Alrighty, good morning and welcome to the Jefferies Global Healthcare Conference. My name is Matthew Pecora with the Jefferies Healthcare Investment Banking Team, and it's my great pleasure to introduce you to Dr. Balaji Prasad, the Chief Strategy Officer. He will get us started here today.
Thank you, Matthew.
Good morning, everyone. My name is Balaji Prasad, the Chief Strategy Officer at Alvotech. It's my pleasure to present the story that we have here with Alvotech, one we see as a fast-paced growth engine for the next five to 10 years. I would also thank Jefferies for giving me the opportunity to make this presentation. Thank you, Jefferies, Team Jefferies. Alvotech, in brief. For those of you who are not familiar with the story, we are a leading pure-play biosimilars company with the vision, of course, to enable access to low-cost biologic drugs, but at a very high quality, not just in the U.S., but across the globe. With this vision, the company was incorporated around 10 years ago. In the last 10 years, we have come a long way with multiple milestones and achievements to date.
What is also unique about us is our entire platform, which where both development and manufacturing is integrated. We have a multi-product portfolio strategy and, rather uniquely, also a global strategy. It is not just the U.S. market. The U.S. market is extremely important, of course, but we look at serving the global market. Towards this end, what did we do differently? We adopted a partnership approach, which means for every company, every country globally, we tie up with very strong local partners. We will discuss that a bit more in detail. To come to where we are today, we have invested a substantial amount of capital over the last 10 years, and that has translated into one of the largest biosimilar programs, if not the largest biosimilar programs globally.
It's translated into one of the addressing nearly $200 billion of total addressable market for biologics and with close to 20 commercial partnerships. What's also unique and what made me join the company recently is the quality of the management team that we have here. I just want to maybe leave a few words about our founder, Robert Wessman. He is somebody who is very well known in the field of generics and biosimilars over the last 25 years. He set up six companies with more than $1 billion in market cap valuations each over the last two decades, two and a half decades. I had the vision to build a pure-play biosimilars company 10 years ago and built a strong team of management team to work with him. I'm really proud to be a part of that.
I'll skip this slide with, we just look at the biologics and biosimilars difference. But this, I think, is a key. Most of the data comes from a report IQVIA have put out in February 2025, clearly saying the dire need for greater biosimilars in the U.S. and globally. Some key highlights. I mean, out of the 62 biologics which are present currently, there are around 14 without any kind of patent protection and only 14 have biosimilars, and the rest don't have any biosimilars as of date. But over the next 10 years, nearly 120 biologics are expected to lose patent protection, which means that there is a huge opportunity for any company with a singular focus on biosimilars and developing biosimilars to these biologics and help meet a dire healthcare need, which is lower-cost drugs at very high quality.
Of these 118 biologics, just around 10% currently are biosimilars in development. There is a significant vacuum in terms of biosimilar developments, which we think is going to be the growth engine for us over the next 10-15 years. Why is this important? We are not just a one to three-year story where we latch on to an opportunity in biosimilars and grow from now 2025- 2028, but this is a growth opportunity which can last for us for a long time, more than a decade or nearly multiple decades. What drives this confidence? As we look at the global healthcare system currently, global pharmaceutical system currently, biologic sales, they're growing much faster than non-biologics. Clearly, over the last 15 years, biologics have dominated the global healthcare market, providing incredible quality of care to patients, and that's expected to continue.
There is going to be no let-up. What this translates into for Alvotech is that we are going to see multiple opportunities crop up over the next 10, 15 years where we'll be able to develop new programs, new projects, and continue to be a growth story. Within this, we look at the biosimilar side. The biosimilar units are growing at around 20% over the last three years. Primarily, what we have seen till now is on the immunology side and oncology side, and we are both part D and part B. We have seen some meaningful patent expiries and biosimilar entries. I would showcase a point that the Association for Accessible Medicines had put out recently, saying that in just the last 10 years, generics and biosimilars overall have saved nearly $1 trillion to the U.S. Healthcare System.
