 2024 adjusted EBITDA of $610 million to $630 million, up from $580 million to $620 million, which reflects 9% to 13% year-over-year growth. We expect 2024 adjusted EPS between $0.57 and $0.63, up from $0.53 to $0.63 in prior guidance.

Our increased 2024 guidance reflects the ongoing strong performance and momentum across our businesses. Continued investments in R&D as we grow are by a similar pipeline and our commercialization efforts around the outcoming CREXONT launch. The addition of CREXONT is an important new catalyst that bolsters our long-term top and bottom line growth profile. Combined with the array of growth drivers we have highlighted today and those not yet disclosed, we're confident in our ability to drive sustainable long-term top and bottom line growth.

Let me now turn to our cash and our balance sheet, where our strong financial performance is translating into higher cash generation and deleveraging with our key pillars of value creation. We now expect higher operating cash flow of $280 million to $320 million in 2024, up $20 million from prior guidance, excluding legal settlements.

Also, we continue to steadily reduce debt as net leverage has decreased from 7.4x in 2019 to 4.4x in the second quarter. We plan to pay down over $100 million in debt in the second half of 2024, including $40 million already paid down in July. We expect to reduce net leverage to about 4x by the end of this year on our way to below 3x over the next few years. I will now turn the call back to Chirag.

[Chirag Patel, executive]

Thank you, Tasos. Q2 was an outstanding quarter on many fronts as we achieved strong performance and raised our full year outlook. With the approval of CREXONT, we expect the momentum to continue building with additional catalysts on the horizon. As we look forward, we are excited for the opportunities ahead to increase access to high-quality affordable medicines, improve lives and create value for our shareholders. Let's now open the call for Q&A.

[Operator]

[Operator Instructions]

The third question comes from David Amsellem from Piper Sandler.

[David Amsellem, analyst]

Just a couple for me. First on CREXONT. Can you talk about how you see the payer landscape evolving, particularly Part D, just given the eventual loss of exclusivity for Rytary. So just help us understand what you think access will look like, how restrictive do you think the landscape could be with Rytary being available as a generic? So that's number one.

Then number two, just wanted to pick your brain on complex generics, particularly interested in what you're thinking regarding GLP-1 generics. I think you called out an exenatide pen in your slides. Are there others the obvious suspects here that you're looking to file on down the road? I wanted to get your thoughts there.

[Chirag Patel, executive]

Thanks, David. So as you know, Rytary has the highest coverage among the Parkinson's products, and we expect similar coverage for CREXONT or even better. And initial discussions with all the payers have been good. We have a very smart strategy on the pricing to make, as you know, we're going after almost 30% of the market share. Therefore, we have devised a great pricing plan where it's more affordable for seniors, especially the Part D.

And with the new Part D out-of-pocket, we expect the adoption for this product and the coverage would be even better. And the fulfillment of prescriptions will be better than previously. We used to lose 20% to 30% prescriptions due to coverage or due to donut hole, we expect that to be much better going forward. Joe, do you want to add anything?

[Joe Renda, executive]

Sure. Dave, thanks for the question. The only thing I would add from what rock said is that remember, too, we've been in this market now for over a decade. So we've developed very, very good expertise in contracting with the payers. So we're intending to leverage that.

And to Chiragh's point, we're also going to be building a pretty comprehensive patient support program to ensure reimbursement and patients actually get on paid therapy to Chiragh's point. So the experience that we've leveraged with Rytary really enables us to ensure access for CREXONT.

[Chirag Patel, executive]

And the second one, let me hand it over to my brother, Chintu.

[Chintu Patel, executive]

So as you know, Amneal is very focused on a complex product development. And we have spent many years of understanding the entire peptide space and drug device combination. So we are in a pretty good shape.

As you mentioned, extends the first GLP that was developing duties and most likely, we'll be launching that product in the next quarter. That does give us the platform to develop more. We do have other GLPs in pipeline. We have not disclosed which ones but we do have a deep understanding of API peptides and manufacturing with drug device combination. So we have a good pipeline in this category of drug.

[Operator]

The next question is from Leszek Sulewski from Truist Securities.

[Leszek Sulewski, analyst]

Congrats on the approval of CREXONT. Just 3 questions for me. So maybe first, to focus on CREXONT now that it's approved. I would imagine you have an improved profile across your lenders. Any consideration for a chunky BD plan further advance your specialty portfolio? Or does the focus remain on internal pipeline with some tuck-ins along the way.

Second question is on residual investments in CapEx, I believe you maintained $60 million to $70 million of guidance. I'm just kind of wondering how that second half of the year plans out and then also 2025? And then third, on the DHT auto-injector launch, I believe that was initially expected in kind of the earlier first half of next year? What's triggering the delay into the second quarter?

