AFT Pharmaceuticals Limited (AFT) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the AFT Pharmaceuticals 2022 Full Year Results Analyst Briefing. [Operator Instructions] I would now like to hand the conference over to Dr. Hartley Atkinson, CEO. Please go ahead.

Yes. Thanks, Noah. Thanks, everyone, and welcome. So basically, what we'll do is go through the presentation, which I assume you should have. As the cover page says, it's the -- it's May 2022, and we're going through our last year financial results ended 31st March 2022. So that's Page 1. Page 2 is effectively the small print, which I assume you will have read and just take that as read, thank you. So now Page 3 to start to go into the details. So basically, what we're showing on this slide is the sales growth has continued. Basically, as you can see from that graph on the bottom right, we're growing at about 14.4% CAGR over the last 10 years, which would roughly double our sales in just over every 5 years. And that's really what's been happening. So we grew from $113.1 million last year to $130.3 million this year, which is a reasonable result. I mean, the thing I really want to make the point, I think, as some people seem to come back to us almost endlessly and say that really, COVID must be benefiting AFT, I mean, it has to be, et cetera, et cetera. But really, to be frank, COVID has not benefited us. It's caused many challenges, and this result is being achieved amongst that background as opposed to really it being some sort of tailwind, which it really isn't. So in terms of rest of the world, we basically commercialized our products in 46 countries at the moment. We have over 100 countries licensed through agreements. So clearly, we're working on improving this from the 46. Asia, we've made some reasonable progress this last year. Basically, we had 2 licensees and distribution partners in Korea and in China. And then we also have our own operations in Hong Kong, Singapore and Malaysia. And what we also did last year is we put in place a regional manager, Lorraine Poppleton. And she is based out of Hong Kong. And we see that as important. Additionally as well, we formed a company in Europe, AFT Pharmaceuticals Europe. It's based out of Ireland. And we have our person up here, Eddie Townsley, who is their director. And we also placed 2 staff into the European market as well: Thomas Gumbley based out of London and [ Tanya Benvega ] based out of Zurich. There's also been a couple of important sort of changes overall. In Australasia, being Australia and New Zealand, obviously, yes, look, we're still making good progress within those markets. What we've done is we've increased our resources further. We hired an additional doctor sales force in the Australian market, which has literally just started on the 1st of April. So it's about team, salespeople and a couple of sales managers as well to help to drive our business in the key Australian market. So that's Page #3. Flicking on now to Page #4, just the overall business. As you can see, we grew revenue by 15.2%. In all of the regions, we managed to keep double-digit growth. The operating profit improved to roughly in the middle of our guidance, as you remember, guidance being $18 million to $23 million. So we got at $20.4 million, and that was up 90% on last year's results. I think as you may also pick up, those of you following us, is we did tend to -- we've always tended to have a stronger second half, and this year was no exception this last year passed. And look, I think we'll see the same thing this year as well. And the net profit after tax was up over 150% to $19.8 million. And yes, the point just to reinforce, as I tried to say before, really, that COVID has been a headwind and certainly not a tailwind. And we don't see ourselves as a COVID stock or something like that. So when you look at the regions, the graphs on the bottom, we can see that Asia market grew just over 24%; rest of world, including licensing income, about 32%. New Zealand grew by almost 15%. Certainly, we're actually really pleased with the New Zealand result. It was better than we've been expecting. And also, I mean, that's a pretty standout considering we had a lot of pretty severe lockdowns across that market, which made it very hard to operate in a lot of sectors, especially Auckland. And then Australia, we got reasonable growth at 12.3%. We do see this accelerating as well because we've got a lot of launches coming. But we did have some delays, and we were pleased overall with the Australian market growing. You can see in that middle pie graph when it looks at the breakdown. It's not a lot different really in terms of percentages. We're still predominantly an Australian business presently, New Zealand maintaining, international starting to grow a little bit more and spread out. And over time, as we roll out international sales, we do anticipate that part of the pie to start to spread out. But that's not because something like Australia is not growing. We certainly see a lot of growth opportunities in the Australian market. And you can see on the far right, look, that's our operating profit over time. You can see that clearly, FY '18, we had a loss. And as you remember or may recall, we'd always talked about the reason we floated and raised money was so that we could accelerate our R&D. That would involve some additional spend ahead of where we normally would have been able to do it. So therefore, we did lose money, which probably the market was maybe slightly not 100% on at the time. But I think they can see that we had done what we said. We've turned that loss round into a profit. And at the moment, we're now growing and expanding our profit, which is what we're planning to do. So that's that page and moving on to the next page, Page #5, Australia. So sales were up, as we mentioned, a bit over 12%. We got growth across all that prime channels being OTC, prescription and hospital. As you can see, too, from those bottom pie graphs, we do have quite a lot of OTC sales being at the moment, it's about 61.5% of our business is OTC. We see that, that's just quite useful. We've always said that this is part of our plan. And with things at the moment, as you'll