We expect this rapid growth in biosimilars to continue and even expand further. Again, just a reiteration that this is not just a U.S. growth story. We are a global growth story. We have a strong presence in the EU market with multiple local partners. We have a strong presence in the U.S., and we also are present in multiple geographies, ex-U.S., ex-Europe, in Japan, and other Latin American countries. Yeah. As I briefly alluded to, what is our strategic advantage? We have a purpose built in our R&D, which means that we are focused on biosimilar development and biosimilar development alone. Our unit is also very closely integrated with the manufacturing facility. We are literally in the same facility in Reykjavik. This gives us tremendous advantage in terms of communication, integration, being able to translate idea to projects to commercial stage.
We have seen that come through multiple times. Again, this is a facility where we have invested a substantial amount of capital over the last 10 years. The unique part about this is that we have said it publicly and often that we are well situated with respect to capacity, not just up to 2030, but even beyond. We have the capacity to manufacture and supply all our programs over the next five years and even beyond that. Yep. As I said, we believe that ours is one of the most valuable, if not the most valuable, biosimilar development programs in comparison with our peers. I have one more chart to discuss this, addressing nearly $185 billion of market over the next 10 years. Lastly, about our partnership model, as I said, 19 global partners.
The ability of this partnership for us to basically provide continuous steady cash flow and being able to reach a stage where we self-fund our R&D projects is very unique. Currently, with most of the projects, we are able to self-fund the development programs. Also, this partnership approach helps us be present in multiple countries at the same time and create regular milestone incomes. Yeah. Recently, we acquired Xbrane in Sweden and wanted to dig into this a bit more. Sweden basically gave us Xbrane, gave us a tremendous advantage because it helps to expand our R&D capacity, where we are going from two to three programs a year to five to six programs a year now with this acquisition, gave us a very strong presence in a place which has a very strong biotech background.
We got around 45 scientists with this acquisition. Clearly, being able to have all of this with a purchase price of just north of $20 million was a significant advantage. The last part, which tells us why this acquisition is a great one for us, is really the acquisition of CIMZIA as a new program for us with this. CIMZIA, many of you would know, is a TNF-alpha inhibitor. What is different about CIMZIA is it is also a PEGylated version, which means that it can cross the placental barrier, and it is the only anti-TNF-alpha indicated for women of child-bearing age or pregnant women and deemed to be safe. It translates into a $2 billion current market opportunity.
What we have seen as soon as we announced this acquisition is that we have had multiple inbound queries on partnerships eager to partner with us on this program. We believe that we will be able to justify the ROI invested into the entire Xbrane acquisition with the CIMZIA milestones alone in the near future. A bit more detail around our R&D pipelines. As you said, one of the most comprehensive pipelines globally. We have seen we have launched two of these into the U.S. market and globally right now, which is biosimilar HUMIRA or AVT02, called SELARSDI and SIMLANDI in the U.S., and AVT04, which is our internal terms, terminology, is to kind of map, which is biosimilar STELARA, which we launched around a couple of months ago, called SIMLANDI.
Of course, this was into the U.S., but they're also present across Canada, Europe, Japan right now, and are going to be the bulwark of our revenue for the next couple of years. Getting beyond this, we are very excited to announce that we are anticipating three new approvals and launches by the end of the year: biosimilar Prolia and SIMLANDI, biosimilar SIMPONI ARIA in the U.S., and biosimilar EYLEA. These three drugs together have a total addressable market of around $5 billion, and we expect to be strong competitors in each of these products and expect to launch soon after approval. Really excited, keeps the excitement going for us in terms of anticipated launches and associated milestones coming through with it.
Beyond these three drugs, three other drugs that I want to call out, which are going to be material for our target 2028 ambitions that we announced a while ago, is biosimilar ENTYVIO, biosimilar high- dose EYLEA and biosimilar XOLAIR. We expect to launch this beyond 2026 and will be a key constraint of our 2028 revenue milestones or revenue targets. Yep. This is just to substantiate what I said earlier, that we feel extremely confident about our strength in the biosimilar program with our singular focus on biosimilars. We currently have 28 projects in development. We saw 14 of that in the previous slide. There is another 14 - 15 in early stage developments. We compare our projects with those of our peers across the globe. We believe that our focus and our pipeline and our partnership approach differentiates us.
