Good morning, welcome to today's Amneal Pharmaceuticals Investor Call. I will now turn the call over to Amneal's Head of Investor Relations, Anthony DiMeo.
Good morning, and thank you for joining Amneal Pharmaceuticals Investor Call. This morning, we issued a press release announcing Amneal agrees to acquire Kashiv BioSciences and reporting preliminary Q1 results. The press release and presentation are available at amneal.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions, are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled Cautionary Statement on Forward Looking Statements for factors that may impact future performance. We will also discuss non-GAAP measures. Information and use of these measures and reconciliations to GAAP are in the press release and presentation. On the call today are Chirag and Chintu Patel, Co-founders and Co-CEOs, Tasos Konidaris, CFO, and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.
Thank you, Tony. Today is a defining moment for Amneal. This morning, we announced that Amneal agrees to acquire Kashiv BioSciences, creating a fully integrated global biosimilars leader and positioning Amneal to become the number 1 affordable medicines company in the U.S. We have long said this was our goal. Today we're showing exactly how to get there. Turning to slide 3, I'll begin the call by discussing the strategic fit of the acquisition and the remarkable biosimilar opportunity ahead. Chintu will share more about Kashiv, our combined capabilities, and the robust biosimilar portfolio we will have. Tasos will discuss the transaction, our financial outlook, and Amneal's very strong first quarter results, which we pre-announced this morning. At a high level, Q1 marked another consecutive quarter of strong top and bottom line growth, with revenue up 4%, adjusted EBITDA 19%, and EPS up 29%.
Our strong start of the year, combined with growth of existing and new products, gives us confidence to raise our standalone guidance for 2026. This consistent performance is something investors have come to expect from Amneal and something we take great pride in. On slide 4, we provide an executive summary of this combination. First, this is a highly strategic transaction that creates fully integrated global biosimilars leader. This unlocks direct access to more than $300 billion of worldwide biologic loss of exclusivity over the next decade by bringing together Kashiv's deep R&D and manufacturing capabilities with our proven commercial scale. This combination builds on a long-standing partnership that significantly reduces execution risk. Second, this combination creates immediate scale in biosimilars. We expect multiple launches each year going forward, supported by a robust pipeline of more than 20 biosimilars programs.
Third, this adds biosimilars as a key growth pillar within affordable medicines. The transaction further diversifies our business and extends our growth profile well into 2030s, while also creating a footprint to expand internationally over time. Fourth, the deal is structured to create value from day 1. With a balanced mix of up-front consideration, performance-based milestones, we expect significant financial synergies, and we maintain a disciplined financial profile with a clear path to deleverage to below 3x by 2028. Let me turn it over to Chintu to share more about Kashiv.
Thank you, Chirag. Good morning, everyone. Going to slide 5. Today's acquisition announcement reflects our long-stated goal to be vertically integrated in biosimilars. I want to acknowledge the Amneal and Kashiv teams whose hard work made this possible. Kashiv is a biologics platform built over 12 years with more than $900 million invested, 600+ employees, and 4 R&D and manufacturing sites. It brings proven capabilities, a differentiated portfolio, and a global operational footprint in U.S. and India, which provides reliable supply chain and cost efficiencies. Turning to slide 6. Kashiv has deep biosimilar development expertise and scaled U.S. and India manufacturing, enabling multiple programs to run in parallel with speed and cost efficiency. The platform can support 3 to 5 biosimilars developments annually and offers end-to-end biologics capabilities from cell-line development and protein characterization to clinical and regulatory execution.
These expertise spans key modalities and the vast majority of biologics, including microbials, monoclonal antibodies, fusion proteins, bispecifics, and cytokines.
From a manufacturing perspective, drug substance capacity is expected to scale from 26,000 liters in 2026 to 75,000 liters by 2028. Combined with Amneal, this creates a fully integrated global biosimilar platform. I will hand it over to Tasos to share more on the transaction.
Good morning. Thank you, Chintu. Turning to the transaction overview on slide 7. As you can see, we have purposely structured this deal to balance upfront value and success-based consideration to ensure alignment of interests. The upfront value of $750 million is a 50/50 mix of cash and equity. The equity portion translates to approximately 29 million of Amneal shares, representing 8% equity dilution. In addition to the upfront value, the deal terms include potential milestones of up to $350 million, contingent upon attaining certain regulatory approval milestones, as well as potential royalties over 12 years contingent on achieving certain gross profit levels. Finally, Amneal will fund operations between signing and closing of the deal.
