West Pharmaceutical Services Q3 2022 Earnings Call Transcript

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Provided by Quartr
October 27, 2022

Key Takeaways

  • Proprietary organic sales grew over 11% ex‐COVID in Q3 but results fell short due to FX headwinds, a $20 M drop in COVID‐19 sales and ~$30 M impact from supply bottlenecks and mix‐shift productivity issues.
  • Transitioning resources from pandemic‐related vaccine stoppers to NovaPure plungers across more SKUs and customers caused HVP capacity constraints and lower throughput, which will persist in Q4 but are expected to be resolved early 2023 when new equipment comes online.
  • West lowered full‐year 2022 guidance to $2.83–2.84 B in net sales (organic growth ~7%), adjusted EPS of $8.15–8.20 and CapEx of $300–320 M, reflecting the capacity‐related headwinds and FX impact.
  • For 2023, management projects a ~75% decline in COVID‐19 sales to $90 M but expects positive organic growth overall as its non‐COVID base business grows in double digits, supported by a 20% year‐over‐year increase in committed orders.
  • Significant capital investments and strategic collaborations—such as the ReadyPAK system with Valor Glass and SmartDose approvals—remain on track to expand HVP capacity and capture future injectable drug demand.
AI Generated. May Contain Errors.
Earnings Conference Call
West Pharmaceutical Services Q3 2022
00:00 / 00:00

There are 9 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Q3 2022 West Pharmaceuticals Services Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being I would now like to hand the conference over to your speaker today, Quintin Lai, Vice President of Investor Relations. Please go ahead.

Speaker 1

Thank you, Gigi. Good morning, and welcome to West's Q3 2022 conference call. We issued our financial results this morning and the release has been posted in the Investors section on the company's website located at westpharma.com. This morning, Eric Green and Bernard Birkett will review our financial results, provide an update on our business, provide an update on our financial outlook for the full year of 2022 and an introduction to a preliminary 2023 outlook. There is a slide presentation that accompanies today's call and a copy of that presentation is available on the Investors section of our website.

Speaker 1

On Slide 4 is our Safe Harbor statement. Statements made by management on this call and in the accompanying Presentation contain forward looking statements within the meaning of U. S. Federal Securities Law. These statements are based on our beliefs and assumptions, Current expectations, estimates and forecasts.

Speaker 1

The company's future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results as well as those expressed or implied in any forward looking statement made here. Please refer to today's press release as well as any other disclosures made by the company regarding the risks to which it is subject, including our 10 ks, 10 Q and 8 ks reports. During today's call, management will make reference to non GAAP Financial measures, including organic net sales, adjusted operating profit, adjusted operating profit margin and adjusted diluted EPS. Reconciliations and limitations of the non GAAP financial measures to the most comparable financial results prepared in conformity to GAAP are provided in this morning's earnings release.

Speaker 1

I now turn the call over to our CEO, Eric Green.

Speaker 2

Thank you, Quintin, and good morning, everyone. Thanks for joining us today. We'll start on Slide 5. I'll begin by covering 3 main topics. 1st, examining the drivers of lower than expected Q3 results 2nd, examining the impact to Q4 and 3rd, providing color on our current view of market demand and projecting a preliminary sales outlook for 2023.

Speaker 2

Let's begin with Q3. As expected, we had a few drivers in the quarter that materialized. We had headwinds from FX. We had declining sales in contract manufacturing, and we had a decline in COVID-nineteen related sales of about $20,000,000 from last year. If we exclude the headwinds from COVID, proprietary organic sales grew over 11 percent.

Speaker 2

However, this performance was below our expectations for the quarter. When we provided guidance On the Q2 earnings call, we projected that we would be able to shift resources formerly dedicated to pandemic related production to other HVP products that are experiencing increased demand. Specifically, we plan to successfully address this transition by accelerating customer orders for NovaPure Plungers and Fulfilling customer HVP orders originally requested for this year, but pushed to 2023 because of longer lead times. These two factors were the underlying drivers to our guidance of strong double digit base organic net sales in Q3 and Q4. Instead, as the quarter progressed, we underestimated the complexity of the transition and were impacted with a series of setbacks related to capacity constraints and mix shift productivity.