Each of these three points differentiates us substantially from any of our peers here. This is some data around our partners globally. As I've said, we look at regional champions and local markets. We, as a strategy, decided not to tie up with one or two companies and try to have a global partnership, but instead focus on regional champions in each market, which company has a strong local presence, which company has a local dominance and is also interested in growing in that market. That really explains most of our strategy with partnering with Dr. Reddy's, be it with Dr. Reddy's in India or Dr. Reddy's in the U.S. or Teva in the U.S. Teva is one of our strongest partnerships to date, and our JAMP in Canada, STADA and Advanz in Europe. These are all solid partners that we are delighted to partner with.
Over the last couple of months, we have been getting multiple inbounds around U.S. tariffs. We did clarify that this is something that we expect to have a limited impact because of two factors. One, Iceland as a whole enjoys a beneficial tariff rate of 10%. Do not expect a change. Secondly, within this, the way our contracts are set up is that our customers, our partners, basically pay the tariffs on the end. We do not expect to see any material impact from this. No change to our guidance at all if the tariffs do come into play. All of this gets us to where are we currently. As I said, 10 years ago, we set up the foundation for growth. We reached inflection last year, and that was when we launched into the U.S. market with biosimilar HUMIRA.
We have had multiple launches since then. Last year, we also achieved positive EBITDA and sustained this now for the last four quarters. Going on from year 2025- 2028, we anticipate rapid value enhancement with our portfolio. What will be driving this? Of course, the launches that we alluded to. We are also at the verge of significant operating leverage. We are seeing this inflection in operating profits come through. This is going to continue over the next few years. This execution will continue to build the value for us over the next four or five years. To translate that a bit into the numbers, last year, we ended with around $275 million of revenues and around $108 million of EBITDA.
This year, we will take the $274 million of revenue to anywhere between $600 million in terms of product revenue to $340 million-$410 million, and overall revenues from $492 million to $600 million-$700 million of revenues. In terms of EBITDA, what I spoke about in terms of operating leverage and inflection continuing, we'll see that this year when operating and adjusted EBITDA goes from nearly $108 million to anywhere between $200-$280 million. On the lower end of the range, we expect to almost double our EBITDA this year. Looking forward over the next three years, we have set up our target 2028 so that investors, stakeholders can understand what is it that we really are targeting and shooting for, which is to grow these revenues from $600 million-$700 million this year to more than double to $1.5 billion by 2028.
Converting this into EBITDA, what could EBITDA be? We expect EBITDA margin of 40%-45%. We can do the math in terms of what the EBITDA is. Within this $1.5 billion, we have a clear line of sight into what is it that's going to come from the product revenues, which is going to be around eight products that we just discussed. The rest is going to be from milestone revenues. We have been accumulating, last year, we had milestone revenue of around $218 million. This year, we expect to generate milestone revenues of $260 million-$290 million. Over the next four years, we expect to achieve a cumulative milestone revenue of $1 billion. Yeah. Clearly, we think that this is highly de-risked, and we are able to achieve this revenue target.
Drilling this down into operating margins, said 40%-45% operating margins. Clearly, we can see that with our COGS is going to be constant. We expect to spend really a similar amount of margin in terms of COGS or G&A. We will expect to see operating margins jump substantially. The last part, of course, is the capacity, which I had spoken about, which means that our CapEx requirements over the next four years is very minimal. Versus $60 million-$70 million this year, we expect to spend CapEx of around $20 million-$25 million over the next three years. What we will see is a dramatic increase in returns over the next three, four years with very limited incremental capital investment needed. Breaking this $1.5 billion down, we have three buckets for this. Currently, $600 million-$700 million.
Biosimilar HUMIRA and STELARA, we get a lot of questions around it as to what is the peak, what is the decline phase of this. We think that while it could peak in 2026, there will still be meaningful contributors to the numbers in 2028. While they won't grow, we expect some compression on the back of regular industry dynamics around pricing and offset by greater volumes. It will still be a meaningful chunk of our 2028 revenue. Towards the end of this year, we're expecting approvals for SIMPONI, EYLEA, and Prolia. We expect this to contribute, we expect this to be the next growth engines for us. We have some more details in the next slide. Nearly 35%-45% of revenues of this $1.3 billion will come from these three launches over the next three years.
