Viatris Inc. (VTRS) Earnings Call Transcript & Summary

Well, good day, everybody. Thanks for joining us at the BofA Healthcare Conference. My name is Jason Gerberry. I'm one of the biopharma analysts here at Bank of America. And I'm pleased to be introducing our next company Viatris, and we're joined by the team. We've got Michael Goettler, CEO; Rajiv Malik, President; and Sanjeev Narula, CFO. So gentlemen, thanks so much for joining us.

Thanks, Jason.

I think, Michael, you may have a few prepared remarks first before we jump into Q&A or no?

Not really prepared, but I want to thank you for inviting us to this. And Viatris -- it's almost 2 years old now, like in November will be our second anniversary. And yet, this because of COVID, actually the first international investor conference that the 3 of us are attending in person. So that's a good opportunity. And it's, I would say, long overdue. If you look at our business, we've got about 3/4 of our business outside of the U.S. We get less than 20% of our shareholding outside of the U.S. So it's a great opportunity to communicate in detail with some European investors and some more international investors. And look, since they maybe not as familiar with us, let me just recapitulate a little bit what we have with the creation of Viatris, right? We built -- when we come together, Mylan and legacy Upjohn in November 2020, really created a one-of-a-kind global biopharmaceutical company. And I think EUR 6.5 billion in revenue, roughly $6 billion EBITDA, $2.7 billion and very solid and growing cash flow as I think one of the unique characteristics of this business. But more importantly, 37,000 colleagues around the world, products reach 165 countries. That's very important to us because of our mission. Our mission is access to affordable quality medicine independent of circumstances, independent of geography, and that's one way we do it. We have a solid operating operational platform over 40 sites around the world. And again, at a time when you hear about supply chain disruptions with COVID, I mean it's hard for anything from diapers to furniture is delayed and stuck, and we had in our service levels that are at/or above our peak levels from before the pandemic. So very, very solid there. We have a strong development house. We have over 3,000 people working in development and regulatory and medical. And Rajiv can elaborate on about a track record of a highly productive development and many, many firsts. First interchangeable insulin with Semglee, similarly the first generic to Advair, the first generic to Symbicort that just got approved, the first Copaxone. And again, it goes to the list, there's a long list of first. We have a business that's extremely diversified, right, over 3,000 products. Brands, generics, complex generics, biosimilars for the time being. And that diversification gives you resilience. And I think we've shown that now with 6 quarters of very solid strong performance quarter after quarter consecutively. We're no longer dependent on what happened to one product or one part of the business anywhere in the world and we have ways to offset. So that's kind of what we built. When we launched November 2020, we set some very clear goals. We said we want to strengthen the balance sheet, reduce $6.5 billion in debt. We're more than halfway there, right? So we're on track of achieving that. We said we want to initiate and grow dividends. We've done that. We've initiated. We've grown it by 9% recently. And so we've got about a 5% dividend yield at the current share price. And we say we integrate and synergize about $1 billion in synergies and we are, again, more than halfway there and on track to achieve that. Importantly, by the end of this year, we'll be essentially free from all transitional service agreements with Pfizer, Upjohn relied a lot on Pfizer support. That gives us the independence to operate, but importantly, the savings, right? So that's kind of what we call the Phase 1, the years '21, '22, '23. And then importantly, last February, we laid out a strategic vision for how we see the next phase going and where we want to move the company, how to move the company more simpler and more stronger and a more focused company that includes some divestitures and includes some capital allocation plans. And those divestures start with the biosimilar deal that we struck with Biocon, which allows us not only to unlock value significant value at 16.5x multiple versus our multiple, $2 billion in immediate cash flow when the deal closes, but also create a vertically integrated champion in biosimilars. So take all of that together, we're unlocking value. We're creating additional financial flexibility and then have a lot of optionality, what to do with that flexibility, whether it's share buybacks, whether it's business development or additional investment in R&D and, of course, further debt pay down. So we're excited about how we're performing. We're excited about the execution we have, but even more excited about where we can take the company.