Speaker 2

Much of our vaccine stoppers were going to fewer customers with fewer SKUs. This enabled high productivity and throughput With our HVP network, when transitioning to NovaPure Plungers, we now are addressing demand coming from numerous customers, Addressing drugs across numerous diseases and more SKUs. The end result is lower throughput through our existing HVP manufacturing sites. And compounding the situation further, as the quarter progressed, We had a reduction in capacity in our HVP operating network through a combination of equipment downtime and project delays related to the installation of HPP processing equipment. We estimate That the total negative impact to Q3 was $30,000,000 While we see these issues as temporary and expect full resolution in 2023.

Speaker 2

They will continue to impact us in Q4. As we look at the capacity constraints, We project that additional HVP processing capacity will come online early next year based on the timeline to install and validate the newer technology. Since we are already running at full capacity, we also are unable to address the additional demand All together, while we still expect our base business ex COVID To grow more than 10% in Q4, we will not be able to offset the expected $80,000,000 reduction and COVID-nineteen sales. While I'm disappointed that we're lowering our forecast for the rest of 2022, I want to stress That these issues are all supply related and not demand related. Moving to Slide 6.

Speaker 2

Our robust order book of committed orders excluding declining COVID-nineteen related demand grew 20% year over year. Our customers have reiterated that they're looking to West to deliver the critical components and devices to address the growing injectable drug demand. And we have several customers that have notified us of potential upside demand, especially for NovaPure Plungers Beyond our current order book based on future drug launches. As we look at 2023, we are confident and expect most of the capacity issues will be resolved early in the year. Taking a reasonable view on capacity expansion and customer delivery timing, Our preliminary look at 2023 includes the following projections.

Speaker 2

First, we now assume that COVID-nineteen sales will decline to a full year 2023 sales of approximately $90,000,000 or a 75% decline from 2022. This is based on current customer forecasts, which we believe assumes a continuation of current trends and COVID booster demand. We expect non COVID-nineteen overall base business to grow in the double digits and in excess of our financial construct of 7% to 9%. Bay's proprietary products are expected to grow in the low teens led by Biologics and we expect Centimeters sales to rebound to growth next year. Our participation rate in recently approved new molecular entities in the U.

Speaker 2

S. And Europe remains strong. Our components by West or our partner Daikyo are expecting almost all the biologics and biosimilars approved so far In 2022, a majority of small molecule is approved. Adding it all together, our preliminary view is that we will have positive organic sales growth in 2023 despite an anticipated decline of approximately $280,000,000 of COVID-nineteen sales. We will provide more detailed guidance on our Q4 call in February of next year.

Speaker 2

Now shifting to Slide 7 and some highlights from the quarter. I want to first thank our team members who continue to focus on our purpose An example of this dedication and resiliency was evident in the recent response to the hurricanes that devastated Puerto Rico and Florida. Despite the personal impacts to our team members, they ensure their plants continue to produce and ship product with minimal impact, Just another great testimony to the strength of our OneWest team. We continue to make good strides with the opportunity to improve at Home Management of Diseases. I'm pleased to share that earlier this month, our customer SC Pharmaceuticals received FDA approval For feroxx delivered via OnBody Infuser utilizing West Smart Doty OnBody Drug Delivery Technology.

Speaker 2

This brings us to 4 FDA approved drugs using our SmartDose technology. Our strategic collaboration with Corning is moving along. We anticipate that in Q1 2023 West's ReadyPAK system With Valor Glass vials, a ready to use sterile packaging system for use with NovaPure Stoppers will be available to customers. Lastly, our West experts are pleased to be back in person at recently held PDA Conference and upcoming CPHI Worldwide showcasing Our leadership with new scientific insights and technical developments across our portfolio of high quality drug delivery and devices. Moving to Slide 8.

Speaker 2

With the capital spending investments initiated in 2020, with a larger capacity expansion, We continue to drive forward to complete the installation of our 2021 expansions and initiate the next tranche of investment earlier this year. You can see from the pictures how impressive the ongoing expansions are across our sites. While they do not happen overnight, We are making good progress and expect all these investments will result in several 1000000000 units of increased capacity for HPP Components. Now I'll turn our call over to Bernard. Thank you, Eric, and good morning.

Speaker 2

So let's review the numbers in more detail.

Speaker 3

We'll first look at Q3 2022 revenues and profits, where we saw mid single digit organic sales growth, Led by performance in our Biologics and Generics market units. I will take you through the profit drivers in the quarter as well as some balance sheet takeaways. And finally, we will provide an update to our 2022 guidance. First up, Q3. Our financial results are summarized on Slide 9 The reconciliation of non U.

