Good morning, ladies and gentlemen, and welcome to the Embecta virtual event. At this time, all participants have been placed in a listen-only mode. Please note that this conference is being recorded and that the recording will be available on the Becton Dickinson Investor Relations website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of the management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including the risk factors of the company's Form 10 filing. You are cautioned not to place undue reliance upon any forward-looking statements which speak only as of the date made.
Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the appendix of today's presentation. I would now like to turn the call over to Mr. Dev Kurdikar, Embecta's President and Chief Executive Officer. Please go ahead, sir.
Thank you, Katie. Good morning. My name is Dev Kurdikar, and I am the President and CEO of Embecta. It's a pleasure to be able to speak with all of you today. Over the course of the next hour or so, we will introduce you to our business and share why we will emerge from our spin in a strong, stable position with global growth opportunities. We will have time at the end to take some questions. Let me first start with who we are. Quite simply, we are an organization with a truly unique opportunity to create the preeminent diabetes-focused company in the world. Our mission is to develop and provide solutions that make life better for people with diabetes. That is our entire focus. We've built an incredible leadership team to advance our vision of empowering people to live a life unlimited by diabetes.
On page two, you will find our forward-looking statement language. Next slide, please. Jake Elguicze, our CFO, and I will take turns today presenting about Embecta. Jake Elguicze and I joined this business from outside of BD and come with significant experience in the med tech industry. I'm excited about what we can do with this business for people with diabetes, our customers, and for our shareholders, and I'm thrilled to have this opportunity. I know Jake Elguicze and other members of our team feel the same way as well. The next page lists our discussion topics for today. As you can see, I'll go through the business first. I'll share with you our perspective on the global diabetes landscape, and I'll offer our perspective on why Embecta has a position of strength in this marketplace.
I'll share my thoughts on the immediate benefits of this spin and outline our global growth opportunities. Next, Jake will provide a financial overview. I will then provide some brief closing remarks, and then we'll open it up for Q&A. Turning to page five, we believe that Embecta will be in a strong position after this spin. Our stable core provides a solid foundation for us to seek and realize new growth opportunities. We are in an expanding category. We have a strong business. This spin has created immediate benefits and looking further ahead, we have opportunities for growth. Now, let me walk you through each of these reasons in a bit more depth. We participate in a large expanding disease area that continues to have unmet needs. We are a pure-play diabetes company, one of a handful that provides products for the treatment of a chronic condition.
Our core business of injection devices is strong. We have been making and selling insulin injection devices for almost 100 years. Our global manufacturing infrastructure is unmatched, and we have a geographically diverse sales and distribution network. The spin will provide us with some immediate benefits. We have a compelling financial profile with the flexibility to invest for growth. As a soon-to-be independent public company, we continue to attract talent and have the opportunity to create a streamlined operating model that will provide enhanced agility and drive decision-making closer to our customers. Finally, we will have the ability to identify and drive opportunities for growth. These include commercial initiatives, a program with the potential to enter into the infusion segment, as well as seeking M&A and partnership opportunities. That is why we believe that our company is uniquely positioned.
We have a strong, stable core business upon which sit opportunities to drive growth in a market that is large, growing, and with unmet needs. Page 6 sets the stage for the rest of my presentation. Over the course of the next 30 minutes, I'm going to walk you through each of these. First, the global diabetes landscape. Second, our position of strength. Third, the benefits of the spin. And fourth, our growth opportunities. Next page. First, let's talk about the global diabetes landscape, a space that is both growing and defined by lifelong treatment. Next slide, please. Page 8 outlines three key points that we think are worthwhile remembering about the diabetes landscape. One, the prevalence of diabetes continues to steadily rise around the world, but especially so in emerging markets as economies expand and more people get access to care.
Two, as you know, diabetes requires chronic lifelong treatment. Once you are on insulin-intensive therapy, you're likely to remain so for the rest of your life. Three, injections are likely to remain the global standard of care. Also, we believe that though advancements have been made in diabetes treatments, there remains a need for further innovations and improvement in care. Let's look into each of these points a bit more. Next page, please. As you see, both the prevalence and the cost of diabetes is growing in every region of the world. The prevalence rate among adults is 10%. Of the 500 million people with diabetes, three of four live in low and middle-income countries. That number, 500 million, is anticipated to grow to almost 800 million over the next two and a half decades.
The costs are tremendous as well, estimated to be almost $1 trillion. That number has grown by more than 300% over the past 15 years. Diabetes, already large and costly, is only expected to grow. Over the next 25 years, another 250 million people will be living with diabetes. Most of this growth will occur in emerging markets. The next page illustrates how and why this growth is occurring in emerging markets due to increases in prevalence, diagnosis, and treatment rates. Let me walk you through each of these factors. First, the underlying population growth in emerging markets is faster than in developed markets. Also, as economies grow and the standard of living increases in emerging markets, people are living longer, adopting a more urban lifestyle, and diets are shifting, all of which is causing the diabetes prevalence rate to increase.
In addition, people in these emerging markets are getting better access to care and to insulin treatment. Given affordability challenges, though, we believe most of these people will be administering insulin through injections versus using pumps to do so. Due to all these factors, we believe that emerging markets will be a source of growth in the number of people who will treat diabetes via injection devices. Now on page 11. As you may know, once you are on insulin-intensive therapy, whether you are Type 1 or Type 2, you're likely to remain on insulin for the remainder of your life. For people with Type 1 diabetes, which is caused by the body's inability to produce insulin and often diagnosed in children, you must be treated with insulin, either via injections or via infusion pumps.
For people with Type 2 diabetes, which is a progressive disease where the body is insulin resistant and eventually doesn't produce enough insulin, you work through a treatment regimen of lifestyle changes and drugs before you start using insulin. Here, too, insulin can be administered via injections or pumps. Also, generally speaking, people with Type 2 are likely to need more insulin a day, around 100 units per day as compared with Type 1. You also see on this page the vast numbers of people with diabetes that are diagnosed and also see that approximately 90% of the people with diabetes are Type 2. Turning to the next page. As the number of people with diabetes increases, injections are expected to remain the standard of care. This is true in both developed markets and emerging markets.