We spent a lot of time structuring this transaction to ensure it aligns incentives with the large commercial opportunities ahead of us and doing it in the most balance sheet-friendly way. The transaction will be funded by cash on hand as well as some additional debt. We expect the combined company's net debt leverage ratio at the end of 2026 to be 3.7x adjusted EBITDA, only a slight increase to the 3.5x adjusted EBITDA at the end of 2025. It is important to note that we expect to resume our deleveraging in 2027 and expect our net leverage ratio to be 3x below net debt adjusted EBITDA by 2028.
Finally, we expect this highly strategic transaction to close in a few months as we work through Amneal shareholder approval and customary closing conditions and regulatory approvals. Let me now share our expected combined financial growth profile on slide 8. First, we're embarking on this acquisition from a position of strength. As you may have seen from our press release this morning, we announced record 1st quarter preliminary financial results, and we also raised our full year standalone guidance. Amneal's ability to deliver solid pipeline growth and double-digit adjusted EPS growth in a tumultuous macroeconomic environment is a testament to our strategic choices, strong execution, and relevancy of our products. Consequently, on a combined basis, including Kazeo, our 2020 to 2086 view remains largely unchanged, aside from a small impact to cash flow related to near-term transaction and integration costs.
Accordingly, we're maintaining the higher adjusted EBITDA and EPS outlook, which we believe is a clear signal of the underlying momentum and confidence in the trajectory of our business. For 2027 and beyond, we expect the combined company to continue to grow both in terms of top and bottom line performance. By 2030, we expect revenues to have grown by approximately $1.2 billion or 40% over 2026, and EPS up by approximately $0.70 or 70% over 2026. Finally, we expect substantial operating cash flow growth, which supports our continuing deleveraging. While increased financial performance is important, I cannot emphasize enough the impact this acquisition is having in enhancing our diversification, providing us with access to large markets into 2030 and beyond, just like our GLP-1 deal with Pfizer. Let me now hand it back to Chirag.
Thank you, Tasos. On slide 9, this transaction fits squarely in our long-term strategy. It adds biosimilars as a key growth pillar and positions us higher on the value curve with greater scale and higher growth. Why now? In looking at slide 10. It's because we are entering the golden era for biosimilars. The global market is expected to grow from about $40 billion today towards $200 billion by 2035, driven by the largest biologic loss of exclusivity in history over the next decade. Advancing to slide 11. Biosimilars represent the next major wave of affordable medicines. We are at an inflection point. Physician adoption is accelerating, patient access is expanding. The U.S. regulatory advancements are lowering development time and cost. Today, about half of U.S. drug spend is concentrated in high-cost biologics.
Furthermore, biopharma pipelines continue to shift towards biologics, with most therapies in development being large molecules. Each biologic is a future biosimilar opportunity. With biosimilars, access expands and cost lowers, delivering meaningful value for patients and the healthcare system. In 2024, biosimilars were estimated to have saved the U.S. healthcare system $20 billion.
There's a powerful opportunity to improve affordability and expand access because what is the point of innovation if it is not accessible? Turning to slide 12. Despite this opportunity, there are only a handful of integrated global players, and today there is no clear U.S. biosimilar leader. Most players have relied on partnerships to date. With Kashiv, we bring together development, manufacturing, and commercialization, enabling faster execution, smarter and bigger portfolio choices, and ability to capture full economics. We believe this level of vertical integration is a true competitive advantage. I'll pass it back to Chintu to share more on the combined capabilities and portfolio.
Thank you. Chirag shared with you the strategy on why biosimilars. Let me share with you the clear reason why Amneal. Looking at slide 13. Since our founding, we have been the leading affordable medicine business. We are now number 3 in U.S. retail generics with over 280 products across dosage forms with one of the most complex portfolio in the industry. This is a natural extension of our strategy, and we will execute with the same rigor and discipline in biosimilars. On slide 14, we show how this combination brings together end-to-end biosimilar capabilities. Kashiv adds scientific expertise and in-house development from cell line through approval, along with scaled biologics manufacturing across a global footprint. Amneal brings a proven commercial engine, leveraging our leading affordable medicines business, long-standing customer relationships, and a specialty branded infrastructure to drive market access and uptake.
Built on a 10-year plus partnership with Kashiv, our capabilities are highly complementary and positions us to execute well. Next, let's look at slide 15 and the combined portfolio. Together, we have a combined portfolio of 20-plus biosimilars that targets over $100 billion in U.S. opportunity and more globally. First, we expect to have six commercial biosimilars by 2027, including biosimilars for Avastin and Denosumab and a biosimilar for Xolair, which is pending approval. Second, we expect six or more additional approvals from our advanced pipeline by 2030. Third, in 2030 and beyond, we have a deep pipeline of future programs that extend our growth well into the next decade. Strategically, this is a balanced and durable portfolio mix.
