Chief Financial Officer at Organon & Co.
Thank you, Kevin. As I've done in previous quarters, I'll remind you that our results prior to spin-off are presented on the carve-out basis of accounting, which is a GAAP convention and it's not intended to present results as if Organon were a standalone company. So, I want to be clear, as we discuss results, that because our spin was June 2, it won't be until the third quarter of 2022 that we can draw a true apples to apples comparison to prior year results where all P&L line items represent post-spin standalone financials for Organon. So, until that time, revenue is where we'll have the best comparability to prior year periods, and that's where we'll start the financial discussion.
So turning to Slide 7. Fourth quarter revenue of $1.6 billion was down 1%, both as reported and at constant currency. We saw solid performance from our growth franchises in women's health and biosimilars and that was offset by the decline in Established Brands as well as a decrease in supply sales. As Kevin mentioned, the underlying portfolio of marketed products performed well. It grew 1% in the fourth quarter with volume and price contributing favorably and offsetting headwinds from LOE and VBP.
And on Slide 8, you can see this depicted graphically on the revenue bridge. So, in the fourth quarter, the year-over-year negative impact from LOE was approximately $50 million. The impact from LOE moderated in the back half of the year as the erosion curves continue to flatten for Zetia in Japan and NuvaRing in the US. And going forward, our LOE risk is very limited with remaining total exposure of about $350 million to $450 million over the next four years combined.
Continuing to read across the waterfall chart, and as Kevin mentioned, the Established Brands portfolio has exposure to VBP in China. The impact to fourth quarter sales was approximately $35 million compared with the fourth quarter of last year and was associated with the third round of VBP. And that's the largest one so far and that included four of Organon's products, SINGULAIR Paediatrics, PROSCAR, PROPECIA and ARCOXIA.
We saw COVID-19 impact to our business in the fourth quarter. And while that was a drag on our business relative to where we believe our run rate should have been, the impact was actually less than what we saw in the fourth quarter of 2020. So this ends up being a slight favorable comparison year-on-year. Volume grew in the fourth quarter, and that mostly offset LOE and VBP impacts. Volume growth came from Nexplanon's strong performance as well as continued growth in biosimilars and growth in Established Brands in China for those products not impacted by VBP.
The other bucket primarily represents supply sales to Merck and other third parties, which consists of lower margin sales of pharmaceutical products under contract manufacturing arrangements. For the full year 2021, supply sales contributed about $80 million to revenue growth but was down about $30 million in the fourth quarter. Full year 2022 supply sales will look much more like an extrapolation of the fourth quarter and will contribute an even smaller amount to total revenues than we saw in 2021, mostly because we expect volumes under these arrangements to decline. And finally, foreign exchange translation added about 0.5 percentage point of favorability for the quarter.
So now, let's take a look at performance by franchise. We'll start with women's health on Slide 9. Our women's health business was up 6% both as reported and at constant currency in the fourth quarter. For the full year, the franchise was up 4% as reported and 2% at constant currency. Nexplanon had a remarkable fourth quarter, revenues of $226 million, up 37%. But for the reasons Kevin explained, Nexplanon's quarterly growth in 2022 will most likely vary quarter-to-quarter, primarily based on how the impacts of COVID and the timing of tenders influence the individual quarters of 2021. And this will be most prominent in the first quarter of 2022, which will be lapping a tough comparison to the prior year period when we saw some initial vaccination optimism driving physician demand in the beginning of last year. For the year just completed, Nexplanon grew 12% at constant currency. We expect similar growth in 2022 with more than half of that growth expected to come from outside the United States.
Fertility was flat in the quarter. The US fertility business grew 10%, but that was offset by China and Europe, which had very strong fourth quarters in 2020, as fertility patients outside the US and especially in Europe, returned to clinics relatively faster than US patients did. For the full year, the fertility portfolio grew double digits on a percentage basis. Volume growth came from an increase in demand from new accounts as a result of increased selling efforts as well as from the macro trend of patients returning to fertility clinics for this time-sensitive treatment.
Overall, the global fertility market has very attractive fundamentals, including global macro trends towards advanced maternal age as well as an increasing number of government initiatives around the world to address future negative economic consequences of lower birth rates. Now together with our increased focus on this portfolio, these trends set us up nicely to expect another year of double-digit growth from fertility in 2022.
