What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-09 · 143 added, 160 removed, 195 unchanged (61% of the section changed)

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and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need.

Our team is focused on delivering growth by building a successful Purified Cortrophin Gel franchise, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our manufacturing capabilities.

Our four current pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, one is located in East Windsor, New Jersey, and one is located in Oakville, Ontario, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment.

On June 2, 2022, we announced that we intend to cease operations at our Oakville, Ontario, Canada manufacturing plant by first quarter 2023.

This action is part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021.

We have transitioned the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites and are on track to cease operations by the end of the first quarter 2023.

We are seeking to find potential buyers for the Oakville site.

Through research and development, acquisitions of businesses, acquisitions of Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”), product rights, and entry into agreements to obtain the distribution rights for various products, we have a commercial portfolio of 111 products with a wide variety of indications and a robust portfolio of pipeline products as of December 31, 2022.

Refer to our website at www.anipharmaceuticals.com for information on our products, including indications/treatments.

On November 19, 2021, we completed the acquisition of Novitium.

With operations in East Windsor, New Jersey, and Chennai, India, Novitium is a pharmaceutical company that specializes in development, manufacturing, and distribution of niche generic products.

Founded in 2016, Novitium has since developed a growing commercial product portfolio spanning a diverse range of dosage forms and therapeutic categories.

Unless otherwise required by the context, references in this Annual Report on Form 10-K to the “Company,” “we,” “us,” and “our” refer to ANI Pharmaceuticals, Inc., a Delaware corporation formed in April 2001.

Our principal executive offices are located at 210 Main Street West, Baudette, Minnesota, 56623, our telephone number is (218) 634-3500, and our website address is www.anipharmaceuticals.com.

The team is focused on delivering growth by scaling up the Rare Disease business through the successful launch of its lead asset, Cortrophin Gel, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our North American manufacturing capabilities.

The Company's three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment.

The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023.

This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021.

The Company has fully completed the transition of the products manufactured or packaged in Oakville to one of the three U.S.-based manufacturing sites.

On November 6, 2023, ANI Pharmaceuticals Canada Inc., a wholly owned subsidiary of the Company, entered into an agreement for the purchase and sale of the Oakville, Ontario manufacturing facility.

However, during December 3023, the agreement was mutually terminated.

In February 2024, the Company entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of 19.2 million Canadian Dollars, or approximately $14.2 million US Dollars, based on the current exchange rate.

The sale is expected to close in March 2024 ( see Note 19.

Subsequent Events, in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Re port on Form 10-K).

The Company's operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results.

In May 2023, through a public offering, the Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resul ting in net proceeds after issuance costs of $80.6 million.

We have a commercial portfo lio of 116 pro ducts with a wide variety of indications and a robust portfolio of pipeline products as of December 31, 2023.

This portfolio is the result of internal research and development, acquisitions of businesses, acquisitions of Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”), product rights, and entry into agreements to obtain the distribution rights for various products..

Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors.

Our overall strategy is enabled by an empowered, collaborative, and purposeful team with a high performance-orientation, Serving Patients, Improving Lives.

Our growth strategy is driven by the following key growth drivers:

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We have spent significant time, effort and resources in establishing our Rare Disease platform.

We acquired the NDAs for Cortrophin gel and Cortrophin-Zinc in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin active pharmaceutical ingredient (“API”), a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin gel fill/finish contract manufacturer.

We acquired the NDAs for Cortrophin Gel and Cortrophin-Zinc in January 2016 and executed long-term supply agreements with a supplier of our primary raw material for corticotrophin API, a supplier of corticotrophin API with whom we have advanced the manufacture of commercial scale batches of API, and a Cortrophin Gel fill/finish contract manufacturer.

During the second quarter of 2021, we submitted a Supplemental New Drug Application (“sNDA”) to the FDA.

multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.

On October 29, 2021, the FDA approved the Company’s sNDA for Purified Cortrophin Gel (Repository Corticotropin Injection USP) for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.