be aware of inflation and some cost effects, certainly, one has a lot more pricing flexibility and ability to react in the OTC market and maybe some of the other markets, which seem to have a more lag effect if you do need to have a price rise. So there is still very much a plan to keep on with that OTC focus. And you can see looking at the far left bottom, you can see that we're getting the sales growth. And look, we see that this should, if anything, pick up as we have -- this year, for example, we've got about 20 new product launches. There was a positive out of COVID for our business. In many ways, we did do -- it forced us to really focus as well on our local channels because we're somewhat restricted with travel, obviously. We did a lot of in-licensing work and built a lot of partners as well using Zoom and things like that. And really now, it's just starting to show up or should show up over the next time period. And with this year, for example, we've got 20 new product launches planned over the Australian market. That's Page #5. Moving on to Page 6. New Zealand, we were actually really pleased despite some pretty tough operating conditions with a lot of our pharmacies being locked down. Customers literally blocked out, and that doesn't help you when you're selling over-the-counter products when customers can't get near the shelves. So we were really pleased to get growth of 15% to $35 million. And basically, over-the-counter products actually improved their sales a bit last year. And see they were 55% of sales, and they've now grown to 57% of sales. So we had some strong results for things like -- some of the staple categories like allergy grew strongly. And we made some really good results -- some really good improvements and progress in the allergy category. And also, we had some good sales with Maxigesic as well. But it's just to stress again, we do have a broad portfolio of products, and that helps us to navigate some challenges like, for example, when people can't go to doctors, for example, with difficulty, you tend to get a decrease in some of your acute medicines. And we do have a number of products in the acute medical treatment area. And certainly, those products are not helped by COVID restrictions at all. So that was a really positive result as far as we were concerned in the New Zealand market. So moving to the next page, Page #7. Asia, we were pleased to get almost 25% growth, and we had some strong growth in actually the hospital area more. We still over time, though, we do want to focus as well on the OTC channel, which didn't really grow last year. There were quite a few stock effects as well where the year before, we had some very large Maxigesic sales in Singapore. And effectively, that soaked up a lot of the sales we would have made last year. But sales in Malaysia, they grew nicely, and that helped to partly make up for it. But I mean, over time, we do see that the OTC sales should also start to grow. And I mean, really, $5 million is a much smaller business than what we're looking at certainly over the next kind of 4 or 5 years. So we've really got a lot of initiatives in the Asian market to further grow there. So you have to watch that space. But certainly, making reasonable progress at this point in time. So that's Page #7. Moving on to Page #8, the Maxigesic international rollout. That was quite difficult, to be frank. We've been stuck in New Zealand for literally 2 years not able to get out, and that really was quite restrictive. And I don't think it's helped us at all. But certainly, starting from this February, and I have 5 weeks in Europe catching up with a lot of our licensees and partners, and other members of the team have just come back from 2 weeks in the U.S. and Central America. And our trial monitor has just been through about 10 sites in the U.S. and is on her way to Europe literally right now. So we've got a lot of travel that's going on at the moment, which is pretty important to catch up on things we were severely restricted by. However, we are making some progress. We did the deal with Hikma Pharmaceuticals, and that is underway in terms of the registration, the approval process with the FDA. We're sort of getting requests for information from them with about a 3- or 4-day time line, which is quite tough. But our team is pretty good. For instance, one of our ladies even got up at 4 a.m. in the morning to go in and sort something out that had to be filed with FDA before 5 p.m. Eastern Standard Time, being the close of their business day. So the team certainly does pull behind these sort of projects, and we are making progress. But I don't really think it was helped at all over the last couple of years. So we really are having renewed efforts to push that forward. The Hot Drink Sachet, we've just launched that in Australia. And then we're also working on further launches in Europe at the moment. Maxigesic tablets, we've extended that -- we launched in Switzerland and Greece. Maxigesic IV, we've had launches in Germany and Austria. But there's a whole pile of major European countries at the moment. We're finalizing the licenses and have ordered stock and working on those launches presently. And the U.S. obviously is one to watch as we continue to work on making progress in the U.S. market. So that's that page. And going to Page 9. You can see the white spaces we've not yet launched -- sorry, not yet licensed or got a distributor for Maxigesic. We're working on a few areas, being Brazil, we've filed there. And we're still having ongoing discussions, which are making progress, a little bit slow. Same in China, we're making good progress there. But certainly, with some of the lockdowns, that's really slowed down our regulatory meeting, which is one of the key things that we have to complete before finalizing something for the China market. We are doing more launches. The yellow is slowly starting to increase. Some of the markets this year is we got France coming up, but we are actually waiting to get an OTC launch completed in a nearby country first, and then we'll roll France out after that. Korea, we launched as well the IV. We're catching on very well, and it was pleasing to see the forecast triple