[Chirag Patel, executive]

Yes. So we are steadfastly focused on getting to 3x as Tasos mentioned, on a leverage profile until then expect us to keep doing the R&D deals, and those are really good for us. We do have a large budget of R&D. And as my brother mentioned that we -- internally for GX now the spend has gone down. It's still a good amount of spend but not as what it used to be in 2016, '17, '18, '19, right? So we have more dollars available for R&D deals, and we may acquire some of the commercial assets in the areas we operate, all on the branded side. So that will remain as a BD plan.

And then obviously, we'll be -- after we get to 3x, we will be very engaged in a very smart business developments and acquisitions as we have -- our intention is to keep growing Amneal to the next level and next level. We have one of the best team to do that and one of the best foundations in the industry. So we'll expect us to keep doing good business development over time.

[Operator]

Your second question on CapEx. CapEx will go up from next year, and we'll share that detail -- this year is in line as we plan to expand, there's certain specific areas which will share information when we have it. The HE auto-injector has always been a first half launch and which allows us to specialty team to focus on CREXONT and we're completing stability in the fourth quarter. It's our own site. So we don't expect any delays anymore. And after that PS is 4 to 6 months after that.

[Chintu Patel, executive]

We expect approval sometime in April, May.

[Chirag Patel, executive]

Yes. So April, May, we'll be launching it.

[Operator]

The next question is from Chris Schott from JPMorgan.

[Ekaterina Knyazkova, analyst]

This is Ekaterina on for Chris. So just 2, if I may. So first, just on biosimilar Prolia and XGEVA, can you talk about your expectations for those markets? And are you expecting similar dynamics to be sold with HUMIRA and kind of any learnings from how that market is evolving over time in terms of the contracting in the PBM stuff? And then the second question is just on generic pricing.

Can you just talk a little bit more about the broader environment. I think you've touched upon this in the prepared remarks, but just what you're seeing in terms of shortages and just the general pricing environment and anything that's kind of changing or something that you're kind of calling out or paying attention to.

[Chirag Patel, executive]

Thank you, Catalina. So Prolia and XGEVA, it touches both markets, the PBM as well as buying bill, and we have expertise in both commercial segment as we have been working with buying groups over the last 20 years, great relationship with them.

So these are similar buying groups have been formed for biosimilar products, and we expect to have a fantastic relationship with them, just like we are ranked top of the line today with our retail buying groups will have a similar relationship. So we expect -- we like that what happened with HUMIRA as aggressively and we knew this would happen.

Eventually, the biosimilars will gain 80% or so market share because it's designed to do that. So we are not worried about market penetration for both products. And if you made our lessons where multiple lessons, right? You -- and which is kind of stabilize the industry as well as you have less competition developing biosimilars than what it used to be, and it's more of a play for companies like us, Teva, Sandoz, which are focused on biosimilars, where we already have experience providing affordable medicines.

And your second question on GX pricing, it's better than before. It was unsustainable in 2016, '17, '18, '19, '20 painful years, and manufacturers cannot just keep lowering prices. We have obligations to patients. We have obligations to quality systems. We have obligations to the government of United States as well.

So we just -- this is an essential industry, feels 92% of prescriptions. It is much needed. It has to be sustainable, and it's a robust industry. I don't know why you would -- somewhere we would sell our GX business. When you think about it, what we are doing. And part of GX now is injectables, biosimilars is this -- it's critical industry, and I hope we start getting respect that we deserve and pricing that we deserve.

[Operator]

The next question is from Balaji Prasad from Barclays.

[Unknown Attendee]

This is Vishal for Balaji. So can you talk about how you see your Parkinson's franchise involved now with CREXONT approved? What will be the pace of ramp-up look like in the next few years? And how do you expect to achieve synergy within the 3 assets of your Parkinson's franchise? And also, could you comment a little bit on how will CREXONT impact your margin profile next year and over the next 3 years?

[Chirag Patel, executive]

So we we're now the leader in Parkinson's. We have Ongentys, Rytary and now CREXONT. We look to add more pipeline assets as well as continue to do research in Parkinson's.

This is the area we know really well for 10 years, and we've been working closely with patients and providers, and it's really touching our heart. So it's -- I think we can do more for this disease state, and we will continue to do so. And it's fantastic synergy, right? The COMP inhibitor with -- CDL COMP inhibitor for certain patient increases the levodopa or it keeps it longer in the brain, so -- which is completely synergistic to market both product CREXONT and Ongentys.

And as we launch more products, which are specialty, biosimilars, even the inhalations, our margin profile should improve on the specialty side, it should improve on GX, and you see the margins -- the [indiscernible] margins, obviously, is the distribution business, so which are going to be lower. So that's -- when you combine it, total margin will improve.

[Unknown Analyst]

Congrats on the approval again.

[Operator]

We have no further questions. So I'd like to hand back to Chirag Patel for closing remarks.

[Chirag Patel, executive]

Well, thank you very much. We're so excited, and we'll continue to deliver great results and really make an impact for patients and providers in the United States and now slowly but surely expanding internationally as well. Thank you very, and have a great day.

[Chintu Patel, executive]

Thanks, everyone.

[Operator]

Thank you for joining. You may now disconnect your lines.