Great. So a lot about the complexion of the company, as you alluded to, is going to change in the company with the divestitures and newly acquired businesses. But let's maybe talk about the performance of the business since the merger and even this year, just maybe kind of what the base business is doing just a set of foundation for maybe then we pivot to some of the strategic topics. Last year, you absorbed some headwinds in business this year, you guided to some headwinds. And then on the most recent quarterly update, there were some offsets to some of those headwinds. So maybe if you can just sort of set the business for what parts of the business are strong, which parts of the businesses maybe -- haven't been as strong and kind of what you see as kind of like the core base of the business that you want to retain versus other aspects of the business that maybe are weaker or...

Let me answer the second part, and then maybe Rajiv and Sanjeev can elaborate on the current performance. But look, what you're going to have is Viatris going forward, you're still going to have a strongly diversified business. You're going to have a core generics, you're going to have increasingly complex generics with the push into complex generics, you're going to have a strong brand business, right? We have 60% of our revenue now is brand. Now most of that is post-LOE brands, right? Like Lipitor, Norvasc, Viagra you name it but it's a branded business. And then increasingly, as we laid out, we want to also make a foray into more innovative areas. We laid out what the therapeutic areas could be, that's GI, ophthalmology and dermatology because of particular opportunities in those areas, and that hopefully sets us up on a return to growth. Yes. Rajiv, if you want to ...

From the base business part of it, Jason, I would say we are hitting on all cylinders. Everything we had anticipated and expected, we are performing either to the expectations or better than expectations. We had assumed we will grow organically again this year by 5%, 6%. We are well on that path. North America, we had anticipated some headwinds the way we had anticipated for the products. Some more competition around Wixela or XULANE. Other than that, we had anticipated some launches, which are coming through. Very recently, we launched the generic to the Revlimid. So it's right exactly how we have anticipated. Somewhere when you say that we are not dependent upon a product or a market and all that, all this comes together to offset somewhere some softness, and you come up with additional opportunity. China is even when I say better than expectations, we had assumed headwinds, we have continued to assume. And yes, COVID has delayed certain policy implementation. So where you see our China business still very -- executing strongly around both in the retail as well as the hospital -- in the hospital. Even in emerging markets, we had tracked in some HIV, some more pressure on the HIV or the COVID. I think where -- whatever we had anticipated rather than that, everything, every business, the branded business is delivering as we have anticipated. So is the generics. And so the -- operations have delivered to support this, taken into consideration the inflation headwinds we have factored in. We are right where we were -- we had assumed. So I don't see anything else.

So if Jason, if you look at the numbers, FX aside, we were clearly transparent, FX is headwind that impacted operationally, everything is exactly in line with what we had expected, maybe slightly better, the top line. Gross margin is coming slightly better because of better mix of what we have and better geography, geographic distribution. The other thing that is also very positive is the cash flow. So we're able to absorb the -- all of the FX impact in our cash flow because of the management focus on looking at the cash flow because it's so critical. And then looking at the cash optimization work, you're looking at the networking capital management, all of that is helping us to advance in all of that.

Can we drill into China a little bit more because that's a segment that you guys have exceeded our expectations and the retail growth, I think, has helped offset some of the headwinds there. I remember at the time of the merger, there was a lot of concerns around Lipitor and I think it was Norvasc and those were 2 products. And you mentioned gross margin, I imagine when China stays flat or strong, that's a good gross margin segment for your business overall. So it seems like you're navigating these lockdowns pretty seamlessly, maybe distribution, even during lockdowns has been something where patients aren't getting deprived of medicines. I guess, where are we right now in terms of like the lockdown dynamics that we kind of -- feels like in London or in the States, we're kind of post COVID. I don't know if we could say the same about that part of the world.

China lockdown have been going on. And the first phase is for Shanghai, now some other small provinces are going through the lockdowns. Our business, let's say, mix a little bit changed. Earlier, we were seeing momentum behind products like Viagra in the retail and all that. That mix may be retail might be a little bit a tad softer than what we thought, but hospital channel more than made up for that. So both businesses continue to -- retail is still going to grow maybe a little bit less than what we thought because one channel which gets impacted when the lockdown is the retail channel as patients are not able to get out as frequently to the pharmacies and all that. But overall, from what we had anticipated, in fact, we did better. We did not anticipate the lockdowns. What had done -- lockdowns had basically -- I think taken the administration a little bit away in managing the COVID than to implementing the policy. So that policy implementation has been a little bit further sort of, I would say, pushed out. But otherwise, our performance in China, the team has done a great job of understanding and navigating through those policy change.