Now, turning to biosimilars on Slide 10. In the fourth quarter, biosimilars grew 14% at constant currency and grew 25% for the year. Renflexis and Ontruzant are our two largest offerings globally, and they're both offered in the US as well. Globally, Renflexis grew 29% ex-FX in the quarter and 36% for 1the year. The infliximab market in the US itself is growing about 10% per year, and biosimilar acceptance and unit growth within the market is also increasing, driven by some recent payer updates and increased physician comfort with transitioning stable patients.
Ontruzant, which was launched in the US in July of last year, was down 30% in the fourth quarter but up 7% for the full year ex-FX. Ontruzant continues to have good uptake in the United States, but in the fourth quarter, growth in the US was offset by a decrease in EU due to increasing competitive pressures in that region and Latin America's timing of tenders and specifically in Brazil. With about half of our biosimilars business outside of the US and also depending upon the timing of tenders, we expect some volatility quarter-to-quarter in the biosimilars franchise. But for the full year 2022, we expect that our portfolio of five biosimilar offerings will continue to deliver double-digit growth over the full fiscal year.
On Slide 11, you can find details for the Established Brands portfolio for the quarter and the year, and Kevin largely covered the highlights for Established Brands, but two points I would add. First, Established Brands was down 13% for the year on a constant currency basis, that broken out by volume and price, 10% of the decline was volume and 3% was price. And if we exclude volume loss associated with LOE, that volume decline is cut in half to about 5%. As we move out of 2021 with significant LOE risk behind us, combined with the renewed investment management focus in the Established Brands portfolio, we believe we can significantly flatten Established Brands revenue CAGR to the point of being almost flat over the intermediate term, and our fourth quarter performance provides support for this view.
Second point is on Slide 12. About 75% of Organon's business is outside the United States and within Established Brands it's even higher, about 90% ex-US. The LOE of Zetia in Japan influenced our Asia Pacific performance, as did the termination of a contract for Rosuzet in Korea. But to emphasize Kevin's earlier point, almost flat performance in China for the year is a win, given the pressures of VBP.
Now, turning to our non-GAAP income statement on Slide 13. This slide shows our summary income statement for Q4 and full year versus the respective prior year periods across a range of GAAP and non-GAAP P&L line items. We already cautioned against the limited usefulness of comparing post-spin period to pre-spin period, so I would choose to focus attention on the full year 2021 column and on the key metrics circled in green.
Revenue of $6.3 billion, adjusted gross margin of 64.7% and adjusted EBITDA margin of 37.7%. For these key metrics, we completed 2021 positively, either in the middle or the high end of the guidance ranges we provided before the spin. The point here is that we launched Organon with a very good sense of the business that we have and the business that we're trying to build. And we delivered on that in our first few quarters.
A few words on debt capitalization on Slide 14. As a result of the spin-off in June, we separated from Merck with a pro forma net leverage ratio of approximately 4 times. One of our capital allocation priorities is to reduce this figure down below 3.5 times. We plan to do that through EBITDA growth, combined with reduction of debt via voluntary prepayments. During the fourth quarter, we made a $100 million voluntary prepayment on our US dollar Term Loan B. So, with 2021 adjusted EBITDA of $2.4 billion, bank debt of $9.1 billion and cash on the balance sheet of $737 million, that would put our net leverage ratio just above 3.5 times, which is a modest improvement over last quarter and overall solid progress towards our net leverage goal.
Now having just mentioned capital allocation, let me reiterate Organon's capital allocation priorities. Our first priority is servicing the dividend. With a target of 20% of free cash flow, the dividend strikes an appropriate balance between reinvesting for growth and delivering near-term value to shareholders. Our second priority is organic growth, which would include life cycle management opportunities for existing products within our portfolio, supported by capital deployed in our manufacturing plants. On the latter, we expect to see annual capex in the range of 3% to 4% of revenue on an ongoing basis, excluding separation costs.
Now, because these first [Technical Issues] generated cash flow for our third capital allocation priority, which is really a tie. It's a tie between the execution of external growth plans to develop a pipeline of new product opportunities, and we're balancing that against discretionary debt reduction just like we did in the fourth quarter. We're committed to maintaining our BB/Ba2 parent rating. We will continue to make progress towards a net debt to adjusted EBITDA ratio of below 3.5 times. [Technical Issues] really a tie and it's a tie between the execution of external growth plans to develop a pipeline of [Technical Issues] including 2022 guidance discusses landed full year 2021, relative to the guidance we have provided.