Speaker 3

S. GAAP measures are described in Slides 18 to 21. We recorded net sales of 686 $900,000 representing organic sales growth of 4.3%. Looking at Slide 10, Proprietary Products sales grew organically by 5.5 percent in the quarter. High Value Products, which made up approximately 72% of Proprietary Product Sales in the quarter grew mid single digits and had growth across our biologics and generic market units in Q3.

Speaker 3

Looking at the performance of market units, the Biologics market unit delivered mid single digit growth. We continue to work with many biotech Biopharma customers were using West and Daikyo high value products. The generics market unit also experienced mid single digit growth led by sales of Westar Components. Our pharma market unit saw low single digit growth with sales led by high value products including NovaPure and West And contract manufacturing declined 1.2% for the 3rd quarter Due to a reduction in sales of components for diagnostic devices, we recorded 268,000,000 dollars and gross profit $20,200,000 or 7% below Q3 of last year. And our gross profit margin of 39% 180 basis point decline from the same period last year.

Speaker 3

We saw a 2% increase in adjusted operating profit $186,400,000 recorded this quarter compared to $182,800,000 in the same period last year. And our adjusted profit margin of 27.1 percent was a 120 basis point increase from the same period last year. Finally, adjusted diluted EPS declined $0.03 for Q3. Excluding stock based compensation tax benefit, EPS increased by approximately $0.05 and foreign currency negatively impacted our EPS by approximately $0.16 in the quarter. Let's review the drivers in both the revenue and profit performance.

Speaker 3

On Slide 11, we show the contributions to sales decline in the quarter. Volume and mix decreased by approximately $1,000,000 in the quarter, net of approximate $20,000,000 decrease in COVID sales. Sales price increases contributed $31,100,000 or 4.4 percentage points in the quarter. Foreign currency generated approximately $49,800,000 headwind on our revenue in the quarter. Looking at margin performance, Slide 12 shows our consolidated gross profit margin of 39% for Q3 2022, down from 40.8 percent in Q3 2021.

Speaker 3

Proprietary Products 3rd quarter gross profit margin of 43.6 2 70 basis points lower than the margin achieved in the Q3 of 2021. The decline in Proprietary Products gross profit margin Was caused by a few key factors. Delays in equipment expansion projects, which led to production bottlenecks in certain Meeting certain customer demand. Customer demand mix shift led to a greater than anticipated impact due to the delays mentioned above as well as continued inflationary pressures on our plant costs, including raw materials, labor, Overheads and Transportation. Partially offsetting these headwinds on our margin were sales price increases 180 basis points of benefits associated with one time fees from COVID supply agreements.

Speaker 3

Contract Manufacturing 3rd quarter gross profit margin of 17.3% was 120 basis points above the margin achieved in the Q3 of 2021. The increase in margin is largely attributed to price increases in the period and production efficiencies. Now let's look at our balance sheet and review how we've done in terms of generating more cash for the business. On Slide 13, we have listed some key cash flow metrics. Operating cash flow was $493,200,000 for the 9 months ended September 2022, An increase of $70,000,000 compared to the same period last year, a 16.5% increase.

Speaker 3

Our operating cash flow in the 9 month period benefited from our working capital performance. Our Q3 2022 year to date capital spending was $189,700,000 $12,800,000 higher than the same period last year. Working capital of approximately $1,270,000,000 at September 30, 2022 increased by $129,000,000 from December 31, 2021, primarily due to increase Our cash balance at September 30 of $729,000,000 It was $33,600,000 lower than our December 2021 balance. The decrease in cash is primarily due to our share repurchase program, A $43,700,000 scheduled payment of debt principal and interest in the 3rd quarter and higher CapEx, offset by our operating cash flow in the period. Turning to guidance, Slide 14 provides a high level summary.