In the developed markets, we believe that pumps will be used by a majority of Type 1 people with diabetes and in the 20%-25% range for people with Type 2 who need multiple injections of insulin a day. However, in the emerging markets, which is where there is anticipated to be tremendous growth in the number of people with diabetes, we believe injections will be used by the vast majority of people, as noted on an earlier page. You may ask why pumps would not become the dominant means to administer insulin globally. It comes down to a few reasons. The cost of using injection therapy is quite less than that of using a pump. Some people will not want to wear the device. Pumps mean you have a medical device attached to your body 24/7.
For many, it also means having to wear a continuous glucose monitor on your body. You're wearing two medical devices all the time. A pump is a technologically complex device, and some people prefer the simplicity of an injection. For some, injection therapy can deliver sufficient glycemic control. Next page, please. For all people with diabetes, unmet needs remain, even if you're on the most advanced treatments. If you have to administer insulin, you're effectively functioning as your own healthcare provider. You have a constant juggling act of managing your glucose levels and maintaining it within a band. You must monitor your glucose levels frequently. You have to make sure you administer insulin dosage based on diet, lifestyle, and other factors. You have to be mindful of what and when to eat or exercise.
Finally, you have to change your lifestyle or potentially change your treatment if your lifestyle changes. You can imagine that this daily juggling of monitoring and decision-making places a high burden on people with diabetes and often their caregivers. That's why we believe that in the large diabetes market, there remains significant room for innovations and improvements in care. Turning to page 14, we will now discuss the second theme, Embecta's enduring position of strength and why we are the trusted leader in injection devices. Next page, please. We will become an independent company with some enduring strengths. We are a trusted leader with best-in-class products and unmatched capabilities. Strengths we have developed after making these devices for almost 100 years. We believe we have best-in-class products and brands across our portfolio in all geographies.
As we separate, we have taken care to ensure that our new name, Embecta, and logo retain a linkage to the BD brand and have decided to keep our product names unchanged. We have unmatched manufacturing, distribution, and sales capabilities. We produce almost 8 billion units a year and distribute them to over 100 countries where we estimate they are used by 30 million people annually. These strengths have been developed and enhanced over almost 100 years and provide a strong foundation for our business. Page 16 shows you our track record in innovation. We have a nearly 100-year history in diabetes, and that creates a reputation of quality, trust, and innovation that we enjoy today. As you may know, insulin was first used to treat diabetes in 1922, 100 years ago.
We made the first insulin syringe in 1924 and have been innovating and making injection devices since. We made the first disposable insulin syringe, introduced pen needles, which are now standard, developed the first safety pen needle that protected caregivers from accidental needlestick injury, and made multiple innovations to our pen needles that allowed for more efficient administration of the insulin while decreasing patient discomfort from injections. These innovations are quite important to people who must inject themselves several times a day throughout their lives. This rich history of innovation and just the sheer brand recognition our business has garnered over a century has made us a leader in the global marketplace. Today, our strong core business reaches people with diabetes around the world. Page 17 gives you a snapshot. We are the number one producer of insulin injection devices.
We produce almost 8 billion of them in 3 facilities around the world. Our 2,000 employees, which includes 600+ commercially focused employees, work to make these products available to an estimated 30 million people in over 100 countries. All this has resulted in almost $1.2 billion in revenue with healthy margins. On page 18, you can see that we have leadership across the injection platform and segment leadership in multiple product categories. We are the number one global leader in pen needles, syringes, and safety. Page 19 gives you a deeper view of our pen needle portfolio, where our number one position gives us strength in a growing category. Our position in this category is no fluke. Our strong legacy, clinical leadership, and customer loyalty firmly places us in this market position.
As you can see, we have a comprehensive portfolio of needle lengths and have continued to innovate, including the design of the contoured hub to allow for an improved injection experience. We have also innovated the design of the wall of the needle to allow for the easier flow of insulin. It's also important to note that our pen needles are compatible with the majority of insulin injection pens available around the world. In this category, our strategic focus is on continuing to maintain our clinical leadership using our latest innovation, the BD Nano 2nd Gen pen needle, to gain category share and to continue to globally expand the availability of this new product. You can also see on this page some of our key competitors in this space. Page 20 gives you more information on our syringe portfolio.
We lead in insulin syringes and therefore are well-poised to take advantage as a shift occurs towards using insulin injection pens. Here, too, we have a portfolio of sizes and syringes for a variety of insulin strengths. Our focus with this product category is to continue to drive operational efficiencies and position ourselves as a single partner that can provide both syringes and pen needles to our customers. Our competitors in this category are mostly local manufacturers that operate in various regions of the world. The next page shows you our safety pen needles and our safety syringes. We have a strategic focus on this area because these products are designed to help protect the healthcare provider or a caregiver from an accidental needlestick injury and potential blood-borne pathogen exposure.
We were the first to have dual-ended protection for the pen needle so that both the front end and the back ends are protected, as well as the first to have a safety insulin syringe that was aligned with clinical recommendations. We continue to work to enhance the safety value offer and compete with a couple of the same names you saw earlier. On page 22, you will see that we build clinical evidence to differentiate our products and build our credibility with key influencers. Through our clinical evidence, we create the data, education, and publications that reach and engage HCPs. Our peer-reviewed research has been published in top-tier diabetes publications. We list just a few such publications on this page. Next page, please.
In addition to the history, reputation, and brand strength that we just spoke about, our leadership is based on our core strengths with our scale, quality, and efficiency create competitive advantages. In short, we have unmatched manufacturing and commercial strengths. Our manufacturing infrastructure consists of 3 highly automated plants and are supported by a stable supply base with long relationships. Over the many decades we've been in this business, we've built up a deep knowledge base of manufacturing expertise and trade secrets. Our commercial capabilities are vast. We have a global distribution network that allows our 600+ commercially focused employees to represent our products in more than 100 countries. On page 24, you see a brief review of how we create unmatched volume through our manufacturing infrastructure.