Cortrophin Gel is an adrenocorticotropic hormone (“ACTH”), also known as purified corticotropin.

During 2021 and 2022, we invested in leadership, expertise and infrastructure in the areas of commercialization of rare disease therapies and developed a launch strategy and commercial plan for this product.

During 2021 and throughout 2022, we hired a significant number of new employees and assembled and trained our Rare Disease field force.

During 2021 and 2022, we invested significantly in leadership, expertise and infrastructure in the areas of commercialization of rare disease therapies and developed a launch strategy and commercial plan for this product.

During this timeframe, we hired a significant number of new employees and assembled and trained our Rare Disease field force.

On January 24, 2022, we announced the commercial launch of Cortrophin Gel in the U.S as our foundational Rare Disease asset.

As a result of the build out of our Rare Disease team, our expenditures in support of these efforts were significantly higher in 2022 as compared to 2021.

We plan to continue to invest behind Cortrophin Gel and our Rare Disease platform in 2023 and beyond.

On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares.

We continued to invest in our Rare Disease team and support investments in Cortrophin Gel during 2023.

We plan to continue to expand our rare disease business through a combination of organic growth, as described above, and through acquisition.

While we continue to execute against our strategic initiatives that we believe will result in long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.

Strengthening our Generics, Established Brands, and Other segment through continued investment in our generic research and development capability and increased focus on niche opportunities

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The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabilities.

We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and Competitive Generic Therapy designation filings.

We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy ("CGT") designation filings.

Additionally, we will continue to seek opportunities to enhance our capabilities through strategic partnerships and acquisitions of assets and businesses.

On July 21, 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were commercial at the time of acquisition.

During 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were commercial at the time of acquisition.

During the second quarter of 2023, we acquired two ANDAs and one pipeline product from the Cha pter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates.

During the third quarter of 202 3, we acquired an ANDA and registered patents and pending patent applications from Slayback Pharma Limited Liability Company.

During the fourth quarter of 2023, we completed two additional asset acquisitions in which we acquired an ANDA from PAI Pharma LLC for one product, and also product rights for a separate product from Alvogen, Inc., which we plan to launch commercially in early 2024.

We have grown our established brand product offerings through acquisition.

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We are innovating in our go-to-market strategy through creative partnerships.

Our overall strategy is enabled by an empowered, collaborative, and purposeful team with a high performance-orientation.

Generic Product Development Considerations

We consider a variety of criteria in determining which products to develop, all of which influence the level of competition upon product launch.

We consider a variety of criteria in determining which products to develop.

These criteria include:

• Formulation Complexity.

Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are difficult to produce, including highly potent, extended release, combination, and low dosage products.

This ability to manufacture a variety of complex products is a competitive strength that we intend to leverage in selecting products to develop or manufacture.

● Patent Status.

We seek to develop products whose branded bioequivalents do not have long-term patent protection or existing patent challenges.

Our development and manufacturing capabilities enable us to manufacture pharmaceuticals that are differentiated and include high potency, modified release, combination, and hormonal products.

This ability to manufacture a variety of differentiated products is a competitive strength that we intend to leverage in selecting products to develop and commercialize.

• Market Size.

When determining whether to develop or acquire an individual product, we review the current and expected market size for that product at launch, as well as forecasted price erosion upon conversion from branded to generic pricing.

We endeavor to manufacture products with sufficient market size to enable us to enter the market with a strong likelihood of being able to price our products both competitively and at a profit.

When determining whether to develop or acquire an individual product, we review the current and expected market size for that product.

and competitive environment.

We endeavor to pursue products with sufficient market size to enable us to enter the market with a strong likelihood of being able to price our products both competitively and at a profit.

• Profit Potential.

We research the availability and cost of active pharmaceutical ingredients in determining which products to develop or acquire.

In determining the potential profit of a product, we forecast our

anticipated market share, pricing, including the expected price erosion caused by competition from other generic manufacturers, and the estimated cost to manufacture the products.