Many opportunities are biologics with less than one or two competitors expected, and others are widely used products with large markets, creating a durable and scalable growth engine. On slide 16, we have a clear line of sight to steady cadence of near-term catalysts from Kashiv. First, Lanreotide is a high-value partner asset expected to be approved in quarter 3. Second biosimilar, Xolair, follows with anticipated approval at year-end, which is another Kashiv partner asset that we now capture full value for. After that, we see a pipeline of traditional approvals in 2028 and 2029, including biosimilars for Orencia and Cimzia, each representing meaningful future growth drivers. Let me now pass it back to Tasos.
Thank you, Chintu. I'm very pleased to share with you our exceptional first quarter preliminary results, our confidence in the strength of our business, which translates to increasing our full year guidance on a standalone basis, and finally, our proposed acquisition of Kashiv BioSciences, which positions Amneal as a leader in the large global biosimilars market. Let me first start with our first quarter preliminary financial results, which were characterized by robust top line growth, exceptional bottom line growth, and continuing deleveraging. Moving to slide 22 in the appendix, total net revenues in the first quarter of $723 million grew 4%. Q1 affordable medicines revenue of $423 million grew 2%, driven by strong performance of key women's health and ADHD products due to high market demand and increased Amneal supply.
These high-margin products drove Q1 segment gross margin to 47.3%, up 320 basis points versus Q1 of 2025. We continue to expect affordable medicines revenue growth of 7%-8% this year, driven by the strength of new product launches and strong execution by our teams. Q1 specialty revenue of $133 million grew 23%. First quarter CREXONT revenue of $21 million reflects continued strong market uptake. Earlier this week, we shared with you our additional phase IV data which showed CREXONT as having more than 3 hours fewer downtime versus RYTARY, reflecting the CREXONT's compelling clinical profile. In addition, we're also delighted with the strong launch trajectory of Brekiya for cluster headaches. Revenue in Q1 2026 was $4.6 million compared to $1.6 million in Q4 2025.
This rapid adoption, as well as feedback from patients and prescribers, confirms the substantial market need and long-term revenue potential for Brekiya. Turning over to Advair, where Q1 revenues of $866 million declined by $6 million or 4%, a strong growth in our government channel was offset by expected decline in the low-margin distribution channel. As you recall, this is part of our strategy to enhance profitability, and we're happy to report that Advair's gross margin this quarter grew by 690 basis points versus first quarter last year. Moving to slide 21. From a bottom-line perspective, the strong growth of adjusted gross margins by approximately 500 basis points and hopeful expense management translated to Q1 2026 adjusted EBITDA of $202 million, up 19%, and Q1 adjusted EPS of $0.27, up 29%.
Our strong financial performance and discipline continue to reduce leverage, and our net leverage ratio in March 2026 declined to 3.5x adjusted EBITDA, compared to 3.9x adjusted EBITDA in March 2025. In summary, and before I turn to our acquisition of Kashiv BioSciences, our business fundamentals, financial outlook, and balance sheet have never been stronger, which positions us well to consider such a strategic deal. Turning back to the acquisition for a moment. As we outline on slide 17, this is a highly synergistic transaction, adding significant value to our commercial and operating business model and providing substantial financial benefits over the course of time. From an integration perspective, we're combining Kashiv's R&D and manufacturing expertise with Amneal's commercial engine. We're strengthening market access, expanding in hospitals, and accelerating international growth.
With our shared global platform, we accelerate time to market at lower cost. From a financial standpoint, we expect $400 million-$500 million in cumulative financial synergies over time. There are 2 key elements to this. First, we're now capturing full economics from partnered assets by eliminating milestones and profit-sharing obligations that existed as part of prior licensing deals. Second, we also expect to realize substantial tax benefits as well as incentives from the local Indian authorities. Importantly, this deal goes beyond traditional cost synergies. It creates strategic scale and durable value by also avoiding the significant time and capital needed to build a biosimilars platform organically. Let me now hand it over to Chirag.
Thank you, Tasos Konidaris. On slide 18, since 2019, we have built a stronger, more diversified Amneal and delivered consistent top and bottom line growth each year. We have done this by executing well across our business. We launched 20-30 products annually, expanded specialty with Trexall and Brekiya, entered biosimilars with our first products, established a novel GLP-1 collaboration with Pfizer, expanded internationally, and acquired and more than doubled the AvKARE business. That said, the opportunity ahead remains significantly greater than what we have achieved to date. We envision Amneal 2030 as a much larger, more diversified biopharmaceutical company with more than 400 retail and injectable medicines, mostly complex and differentiated, a large pipeline of 20-plus biosimilars and multiple specialty branded products advancing the standard of care while Amneal fills hundreds of millions of U.S. prescriptions each year.