Speaker 3

We are updating our full year 2022 net sales guidance and expect net sales to be in a range $2,830,000,000 to $2,840,000,000 compared to a prior guidance range of $2,950,000,000 to 2,975,000,000 There is an estimated 4th quarter headwind, dollars 60,000,000 based on current foreign exchange rates. We expect organic sales growth to be approximately 7% compared to prior guidance of approximately 11%. We expect our full year 2022 adjusted diluted EPS guidance to be in a range of $8.15 to 8.20 Compared to a prior range of $9 to $9.15 this revised guidance includes Our $0.16 EPS positive impact of tax benefits from stock based compensation during the 9 month period. Also, we are updating our CapEx guidance to $300,000,000 to $320,000,000 compared to a prior estimate of $380,000,000 for the year. There are some key elements I want to bring your attention to as you review our guidance.

Speaker 3

Estimated FX headwinds on EPS in the 4th quarter was an approximately $0.17 headwind. We expect full year COVID-nineteen related sales to be approximately $85,000,000 lower than 2021 sales, unchanged from our prior guidance, and our guidance excludes future tax benefits from stock based compensation. I would now like to turn the call back over to Harry.

Speaker 2

Thank you, Bernard. To summarize Slide 15, looking ahead With a sharpened focus, we continue to ensure our growth strategy is bringing value to our customers. Our committed order book remains robust. We continue to capture the benefits of the globalization of our operating network and delivering products in this complex environment. And we're continuing to drive forward the capital investments across our operations to meet current and anticipated future growth.

Speaker 2

Gigi, we're ready to take questions. Thank you.

Operator

One moment please for our first question. Our first question comes from the line of Paul Knight from KeyBanc.

Speaker 4

Hi, Eric. On the CapEx, it's now $300,000,000 to $320,000,000 versus $380,000,000 prior. Is that a signal that you see lower demand? Is it difficulty getting equipment? What's behind that lower CapEx guidance?

Speaker 2

Yes, Paul, the lower CapEx guidance is really Two things. 1 is delivery of equipment has been delayed in a couple instances and also Longer duration of capital build up projects. So we're seeing that as the impact, not demand. We still need the capital In place, it's really getting caught up to the demand we have in our hands today.

Speaker 4

And then you mentioned that the transition from Among COVID and a few customers to many customers on the plunger side, Are there also some we've also seen some huge prescriptions out of recent approvals. Are those also surprising you in terms of some of these large prescription trends that are being seen in the market?

Speaker 2

Yes, Paul. That's one of the drivers of the healthy order committed order book. And that is particularly in the biologics area, we're seeing outsized growth than we anticipated working with our customers.

Speaker 4

And last on the plunger side, where will that product be made?

Speaker 2

Well, we have really 5 key high value product plants. The 2 that have probably the most constraints right now are here in the United States, Kinston, Jersey Shore. And we're currently working to have that resolved as we speak.

Speaker 5

Okay. Thanks.

Speaker 2

Okay. Thank

Operator

you. Thank you. Our next question comes from the line of Larry Solow from CJS Securities.

Speaker 5

Good morning, guys. Thanks for taking the questions. I guess, first question, Eric, is just

Speaker 2

I know you normally,

Speaker 5

I guess, do give some a little bit preliminary outlook this time of year, but just sort of trying to gauge at your confidence level, obviously, a little bit of A surprise or in terms of looks like customer inventory management is skewing your numbers a little bit. So and obviously there's some of the capacity issues. Just curious like your confidence level today to give pretty good guidance for next year, Some nice clarity there on the revenue side. Is it just you felt like you had to put that out today or what kind of gives you that extra confidence sort of in a Looks like a little bit of a challenging short term period.

Speaker 2

Yes, Larry, thank you for the question. So, no, there's 2 things To give you insights on one is, when you think about inventory management, the only part of our business where there's fluctuation, I would say, is around the COVID-nineteen vaccines. That has been quite volatile in the last several months. And I would argue the transition to lower Volume has been a little bit faster than we anticipated. But when it comes to demand for our other products, particularly the base, Think about our high value products, we're not seeing that inventory management.

Speaker 2

In fact, just meeting with customers more recently, they are Very keen for us to get the installed equipment that's currently being worked on and validated And up and running to really alleviate some of the bottlenecks that we have today. So we don't see that large Any major movement. We did, however, for clarity, I did say in the script that as we went through 2022, our lead times were Because of the demand we had on COVID at the time, and therefore, we had orders that we were committing to customers in early 2023. But that wasn't driven by any inventory management. That was driven by our visibility to make the order in a timely fashion.

Speaker 2

Now on the second part this is Larry. The second part on the on giving guidance or giving visibility of sales, I think it's important To give context with what we just described about installation capacity and the current demand to give visibility of what we're seeing that's going into 2023 with a high degree of confidence.