In determining the potential profit of a product, we forecast our anticipated market share, pricing, competitive environment and the estimated cost to manufacture the products.

• Manufacturing.

We generally seek to develop and manufacture products at our own manufacturing plants in order to optimize the utilization of our facilities, ensure quality control in our products, and to more closely control the economic inputs and outputs of our products.

We generally seek to develop and manufacture products at our own manufacturing plants to ensure quality control of our products, supply chain reliability and to more closely control the economic inputs and outputs of our products.

• Competition.

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We seek to develop products for which we can obtain sufficient market share and may decline to develop a product if we anticipate significant competition.

Our specialized manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies are able to compete.

In addition to laboratories that support the requirements of raw material, finished product, and stability testing, we have a 1,000-square foot pilot laboratory offering liquid, suspension and solid dose development capabilities.

This pilot laboratory offers a full range of analytical capabilities, including method development, validation and de-formulation, and is licensed by the Drug Enforcement Administration (“DEA”).

Finally, a separate development suite located within our high-potency manufacturing facility offers additional capabilities for product development.

We also lease a 968-square foot industrial space in Chennai, India where we perform research and development activities.

Products and Markets

A complete list of our generic and branded pharmaceutical products and descriptions is posted on our website, www.anipharmaceuticals.com.

In determining which products to pursue for development, we target products that are complex to manufacture and therefore have higher barriers to entry.

These factors provide opportunities for growth, utilizing our competitive strengths at the same time that they decrease the number of potential competitors in the markets for these products.

These markets currently include controlled substances, oncology products, hormones and steroids, injectables, and complex formulations, including extended release and combination products.

Controlled Substances

Schedule II controlled substances are drugs considered to have a high abuse risk but that also have safe and accepted medical uses.

In addition to our Schedule II products currently on the market, our pipeline includes ANDAs in this market.

One of our manufacturing facilities in Baudette, Minnesota and our manufacturing facility in East Windsor, New Jersey is licensed by the DEA for the manufacture of Schedule II controlled substances.

Oncology Products

Due to the capabilities of our containment facility and our expertise in manufacturing segregation, we are focused on developing and manufacturing niche oncology products (anti-cancer).

In particular, we are targeting products subject to priority review by the FDA, more specifically those with no blocking patents and no generic competition.

We currently have a variety of oncology products on the market.

Hormone and Steroid Drugs

The market for hormone and steroid drugs includes hormone therapy to alleviate menopausal symptoms in women, contraceptives, testosterone replacement therapies for men, and therapies for treating hormone-sensitive cancers.

Hormone Therapy (“HT”) has been a long-accepted medical treatment for alleviating the symptoms of menopause.

Initially, HT consisted of estrogen only but has evolved to include combination therapies of estrogen, progesterone, and androgens.

We target niche products in the HT and steroid product market for several reasons, including:

● Hormone and steroid products are a core competency based on our manufacturing and product development teams’ long history of manufacturing these types of products;

● The aging “baby boomer” population, of which women represent a majority, is expected to support continued growth in the HT market.

Our burgeoning injectable portfolio contains injectable ANDA products encompassing several key therapeutic areas.

Cortrophin Gel is our first branded injectable product.

We work with world-class manufacturing partners to support these efforts.

Complex Formulations

We have a range of complex formulation products currently on the market and a pipeline that includes various extended-release products and combination products.

Our manufacturing facilities provide a means of entering niche markets, such as hormone therapies, in which fewer generic companies typically compete.

Competitive Generic Therapy

The FDA Reauthorization Act of 2017, or (“FDARA”), created a new pathway by which FDA may, at the request of the applicant, designate a drug with “inadequate generic competition” as a competitive generic therapy (“CGT”).

The FDA Reauthorization Act of 2017 (“FDARA”) created a new pathway by which FDA may, at the request of the applicant, designate a drug with “inadequate generic competition” as a competitive generic therapy (“CGT”).