We are able to supply 7.6 billion units annually and have the flexibility to meet changing demands and capacity because of the size and consistency of our manufacturing plants. Taken together, our plants comprise approximately 800,000 sq ft of production space. Our plant in Dún Laoghaire, Ireland, is the world's largest manufacturer of pen needles. In Holdrege, Nebraska, our plant is the world's largest manufacturer of insulin syringes. Our newest facility in Suzhou, China, makes pen needles primarily for China and other countries within the Asia-Pacific region. All these plants are highly automated and operate 24/7. We are proud of the efficiency that they operate with and the continuous improvement mentality that is embedded within the operations team. Next page, please. Here you see our planned global distribution network, and you can see how our products are available all over the world.
While we anticipate using BD's distribution network throughout the TSA or the Transitional Services Agreement period, we plan to have a comprehensive distribution network post the TSA period. This distribution network will allow us to have high quality and reliable product continue to be available in more than 100 countries around the world. Page 26, please. Taken together, this extensive distribution capability and our sales infrastructure enables us to reach more people with diabetes than any of our competitors. Furthermore, we are especially proud of the fact that we have strong presence and infrastructure in emerging markets. More than half of our commercially focused employees are in emerging markets. This is particularly relevant given that we expect the vast majority of the growth in the number of people with diabetes to occur in emerging markets. Next page, please.
It's critical to emphasize that we have both size and precision. Our go-to-market strategies differ across geographies. They're built to ensure optimal representation of our products with key stakeholders in each market. In North America, and more specifically in our single largest market, the United States, we have ongoing collaboration with retail pharmacies, IDNs, and long-term care facilities. The reimbursement environment continues to be stable, and we have broad coverage from private payers as well as Medicare. In Europe, Middle East, and Africa, we have coverage across some 70 countries. In some of them, we have direct presence. In many of them, we work with distributors. In most developed countries, we have stable reimbursement. In Asia and Latin America, we have tailored teams depending upon the market dynamics. The payment dynamics are a mix of self-pay and reimbursement.
In every region, we differentiate our products on quality, reliability, and clinical evidence. Next page, please. We augment our commercial teams' outreach efforts with a direct-to-consumer digital app. This app has had over 400,000 downloads and has been launched in nine countries so far. A broader rollout continues. The app provides an ability to track key metrics and provides some self-help tools around food choices and activity tracking. We are proud that our app is the only self-management app whose content has been favorably reviewed by the Association of Diabetes Care & Education Specialists. Page 29 shows how all our commercially focused efforts come together to reach every stakeholder in the buying process. We engage with people with diabetes through our app and other digital marketing means to provide tools and education and therapy adherence.
Our commercial and medical affairs teams call on healthcare providers, and we conduct webinars, convene roundtables and advisory boards to advance injection therapy. Our channel focus teams calls on retailers and pharmacists. We work with them on in-store promotional planning and conduct training events for pharmacists who are often the ones dispensing our products at the retail level. Finally, we have focused teams that work with a multitude of payers to ensure we have appropriate coverage and can position ourselves optimally in tender-based markets. Next page, please. As we went through this section, I hope you saw why we believe we have core strengths that are foundational to our business. Now let's talk briefly about why the spin allows us to take incremental advantage of those strengths.
Turning to page 31, you will see some of the reasons why we think we will have a stronger Embecta post-spin starting at day one. First, as we showed earlier, we have a strong core which translates into a compelling financial profile. Second, our core is broadly defensible. We have solid intellectual property comprised of patents, know-how, and trade secrets. We have a long-term agreement with BD to continue to provide cannulas. These are the needles that are used in our products. Finally, we are able to build an organizational capability around a single-minded mission of developing and providing solutions for people with diabetes. This purpose motivates our workforce and continues to attract talent to Embecta. Turning to page 32, let me now walk you through how our business today provides a financial foundation for growth.
Both our business model and our healthy balance sheet provide a strong core. First, we have a stable, recurring, geographically diverse revenue base. Our products are chronic use, and the vast majority of people with diabetes will continue to use injection devices. Second, our margin profile is healthy. This is supported by a brand recognition, long history of reliable supply, scale and efficient manufacturing and distribution infrastructure. Third, we have a history of generating strong positive cash flow from our operations. Fourth, we will, at spin, have modest leverage and be considerably below the net leverage governance in our credit agreement. Fifth, our starting cash balance will allow us to quickly capitalize on any suitable growth opportunities that we identify.
While Jake will go through these factors in detail in the financial overview section of today's presentation, you can see that these elements allow us the financial flexibility to invest for growth. Next page, please. Our core business is broadly defensible. Taken together, our IP, manufacturing strength, and cannula agreement create a competitive advantage for us. We will launch with robust intellectual property and patent protection consisting of our own IP, as well as certain exclusive rights from BD. The patents cover technologies related to pen needles, syringes, patch pump, flow sensing, and glucose monitoring. We've already spoken about our highly automated plants and the unmatched scale of our production capacity. What's perhaps worth stressing here is that we have significant know-how gained over decades of experience that's embedded in our processes. In addition, manufacturing line IP is protected with carefully crafted agreements with BD.
We have strong relationship with our suppliers. We are a well-regarded customer to them, given our history and scale. Our source of cannulas will be BD. BD has been making cannulas for decades. We have an agreement in place that allows for us to continue to obtain these cannulas from BD for at least 10 years. Together, these key factors provide us with a competitive advantage in our core injection device business. Turning to page 34. We've been able to attract an experienced leadership team and world-class talent because of this defensible core business with a financial profile that can support and invest for growth strategy. Our strong position from day one has allowed us to assemble an experienced world-class team with deep med tech experience.