In summary, the key takeaway from today's call are on slide 19. Today marks a pivotal moment for Amneal, establishing a fully integrated global biosimilars leader, strengthening our diversified portfolio, and extending our durable growth profile into 2030. Our strategy remains clear: to become America's number 1 affordable medicines company and a leading global provider of essential medicines, because innovation only matters when it reaches the patients. With that, thank you, and we'll open the line for questions.
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.
Your first question comes from the line of Matthew Dellatorre with Goldman Sachs. Your line is open. Please go ahead.
Guys, congrats on the deal. I know this was a long time coming, very exciting. Maybe 2 questions, if I may. First, just on the commercial strategy for the new expanded portfolio. I see you have both, you know, the mega blockbusters like Dupixent, Keytruda, and also many sub $5 billion assets in there. Also, you know, it's a healthy mix of pharmacy benefit and medical benefit drugs. Could you maybe just speak a bit on how you approach portfolio construction and what type of assets we should expect over time as you all disclose more in the pipeline expand? I realize you are primarily focused on the U.S. market, but could you just remind us how you guys are thinking about this international biosimilars business as well?
Then maybe stepping back, question for Chirag. When you look at this new kind of combined company you all have now, what would you highlight as maybe the two to three specific things that you're most excited about and that you think could drive upside to this long-term guidance that you're giving today? Thanks a lot.
Well, thank you, Matt. Good morning. Let me address the portfolio mix first, the Kashiv pipeline. Markets are shifting more towards PBM as we know. We predict 70%, 75% market to be driven by private label PBMs, specialty pharmacies, and 25% or so percentages will be driven by buy and bill. It's a well-thought-out portfolio. If you look at it, the disclosed product, there are certain undisclosed product that just like what we did with small molecule, we want to be the big player, relevant player, and mostly focus on niche products. How do we achieve that? That is why we have some of the big products like Keytruda, Opdivo, Dupixent. Each has its own reason why we have selected. Just give you an example. Dupixent requires such a large biologics capacity.
We're building it, at the right time, it will be ready to deliver. We have niche products which we expect 2 to 3 competitors. If you look at overall in next 10 years, our portfolio would be probably 70% would be niche, about 30% would be the large molecule that we must have to offer a complete package to the customers. That is how the portfolio makes very well, and obviously the IP driven, a lot of strategy work goes behind it for the last 10 years, what Kashiv has done. We love the portfolio. Execution is going to be the key, which Amneal has executed over the last 25 years. We'll bring the same rigor to execute this big platform on the biologics. The second question on how do I think about U.S. commercial.
As I answered most of the products, we will be marketing Amneal directly. We already have a long-standing relationship with big buyers such as CVS Health, Express Scripts, The Cigna Group, Optum, UnitedHealth Group. These 3 are about 80% of the market. We also enjoy a great relationship with smaller customers. We're well set to commercialize products in the United States with a broad portfolio of small molecules. Don't forget that plays a role as well. It's the same people, same relationship, same trust that we have established. If you ask the Red Oak Sourcing of the world or Walgreens of the world, they would rank Amneal as the most strategic, the best platform, best values, the most complicated products that we come up with and create a massive patient access at affordable prices. We intend to do the same with biosimilars.
Your international, our strategy has been clear. India, we have started marketing on our own, mostly the unmet need on the branded side and biosimilars. The rest of the world, we enjoy great partnership as Amneal. Kashiv has also built great partnership with companies as well, which will be disclosed in the near future. I'm a big believer in a partnership model. There is a biosimilar void. There's 118 biosimilars. How do we deliver as an industry on all of that? Partnership will make great sense, and we don't intend to have boots on grounds in Europe or South America or Canada. That's not where we are focused on. We are solely focused on delivering biosimilars at scale, staying in the molecule for a long time.
Be a champion in America, as we have a stated goal as America's number one affordable medicines company, we are on our way to get there. Maybe 2030, 32. We are multi-decade strategy. We are completely focused, internationally great partners. We look forward to work with them. The last one, I'm sorry, is a long answer, I'm so excited. The new combined company, what is the most exciting thing? Let's go back. I mean, our core business is performing at a full throttle. The women's health, the hormonal patches demands has gone up. The inhalation products demand, ophthalmic products demand, they're all at a high level. Also the small molecules LOEs are going to double in next 5 years than it had for the last 5 years.
Tremendous growth opportunity in core business by itself. Second, our specialty brands. Very exciting. You saw the Treximet data. Amazing. I mean, we're getting words from our partners in Europe and India that this would become a first-line therapy. Because they've been using 40 years old technology platform, the product was made 40 years ago, IR product Sinemet, which gives you off time every 2 hours, 3 hours. You think of a life of a Parkinson's patient. Treximet is the best therapy out there for maintaining their daily lives. Very excited about Treximet and seeing a great outcome on Brekiya. It's a much needed product, useful product for cluster headache patient and severe migraine patient. The third, GLP-1 partnership with Pfizer. As we all know, GLP market is going to keep growing. It's gonna become like steady.