So, the full year 2021 revenue bridge on Slide 15 illustrates what we said since the spin-off, that 2021 would be an inflection year and the last year for which our product portfolio would be subject to significant LOEs. You can see that in the first bar that LOE was clearly a significant headwind to growth in 2021, with approximately $300 million of impact compared with 2020. VBP was also substantial at approximately $170 million over last year.
COVID remained a factor in 2021 with about $400 million of impact to the business during the year, higher than 2020 by about $20 million. Also, as we expected, pricing erosion modestly offset volume growth. But the key takeaway from this chart is that we had good visibility into the business, and all of these bars fell squarely within the ranges that we had communicated.
On slide 16, we bridge 2021 revenue of $6.3 billion to our 2022 guidance range of $6.1 billion to $6.4 billion. At first glance, 2022 revenue guidance looks very similar to 2021, but the underlying business is actually much better positioned than it was a year ago. And beginning with the first bar, in 2022, we expect about $100 million impact from LOEs or a third of what it was in 2021. And this is related to NuvaRing as well as the potential for a generic competitor for Dulera in the U.S.
Volume-based procurement in China will continue to have an impact, about $100 million in 2022, and we're managing that by strategically moving exposed brands into the retail channel. And given the majority of our revenues outside the United States, we expect about $200 million of price erosion in 2022. And this level of price movement is aligned with historical pricing trends for the global markets that we've been selling into for many years.
And if you look at the green bar, you see that we're expecting very solid growth in volume in 2022 between $600 million and $700 million that would more than offset the other business factors I just mentioned. So that means we expect volume growth to grow by about 10%. And by the way, we estimate that less than 20% of that growth is coming from COVID recovery. The majority of the volume increase is coming from growth across multiple pillars, Nexplanon, biosimilars, fertility, China retail and to a smaller extent, recent business development activity, which is primarily the Jada postpartum hemorrhage device acquired as part of Alydia Health. And as an aside, the incremental contribution from reacquiring the marketing rights to Marvelon and Mercilon in certain Asian countries that we just announced, that's really immaterial to our consolidated financial reporting, and especially so for 2022 since we'll only see a partial year impact there.
As we keep moving to the right, you'll see a fairly sizable headwind from foreign exchange translation of $100 million to $200 million, which equates to a 200 to 300 basis-point headwind to revenue. This is largely a financial reporting dynamic. On an economic basis, we have natural hedges in place, including having the majority of our employees and all of our manufacturing plants outside the US as well as a meaningful portion of our debt denominated in euros. And these hedges help us manage our true economic currency exposure.
Our guidance range of $6.1 billion to $6.4 billion implies nominal growth of negative 3% to positive 1.5%. But adjusting for FX translation, let's call it, 250 basis points FX translation headwind at the midpoint, revenue growth on a constant currency basis would be more in the range of down less than 1% to up 4%.
And moving to the other components of guidance on Slide 17, you can see 2021 actual performance side by side with what we expect in 2022. As we move down the P&L, you'll notice consistency between the years. Guidance for gross margin in the mid-60% area, and that's in line with what we said and delivered in 2021. We're again guiding to mid-20s percentage of sales for SG&A in 2022. And I'd point you more towards our second half of 2021 non-GAAP SG&A spend as a percentage of revenue since that's the time period for which we were operating as a standalone company, and it's more indicative of a go-forward run rate.
Where you will see an uptick is in R&D expense, where we're expecting mid to upper single digits as a percentage of revenue. We are building a pipeline of assets that will set up the company for future growth. And we need to invest to support those programs and a key element of that investment shows up on the R&D expense line. That would bring us to adjusted EBITDA margin of 34% to 36%, and then you'll see that below the line items have remained very much in line with what we guided to in 2021.
So wrapping up the financial discussion, the business performed well during 2021, very much in line with how we thought it would. This is a durable predictable product portfolio with solid cash flow. We saw in 2021 growth in women's health and biosimilars, supported by the significant cash flow generated from Established Brands. And going into 2022, we see these trends continuing in these franchises.
The overall portfolio is significantly derisked with most LOE risk behind us. And we're really just getting started in terms of maximizing the potential within this portfolio, whether it's through uncovering opportunities in currently marketed products through the life cycle management programs that Kevin spoke of or through strategic business development that leverages our therapeutic expertise. And if for any reason the pace of acquisitions slows in 2022, we can always redirect surplus free cash flow to accelerate debt reduction.
And with that, we'll now turn the call over to Q&A.