Several of us joined others already in the business, so we are now a great mix of internal and external hires. I'd specifically like to point out that both our commercial region leaders had responsibility for running key regions for a number of years, as did our leader for manufacturing and supply chain. Thus, we've been able to maintain continuity in both our manufacturing and commercial capabilities throughout the separation process. Next page, please. Being in a spin allows us to craft a set of values that are essential to our aspiration of getting this business back to growth. In particular, the sharpened focus on customers, measuring ourselves by the results we deliver, and having a hungry mindset that will relentlessly push us to continually improve will be important factors in our success. Next page, please.
Being an independent company, we are able to create a strong organization that has clear incentives and innovative culture and operates with agile decision-making. We will have a clearer line of sight between our results and compensation and use operating processes that enable decision-making faster and closer to the customer. Thus, you can see for all these reasons, the spin creates a stronger business. Page 37, please. Now that I've shared why Embecta is strong from day one, I'd now like to shift gears to the final section of my discussion and share my thoughts on how we can take this strong business and reinvest in ourselves to pursue global growth opportunities. Turning to the next page, you will see that we will make strategic investments to accelerate our long-term growth profile.
We will do this through commercial investments, the introduction of next-gen products, and M&A. First, we can continue to expand and penetrate through our core business. Second, we can continue to innovate, both in the core injection device business and enter the type 2 diabetes market with our internally developed patch pump. Finally, we will seek partnerships and acquisitions where we can use our manufacturing strengths and commercial capabilities to add value. On page 39, we look at the insulin administration category, and we see a large $6 billion-$8 billion market opportunity for insulin delivery. If you look at it from a revenue perspective, the majority is in pumps with players such as Medtronic, Insulet, and Tandem. If you look at the opportunity from the number of people with diabetes perspective, you will see that 95% of patients will be using injection devices for their insulin delivery.
As you know, we already have an established presence in the injection space, but we intend to maintain our innovative edge through continuous refreshment of our portfolio. We have a patch pump program that we intend to use to enter the infusion space. Success there will expand our total addressable market significantly and increase our long-term organic growth rate. On page 40, we outline our strategies for how we can capture immediate opportunities to expand and penetrate within our core, both in developed and emerging markets. We could work to improve adherence around the single-use concept. We know people often reuse their pen needles even when there is adequate reimbursement and coverage. Working with pharmacy retailers to address that would open up a growth opportunity for us and increase treatment adherence, potentially improves long-term outcomes, and avoids complications.
Given the vast numbers of people that use our product, we believe greater investment in an omni-channel approach, where we can increase the digital impressions on people with diabetes, will solidify our brand recognition. This will be particularly important in emerging markets. Also in emerging markets, the purchasing of our products is moving online. We want to invest in building the right front and back-end capabilities with partners as needed to be able to participate in this growing channel. Finally, in select markets, we have the opportunity to drive conversions from conventional pen needles to the higher value safety pen needles. On page 41, you will see that we continue to build on our pen needle innovations. These will allow us to improve user experience and strengthen our core business.
We are working on a safety pen needle that provides a differentiated solution by making a product that is smaller and thinner than our current solutions. We are also developing a finer gauge pen needle that combines the unique design of the Nano 2nd Gen hub with a thinner needle than we currently make. Continuing to innovate within our core injection business will improve user experience and help maintain our leadership position. Next page, please. As I mentioned before, insulin pump therapy has substantial potential for people living with Type 2 diabetes, even if some barriers remain. At Embecta, we are pursuing this opportunity through an internal R&D program to provide pump therapy specifically designed for Type 2 people with diabetes. We believe the commercial opportunity is large.
We estimate that just in the U.S. alone, the number of people that need multiple daily injections of insulin and are potentially candidates for pump therapy is from 2-2.5 million. Some in this population have already adopted pumps, but we estimate the current penetration is in the single-digit range. We believe that some barriers have and may continue to prevent significant penetration. Chiefly among them, the fact that the pumps have been designed to meet the needs of type one patients. Adoption in the type two population may be limited by the complexity of the pumps, the high training requirements, and the daily insulin dosing requirements. What we are doing, as you will see on page 43, is designing a patch pump that is based on input from both people with diabetes and HCPs.
We are proud to say that the device is being developed under the Breakthrough Devices Program of the U.S. FDA. This offers us an opportunity to interact with the FDA's experts to efficiently address topics as they arise during the pre-market review phase. This has allowed us to have multiple discussions with the FDA and receive feedback even during the pandemic period. The Breakthrough Devices Program will also allow us to have a prioritized review of our submission when made. Regarding the pump, you see the picture of the planned patch pump on the left-hand side of this page. Some of the key features we are planning to incorporate are improved user experience, including the initial training and the ability to tailor certain alarms, and the capacity to hold more insulin than the currently available patch pump.
In addition, when the closed loop version of the pump is available, we anticipate it'll use an algorithm that's specific for Type 2 diabetes. On page 44, we lay out our third growth vector that we plan to pursue. We will seek partnerships and M&A opportunities that fit three criteria. These include we can use our existing distribution and commercial capabilities to enhance the commercial potential of any product that we add to our portfolio. Recall that our reach spans over 100 countries and an estimated 30 million people with diabetes. We can leverage our deep, high-volume manufacturing expertise. Opportunities that are market appropriate, especially as we think about the emerging markets, are also of interest to us. Collectively, these three vectors, organic growth, new products via internal R&D, and opportunities for partnerships and M&A, provide a source of growth that sits atop a stable core business.
As an independent company, we have the financial and organizational capabilities to pursue and invest for growth strategy. With that, let me turn it over to Jake to provide a financial overview. Jake.
Thank you, Dev, and good morning, everyone. It is my pleasure to have the opportunity to speak with you today about Embecta, as during the next several years, we believe that we have a truly unique opportunity to create the preeminent diabetes-focused company in the world. Before I discuss the future financial profile of Embecta, I'd like to begin my presentation by providing an overview of our historical financial performance. As a reminder, Embecta has a September 30 fiscal year-end. Turning to slide 46. As Dev mentioned earlier, Embecta's consumable product portfolio has been in existence for almost 100 years, and we have an unmatched global manufacturing infrastructure and a diverse sales and distribution network. That framework has allowed Embecta's core injection business to perform incredibly consistently over the past several years, even while operating during the unprecedented COVID-19 pandemic.