At the request of the applicant, the FDA may also expedite the review of an ANDA for a drug designated as a CGT.

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Our Novitium subsidiary has developed a strong track record of obtaining CGT approvals and we expect to continue to develop generic drugs under the CGT pathway.

Contract Manufacturing

We manufacture pharmaceutical products for several branded and generic companies, who outsource production in order to:

● Free-up internal resources to focus on sales and marketing as well as research and development;

● Employ internal capacity to manufacture higher volume or more critical products;

● Utilize our specialized equipment and expertise.

We currently anticipate that revenues from contract manufacturing arrangements will begin to decline as we focus our efforts on Rare Disease and leveraging our generic R&D and manufacturing platform for ANI labeled products.

In conjunction with our acquisitions of WellSpring and Novitium, we acquired WellSpring’s and Novitium’s pharmaceutical manufacturing facilities.

As a result of these transactions, we perform contract manufacturing in our Baudette, Minnesota and East Windsor, New Jersey facilities.

On June 2, 2022, we announced that we intend to cease operations at our Oakville, Ontario, Canada manufacturing plant by first quarter 2023.

This action is part of ongoing initiatives to capture operational synergies following our acquisition of Novitium in November 2021.

transitioned the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites and are on track to cease operations by the end of the first quarter 2023.

A complete list of our generic and branded pharmaceutical products and descriptions is posted on our website, www.anipharmaceuticals.com.

Manufacturing, Suppliers, and Raw Materials

We require a supply of quality raw materials, including active pharmaceutical ingredients (“API”), and components to manufacture and package our pharmaceutical products.

We require a supply of quality raw materials, including API, and components to manufacture and package our pharmaceutical products.

In order to manufacture certain of our products deemed controlled substances, we must submit a request to the DEA for a quota to purchase the amount of API needed for manufacture.

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The pharmaceutical industry in the U.S.

and Canada is highly regulated by multiple U.S.

and Canadian government agencies, such as the FDA, the DEA, the Centers for Medicare and Medicaid Services (“CMS”), and Health Canada.

is highly regulated by multiple U.S.

government agencies, such as the FDA, the DEA, and the Centers for Medicare and Medicaid Services (“CMS”).

As a result, we are subject to extensive and complex rules and regulations, which are subject to revision from time to time.

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It typically does not require new preclinical and clinical studies, because it relies on the studies establishing safety and efficacy conducted for the branded drug approved through the NDA process.

The ANDA process, however,

typically requires one or more bioequivalence studies to show that the ANDA drug is bioequivalent to the previously approved reference listed drug (“RLD”).

The ANDA process, however, typically requires one or more bioequivalence studies to show that the ANDA drug is bioequivalent to the previously approved reference listed drug (“RLD”).

The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) provides that generic drugs may enter the market after the approval of an ANDA, which requires (1) that bioequivalence to the branded product be demonstrated through clinical studies, and (2) either the expiration, invalidation or circumvention of any patents or the end of any other relevant market exclusivity periods related to the branded drug.

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Additionally, FDA may approve an NDA with post-marketing study requirements, meaning that additional clinical trials must be conducted after approval in order to further monitor the drug’s safety and efficacy.

The FDA has the authority to require a Risk Evaluation and Mitigation Strategy (“REMS”) for any product they approve.

A REMS is designed to ensure that a drug's benefits outweigh its risks, and may include elements such as medication guides, patient package inserts, communication plans to educate healthcare providers of the product's risks, patient registries, or limitations on who can prescribe or dispense it.

The FDA has the authority to require a Risk Evaluation and Mitigation Strategy (“REMS”) for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks.

A REMS may include, but is not limited to, elements such as medication guides, patient package inserts, communication plans to educate healthcare providers of the product's risks, patient registries, or limitations on who can prescribe or dispense it.

A REMS imposes numerous compliance obligations on the NDA and ANDA manufacturers.