Yes. You mentioned having a lot of post-LOE brands, right, in the portfolio. You're now, I think 60% of your revenue is brands give or take. Are there any chunky products that have any kind of exposure points or LOEs in the portfolio? Or do you feel like you're pretty insulated from the LOEs?

LOEs are -- LOEs in [indiscernible], which goes in 2030 that only small product, which is going to go LOE, maybe in the next couple of years is Dymista, mostly Europe-based product, that's small, about $150 million brand. We factored in...

The FX for Japan...

The FX for Japan is 27, FX with brand. And that also is not big like Lyrica. It's a couple of hundred million dollar products. And so it's Amitiza, it's 2026. So our branded business, patent-protected brand business is less than $600 million, $700 million, total in the $16 billion, and that's over period of so many years.

Yes. Okay. And maybe, Sanjeev, just in terms of -- you talked about capturing the synergies. I think that the goal -- is there an opportunity for incremental synergies? If you can talk about the cost structure as the company is currently constructed. I imagine a lot of that could change with divestitures in the future as to what goes and what stays, but maybe how you're seeing the business currently?

So Jason, we're always constantly looking at opportunities. We have a very robust plan right now, multidimensional on capturing synergy, which is at least $1 billion over 3 years. We are well on track. We did $0.5 billion last year, $250 million this year, well on track coming from different line items. And we're constantly looking at it. Right now, we are on track. And as we're looking at these businesses, divestment, we'll continue to look at the opportunities. And that's going to be the goal of how we can free up a lot of the capital and do that. But I think right now, I'm very confident and comfortable with the plan that we laid out in front of us.

Okay. Okay. Maybe a couple of questions for Rajiv, just on the pipeline. Thinking about a few product opportunities, there's Symbicort in terms of where we are with that process. I know that there's a patent ruling pending. And as we think about that opportunity, assuming if the IP events go your way, just curious like commercialization, I know with Advair, there was a decent amount of CapEx investment to have a facility to make dry powder inhalers, can you leverage that investment for a product like Symbicort, DPI as well?

It's MDI and we have -- and Diskus, we have a manufacturing partner Kindeva, which was a legacy 3M company. who is our partner. We are in the state of readiness from the launch perspective. All we are waiting for is any day which this -- we said September. So in the next 14, 15 days, we can hear from it. And then based on that, we'll take a call on the launch of the product. It's not factored in our 2022 numbers. We didn't factor that in. If we launch, it'll be an upside. Let's see, we are hoping -- we are pretty confident, optimistic, but we're hoping -- we're waiting for...

Is that because there's additional IP that got asserted later that's not in the ruling and that may put you in a position of an at-risk launch?

We -- once we take a call, we take everything into consideration. We take a view as management presented to the Board. Our business has been -- we have been taking risk, launch at risk is a part of our business plan. But I just don't want to get ahead of us. We'll go back to our IP legal team, understand where the litigation is and then based on that make that call.

Yes. Okay. And you also have the once-monthly glatiramer acetate product that I believe you've some data here in the second half...

Any day now.

Any day actually.

Just thinking conceptually about what that product could be as a value enhancement to patients, right? I know you want to look at our RMS endpoint for registration purposes, but how that could potentially differentiate obviously, fewer injections, perhaps -- there's a lot of injection side effects that you have with the drug and there's convenience, right, in the patient's life. But have I sort of encapsulated the benefits there, have you...

Yes. You've encapsulated very well. Of course, it has to be efficacious, as efficacious as twice a week. So that's -- one is the convenience. Along with convenience, we believe that injection site because that's been one of the issue because you have now in lesser number of injections, you would assume less number of incidences. So yes, address depends on the readout of the data. So I don't want to get ahead of me. We are waiting any day. It should be actually -- it's due in the next maybe a week or so.

This would require until building out some sort of commercial presence to call on MS specialists. It's not an area that you currently I imagine are -- have a sales force detailing.

Look, Copaxone, even generic, was not as simple. It required a lot of hub services and some call points delivery to do that. So yes, we'll be able to leverage our experience and understanding this market, how this MS market works, the key ways around that, we have been working very closely. So yes, we will not bring sort of 505(b)(2) product like this and then launch it as a generic to do whatever we need to do to make it success.