after the launch because of the good feedback that they received. So look, that's all basically progressing, and it's just a matter of taking off a few more countries such as Brazil and China and then later Japan and I mean, several more launches, so the blues to the yellow. So that's Page #9. Page #10, yes, this has been something we have been quietly working on pretty hard actually. And personally, I think it's really important because strengthening our pipeline will assist going forward. We've added another 5 projects to our R&D pipeline. And you'll see on that graph on the top left, we are starting to -- we're certainly not pulling back from R&D expenditure. Last year, we did about $10.4 million R&D expenditure. This financial year, we're at the moment looking to grow that to about $12 million. What we're doing those, we're funding it out of existing profits and of existing cash flows, which is a very strong kind of position. And actually, if anything, we're seeing positives in that some people we have worked with as partners, they're really not able to raise capital easily in this sort of market. And it gives us the opportunity to say to them that, look, we can partner with you on a share basis. We're not going to give you all the money upfront, but we can pay for research and development over the next kind of 3 years, and then we'll share in the proceeds. So if anything, the current financial conditions are actually positive for us. Like people often ask us and say, "Look, why don't you go buy a whole other company or something like that?" We really still have not been able to find value in this sort of approach, although we did a lot. But we do see value in this sort of approach where we partner with people, we then advance the R&D projects. Because another important thing is we do have our own R&D department, and we can run clinical studies considerably cheaper than many of these companies in the United States. So that's another major advantage for us. So look, that's important really, the R&D side. The Pascomer, we're finishing off that study in the middle of this year for the orphan drug indication. We did have larger non-orphan indications, which, if anything, is the key part of Pascomer. And we've got a study starting soon, the first study in [indiscernible] is starting in Spain in the next sort of month or 2. The NasoSURF, we're just working on that to crunch through our first entry into human study. So those are underway. We've got another few projects, as you can see. We've code-named them. Look, the only reason is not to try to be awkward, but we really are conscious that it is a competitive industry. And really, we don't want to tell everything to our competitors. We'd rather just give them code names and then kind of execute them and then announce further details as we're doing that. So we've got one called HS, which is a reasonable market. They're quite targeted. It's well advanced. Got another product with Project BT. We purchased the medicine actually for a pretty modest amount, and it's a couple of hundred million U.S. market. And we're just working on that at the moment on finalizing the dossier. And we'll be looking to start doing filings at the end of this calendar year. Got another product, Project KW in the gastrointestinal area. We're working on a couple of formulations there up in Italy. And then also, we are looking at another more complex version, which would have a patent. But that's a busy sales market as well and adds to one of our areas we're working on at the moment in gastrointestinal. Same with dermatology, Project SD. We're also doing some work with medicinal. We call it CBD rather than cannabis. But effectively, it's the CBD portion of cannabis, which is nonhallucinogenic. We're not working on the THC variant. So we are working on this at the moment. So that is underway and advancing as well. So that's a bit about our R&D portfolio. And then to flick to the next page, please. It says building the Maxigesic addressable market with new dose forms. So we are getting close to finishing off a lot of our Maxigesic drug development, which is why we brought another pipe to the pipeline. So there's the tablets, which we've talked about quite a lot. Maxigesic PE, we launched that in New Zealand and the Middle East. That's a more limited product that will only be in certain geographies. The Maxigesic IV, that has a number of patents going out to 2037, and the launches for that really are just starting to roll out. Maxigesic Oral Liquid, we have got our first approval in Europe, and we're working on launching that during this calendar year. Pediatric medicines, to be honest, always very challenging from a regulatory perspective. So that one will always sort of have ups and downs. But given we've got our first European approval, we'd be confident we'll add other approvals to it. Maxigesic Hot Drink, we've just finished our first launch the Australian market, which actually has gone extremely well. The pharmacists are very positive about it. It's actually gone so well that we -- despite what we believed was a good forecast, and we sold out -- went on stream very quickly. And we're urgently manufacturing more stock right now, which we'll have to get over as quickly as possible. So that actually is looking to be a product that is well received by the market. Maxigesic Rapid is the product in the United States, but we will also be able to get approval in other countries as well. We're looking to get this approval for Maxigesic Rapid during this calendar year. Maxigesic Cold & Flu, we filed that at the moment in the first couple of markets, and we would expect approval actually pretty quickly during this calendar year. And we'd look to launch in quarter 1 next calendar year, so in the quarter 1 of 2023. The Dry Stick Sachet is a popular dose form in a number of countries like North Africa and France, and we're just doing some additional work on that. And we'd look to file a dossier sometime next year, all going well. So that is our Maxigesic portfolio. So we've certainly padded that out quite a lot since when we first started. And now moving on to Page 12, which is financials. I'll hand you over to our CFO, Malcolm Tubby.