Speaker 5

Got it. Okay. I appreciate that color. And it sounds like you're there's no real change, it sounds like in terms of customer demand and you guys are continuing obviously To build out capacity, it doesn't feel like it just feels like it's a completely a supply issue. Is that Fair to say, with no ambiguity?

Speaker 2

Yes, Larry, that's fair to say. So as we transition from very long runs of NovaPure Stoppers Shorter runs of Novopur plungers as an example. The equipment that we had intended to be ready to go halfway through this year, which is That's the delay that we've been discussing, has caused that mix shift lack of productivity. And so once that's up and running, we will be in a good position to fulfill those orders in a timely fashion.

Speaker 5

Okay, great. And just last question perhaps for Bernard. And I know you guys are not ready to a little early on giving full guidance. But in terms of just High level margin outlook, what needs to kind of go right or wrong? What could happen?

Speaker 5

Could you keep margins flat in a with overall revenue growing, although your COVID probably little higher margin Revenue coming down, is that from a very high level, is that you think feasible?

Speaker 3

Yes. Just on the margin, we'll provide more color on the margins and earnings on our usual timing on our Q For a call here in February, but there are a number of things that we are monitoring really closely just like everybody else at the moment. We're looking to figure out how FX is going to settle in for early 2023. And it's really it's too early to make a call on that given the volatility that we're seeing today. And then secondly, We're looking at monitoring the inflationary costs right across the spectrum for materials, energy, labor.

Speaker 3

And again, It's early to make a call on many of those. And then thirdly, we're in the process of preparing our price increases for next year, Especially in light of that second topic around the inflationary costs that's evolving. And so then the 4th point, we'll examine again how fast we can get that extra capacity online to generate those Demand is currently demand at HPP sales. So if we can do it sooner than our guidance, there's upside there to our sales and associated profit With that, the growth in our base HVP business and HVP margins that will come with that, We're looking to offset that decline around C19, but again, we have to manage through a lot of these Issues at the moment. So but the big positive for us is the demand is there and we're seeing increasing demand around high And particularly around plungers that Eric just mentioned.

Speaker 3

So as soon as we are on that call, we'll give you more update.

Speaker 5

Yes, fair enough. I appreciate those points. Thanks guys.

Speaker 2

Thank you, Larry.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Derik De Bruin from Bank of America.

Speaker 6

Hi, good morning.

Speaker 5

Good morning, Andrew.

Speaker 6

So just like clarify the comment. I mean, it's You're talking about seeing positive organic revenue growth next year. I mean is that are we talking 1% or are we talking Yes, sort of back to the 7% to 9% range. And along those lines, you're to get to positive that sort of implies that your Overall HVP, next year proprietary products next year have to grow well in excess of That's 7% to 9% range. I mean, are those can you just sort of provide a little bit more color in terms of how we should think about it?

Speaker 6

I mean, that's a big range to sort of think about.

Speaker 2

I'll start and Vernon, if you want to add. So you're right, the non COVID related base business in Proprietary is going to have very strong double digits and it's been led by biologics, but we're also seeing strength in both generics and pharma, but Key drivers can be the biologics in the portfolio that will support that is mostly around our HVP, Higher end of the portfolio, NovaPure and Flourotech, and particularly around plungers. Bernie, you want to give more color?

Speaker 3

Yes. As Eric said that, we would expect to see on our base business double digit growth And that's within that base, that's going to be north of our construct that we put out there. So we're Looking at that base business to be able to offset the C19 and decline that we potentially could see here. And then, again, looking at the timing of capacity, there could be some upside there also for us.

Speaker 6

Got it. And back to the margin question, I mean, it's I mean, we sort of look at the I guess, it's a question of What's the worst case scenario that you're sort of looking at for next year? I mean is there a situation where you can't get the capacity online, further push out? I guess there's some fear that the 4th quarter number that you put up, if you sort of annualize that going into next year, It's pretty ugly in terms of an EPS perspective. I mean is that a worst case scenario?

Speaker 6

I just sort of help us sort of understand what the parameters are around The risk to you not being able to bring capacity online and going back to sort of like the margin profile, Yes, sort of thinking about how this all goes through?