We currently participate in the Opioid Analgesic REMS for our Oxycodone Hydrochloride Oral Solution, Oxycodone Capsules and Levorphanol Tartrate Tablets commercial products.

The FDA regulates the marketing, labeling, advertising, and promotion of products that are placed on the market.

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The Drug Supply Chain Security Act (“DSCSA”) requires manufacturers and their trading partners, such as repackagers, wholesale distributors, dispensers, and third-party logistics providers, to implement product tracking and tracing technology at the package level to identify and trace certain prescription drugs as they are distributed in the United States.

ANI started manufacturing serialization-compliant products in November 2018.

See "Risk Factors ― We are subject to federal, state, and local laws and regulations, and complying with these may cause us to incur significant additional costs."

Controlled Substances

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Unapproved Products

Two of our products, EEMT and Opium Tincture, are marketed without approved NDAs or ANDAs.

Three of our products, EEMT, Opium Tincture, and Thyroid Tablets, are marketed without approved NDAs or ANDAs.

During the fou rth quarter of 2023, we acquired product rights for Hyoscyamine, a product without approved NDAs, which we plan to launch commercially in early 2024.

The FDA's policy with respect to the continued marketing of unapproved products appears in the FDA's September 2011 Compliance Policy Guide Sec.

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However, we can offer no assurance that the FDA will continue to follow this approach or that it will not take a contrary position with any individual product or group of products.

See “Risk Factors – Two of our products, which together comprised less than 10% of our total revenue in 2022, are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.

See “Risk Factors – Three products, which together comprised less than 10% of our total revenue in 2023, are marketed without approved NDAs or ANDAs and we can offer no assurances that the FDA will not require us to either seek approval for these products or withdraw them from the market.

In either case, our business, financial position, and operating results could be materially adversely affected.”

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State drug coverage policies under Medicaid may vary significantly state by state.

The Patient Protection and Affordable Care Act (“PPACA”), as amended by the Health Care and Education and Reconciliation Act of 2010, together known as the Affordable Care Act (“ACA”), originally required states to expand their Medicaid

programs to individuals with incomes up to 138% of the federal poverty level.

Although the United States Supreme Court in 2011 made the Medicaid expansion optional, many states have expanded their Medicaid programs.

The ACA also made changes to Medicaid law that has negatively impacted our business.

Pharmaceutical manufacturers that want their drug products covered by state Medicaid programs must enter into a rebate agreement with CMS and pay rebates to state Medicaid agencies on utilization of their drugs dispensed to Medicaid beneficiaries.

Pharmaceutical manufacturers that want their drug products covered by state Medicaid programs must enter into a rebate agreement with CMS and pa y rebates to state Medicaid agencies on utilization of their drugs dispensed to Medicaid beneficiaries.

The ACA raised the rebate percentages for both generic and branded pharmaceuticals effective January 1, 2010.

The basic rebate is currently 13% of the average manufacturer price for sales of Medicaid-reimbursed products marketed under ANDAs.

Sales of Medicaid-reimbursed products marketed under NDAs require manufacturers to rebate the greater of 23.1% of the average manufacturer price or the difference between the average manufacturer price and the “best price” (as defined in the Medicaid statute) during a specific period.

Sales of Medicaid-reimbursed products marketed under NDAs require manufacturers to rebate the greater of 23.1% of the average manu facturer price or the difference between the average manufacturer price and the “best price” (as defined in the Medicaid statute) during a specific period.

In addition, there is an additional rebate if the average manufacturer price of the drug is rising faster than inflation.

Federal and/or state governments may continue to enact measures aimed at reducing the cost of drugs to the Medicaid program.

Since passage of ACA in 2010, Medicaid rebates have been capped at average manufacturer price per unit.

However, beginning January 1, 2024 pursuant to the American Rescue Plan of 2021 Medicaid rebates will no longer be capped at average manufacturer price.

As a result we could end up paying substantially higher Medicaid rebates on certain products.