Tremendous capacity would be and capability would be required. This is what we are building with Metsera, then with Pfizer. We enjoy a great relationship with Pfizer. It's a win-win situation. Global markets, global demand. We have 18 countries, emerging countries, including India. We've been given the rights to market Pfizer's branded products, which came from Metsera portfolio. That's a completely unique strategy than fighting over the generics at such low prices that been out there in just started in India and rest of the world. We believe this is consumer products everybody would want. Less side effects, longer duration, which potentially Pfizer products delivers. The last one, as we've been talking on this call, is all about biosimilars. Huge growth. We've been saying that this is the inflection point. The providers are excited. The 80% now turns into biosimilars.
The insurance company, the coverage is becoming better and better. CMSs keep pushing for it. FDA has reduced the regulatory requirements. This is the perfect time that we integrate this platform and deliver 3 to 5 biosimilars, develop and file and commercialize for many years to come. It also opens up the opportunity for bispecifics, right? The fusion proteins, and in the future, ADC as well. This is why it's so important for Amneal to now have a complete platform, small molecule platform and large molecule platform. Long answer, but I hope it was helpful, Matt.
Yes. Yes. No, thank you. Super helpful. Really appreciate the color.
Your next question comes from the line of Les Sulewski with Truist Securities. Your line is open. Please go ahead.
Thank you. Congrats on the transaction. You noted the capacity scaling from 26,000 to 75,000 liters. You know, how does this compare to some of your peers? What's the magnitude of dollar spend to get there? Separately, would you say this is right size for that business moving forward? You know, do you see a further need for capacity expansion beyond the 75K? Second, on the gross margin profile, maybe just walk us through the puts and takes around the 1Q and how does the remainder of this year look. Over the long run, how should we think about the margin profile now that the biosimilars business will be integrated? Thank you.
Great. Chintu and I will take the 1st one and pass it to Tasos for the 2nd one. Kashiv has built the platform manufacturing sites over last several years, which coincides with the product approvals timing. Xolair being 1st to be manufacturing in Piscataway, New Jersey, and also the backup site is India as well for global supply. All key molecules will have 2 sites. U.S., which as you know, we're a U.S. champion. We always believe in U.S. manufacturing, so we keep expanding U.S. manufacturing. And we already have a site in Chicago with Kashiv acquisition, which is for E. coli. The current capacity is sufficient for 1st few launches.
Over 2027, 2028, 2029, we're expanding to 75,000 liter, which is again, matches with the pipeline execution and pipeline approval and launch timing. That is how we see the capacity expansion, and it'll be a good problem to have from 2030, 2031 to keep expanding. Once we have the infrastructure in the same site, we can keep expanding 25,000 liter, another 25,000 as we need. We, we are always smart about this. We'll keep expanding the capacity, so we never would have issue with capacity. I'll pass it to Chintu to give more lights to this.
Hi, Les. Good morning. We have perfectly sized the capacity, and it's not only about the how many thousands of liters, it's also about how you design and the number of bioreactors, because you need flexibility in your manufacturing and for the execution of the filing product. I think that's the key differentiator that how we have thought through that on a long-term basis to cater to our goals of filing a few biosimilars every year and same time also commercially to make sure that we have the excess capacity and we have diversified our supply chain from U.S. and India perspective also. If it's a cost-sensitive product, we will have enough capacity in India and also in U.S.
I think we are positioned well to cater to all the 20 products that we have. We have also considered this is at the global capacity. It's not only U.S. specifically. We are playing globally in this market. We are pretty comfortable with the 20 products having 75,000 liters. It's all about the design and how we have thought through that. We have taken under consideration good market share. That's also there. About the spend, it's about $30 million-$50 million a year we'll be spending for next 2, 3 years on a CapEx to get to the 75,000 liters.
Last, good morning, this is Tasos, around gross margins. I'll just speak in annual terms. If you think about our gross margin in 2025 full year, total company, we were at 42.9%. Let's call it 43%. My gut feel is I think we will finish 2026 at about 45%. At least a 200, we're aiming at a 200 margin, 200 basis points expansion. That's gonna be driven, A, by all the business units. Our affordable medicines margins will continue to expand as we have continued to evolve the pipeline to more and more complex products with higher price points, right? You've been hearing this from us for the last 6 years now, number one.