Yes. Okay. And then the other product I'm curious about, you retain this in the Biocon arrangement as BOTOX. This was, if I recall correctly, you guys got this through Revance. Revance got approval recently for aesthetics. You guys want to be in dermatology down the line. Is -- so maybe help me think through the opportunity and if you're able to get this, is this more of a true generic for the therapeutic applications? Is this something that -- the aesthetic market is kind of a difficult very different, unique market. So just kind of curious how you think about the value opportunity.

It's -- for us, it's a biosimilar, which will have all the indications, meaning therapeutic as well as aesthetic. At point what -- the business case we built was mostly use therapeutic. Aesthetic will be a upside. So if we -- for example, when we launched -- when we said dermatology, can this be a product of interest? Yes. So if not, we will find the right dermatology partner at that point of time to leverage what we have to -- the science we will create out of that.

Got it. Okay. This is the same API that Revance just got approval on though? Is it the long acting? Or is it...

Long-acting formulation thing. It's basically -- the product basic strain and science is the same.

Yes. Okay. Okay. Maybe we can shift gears to some of the corporate strategy updates and talk a little bit more about the decision to divest the biosimilars business. And how much of that was driven just by perhaps pricing erosion in biosimilar end markets, maybe not the pricing power, maybe not being as sticky. It seems like biosimilars is very much a first mover type of category. It's a tough business and like products like Humira, there's a lot of competitors. We're seeing [ Novartis ] decouple their biosimilars business. So just kind of curious what -- or ultimately, was this the valuation so compelling that you had to do the right thing for shareholders?

I think it's a combination of things. Number one is the biosimilar market is an attractive market right now, right? There's no doubt there's growth opportunity. There is better margin than the core generic market. But if you look out a little bit more strategically and a little bit longer term, you see that this is a market that's kind of similar to where generic market was maybe in the mid-2000s. And the way to be successful in the generic market was vertical integration. The same thing here. You need to have vertical integration. Eventually, it just makes pricing power better, it makes decision-making better. You're more flexible, more nimble in the market, et cetera. And so that was the logic. And then the question is, why do you have 2 ways of doing that? You either double down and invest yourself and do that or you find another way to participate. And luckily, we have this great relationship Biocon. So we found another way to do that. And obviously, you mentioned already the valuation is very, very attractive at an implied multiple of 16.5 versus companies. There's a clear value creation, but we continue to participate with at least 12.9% shareholding in what we believe will be a vertically integrated biosimilar powerhouse.

Yes. The only thing I will add is because you said it's going to be more and more competitive. And if you want to basically really lead this market, you need to capture the whole margin line over there and do that. So for us, because we are not vertically integrated, either we're sharing with a partner over here or partner over there. So that's partly meant by either double down, invest and create your own supply chain, create your own capacity to create your own R&D too. Do everything you need to do because that gives you that flexibility, ability to strike in the market, pick up the opportunities, hang in, in the market. It's like then first in last out, that was the slogan 10 years back. You have to get in first and you need to have it staying power to hang in, in the market. And vertical integration is that what's going to give you.

And Jason, one other thing that this deal does that is the enhancing the financial flexibility, right? So we now from this transaction, as soon as we close the transaction, have flexibility to do a lot more than we were able to do before, at least in the Phase 1. So we're looking at potential tuck-in and bolt-on deals. We're looking at potential share buyback, all the flexibility that didn't exist before now we've that with this and then the other divestments that are on the docket by the end of next year.

Now there are additional businesses that you -- I believe you've already identified that could garner an estimated $4 billion to $6 billion of divestiture proceeds. So are you in that process? Have those businesses been identified? Are you talking to other counterparties about those divestiture? Just kind of curious if you can give us a sense, I know you indicated by, I think, 2023, you'd like to have, I think those deals closed or announced. Maybe just kind of...

Closed. Yes. So the time lines are right. So on the Biocon deal, we continue to be confident that we can close this within this year, right? You said second half, already September now. It's coming soon. And on the other divestitures, we're very pleased with the progress we're making. We continue to be confident we have that by the end of 2023. Now we still haven't announced them yet, right? And I think what you can expect is to see that maybe as the deals become more concrete at that time that we would completely announce.

But to be specific to your question, of course, we have identified. When we gave you that number we have not only identified exactly what -- how much it can be valued on. So you would expect us to do that work. So we have identified it, and we are at a point in socializing that and getting out there. And we didn't want to compromise the integrity of the whole process, so we are right there now. So...

