Balaji Prasad: Thank you.
Operator: Our next question comes from the line of Chris Schott with JPMorgan. Please go ahead.
Christopher Schott: Great, thanks. Just two questions for me. Maybe the first one is, Matt, how should I think about EBITDA margins progressing beyond 2024? Just as a high level, is this 31% to 33% range a decent one to think about going forward or can we see margin expansion? So basically, some of the cost opportunities you’re talking about, are those largely captured this year? Is there more opportunity? And the second one for me was just on business development. Just what does the funnel look like for more, I guess, Emgality-type transactions out there? Is there a wide range of these deals that you can look at or are these more kind of one-off opportunities for the company? Thanks very much.
Matthew Walsh: So I’ll take the first part of the question. On margin expansion beyond 2024, I think you’ll see it come from potentially three places. We believe we can continue to grow revenues faster than our need to build the infrastructure around it. So we’ll get leverage over our fixed costs, similar to what we are starting to realize this year. Then over time, as I mentioned in the prepared comments, as we start to peel away all of our manufacturing from Merck, these are margin-up opportunities as they happen, that will be on a bit of a longer cycle time for those. And then I think as we roll out beyond 2024, we’ll have higher contribution in our revenue, our revenue mix from some of the newer things that we’re either onboarding now where we expect to be able to onboard, those will all be higher margin.
So we’ve got the potential there on product mix. Of course, that will depend on how fast other parts of our business grow, biosimilars, for example. And — so that product mix is a bit of a question mark, which will provide more clarity to as those time periods draw closer.
Kevin Ali: And Chris, great to hear your voice. And I will say that in regards to essentially to our BD component. If you think about the Emgality product in terms of launch in the European Union, we see that as essentially a $170 million peak revenue business. If you put all of the BD stuff that we’ve done, just the commercial stage assets that we’ve done since spin, we’re talking about — when you put all the peaks together, you’re talking about $750 million of potential, obviously, upside opportunities in terms of growth. We are working on a lot of generic — a lot of regional business development deals. I mentioned to you when I saw you in San Francisco that we’ve got some China for China deals lined up, we’ve got some European deals more lined up. So to answer your question, it’s not a one-off, there’s plenty in the queue that ultimately we can go after that are really nice opportunities for continuing revenue growth and EBITDA growth.
Operator: Our next question comes from the line of Karishma Raghuram with Goldman Sachs. Please go ahead.
Karishma Raghuram: Karishma on for Chris Shibutani. Thanks for taking the question. In regards to your women’s health branch, what are kind of the key positive growth drivers and what dynamics are weighing on market growth? How is Organon’s portfolio positioned to address these dynamics going forward?
Kevin Ali: Karishma, it’s — look, I mean, we’re very confident on what we’re going to do this year with our Women’s Health franchise. If I pull it apart, we decided to take a new kind of go-to-market approach to pricing for Nexplanon. We’re going to take full pricing this year. We’ve reduced our 340B voluntary discount. We pulled that. So there’s going to be a lot of reasons to believe the Nexplanon will continue to do very — this will be a strong year for Nexplanon globally because we don’t have some of the headwinds we started with last year. And ultimately, we’re in a good position, and Nexplanon itself has now taken over the number one position in the large segment in the United States, which represents about 70% of our business globally.
So we feel very good about that. Fertility. Fertility grew 9%, as I mentioned, high single digits last year and this year, we assume the same driven in large part by China and the U.S. We put the China and the U.S. businesses together, that represents about 60% of our overall business, but then we’ve got opportunities in some of the regions like the Lamera region, which we’ve had some recent launches and opportunities to continue to even drive hopefully beyond the high single-digit area, but that’s what we’re focused on right now. And you’re talking about Jada. Jada is — the opportunity there is to really — I mean, we’re at the steep end of the launch curve. We did very well with over $40 million of sales just in the U.S. We have opportunities to do two things with Jada to see it to continue to move to its peak, what I would consider global peak in the in terms of the $200 in terms of millions because now we’re launching in the EU this year sometime during the — between now and the end of the year.
We’re launching in a number of other emerging market countries. And so we have opportunities to really drive the EU. And then we got Brazil launch in the end of 2023, which is a very large and nice piece of business to get as well. So that’s Jada. And then when we talk about oral contraceptives, oral contraceptives continue, and we had — we brought back the Marvelon, Mercelon business in the Asia Pacific region, including China, Vietnam, Macau, and that continues to do well with more than 25% growth in 2023 and continuing double-digit growth that we see strong double-digit growth with that oral contraceptive franchise. So you put those things together, and you see that our women’s health businesses is diversified. It’s getting stronger. We had a launch of Xaciato.
It’s very small right now in the U.S. And then we’ll see how that comes through. But we’re in discussions right now with payers in order to get formulary acceptance. And hopefully, that will start to really kind of generate some nice additional revenue growth for the Women’s Health franchise as we go forward. So all of that is coming through. And then, of course, our pipeline is actually filled with some very nice assets. The first and foremost and probably the most important will be 6219, a very unique mechanism of action to treat. Nothing has been done before I like it to treat endometriosis. Our Phase II data will read out sometime next year, hopefully, in the first half of next year, and then we’ll have potentially an asset we can talk much more about in terms of really a breakthrough asset for the treatment of endometriosis.
Karishma Raghuram: Thank you so much.
Operator: I would now like to turn the call over to Kevin Ali for closing remarks.
Kevin Ali: Thank you. Thank you. We’re entering 2024. As you’ve heard from the discussion this morning, feeling very good about delivering our third year of constant currency growth as a stand-alone company. Nexplanon and Fertility are positioned for strong performance in 2024. We expect another year of double-digit growth in our Biosimilars franchise, and we continue to demonstrate our ability to really ensure continued performance of our established brands business. Look, the combined businesses generate what we expect to be close to $1 billion of free cash flow before onetime charges in 2024. This gives us ample financial flexibility to continue to service our dividend continue to execute on our business development agenda and to make progress towards achieving a net debt-to-EBITDA ratio of below four by the end of this year. I thank you very much, and we look forward to the next time we speak.
Operator: This concludes today’s call. You may now disconnect.