Number two is we talked about our conscious decision to increase the gross margins in our Arbtor business, which has been that acquisition has been a spectacular success, and by focusing more on the government at the expense of the low margin distribution business. That continues to pay dividends. Finally, in our specialty business, which already has, you know, low 80s, you know, 81%, 82% gross margins, gonna continue to drive that adoption. Those have been the drivers why our gross margin this year should be at about 45% compared to about 43% last year. As you think over the course of time, margins have more room to grow beyond the 45%.
You know, if you were here about five, six years ago, you would have heard Chirag and Chintu talking about having, you know, gross margins, you know, in the, in the old days, almost 50%. This is where we are driving directionally over the next 10 years. It takes some time to get there, but we see another over the next, you know, 3 to 4 years, we look at the 45% gross margin to be closer to call it 47% gross margin as the portfolio continues to be driven by biosimilars, which have a highest higher price points than the rest of the business.
Very helpful. Thank you.
Your next question comes from the line of David Amsellem with Piper Sandler. Your line is open. Please go ahead.
Thanks. I have a few. First, can you just comment and elaborate on the insider ownership of Kashiv? That's number 1. Number 2 is, why provide long-term revenue EBITDA targets, not just 2027, but also out to 2030? What was the rationale there? Just remind us, is the EBITDA margin expansion that you're factoring in between 2027 and 2030, is that how much of that is a function of just the elimination of the shared economics on biosimilars? Then the last question is, how much of your revenue base by 2030, do you expect will be from biosimilars? Thanks.
Hey, David, I'll take question number 2 and number 3. If you can just repeat question number 1 for 1 second, if you don't mind?
Yeah. The insider ownership of Kashiv.
Insider ownership of Kashiv. Okay. Got it. Okay. Well, I'll take the first one. I'll start with the first one. The insider ownership of Kashiv, you can see essentially in our, in our, in our proxy, which has been owned by the Amneal group, which has been also a big shareholders at Amneal since the beginning of time. Ownership of the Amneal group includes both our CEOs, who've always been transparent of that, as well as people have been investors in Kashiv and also at Amneal for a very long time and key contributors to what we have built now, which is a great company. That kind of thing addresses question number 1, hopefully.
Number 2 is no CFO that I know loves, likes to provide long-term guidance because it's a catch 22 as a lot of things can happen over the course of time. Having said that, you gotta, I think you know us long enough to know we take our long-term guide and financial commitments incredibly seriously.
For us to provide long-term guidance, we have to feel pretty confident on our ability to deliver on those commitments, number one. Number two, I think it speaks to the tremendous amount of diligence we have done in this acquisition, which probably expands at least a year's worth of work by tens of people in our R&D group, in our legal group, in our business development group, in our financial group, in the commercial group, to convince me and convince us as a management team to lay those numbers out for our investors. You know, the final thing is I would say, why provide long-term guide to us. It provides the focal points by which we focus 8,000 employees at Amneal and now our brand new colleagues at HESi.
Everyone, all of our 8,000+ employees are singularly focused to a set of financial metrics, so it eliminates ambiguity. This is what's behind why provide those targets. You gotta assume, we're being prudently conservative, right? No management team, at least that I know, wants to put out numbers, which, you know, they're at risk of missing. That's kinda how we thought about and why we provide those long-term targets. Now in terms of revenue and EBITDA expansion, it's combination. It's combination of both. I don't have the exact percentages, right? A lot of how much of that is in the new acquisition versus how much of that is the existing business. As I mentioned before, we have an existing business.
You look at our affordable medicines, every part of our business is growing. We are doing this deal not because we need to, because we think this is the right deal to do at the right time with the right, with the right risk parameters to drive growth for this business in 2030 and beyond. You look at our affordable business, and that business is growing this year. We're expecting to grow 7%-8%. That growth will continue, and you can model this and biosimilars will add to that, right? In terms of an EBITDA basis, you know, Q1 EBITDA was up 19%, right? Last year's EBITDA growth was 10%. This year, the base business that is growing at least adjusted EBITDA 10%.
We expect this to continue and add on, the additional add on will expect it to come on biosimilars. That's how we think of it. It is a highly de-risked long-term forecast that is based on the growth of the existing business across the acquisition, and it's conservative in nature. Hopefully that addressed some of your questions. Yeah.
Yeah. How much of your business do you think is gonna be biosimilars? Like, what's the revenue base gonna be in 2030?
So, so the-
For now. Yeah.
Yeah. If you think about 2030, for example, the guidance we're providing is between $4.3 billion and $4.5 billion, probably about $1 billion or a little $1 billion, a little over $1 billion, $1 billion-$1.3 billion, that's gonna be biosimilars.
All right. Helpful. Thanks, everyone.
Your next question comes from the line of Chris Schott with JPMorgan. Your line is open. Please go ahead.