Is there anything about the -- what will be the closing process for those types of deals? Would they be similar to Biocon such that where I'm going with this from trying to back into, if you're saying year-end 2023 closed, if they have a similar kind of announcement, the closing time line as Biocon, that will investors kind of think through where we are now versus how the process could evolve.

We're talking about as having these deals announced and mostly closed by the end of 2023...

Yes, I was -- like the approval in different regions like India and stuff like that maybe slowed the closure of the Biocon deal versus say, a pure U.S.-only asset.

We're, I would say, announcing by the first quarter and then giving ourselves 6 months to close. We had factored in mostly, and I don't think these are going to be highly -- like from the competition commission point of view that sort of issues from there.

Okay. And are the efforts internally about those processes or even in parallel running the process of looking at the future assets that you want to acquire, and in earmark those proceeds. I know that there's a bit of a gating factor to buying some of the more durable assets that you want to buy? And I'm just curious if you're in the process of identifying those assets now, and it's just really for the capital infusion.

Yes and no. I mean, of course, we run both processes in parallel. And obviously, we always look at opportunities. We always have and we actually did a couple of very small deals. But -- and I don't -- I wouldn't say we are limited or gated by the availability of capital. We're a very cash-rich company. And I think for the right deal, we can strike. But we're also very committed to the commitments that we made on capital allocation in terms of debt paydown, dividends, et cetera. So you've seen us being very, very disciplined, I think, up to now. And clearly, those -- starting with the Biocon deal then maybe some of the future deals, really enhance the optionality that we have for capital allocation.

Jason, from long term -- like when he said, we know that we have announced the strategy on February 28, 3 therapeutic areas going up the value chain, investing in that space. That's exactly -- I think that's the one question which we are trying to come back and answer as quickly as possible about how to -- how to bring the company back to the growth and by when, so that we can give you the elements of that. So this strategy of reshaping, creating the flexibility, financial flexibility and investing in is all tied up so that we can get there sooner the possible.

I want to just one point to add to that, Mike, in the capital allocation. I think one thing is very clear is about maintaining an investment-grade rating. We're very committed to that. Even before these divestments, that was on part with that. But that's something that's always going to be in the forefront, and we are committed to that.

Yes. And as we think about these the therapeutic categories where you want to get more NCEs and 505(b)(2) type products that are brands. Presumably, these are global brands because you have a global infrastructure and presumably there's an element of using internal in-house capabilities to also pair and build these therapeutic verticals such that it's not entirely about what you can license and acquire, but it's also you're preparing that with assets that you bringing out as well. Is that the right way to think about it?

It's the right way to look into. If you're looking into -- first step -- take ophthalmology or dermatology, as an area. The first acquisition our first tuck-in acquisition can be a sort of anchor asset, where we also bring in some capabilities, competencies and some pipeline or some marketed products depending upon what's available at that amount of time. And then simultaneously continue to scout for more Phase II, Phase III candidates to enrich the pipeline and build that pipeline because one product is not going to build a sort of franchise for that. And we are -- what we are good at from a development point of view to take this science across the globe. So that will be a simultaneous plan, which we'll work on.

Yes. And we have experience, regulatory experience, development capabilities.

Well, that was where I was going to go with this in terms of do you need to do like a CMO hire? Do you have the people in-house to kind of help get these assets and build out these therapeutic verticals? Maybe -- some of those people maybe came from the Upjohn side which had more of a lineage in brands versus the Mylan, people have more of a lineage in generics?

Yes. Well, maybe go back and maybe explain a bit why we pick these 3 areas, right, where we think they're particularly fit for us. And it starts with these are areas that are, number one, of sufficient size; number two, there's sufficient innovation there. A lot of the innovation that happens is I don't want to say incremental, it's kind of a bad word, but a little bit more incremental is often the reformulation of an existing molecule or repurposing of an existing molecule. So you have a lot of that kind of innovation happening. A lot of innovation happens by smaller companies, not -- big pharma is not focusing on these 3 areas, which means we're also not competing with big pharma. Which means we actually to get a commercial presence, a relatively normal size sales like in the U.S. with 60 to 80 people, you can cover most of these areas from a sales force perspective. So the build is relatively small. You have high likelihood of development success, right? The PTRS is higher. The endpoints are clear. So that's all the characteristics that we think that, that fits us. And when Rajiv talks about an anchor assets, I mean, an anchor doesn't have to be $1 billion blockbuster. It could be $500 million, it could be a $400 million product that comes in. That gives you the presence in the market, maybe comes with the sales force, maybe comes with some of the branded capabilities, not that we don't have it, but we can always add some more experts exactly particularly from that therapeutic area, some of the KOL relationships, et cetera. And so bring that in-house, really the anchor assets will bring that in and you can build around that and expand. That was always a strategy.