Yes. Thanks, Hartley. So revenue is up 15% to $130 million. Gross profit up 26% to $62 million, improving the margin to 47%. That does include the license income, which is at 100% profit, of $6.7 million. So we put a little analysis at the bottom of that table to show you that the underlying from product sales and royalties, we've had an increase in margin there, up to 44.5%. Operating expenses increased in dollar value but declining as a percentage of revenue to give us an operating profit of $20 million. If we move down to the bottom. Profit after tax, we did have a little bit of unrealized taxable losses that we could put into the balance sheet. And they'll run out through this year. So we'll have used all of those tax losses up, but that's improving our profit after tax up to $20 million compared to $7 million or $7.8 million last year. If we turn to the next slide, Slide 13, the cash flow. Apologies on the net increase. So could you take the brackets off the $4.6 million? That is an increase in cash, not a decrease. So that's generated from of the operating activities of $14 million. And as we've said earlier, we're still holding these high levels of inventory. We invested the $5.5 million, putting that into R&D and then the financing costs. So surplus cash of $4.6 million, increasing our cash balance in the balance sheet up to $8 million at year-end compared to $3 million last year.

And we are pleased, I mean, Malcolm, that we were able to make the extra investment and spend and yet still improve our cash balance, weren't we?

Yes. Yes. And then on Slide 14, looking at the balance sheet, the net debt is down into that target range we'd identified of $25 million to $30 million. So we're down to $29 million compared to $35 million last year. We will carry on holding those inventory levels. There is still disruption more in the supply chain than anything sort of getting hold of containers and then getting places on a ship. So we'll carry on at that level. And then going forward, we'll be talking more about net debt as a percentage of our operating profit or EBITDA. That's -- this is moving our total equity now up to $57 million. And I'll toss it back to Hartley to talk about our dividend. Hartley, please.