Speaker 3

Yes, on the getting that capacity online, That's actually in progress. And as we mentioned in the comments at the start, we would Expect to see that early 2023. So we are reasonably confident around having that uplift.

Speaker 6

Got it. And just to sort of reiterate, read at the point, That you're not seeing any inventory related issues. But can you give us sort of like any indication of what some of the drugs you are you're scaling up for? Are you involved in some of the new obesity drugs that are coming up and coming online? Just Give us a sense of where some of the demand is coming from.

Speaker 2

Yes. I'll give you a couple of areas. We don't give specific customers or drug molecules, Unless our customers will articulate that publicly, but they do tend to be First of all, we're seeing as indicated a little bit earlier, successes of very drug launches, particularly in biologics that were over the last few years. That's quite positive. We are obviously in discussions around the obesity drug launches They're being looked at in the marketplaces.

Speaker 2

Diabetes, obviously, those are the key large volume areas That we're West is part of those conversations. But I go any further into specific drug molecules, specific customer that would be We just simply don't go down that path.

Speaker 6

Thank you. I'll get back in the queue. Thanks.

Operator

Our next question comes from the line of Dave Windley from Jefferies.

Speaker 7

Hi, good morning. Thanks for taking my questions. Burns, you mentioned in your prepared remarks, I think I kind of missed it, but 180 basis points In reference to COVID supply agreement and we had in our notes that there was some carryover take or pay related Revenue or payment that you were expecting, had it in 2Q, expected some again in 3Q. Was that the same thing? And could you elaborate,

Speaker 3

Yes. It was the same. It was relating to The same customer had to get split over 2 quarters. So that's And then there were some other smaller bits that were not really material, but it was primarily related to one customer.

Speaker 7

And the 180 basis points, I missed the detail that was benefit to gross margin. What was the 180?

Speaker 3

Yes, it was to gross margin.

Speaker 7

Yes, okay. In thinking about your 4th quarter guidance And kind of dovetailing on both Derek and I think Larry's questions on margin. It looks like the 4th quarter Gross margin proprietary product is probably down in the mid-30s, maybe lower. And so I wondered if you could help us to understand, is that just basically Unutilized or underutilized capacity, because so much COVID is coming out and before you're really able To ramp high value for these other products, sounds like plungers mostly, or what other Factors should we be thinking about relative to 4th quarter margin and how much that does or does not Set the baseline for thinking about 2023.

Speaker 3

Yes. So in the Q4, it's a carryover from The issues that we experienced in Q3 with the delays and getting equipment in place and then the impact that's having on Our throughput and then also been able to work through this mix shift change at the same time. When we layer in The capacity in early 2023 and that will resolve a lot of that problem. So it's really down to having that increased capacity and throughput. So we don't believe it will reoccur.

Speaker 7

So Pardon the follow-up. So I know you probably don't want to get into too much operational minutiae, but Adding capacity doesn't sound like something that levers margin. That sounds like something that adds more cost. It seems like you would want more volume on the same capacity to get the margin back up. So maybe you could help us to understand Kind of how that flows and how that works?

Speaker 3

Yes. So it's not it's actually going to Enable us to clear more products through our end of line, so the capacity will actually help our HPP sales And help distribute fixed costs and improve our absorption. So it's not that we're going to layer in more cost It's going to be detrimental. It actually gives us the ability to sell more high value products and get it through our plants actually quicker, so we can realize those revenues faster.

Speaker 7

And zooming out a little bit on high value, I think We've probably been slow to absorb it in the market, but your COVID product mix, you'd consistently highlighted that Flurotech and NovaPure were Popular in that market or to those customers. It sounds like NovaPure is You're still calling out NovaPure and NovaPure Plungers. I'd ask if we should be thinking But those plungers are purely NovaPure if it's more of a mix. But the general question here is, how should we think about The mix within high value products, as you move out of a COVID heavy period and into this period, where as you described the customers and the SKUs are much broader.

Speaker 2

Yes. So when you look at the portfolio, It's going to be mostly you're right. So when you look at COVID-nineteen, most of it is NovaPure and Floratec, stoppers and a high Nice margin associated to that. And when you think about the plungers demand that we currently have, it is a mix, But mostly it's NovaPure. And that is when you think about the investments we're making right now, it is around that NovaPure corridor.

Speaker 2

And so some are laminated, some are not laminated, but it's a NovaPure platform that we're working with.