As our constant currency revenues grew at a CAGR of approximately 2% from fiscal year 2019 through 2021. That consistent revenue performance holds true both from a product family as well as from a regional perspective, and it is because of the non-elective, not easily postponed, single-use nature of our product lines. The scale of our business, at approximately $1.2 billion in revenue, makes Embecta one of the largest diabetes-focused companies in the world, and our consistency and diversity provide us with a good level of predictability as we move forward as a new public company. Moving to slide 47. The stability of our core injection business revenue also leads to strong gross profit and adjusted EBITDA performance as depicted on this slide.
We are a highly profitable cash generative business with pro forma fiscal year 2021 gross profit and margin of $778 million and 65.5%, respectively. While from an adjusted EBITDA perspective, our pro forma fiscal year 2021 totals were also strong, reaching $488 million and 41.1% respectively. As we embark as our own publicly traded company, this historical level of financial consistency and profitability will serve us well in the future as it provides us with significant flexibility to execute upon our invest for growth strategy. Turning to slide 48. As Dev mentioned earlier, this management team is highly focused on driving an acceleration in our constant currency revenue growth rates and creating a company that has an ability to sustainably grow in the future.
From a revenue standpoint, we expect this future revenue growth to come from the following activities. First, we intend to partner more with pharmacies to improve treatment adherence, as we see this as an opportunity to accelerate the use of our existing product portfolio. For instance, today we have some activity with pharmacies, such as contracting to be their preferred brand, conducting patient education programs on the benefits of shifting to needles with shorter lengths and injection site rotation. In the future, we'll be working on initiatives where Embecta could partner with pharmacies to sync the proper amount of pen needles with the amount of insulin injections people are prescribed. For example, if a patient takes four injections per day, they will need 120 pen needles per month or more than 12 boxes per year.
Whereas today, the average patient only gets between three and four boxes per year. Second, we think that an increased level of investment in omni-channel and e-commerce will also provide us with an opportunity to accelerate revenue growth in the future. Omni-channel will provide for enhanced touch points to customers to ensure our message is received in an efficient way. You should think about it as a combination of a type of paid search on Google or Doximity, email reminders, etc., that all lead to extra touch points to drive home our message. E-commerce, on the other hand, is still in the early stages in the U.S., and we expect it to increase in the future.
Third, we believe that our established geographic footprint, one that is a bit unique for a company of our size, will serve us extremely well in the future, and we intend to focus heavily on expanding our presence within emerging markets. This would include driving further penetration of products that are primarily sold within the U.S. and Europe to emerging markets in the future. Lastly, we intend to become a company that is focused on innovation and driving improved outcomes and the reduction of complications for those people who live with diabetes. As such, over the course of the next several years, we intend to come to market with a variety of next-generation technologies, including both an open and closed loop version of our insulin patch pump.
Moving to adjusted EBITDA, the stability of our core injection business and significant cash flow will allow us to accelerate investments to drive higher and sustainable constant currency revenue growth rates in the future. As BD has said in the past, one of the benefits of the spin and Embecta being its own standalone company is that we can now use our free cash flow to invest back into the business and expand our market share in one of the fastest-growing subsegments of healthcare today. Over the next several years, we anticipate that these investments will be focused on both increased commercial and R&D spending, which is expected to drive innovation and the global adoption of our product offerings. We expect that all of this will occur while maintaining a conservative and balanced financial profile as shown on slide 49.
Our capital structure, which currently consists of a mixture of term loan B and senior secured notes totaling $1.15 billion and $500 million respectively, provides us with a significant amount of financial flexibility as our pro forma fiscal year 2021 net leverage is only approximately 2.8x. One of our most stringent financial covenants is that we need to keep leverage, net leverage below 4.75x. Right at the inception of being our own publicly traded company, we have a balance sheet that we can use to invest both organically as well as use for M&A and partnership opportunities. As we prepared our forward-looking projections, we did not include any contribution from M&A or partnerships.
To the extent that we execute upon them, this would be incremental to what I will share with you in a few moments. As we created our capital structure and leverage levels, we also tried to be mindful of our current financial profile, the need to increase the level of investment into the business and shareholder returns. As such, right from the outset, we intend to provide shareholders with a sustainable return of capital in the form of a dividend that is targeted at a 20% payout ratio of GAAP net income. We think that we can provide this return to shareholders while correspondingly increasing the level of investment in the business to drive accelerated constant currency revenue growth rates in the future, all while maintaining a very strong liquidity profile.
Lastly, before I turn the call back over to Dev for closing remarks, let me share with you Embecta's near-term financial profile and financial targets that appear on slide 50. At this point in the presentation, it should be clear that the new management team of Embecta is acutely focused on the need to improve our top-line revenue growth profile. While our current product portfolio's constant currency revenue growth rate is expected to remain relatively flat over the near term, our strong margins and cash flow generation capabilities allow Embecta to employ that invest for growth strategy. It is through the execution of this strategy, including increased spending behind various commercial and R&D initiatives that we expect to penetrate new markets and drive an accelerated revenue growth rate in the future.
While Embecta will incur additional stand up, public company and TSA costs, as well as very deliberately invest for growth, we currently anticipate that we will maintain a robust adjusted EBITDA margin of approximately 30% within three years post-spin. Lastly, while the targets I just mentioned do not include any M&A and/or partnership opportunities, given the mixture of our balance sheet flexibility, strong distribution network and geographic reach, we view M&A as a growth accelerator. That completes my prepared remarks, and at this time I'll turn the call back over to Dev for a quick summary. Dev?
Thank you, Jake. To summarize, Embecta will be in a strong position after the spin. As Jake said, we believe we have a truly unique opportunity to create the preeminent diabetes focus company in the world. Page 52 highlights why that is the case. We are in an expanding category with unmet needs, and we are a pure play insulin delivery company. We've been in this business for almost 100 years and have unmatched global manufacturing, infrastructure and commercial capabilities. We have a compelling financial profile and continue to attract talent as a soon to be independent company with a streamlined operating model. Finally, we have opportunities for growth within our core business via R&D and via M&A. The way I think of it, we are a stable, profitable business with the options and the financial flexibility to drive growth and create value.