Yes. Thanks, Malcolm. Yes, look, what we wanted to do is we had shadowed, I think, earlier on that we were wanting to have a dividend policy. And certainly, the results have reinforced that. And basically, the Board expects the company to continue growing. And provided we're hitting our results, then we would be looking to pay dividends of between 20% to 30% of our normalized net profit after tax, so removing things like any extraordinary one-off gains and losses and looking to maintain, as Malcolm mentioned before, that debt of around about 1x operating profit. I mean, there are obviously different viewpoints on this. What I'd sort of like to stress is that we're not pulling back on growth. We actually are still doing both things really. We are investing in sales and marketing and R&D to continue growing the business. However, we are generating cash. And therefore, this is sort of more of a modest kind of dividend policy of between 20% to 30%. So that's, we believe, a strong signal about the business. So that's certainly what we're looking at. And all going well, we would look to declare a maiden dividend to shareholders during this FY 2023 year. That's Page #15. Page #16. Look, just to quickly mention that there's clearly -- this is a topic that we do get asked about, about the ESG side of the business. So that's the 3 [ beds ], as I'm sure you're all aware of. In terms of the environment side of it, we've done a lot of work on packaging. Some things we can't control that well. Like pharmaceuticals is pretty rigid around the actual packaging that's in contact with the medicine. However, we were pleasantly surprised. Really, there was a lot of work we've been able to do around the other packaging to really reduce waste and things like that. And at the moment, too, we're also working on the climate change side to look at our carbon footprint, and that is -- will be part of our reporting requirements going forward. We are generally, though, to be frank, a pretty low, less carbon intensive business than many because really, we don't have any major footprint really around shipping and things like that. And pretty much all our shipping is done by boats as opposed to airplanes, which is more carbon affected anyway. In terms of social, that's certainly one of our main things where really, the reason we exist is so -- as to produce medicines to improve people's health. And that's something we do feel strongly about and has always been our kind of guiding principle. And even our business card well as 10 years ago, we put on a tagline, working to improve health. And that's -- so it certainly something that hasn't just happened. It's always been there. And then in terms of governance, obviously, compliance, transparency, ethical and sustainable supply chains is another key area. As our business has grown to over $100 million, we are required legally to report on this in Australia. And we've had a big project. We've looked at our supply chain and to look at -- to make sure there's no slave labor or anything like that. So we have looked through that or -- and we've included that in our reporting as well. We certainly would not expect this sort of thing, and the data we've got back so far is certainly consistent with that. So that's Page #16. And then look, going on to Page #17, which is the last slide, the outlook. I mean, basically, we do continue to see considerable opportunities for growth. We've worked very hard on improving our in-licensing. In fact, we've actually had to hire more people around that, and then we started out with a sort of business development manager. And then we've had to actually hire another probably couple of people on top of that. So we now have a new launch manager because we are doing that many launches. We have a legal person who's doing a lot of the contracting in-house, which has been useful. And then we've also got another person who does a lot of the business analysis as well. So certainly, we've really grown that side. So we have improved our pipeline. And also, we're using that to grow our R&D pipeline as well. So it's another important angle. We do see things becoming more normal as the COVID tends to retreat. I appreciate -- especially in New Zealand, there are a lot of people who seem to be catching it at the moment. We certainly had that within our staff. Fortunately, no one has been more than kind of moderate effects. But I spent 5 weeks in Europe in February, and they were well and truly moving forward and kind of well ahead of us in terms of the curve. And then we did come back to Australia for the big pharmacy conference that they hold in the Gold Coast. Literally, there were 7,000 attendees, and things were really not much different from pre-COVID in terms of attendance and what people were doing in terms of engagement and things like that. So we saw that as quite positive. I certainly really do want to once again emphasize because we've commented a number of times as though somehow, we're a COVID stock and we must have benefited from it. I can guarantee you, over the last couple of years, we -- COVID overall has not benefited AFT. We've managed to achieve what we've done under very difficult circumstances with a lot of multiple curveballs coming at us, but the team has been able to work around that as well as we could. And really, for us, it will be much more positive as we would anticipate the effects of COVID would recede, especially overseas, which we continue to see they are. So look, it's really focusing on the new financial year and opportunities to accelerate our growth. We're not backing off investing in sales and marketing. We do have a number of e-commerce initiatives underway, which probably not that obvious at this stage, but we have flagged them. We've launched our own website called Goodpharm in Australia and New Zealand, and we're just working on that. In China, we have approval now for quite a significant number of our OTC drugs, being at least 15 or so to be allowed to be sold cross-border. This is still quite an interesting scenario because basically, 28% of the Chinese population do purchase medicines online, and 28% of 1.4 billion is about 392 million. So there is a good potential audience there. And we will be working on things. Marree and I, we'll also be preparing quite a lot of content as well for our launch platform. And we will be working with some local Chinese influencers. By local, I mean in China. So yes, quite a lot of work going on to -- into that project, which effectively is being run out of Hong Kong and out of Mainland China. We've also got a number of initiatives in Amazon, which will become more apparent. And we'll announce those as well as the year goes on, where we are doing a lot of work in that area and looking to have a launch in some significant markets with Amazon. Look, on that basis, we're expecting profits are all going to plan in the range of -- operating profit in the range of $27 million to $32 million. I mean, the other comment I know we do get as people say, "Look, how come it's so wide? Do you not know what you're doing?" I mean, to be fair, our point we would make is there are still a number of moving parts to things. So we feel more comfortable with a wider profit range because we do have a significant amount of moving parts still, which do impact things like time lines. And that does make a difference to the overall result. But anyway, still, I think as you could see, this year, we came in around about the middle despite quite a lot of challenges and problems. But so we were pleased with our results. And look, happy to take any questions to try and add to that. So I can hand it on to Noah to hand questions over to us. Thank you.