And there was one area, definitely, we enhanced and strengthened was the medical with Upjohn coming together. So we had enough medical to prosecute the biosimilars or 505(b)(20)s because a lot of these, even biosimilars, have to go through Phase III and stuff like that. But yes, that's one area which got strengthened. So -- and anything what you don't have, you reach out to get more KOLs or CMO on the part, yes.

And then you throw in some kind of guardrails around this, talking about $200 million to $500 million type of acquisitions, thus preserving your investment-grade status in terms of the capital deployment. Is the thought that you can go out and get commercial stage assets because the multiples on those we can kind of back into that would imply kind of niche year size brands? Or would it be more trying to acquire pipeline assets and to invest and build things where you can get perhaps things with greater growth potential in front of the company?

I think it's a combination. I mean at the end, what you want, you want some commercial presence to get started. You want some pipeline and you want the capabilities to complement the internal capability that we already have. That's what you need to build to build the franchise.

Yes. Okay. Yes. And then the other question that I had, just thinking about this as a process, right? So for investors, you'd be divesting some things, you should be bringing some new things in, my mind goes to -- or the financial results going to be very muddied for a couple of years, right? Because on the one hand, like once divestitures happen or -- what are the comps, right? That becomes the challenge for kind of modeling the business and will you recast financial results ex the divestitures? Or how are you thinking about that? Because I think it's an important thing for investors to sort of understand what's left and what's the core kind of base business and performance trends. So maybe for Sanjeev, just kind of...

Yes. Yes, sure. So let's start with, first of all, the base business, like before the divestments. That is executing as Rajiv and Michael pointed out, firing around cylinders, all the commitments that we've laid out, we are on those commitments or maybe slightly ahead of that. Including this year, as we said on the second quarter call, this year operationally on track with the base business, barring the foreign exchange, which we talked about that. So all that is on track as we talked about. Now we've given some kind of pro forma numbers when we went down in February in terms of what the RemainCo looks like post these divestments kind of give like a high-level number on that. So while not giving the specific guidance on what the numbers would look like, we'll come back with that at the right time about that, right? But here is what you should think about that. You should think about stability in the top line, right, because there are no big LOEs that are -- that these are still branded products. You should see stability in gross margin, as we talked about because the concentration of the business that you have. You should see new product revenue, even after biosimilar, of roughly $500 million that actually [ held ] from that. You should expect that there is going to be a flow-through of the synergies in that SG&A line and then we kind of manage the SG&A line as we go forward. You should also expect a very significant sustainable cash flow that will come from the business that we'll be able to kind of sustain. Once we get to our leverage target by the end of next year, just in the cash flow that we generate from the business, all that cash flow is available to returning capital to shareholders or investing back in this. That's what we should expect, right? So we'll come back at the right time about what this would look like, but you should expect a very robust sustainable cash flow from the company going forward.

That's the profile of what we call RemainCo, right?

Exactly.

And overlay on that, anything new we add which we have been talking about, there are 3 therapeutic areas or tuck-ins we do. And that's how we see that can bring the company back to the growth in the period of the time that we...

And it's no different from the original strategy, if you will, what the reshaping does it kind of accelerates that.

Yes. So. Okay. And then there was more discussion about, and I think, at the onset of the merger being as partner of choice for biotechs in China, right? These companies who probably don't have the infrastructure ability to take these products to market. We -- certain companies like Everest and LianBio do this with a lot of biotech companies. We haven't really heard a lot of announcements of a lot of these types of deals. Is that still a focus? Is that still part of the strategy in terms of the cap deployment and being that partner of choice?

Yes. And it's not only China. I mean it really is we've got a global platform and capabilities pretty much everywhere in the world. We have a lot of companies to whom that capability can be very valuable. And so our business development effort do not only focus on the 3 therapeutic areas that we outlined. That's kind of -- also in the near term, there are some regional opportunities, and that's also being prosecuted, of course.