Thank you for your interest and for attending our presentation. At this time, we will open it up for Q&A.
Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself to the queue again by pressing star one. We will pause for just a moment to allow those to queue for questions. Thank you. Our first question comes from Travis Steed with Bank of America.
Hi, good morning, everybody. Thanks for the questions. I guess I'll start with EBITDA margin. Today you're, you know, in the 40% range, and you said goal in 30, is 30% in three years. How much investment are you going to push out of the gate versus more of a methodical path from 40% - 30% over the next three years as you find investment opportunities?
Yeah, Travis, thanks very much for the question and for the interest in Embecta. You know, I think that the short answer is that this is going to be something that is gradual and continues to build over time. We're not necessarily going to see the entirety of the move from what 41% to approximately 30% occur within one year. It's gonna be certainly more gradual. Just so that you understand, when we're talking about the near term and three years post-spin, we're really talking about fiscal year 2024 as the year that that would occur.
You know, maybe just to provide you know, a little bit more information as far as how that is going to occur. You know, I think you should think about you know, sort of, our adjusted gross margin during that time going into sort of the low 60s%-ish type range. R&D as a percentage of revenue continuing to increase more and probably reaching up into the sort of that 7%-ish type range. You know, as we think about you know, the margin profile over time you know, obviously we're going to incur additional stand up public company and TSA costs, right? We're also very very deliberately going to invest you know, for growth. That is something obviously that we can control, right?
We can control that spending that we make very deliberately to invest for those growth initiatives to try and drive that sustainable top line revenue growth in the future. If you think about the components of margin, you know, and going sort of from that 41% down to say, closer to that approximately 30% range by 2024, you know, I think gross margin right now is expected to drive approximately half of that decline. That gross margin is really gonna occur from a combination of factors. It's gonna come from increased material and supply chain costs that we're sort of factoring in right now and trying to anticipate sort of that current market environment.
It's going to take the form of incurring additional costs from the creation of certain global functions now that we are our own standalone, publicly traded company like supply chain, regulatory and quality control, procurement, et cetera. It's also going to include, you know, right now we are trying to factor in very, very modest, I would say, pricing pressure. You know, our products tend to be actually a price premium product in the market today. While pricing typically does not have a material negative headwind, you know, over the last, let's just say, three years from 2019 through 2021, you know, pricing has only impacted us negatively by about 50 basis points per year. And the majority of that actually occurred only in one year, in fiscal year 2020, largely because of COVID.
We're trying to factor in the future some continued very modest pricing headwinds impacting margin. And then obviously, there's a variety of the contract manufacturing agreements that we have in place with BD, and that includes the cannula supply agreement that in which BD will continue to provide us, you know, cannula. As you think about, you know, the going from 41% adjusted EBITDA to approximately 30%, you know, I would tell you that right now we're anticipating that maybe about half of that decline would come at the gross margin line. OpEx increases are expected to drive the remainder. That includes, you know, the creation of a variety of different global functions that we're going to need as our own standalone company.
That's gonna include the impact of the transitional service agreements that we'll have in place. Obviously, you know, again, coming back to into the invest for growth strategy, you know, we very, very deliberately have significant investments included over a multi-year timeframe to try and create a company that has the ability to drive, you know, an accelerated, sustainable top-line revenue growth in the future. Hopefully that's a little bit more color for you.
Yeah. Thanks, Jake. That's a very thorough answer. Appreciate that. I guess the follow-up would just be on the patch pump. Just curious what's changed with that since it was part of the BD story, you know, I guess six years ago. You know, is the insulin dosing algorithm something that you guys are gonna do yourself or partner with somebody else? Curious, you know, why not more focused on smart pens?
Hi, Travis, this is Dev. Thanks for your question. A few things, right? You know, obviously since I've come on board about a year ago, I've sort of, you know, learned a little bit about the history of the patch pump within BD. What I'll tell you now is, thanks to the breakthrough device designation we received from the FDA over the course of the past year, even maybe a little bit more, we've had the opportunity to engage with the FDA on various aspects of what would be needed in terms of performance data, et cetera, to get regulatory clearance. You know, we are very pleased with these interactions. It has guided and continues to guide a lot of our development efforts. We've been able to augment some of the skill base that we have.
You know, for example, our head of medical affairs is a well-known endocrinologist who's now deeply involved in the development of the patch pump. We continue to use, you know, external experts as necessary on various systems and subsystems of the pump. We feel really good where we are. I know there will be eagerness to know more about our pump, but as the development continues, Travis, we'll sort of, you know, speak a little bit more about where exactly we stand in development. With respect to smart pens, you know, I did allude to the fact that, you know, when we think about partnerships and M&A, you know, we'll be open to opportunities where we can leverage both commercial and manufacturing capabilities.
Certainly anything that falls into that insulin administration space would be of interest to us. With regard to smart pens in particular, you know, where we think the sort of technology stands right now is that the cost-benefit ratio still needs to be worked out. It's something that we'll pay attention to, Travis. I'm not suggesting that we are ruling it either in or out. I'm just saying that we'll watch it carefully and participate if we find the right opportunity to do so.
Great. Thanks for taking the questions.
Yeah. Thank you, Travis.
Thank you. Our next question comes from Cecilia Furlong with Morgan Stanley.
Great. Good morning, and thank you for taking the questions. I wanted to ask just on your outlook around growth, what's factored in from an expansion and emerging market standpoint? Kind of on the tail end of that, emerging market growth versus contributions from the patch pump longer term. Just how you're thinking about the growth profile of over the next few years, major contributors and then over the long term.