Lastly, future launches, which is what you can think of as 2027 or 2028 launches, EYLEA High-Dose , and ENTYVIO. We are extremely excited with the opportunities, especially with EYLEA High-Dose, ENTYVIO, and even EYLEA, because we think that these are ones where we have a significant competitive advantage where there is limited competition. We expect to be able to be present in the market on time with limited to no competition for quite some time. That gives us our confidence in putting these numbers across. Within these, I think, again, questions tend to be focused more around HUMIRA and STELARA on what is the ramp curve. What we have said for this year and next year is, starting with biosimilar HUMIRA, we expect the U.S. market share to be in the low double-digit range. We expect that this would peak and plateau sometime in 2026.
Thereafter, have a tempered contribution to growth and just be stable. We will see some growth continuing in the EU and rest of the world, basically entering new markets, volume growth. A similar dynamic happens with STELARA too, with the U.S. market share somewhere in the low double-digit range. Expect this to peak and plateau in 2026 and continuing introduction into new markets beyond 2026 in [narrow] review. Coming back to the slide that I started with, this is our story. Very strong pure-play biosimilar platform, vertically integrated. We think we have all the engines required to drive growth over the next or the foreseeable future. I'll stop here at this point, and I look forward to meeting many of you in our one-on-one meetings. For those of you who have any questions, please do feel free to get back to my team and I.
Today with me, I have Benedikt Stefansson, who is the Vice President of investor relations. and we have Mikaela, who will be working with me also on strategy and investor relations with us. Feel free to reach out to us. We have five minutes. If there are any questions, I can take them. Please.
Thank you for this nice talk. I was wondering about your target.
Thank you. I was wondering about your target for 2028 for High-Dose EYLEA. Do you not expect patent issues here with this timeframe?
We do have some discussions around it, but we are confident of launching it somewhere in the 2027 timeframe. Confident of launching this and also confident of this being a limited competition product for us. Yeah, as typical with any kind of patent discussions, I would not disclose more around this time.
Thank you.
Thank you for the presentation again. So can you actually explain a little bit about the interchangeability of your HUMIRA biosimilar? I think FDA is trying to get rid of the interchangeability designation. And you are one of the few players that actually have the interchangeability at the moment.
Yeah, sure. Thanks for the question. So interchangeability for biosimilar HUMIRA was a substantial differentiator when we introduced the product into the market last year. And it gave us a significant advantage that we were one of the last to enter the market, as you know. But we still ended up with a solid market share in the double- digits because of this differentiation, interchangeable, high- concentration. We are the only interchangeable high concentration asset for nearly one year, right? With the exclusive which lasted us till May. So going forward, it's unlikely that it'll be a major differentiator.
Also, as I said, the FDA is trying to do away with it. I think it's understandable because somewhere interchangeability as an industry unit or industry designation moved from being a regulatory standard to being perceived as a clinical standard. The FDA doesn't want this connotation to stand. We would think that gradually the relevance of interchangeability will go away. I think customers will focus more on companies that have a comprehensive pipeline, that have adequate manufacturing capacity, who they know that there's not going to be any supply issues. The differentiator is going to be moving towards more of these characteristics on where we stand very well positioned. That will be our future differentiators. Thank you.
Yeah, thank you for the presentation. Can you expand on your strategy on expanding with the existing partnerships on an ongoing basis?
Sure.
We are extremely happy with the partners we have chosen across the globe. Where feasible, I think our goal would be to deepen our partnerships for each individual market. I think that focus is not going to change anytime in the near future. We know if we have chosen a particular company, let's say Teva in the U.S., or Dr. Reddy's for some products where we could not partner with Teva, we believed in their competence in delivering us the growth in the U.S. market. These have been invaluable partners for us. That is going to be the modus operandi that we would look to leverage the existing partnerships for each individual geography or market. As and when we bring new products, I think it's reasonable to expect that our existing partners would get first look in it unless they cannot for multiple reasons.
They may have their own assets or they may have a different stand. It's reasonable to expect that we will continue to value our current partners.