Yes. Yes. Okay. Maybe just shifting back gears to 2 questions, one on the pipeline, one on inflation. Pipeline, anything else that you're really excited about? I know you have the Blepharitis program that you recently partnership on. Just anything that we didn't touch on that you think is maybe missed by investors or you're really excited about the opportunity.

There are. There are, one, the complex injectables pipeline is progressing very well. And they are unique assets once they hit -- you don't see multiple players out there for a period of time just because what it is to develop them and make them. The second is some 505(b)(2)s, like we talk XULANE low-does patch. We have been maintaining and sustaining the brand for XULANE 5, 6 years, which is a contraceptive patch. We're coming up the low-dose patch of that. Meloxicam, that's another exciting product. We very soon will have a readout of that product, which is an opioid sparing especially for day surgeries. And if you -- if we can signs up that product from the Phase I dose finding and all that, if they can be confirmed, that can be a very nice add-on. So like Copaxone once a month falls in that category, and there are a few more in that. So we are building the portfolio of this 505(b)(2) other than complex generics, which I just talked about and continue to add those to our portfolio.

Complex injectables, feels like 3 buckets to me. It's long-acting antipsychotics. It's these microsphere products that are hard to make, like Exparel and then there's Venofer, which we've talked about a decade -- he's never been able -- these are basically generic opportunities that presumably would have first-to-market potential exclusivity dynamics that could be longer than...

Nice tails also.

But with the LAIs, I mean, from my recollection, I think INVEGA got patent upheld and maybe gating for the market opportunity for a while.

For the paliperidone or with...

INVEGA is paliperidone.

I have to come back, there are 3 on that: 1 month, 3 months. We have the 3 months one, which we are the first to file and all that. But I'll tell you, there are multiple strikes on the goal in this case between the Sandostatin, this one, aripiprazole, I can go on. This is a very exciting pipeline, which is going to cover over the next 5, 6 years. These all products are going to hit the market over this period of time. One is a first to market. Second is these products are going to have a long tail. They are not going to be 10 players within -- because these players -- these products have been out there for so long. So they are difficult, really try hard to make products.

This all dates back through the Strides business that you guys acquired in terms of where are these product opportunities are...

We acquired technology. We developed these products in the last 5 years.

Yes. Okay. And then lastly, just some of the inflationary dynamics that affect your business and not asking you for guidance per se, but just kind of just currently, your assessment of the world we're living in, we heard J&J talk on their 2Q call about people costs being more of a 2023 headwind, right, in terms of employees and having to pay up and raw material costs is another aspect. Thinking about the inputs, right? I know that you guys did provide some guidance parameters for this year, but just if you look...

And I would limit my comments for this year because we're not given guidance yet. But I think 2 things I want to point out, Sanjeev, maybe have more, as no one is -- we included it in our guidance call at the beginning of the year. It wasn't a very popular item at the time, right? But you haven't heard us talk about it since, right? So we think we made the right call. We managed within those parameters, maybe even a little bit better, right? So that's number one. Number 2 is, obviously, as we put the plan together for next year, we have multiple levers, right? There's other efficiencies that can be gained, there's SG&A. We have the synergies coming. So I think it's too early to make any call on how would that influence us for next year.

Got it. I guess maybe since we have 2 minutes left. Just anything just on the legal front, it's always a conversation point with the price fixing matter, opioids, et cetera. It seems like there's really no exposure there, no exposures intact. Those are probably the big 3 make my job complicated on certain days. But maybe just can you summarize your exposures...

There's really no update to what has been disclosed and -- or anything that we said in the last 6 earnings calls, really...

Yes. I mean I imagine that there's Statute of Limitations on the price fixing matter, they probably have subsequently...

Yes. Again, look, the bottom -- I think the core is -- I don't know about Statute of Limitations, but the core is that we have done nothing wrong, right? That's our investigation shows and we stand by that and figures will defend ourselves. On opioids, you know that we were a very, very, very small player, no impact of any of the settlements back of the line on that one. So we have other things to focus on.

Yes. Well, all right. Well, great. Thanks so much for joining us at the conference, and I appreciate the update.

Thank you very much.

Thank you.

Thank you for having us.