Thank you, Cecilia. This is Dev. I'll start off, and maybe Jake can augment. As I think about, you know, especially over the near term, right? Over the next couple years or so, the way, you know, we think about core growth in our core injection market is going to be, you know, it'll essentially follow the growth profile of where you're gonna see an increase in the number of people with diabetes. We anticipate that, you know, we'll have sort of the mid-single digit growth range in emerging markets, closer to flattish in the developed markets.
together, you know, just given the fact that currently we are sort of overindexed in the developed markets over the next couple years, I think, you know, we said we'd be sort of flattish over the next couple of years in the core injection market. With respect to the patch pump, you know, it'd be a little too early for us to, you know, obviously say specifically what we expect in terms of revenue contributions of the patch pump. We'll certainly provide that as the development continues. just from watching, you know, participants in the marketplace, you know, we recognize that it's a growth area, large market, growing opportunity.
Frankly, we feel like we have a place to play and participate in that growing market thanks to the strength and the fact that, you know, we have almost 30 million people currently that have our products in their hands at least once a year. It provides us a unique opportunity to reach those patients. We'll provide more details on that, Cecilia, as the year goes through and as development progresses, but hopefully that provides some color for now.
Yeah, Cecilia, maybe I'll just jump in and just add a little bit more, you know, color. You know, I think when we tried to create, you know, the financial projections or thoughts that we sort of shared right now, you know, we wanted to do so in a very thoughtful approach and a more conservative approach. To the extent that, you know, we certainly wanted to make sure that as a new publicly traded company, you know, we burdened, I would tell you, the forward-looking financial projections with a fair amount of investment, you know, and costs associated with trying to create an accelerated top-line company.
Yet, I think from the revenue standpoint, particularly as it relates to the patch pump, you know, through what we're referring to as the near term being 2024, you know, we didn't factor in really any revenue contribution, you know, from the patch pump. I think our financial projections were sort of built with the mindset of, let's make sure that we burden the P&L and the cash flow with the cost necessary in order to do that, while from a revenue standpoint, you know, we're not really anticipating, you know, any meaningful contribution from the patch pump, at least through the near term.
Great. Thank you for all the color. If I could follow up, just you talked about pharmacy partnership to enhance compliance. Can you walk through when kind of from a timeline standpoint you expect to see this start to play out, as well as you think about just your ability to leverage your diabetes app to drive enhanced utilization, how you're thinking about that today? Thank you.
Yeah. Thank you, Cecilia. I'll take that. You know, what we've found and what we know just from some of the research we've done is that people with diabetes who are using our products, right? I mean, our products are single use, and therefore they should be using a fresh pen needle, for example, with every injection. Even in developed markets, including in the United States, where there is adequate reimbursement and coverage, people often reuse the needles. One of the things that we are identifying is that when, you know, people go to the pharmacy to get their, you know, supply of insulin, is that synced up with the number of, for example, pen needles they would need to deliver their insulin, right? Which is based on that typical patient, that particular patient's profile.
You know, we are right now in the pilot phase of a program where we are trying to work with retailers to say, is there a prompt that we could have the retailers at the dispensing level that would prompt a question of or prompt a supply of pen needles that is synced with the insulin that they take? You know, again, with respect to the specific contribution of that particular program, Cecilia, we'll sort of stay away from that right now. It's one of. It's an example of what I would say we are trying to do with respect to to increase the treatment adherence. You know, overall, as treatment adherence increases, we believe it will, you know, lower the risk of complications and potentially improve outcomes for people with diabetes.
With respect to the diabetes app that we have, as you said, I mean, it's a unique opportunity because we have 400,000+ downloads in nine countries. We're continuing a broader rollout. As we think about our e-commerce and omnichannel strategy, we are looking to see how we can tie that in into being a place where people not only can get educated, but also have a way to be able to procure product as necessary. I will leave it at that now, Cecilia, for obvious reasons. We got to work through some of the front and back-end capabilities. But amongst one of the investments that Jake mentioned, that is going to be an area for investment for us.
We think this is especially gonna be powerful in emerging markets where, you know, the procurement of these, our products is moving online in some of these emerging markets.
Great. Thank you for taking the questions.
Thank you, Cecilia.
Thank you. Our next question comes from Larry Biegelsen with Wells Fargo.
Good morning. Thanks for taking the question. Hey, before I ask my two questions, Jake, can you just clarify the growth rate of the flat CAGR that you talked about? Is that flat relative to the 2% you did the last couple of years, or is that flat as in zero?
Larry, good morning, and thanks for the question. You know, obviously we grew approximately 2%, you know, CAGR over 2019 through 2021. You know, in 2021, in particular, that did include some items that you know, we did not necessarily expect to reoccur in the future. When we're thinking about that kind of constant currency revenue growth rate, you know, we are expecting it to be relatively flattish. We're not gonna give a specific number, you know, at this point in time, but I would say, you know, relatively flat.
Again, I think we're also trying to be very highly cognizant of the fact that as a new management team and company, we wanna make sure that we continue to build you know credibility out there with The Street. We're right now predicting you know the constant currency revenue growth rate to be relatively flat through 2024.
That's helpful. Jake, you know, there's been a lot of discussion about emerging markets, but I didn't hear you guys actually give a % of emerging market sales today, you know, any goals you have, and how the pricing and margins compare to developed markets.
Larry, maybe I'll start off and then Jake can augment. Good to meet you, Larry. You know, the emerging markets right now is. I think in 2021 was right around 16%-17% of our total. I think over the past couple of years, you know, that sort of emerging market growth rate has been in the mid-single-digit range. You know, we expect. We don't see any reason why that profile, you know, is gonna dramatically change in the future as well. I think, you know, from a growth perspective, you know, we have, as you heard in my remarks, we have sort of strong infrastructure in emerging markets, and we're gonna, if you will, make some additional investments as necessary to optimize that growth profile even further.
With respect to margins, I'll let Jake comment, but broadly, I'll say that, you know, our margins in the emerging markets versus developed markets are not dramatically different. I know in, you know, some companies, they have dramatically different gross margins. You know, in developed markets, our gross margins are above corporate average. In emerging markets, they are below. Maybe I can let Jake go on from there.