Just two for me. Maybe just first a bigger picture question on biosimilars. Can you just talk a little bit more about how you see the competitive landscape evolving as we approach this very large cycle of biologic patent expirations? I know you mentioned there's no clear leader in the space, but do you anticipate there's gonna be a more meaningful consolidation of share, and it's gonna just be a handful of players, or will this remain a more fragmented market as a whole? The second one for me, just on a specific product on lanreotide, Somatuline Depot. Can you talk a little bit about that opportunity as we think about 2026 in terms of market dynamics and competitive landscape and just how meaningful a product that could represent for Amneal? Thanks so much.
Thank you, Chris. Competitive landscape on biosimilars. As we know, the vertically integrated players are taking more market share. Amgen, obviously one brand company that is still investing in biosimilars. The rest of the brand companies have moved out of favor for biosimilars, as you know. They're more obviously back to the innovative medicines. That leaves Sandoz obviously clear a global leader at this point and a great company. Celltrion is coming in as a from a South Korean company which is expanding in the U.S. and globally and building a large vertically integrated platform. Samsung's doing both out-licensing mainly and concentrating also different division on biosimilars. India's Biocon has been in the biologics for over 40 years, they're already in the U.S. market.
Kabi with Mapsize ownership and their own, we see them as a vertically integrated player. The way it will expand is why it's inflection point that we, as Amneal, got the platform or getting a platform with the manufacturing capacity, with the pipeline that we execute over the next 5 to 7 years. It requires a lot.
Manufacturing infrastructure, a lot of R&D infrastructure. Number of years, even with FDA's phase III gone, still will be 5+ years from the timing of starting the clone development all the way to the filing and approval and then the IP negotiation or settlement. All those things would take 5, 7 years. You can see, like in a small molecule, you have 50 companies jumping in from India and China. We don't see that. We see few companies will come from India, few maybe from China, but they all have to build these U.S.-oriented infrastructure or regulated markets. This is a different ball game than you've been producing biologics for the emerging markets, because the requirements of FDA's are much at higher standards than those other countries. Amneal builds everything first with U.S. in mind.
Yes, there will be more competitors. The large molecules like Keytruda, Opdivo, you will see 5 to 10 competitors. Some would be partnered. Niche, this is why we're Kashiv and Amneal will be focused on, is in niche molecules where we will see 2 to 3 competitors. That's how we see the competitive landscape. Maybe 8 to 10 players at 118 molecules to go after. Big biosimilar void is there. That is a large number of products to work on, and not everybody can do every product. As we said, our capacity capability is 3 to 5 per year. Chintu, you want to add anything to this comparison?
I mean, there's a lot of high barriers of entry, and science is much more complicated than the small molecules. It will cost close to $50 million-$75 million per product. There are lots of barriers. I think it still will remain not that competitive. Plus, as Chirag stated, it takes 5, 7 years for a new player to build this platform and have the manufacturing and development expertise and capacity. At Kashiv, we have a fantastic group of 600+ people. That experience, I think, gives us the confidence of these 3 to 5 biosimilar. Competition, as Chirag stated, would be these 4, 5 player, might be vertically integrated, but still is largely space for somebody to be a leader, and Amneal will be a leader by 2030.
Lenalidomide, Chris, is the market dynamics changed. There was a supplier was in the market. They had some contract manufacturing issues, so they're no longer in the market. It leaves it only with brand and the product is in high demand. We're getting calls from everybody. We have requested FDA to expedite the approval, and they're working on it. We could be the first, again, I'm sorry, it's the small molecule, so generic lenalidomide in the market, and we will supply and create another access for the hospitals and clinics as soon as possible.
This is also a global, so we have a pending approval in Europe also, and it's a highly complex product. It's a drug-device combination peptide. We are looking forward to this product and its opportunity.
Your next question.
Next question, please.
Your next question comes from the line of Glenn Santangelo with Barclays. Your line is open.
Hey, good morning.
Go ahead.
Thanks for taking my question. Just a couple from me. You know, Chirag, I mean, I think everyone would generally agree strategically that a deal like this kinda makes sense, but I'm kinda curious to get your perspective on the operational complexities of sort of what's involved here. If you look at the, you know, we were just talking to Chris's question about the evolution of the competitive landscape. A number of the other players have decided to go more in the partnership licensing route versus the vertical integration route. Maybe that's a function of how, you know, complicated or operationally complex it is. I'm kind of curious if you worry at all about increasing the risk profile of the company in that way.
Maybe secondarily, I wanted to talk about the 2027 EBITDA guidance that you put out today. I'm guessing you kind of realize that number's a decent amount below what the street was already forecasting for fiscal 2027 and kind of implies some deceleration in the EBITDA growth rate in 2027 versus 2026. You know, just sort of given the $400 million-$500 million in synergies we sort of talked about. You know, you had a couple partnership deals that seem like they're on track, and maybe you'll have full ownership of them by the time they come to fruition.