Speaker 7

Okay. And then a final question for me. You mentioned the Valor the packaged Valor go to market Product

Speaker 3

or system

Speaker 7

is available in January, which strikes me as Pretty early, pretty quick. So good news there. But I guess I wanted to ask what does availability mean? What does that start some kind of early stage development sampling and testing or what does that availability really mean?

Speaker 2

Yes, that's early stage. When you think about one of the benefits we have with our ReadyPac Portfolio is that it has been known to be a great accelerator of seeds in the market. So particularly around the smaller pharma and Smaller Biotechs, they're looking for a off the shelf solution and we're able to provide it with all the technical data to support it. So this is feeding the pipeline large and small customers, and it's really around the early drug development phase. Just want to use this as an example as when we launched NovaPure in 2016 timeframe, Our avenue was through the ReadyPac, same channel, same approach, seed in the market And today, You can sense from this call, we're spending a lot of time talking about NovaPure becoming somewhat now the new standard of biologics.

Speaker 2

That's the intent with the collaboration between Corning and West. And I'm very pleased Both technical teams are really continuously driving that differentiation of what this means in the market for our customers and ultimately the patients. So It's early stages, but we will keep you updated, but I'm excited about the launch in the 1st part of the year.

Speaker 7

Got it. Thank you.

Operator

Thank you. One moment for our next question.

Speaker 4

Our next question comes from the

Operator

line of Jacob Johnson from Stephens.

Speaker 8

Hey, thanks. Good morning. Maybe a follow-up on Darragh's question around kind of 2023 revenue growth. Obviously, a little bit of a change this morning in your 2022 kind of revenue dollar expectations versus where you were 3 months But that seems to be due to some kind of one off issues. Is there any change to kind of your 2023 expectations today versus Where you were a couple of months ago because obviously as we think about 2023, you will have a little bit of an easier comp Given kind of the revenue decline in the 4Q, so I'm just kind of curious how much of that strong growth next year is some of that's easy comp versus kind of strong demand.

Speaker 8

I don't know if that's possible to answer, but I'll try asking.

Speaker 2

No, thanks, Jacob. So I think there's a couple of levers to look at. One is this We'll put COVID to the side after saying that I think in the last call we talked about roughly around 50% reduction In 2023 over 2022, right now what we're saying is about a 75% reduction. So that equates to that $280,000,000 We discussed on the growth, the airline growth of the business, we were relatively the same as what we were Looking at about mid last year, but maybe a little bit stronger than the biologics than we anticipated. So net net about the same, I would say.

Speaker 2

If we are able to get capacity online sooner, I can assure you that we're laser focused on really those two sites right now to get this equipment validated with our customers, So we can produce product, but we're just conservatively saying right now, we're looking at a benefit of early 2023. If we can get on in the next several weeks, we will do so because we do have demand and we have customers Asking us to produce as much as we can in the short term. I think one last thing about The last change I would say is small piece, but the Centimeters returning to growth. We didn't Really talk as much about that last quarter, but we're seeing that starting to come back to that mid single digit type corridor, It's not a little bit better for next year. So that's where we stand with kind of the changes from 3 months ago.

Speaker 8

Okay. Super helpful, Eric. And then just, I know COVID is going to be a smaller piece of revenue next year, but, on kind of The transition that single dose vials are prefilled syringes, I think Pfizer highlighted some of this in an announcement last week. Just curious your latest thoughts on the shift towards single dose vials in terms of kind of timing and the mix COVID doses that could be single dose, maybe as we look into next year or what's contemplated your guidance?

Speaker 2

Yes. Just a quick comment. I mean, if you talk about a lot of variability, that's one area where there's a lot of variability in COVID in the last 6 months. So yes, there is a if you think about there is a transition trying to get lower doses per vial and a Single dose use obviously proof of syringe. That shift is still occurring, but it's not as fast as we anticipated.

Speaker 8

Okay, got it. Thanks for taking the questions.

Speaker 7

Thank you.

Operator

Thank you. I would now like to turn the conference Back over to Quintin Lee live for closing remarks.

Speaker 3

Thank you,

Speaker 1

Gigi. Thank you for joining us on today's conference call. An online archive of the broadcast will be available for 3rd days on our website. We will now

Speaker 8

begin the call to open the call to questions.

Speaker 1

That concludes today's call. Have a nice day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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