Yeah, no. I mean, just to add a little bit, I would agree with Dev's comments. I mean, you know, our margin profile, you know, is very strong. I think, you know, today it's obviously very strong. It's still expected to be strong. I mean, 30%, you know, EBITDA, adjusted EBITDA margins in the future and low 60s%, you know, gross margin in the near term through 2024 is still very, very robust. Again, I just wanna make sure that I emphasize, you know, in particular on the adjusted EBITDA margins, you know, we are very, very deliberately trying to invest significantly behind growth initiatives to try and drive that accelerated top line growth rate in the future.
You know, as far as the gross margin profile is concerned, you know, obviously in the U.S., and in the U.S. in particular, you know, the gross margins are, you know, sort of in excess of what the corporate overall margins are. But, you know, to Dev's point, you know, the margins in international markets are actually relatively similar. You know, in particular in Asia, which we would consider to be, you know, an emerging growth market, the gross margins in that particular area are very, very strong for us. I think all of that, as we continue to grow, you know, in emerging markets, I think that should be generally a positive, you know, for the company.
That's helpful. Just lastly for me, you know, we're mostly device analysts covering this call, you know, following this on this call. On the drug side, we hear about these, you know, long-acting insulins, et cetera. Is there anything on the drug side, I'm sorry, that has an impact on utilization of your products? Thanks for taking the questions.
Thank you, Larry. This is Dev again. Maybe I'll take that. You know, there's certainly been over the last several decades, right, a lot of advances in therapies to treat diabetes, particularly type two diabetes, right? With the introduction of novel oral drugs as well as novel injectable drugs. I mean, some of those injectable drugs that have been used also use pens and pen needles. They use our pen needles, if you will. Over the course of that time, Larry, even with the new drugs that have been introduced, the fact that you know, pumps have really taken off over the past several years. I mean, if you look at our revenue profile, it has stayed pretty stable. Our shares has stayed pretty stable.
You know, there is nothing we see, at least we are aware of, that's sort of imminent that would dramatically change the stability of our core business. The second thing I would say is that tends to be more of a developed markets phenomenon, right? In emerging markets, because of affordability reasons, which is where we expect the most of the growth to occur, you know, that's even less of an issue for us in the emerging markets. You know, I don't wanna be in a position of describing which drugs might come out at that time, but there is nothing that we've seen that's about to happen that would dramatically change our profile.
Thank you so much.
Thank you, Larry.
Thank you again. As a reminder, if you would like to ask a question, please press star one to join the queue. Our next question comes from Marie Thibault with BTIG.
Hi, Dev and Jake. Thank you so much for hosting this event and I appreciate you taking the questions. Just one quick one here on your traditional insulin injection market. As you think about the strategies you detailed, you know, to expand within that market, you know, driving adherence, the digital channel, e-commerce, the safety pen needle conversion, which of those is sort of differentiated from how some of your large multinational competitors are thinking about growth within that traditional market?
Yeah. Thank you, Marie. This is Dev, and thanks for the question. You know, maybe the first thing I'll point out is we don't have a whole host of sort of large multinational competitors in this space, right? I mean, in pen needles, we have a couple of competitors, but just from a size, scope and skills perspective, you know, we are, I would say, the clear leader.
Some of the things that we are able to do with respect to clinical evidence around our products, with respect to the brand recognition that we have, with respect to the reach that we have is, you know, I would submit is fairly unequaled by anybody who's quote-unquote "global." Some of these things that we can do, just because of the number of patients that we reach with respect to treatment adherence, I mean, we are, you know, virtually all pharmacies in the U.S., you have access to our products. The relationships that we have with some of these channel partners, and therefore the discussions we can have, and therefore the programs that we can run, you know, is not that easy for a competitor to replicate.
You know, without going into the details of which, quote-unquote, "can be," replicated and whatnot, let me just sort of broadly leave you with that. Now, with respect specifically to your safety pen needle question, you know, we were the first to have, you know, both the front and back end. There aren't that many competitors out there that even have that feature. In certain markets, you know, we intend to use that differentiation to drive that conversion. You know, broadly speaking, look, over a hundred years of brand recognition, you know, when people walk into a pharmacy, they know the look and feel of the product they want. I mean, if you are injecting yourself several times a day, you can imagine why a person would be reluctant to change their brand.
If you have a pharmacist that is partnered with our company, right? Or a pharmacy chain that's partnered with our company, there are some unique opportunities that we have, that are gonna be hard for somebody else to copy.
All right. That's very helpful. Thank you for that. One quick one here, kind of on the future profile for the company. Were you able to offer any timelines on the patch pump? And secondly, as you think about moving into some of the latest technology in diabetes, do you intend to keep Embecta as an insulin delivery business? Or is there potential to move possibly further up the care continuum, possibly into, you know, diagnosis, monitoring, anything to help with kind of disease management? And thanks again for taking the questions.
Thank you, Marie. With respect to the timing of the patch pump, you know, I know there is gonna be eagerness around that, but at this point, you know, we really don't wanna speak about the timing, Marie. What we intend to do is, you know, as we continue to do development, we'll certainly speak more about it and provide more information as the development progresses. Forgive me for now, but let me just leave it for that without going into more detail. With respect to the technology, you know, as we think about the impact that Embecta can have on people who are living with diabetes, obviously we intend to have the widest possible impact we can. Now we want to do that while still leveraging the strengths we have, right?
Our commercial infrastructure, the fact that we are expert at high volume manufacturing and distribution. You know, as we become independent on April 1, we'll look for opportunities that allow us to really leverage the strengths that we have, where we can create value, certainly for our shareholders, but also improve the lives of our patients. You know, we will start with insulin administration, right? Because that's the core. Certainly we are going to keep our eyes wide open for other opportunities where we think we can leverage the strengths we can talk about and get that revenue growth growing again and create value and help patients.
Thank you.
Thank you. We currently show no remaining questions in the queue at this time. That does conclude our conference for today. Thank you for your participation.