[Operator Instructions] The first question comes from Matt Montgomerie with Forsyth Barr.

Well done on a solid result. Maybe firstly, if I just start on the results itself. Looks to be some pretty solid cost control through the second half. Just wondering if you could please make some comments on inflationary pressures that you're seeing in the business currently and how you've countered that in terms of product pricing recently.

Yes. Look, I think as everyone knows, there are some inflationary pressures. We have seen some price increases. What we see as important is still that business, a good 60% or so of it is OTC, which is always easier to change prices, there's a reasonable amount of pricing flexibility. So I said, I mean, we are able to pass on price increases in that area. And then with the other areas, it's really a matter over time of passing on any price increases. It kind of depends. In some areas, there have been increases. And actually, in others, there haven't been. But obviously, things like freight and things like that have gone up quite a lot with the price of a container probably going, say, from USD 6,000 to about USD 18,000. And what -- we had a good logistics team, and they're working pretty hard on things like consolidating shipments because one of the challenges, for example, is the difference between a 20-foot container and a 40-foot are actually not that much. So we're working on making sure we consolidate things to order enough that we have it on a 40-footer. The difference, they might be USD 18,000 for a 40-footer and a 20-footer would be $15,000. So it's certainly not proportional. So things like that and just working hard on all those angles have been important and continue to be.

Great. Maybe secondly then, looking ahead on guidance, clearly, a wide range, which is understandable in the current backdrop. But just wondering if you could please give us a steer for what you're assuming in terms of licensing income. And then I guess what you view are the key swing factors between the top and bottoming of that guidance range?

Yes. We tend not to break out the license income, and that is a fair factor in that the swing factor there in the revenue. So we'd probably rather just leave that one just -- if we can. We just really just give guidance on the operating profit.

Okay. No, fair enough. I'll just leave it there for now.

Thank you.

Your next question comes from Christian Bell with Jarden.

Well done on a good result. Just a few questions from me, if I could. EBIT growth was underpinned by Australia with the revenue uplift basically falling straight through. Does that reflect that the cost base there is largely [ flat ]? And hence, we should expect any future incremental growth to basically fall through to EBIT as well?

Yes. We're launching new products. We are going to increase our sales and marketing spend, don't we, Malcolm? So there will be some increase around that. And then we've also got the additional sales force in terms of the doctor reps. There should be -- it certainly won't cut our returns, but they won't get quite as much operating leverage at first. But that will flow through over time. Malcolm, maybe you can comment more on that.

Yes. That's right. We do see, it will be a -- it's a bigger spend next year with the launches for Australia, in particular, also New Zealand. But then, of course, as international grows, we -- that had a much lower overhead base on it. But -- and then Asia, we are spending some money, which we did last year and we would again this year on marketing of the OTCs. So there will be some increase in both overhead costs.