I'm just trying to reconcile all the pieces that you've laid out here and, you know, as it relates to, you know, how soon we may see those synergistic benefits in 2027 and beyond. Thanks.
Thank you, Glenn. Let me take the first one. I'll pass this back to Tasos for the second question. The, the first one, partnering versus full economics or vertically, being vertically integrated. Yes, it is complex. This is why it took 10 years for Kashiv to build this platform with significant investment. This is why we believe it to be competitive light compared to all busy, the small molecule. Why you can take the last few molecules, right? Who could stay in the market, who could take the leadership position and stay all the way until the molecule needs to be delivered and produced. First of all, it gives you full economics. Your margin expands, you have full freedom of selecting products, and it's not easy to re-license 20 products.
We have 20 products biosimilar basket, and we're going to add more in coming years. That freedom, the full economics. In the U.S. market, it makes sense to be completely vertically integrated. As I stated before, Glenn, that partnering is great. In international market we look to partner, and Kashiv already has partnership with the key players globally who are well set globally. I see the combined model, but mostly the companies that would be successful if you look back in 2030 or 2035 are going to be all vertically integrated. Just like in small molecule, there are not any companies that has survived being just marketing companies. You've got to do lot more than that because real complications is R&D, is IP, is manufacturing.
I think the PBMs and private labels are making the marketing and sales easier, which is how it should be. I hope that answers the first question. You may have follow-up, but let me pass it to Tasos. Go ahead.
Good morning, Glenn. I love financial modeling questions. Let's kind of put things in perspective. First point is guidance for 2027 on EBITDA of $820 million is kind of substantially below where the Street is. I'm not sure where the Street is, number one. I think that they're about $835 million. Us providing guidance of $820 plus compared to $835, I don't think it's substantially less than that. Kind of point number one. Also obviously, you know, we don't run our business to kind of satisfy, you know, anybody else other than us and our shareholders. Kind of point number one. Point number two, this kind of notion of kind of deceleration. You know, this year EBITDA, right?
The midpoint is at $755, is about 10% growth versus prior year. Even if you take the low end of what we gave you for next year of $820, that's about 9%. 9% versus 10%, I don't think it's a big deceleration, number two. number three, we feel great about growing EBITDA 9%, 10%, even absorbing, even absorbing a strategic deal, which is gonna have some dilution next year until it becomes accretive in 2028. We feel great about being able to give our shareholders a view about next year of adjusted EBITDA, up of about at least 9%, number one. At the same time, on incremental R&D, right?
To maximize the opportunity here of, you know, $300 billion plus of branded products going generic over the course of time. That's kind of how we thought of it. You know, trying to give you guidance for 2027, you know, that's a long time away. I think it speaks to our confidence about telling you what we think the minimum we can deliver next year. Hopefully that gave you some perspective.
Glenn, that's perfect. I appreciate both those answers. Thank you very much.
Thank you, Glenn.
Your next question comes from the line of Ashwani Verma with UBS. Your line is open. Please go ahead.
Hey, this is Dee from UBS. I'm just asking questions on behalf of Ash. Thanks for taking our questions. I have two. The first one, and I apologize if this has been discussed before. The first one, how do you think about the lenvatinib market opportunity? It seems like there's just limited competition in this molecule. I just wonder, like, how confident are you about the approval timeline in 3Q, and what will be the gating items for the launch? My second question on growth margin. I think like it was discussed before, the Amneal term, it's about like 40%-45%. 1Q, I think, like, this quarter is about, like, 48%.
Does that mean, like, we're gonna see some growth margin normalization later this year? If you can give some clarification on that would be helpful. Thank you.
Yeah. Thank you, Dee. The lenvatinib, the gating item is only the FDA approval. We're ready to supply, and it's a great opportunity for Amneal. I'll pass it to Tasos on the gross margin.
Hey, good morning, Dee. How are you? You know, our Q1 gross margin followed for a while. It was just a record quarter which was, you know, overall up 510 basis points versus Q1 of last year. It just, you know, just to kinda enable the sustainability of a 510 basis points is kinda hard to keep repeating quarter after quarter. This is why I think we're being, we have a little bit more modest gross margin expansion for the rest of the year.
This is why though, even though with a little, call it, a little bit more modest growth the rest of the year, we still feel confident that overall company gross margins this year in 2026 should be closer to 45%, 45, maybe a little better, compared to about 43% last year. Hopefully that's, that's helpful.
Yep. Thank you.
There are no further questions at this time. I will now turn the call back to Chirag Patel for closing remarks.
Well, thank you everyone, and have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.