Okay. So yes, it's just quite good to know, I guess. But generally speaking, while there might be a bit more cost than this year from investments, generally speaking, though, we're starting to see decent operating leverage from the Australian business. I guess the interesting point here is just that it's quite a stable, robust sort of segment of the wider group. So it's just, I guess, quite good to know that the future guidance is sort of anchored to that business.

Yes. Look, there will be some good leverage. It will slow down next year because we've got so many launches that have been delayed. But then, of course, as they establish themselves like our established brands, they do just have a -- you can get to a fixed amount of dollars spend but still get the revenue growth on those established brands.

There's some quite positive potential like, for instance, even with something like Maxigesic, like even though it's the market leader, there's still a lot of potential to grow. And then the more different line extensions we've dropped in, it makes the whole bundle of products stronger. Like we've really seen that. Like with the hot drink sachets, it's gone -- going well. And point is having more than one product kind of really helps. So we do see quite a lot of potential around things like that to get more leverage as well. We can promote across the whole category with kind of more different line extensions of Maxigesic as well.

Yes. That's cool. And then just on Australia, 20 products planned for FY '23. Does that mean we can basically expect even bigger growth in Australia this year compared to '22?

Yes. We're planning on better growth, yes. I mean, we've always talked about -- I mean, this is nothing new. We've talked about cracking $100 million in Australia, and the question is just exactly when and not the scope for sort of kind of flexibility around that. But certainly, yes, look, Australia, we would be aiming at growing it more this year than last year.

Great. And then just on the international product sales revenue. Because excluding licensing revenue, that was flat, even though the number of countries sold increased and also have crossed -- included IV sales as well. Are you able to just sort of talk to sort of a flavor there?

Yes. Yes. I mean, if you actually look as well that licensing, the royalties, you can see the royalties, which is a better reflection in many ways of in-market sales. That did grow a fair amount. Like it was up about 97% or almost 100%. With COVID having an impact in Europe, we got quite a few kind of major effects where people stocked up quite a lot the year before and then didn't buy that much last year. So we saw kind of that impact and then sales of recovering quite strongly at the moment. So there were quite a lot of impacts around COVID with purchase of stock and then lumpiness around that, which makes it harder to -- when you're comparing time period on time period. But I guess if you look at the royalty income, you can see that, that is improving, and that is consistent with the in-market sales. But the licensee and distributors who purchased the stock was real kind of lumpy, which skewed things.

Right. Okay. And I guess it just kind of leads me to my final kind of wrap-up question, just talking to the guidance. Basically, just trying to understand what the main growth driver is there. So I mean, we expect Australia to have some meaningful top line growth, offset by a little bit more cost burn. But then I guess, I mean, we'd have to assume a little bit from licensing -- in the licensing or the -- sorry, licensing revenue in the U.S. this year as you sort of register the IV and tablet and later launch there. But I mean, just in terms of breaking down what the kind of key drivers of the growth is, is it -- what's the sort of balance between ANZ business, Maxigesic? Are we kind of expecting Maxigesic revenue to double? Or just trying to get a gauge on what kind of trajectory we should be expecting.

Yes. We're looking for a strong growth in Australia, as you say, good growth in New Zealand and -- but then bigger growth in the rest of the world. So the main drivers will be -- in the total overall picture, will be Australia and rest of the world. And there is the element of the licensing income in the rest of the world.

[Operator Instructions] Your next question comes from Nicholas Sundich with Pitt Street Research.

Just one very quick question. Now I know you've already said that we don't generally like to talk about some of the underlying profit assumptions. Just one very quick one. Is that -- is it -- how much of it depends on the -- on a U.S. launch for Maxigesic? Or is it just -- or will it be too early a stage for the launch of Maxigesic for it to matter in the context of already having an established market position in Australia and in other markets?

Yes. The specific Maxigesic sales in the United States don't really contribute that much and not really in the forecast, particularly for this year. I mean, like we've got a lot of launches in Europe that are underway kind of right now, and they also have a bigger swing factor really. We've got markets like France and Italy, all are underway, and it starts from there. They have more of an impact. Malcolm, do you want to, I mean, say anything?

No. I think that's right. I mean, there is a bit of America in there. But as Hartley said, it's not huge. And that is the reason for the -- you can understand, the reason for the range of the guidance is the timing of these different things coming on stream, including the launches in Australia.

Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.