Furthermore, in a Proposed Rule released in May 2023 CMS proposed changing how “best price” is determined.

If enacted it would require a manufacturer to aggregate any and all discounts and rebates to best price eligible customers when determining best price rather than considering only discounts and rebates to each best price eligible customer individually.

If finalized, we could end up owing additional rebates on Medicaid utilization of our branded products to the states.

Medicare is run by the federal government and is largely focused on the elderly and disabled.

The Medicare Modernization Act of 2003 (“MMA”) created Medicare Part D to provide voluntary prescription drug coverage for Medicare beneficiaries.

The MMA has increased the amount of reimbursement for pharmaceuticals, a trend that we believe will continue to benefit the generic pharmaceutical industry.

The MMA has increased coverage of pharmaceuticals, which has benefited the pharmaceutical industry for both brands and generic drugs.

The ACA made some changes to Part D to make it easier for Medicare beneficiaries to obtain drugs, such as reducing coinsurance amounts.

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Under the Medicare Coverage Gap Discount Program, any pharmaceutical product marketed under an NDA, regardless of whether the product is marketed as a “generic,” is subject to the discount requirement.

Our Candesartan Hydrochlorothiazide, Fenofibrate, Fluvoxamine, Hydrocortisone Enema, Lithium Carbonate ER, Mesalamine, Propranolol ER, Terbutaline, and Vancomycin products, while marketed as “generics,” are sold under approved NDAs and, therefore, are subject to the discount requirement.

Since its enactment, there have been judicial, administrative, executive and Congressional legislative challenges to certain aspects of the ACA.

For example, the ACA is currently subject to a broad legal challenge in California vs.

Azar before the U.S.

Supreme Court.

Additionally, in November 2020, the U.S.

Supreme Court heard argument in Texas v.

Azar, which challenges the constitutionality of the ACA.

Pending resolution of the litigation, all of the ACA, except for the individual mandate to buy health insurance remains in effect.

Were the Supreme Court to invalidate the ACA, that could have far-reaching consequences of an uncertain nature for our industry.

There are a number of additional bills pending in Congress and healthcare reform proposals at the state level that would affect drug pricing in the Medicare and Medicaid programs.

This changing federal landscape has both positive and negative impacts on the U.S.

healthcare industry with much remaining uncertain as to how various provisions of federal law, and potential modification or repeal of these laws, will ultimately affect the industry.

Certain of our products, while marketed as “generics,” are sold under approved NDAs and, therefore, are subject to the discount requirement.

The Inflation Reduction Act of 2022 ("IRA"), was signed into law by President Biden on August 16, 2022.

The IRA brings sweeping changes to Medicare coverage and reimbursement for prescription drugs that could negatively impact us and other pharmaceutical manufacturers.

Of note, beginning January 1, 2025 the IRA alters the current structure of the Medicare Part D standard benefit by eliminating the coverage gap.

The IRA reduces a beneficiary’s out-of-pocket maximum to $2,000 beginning in 2025.

The existing coverage gap discount program for pharmaceutical manufacturers will be replaced by a new manufacturer discount program effective in 2025.

Under the new program, manufacturers will provide a 10 percent discount off the negotiated price for applicable drugs (branded drugs and biologics manufactured by companies that have Part D discount agreements) after the deductible is satisfied through the catastrophic phase of the benefit.

In the catastrophic phase, manufacturers will provide a 20 percent discount off negotiated price.

Any pharmaceutical product marketed under an NDA, regardless of whether the product is marketed as a “generic,” is subject to the manufacturer discount requirement.

This could increase discounts due on Medicare Part D utilization of our drug products.

In addition to restructuring the Medicare Part D benefit, under the IRA the CMS will negotiate directly with manufacturers the price that Medicare will pay for certain high-cost drugs via establishment of the Drug Price Negotiation Program (or the "Program").

The Program will apply to drugs administered or dispensed under both Medicare Parts B and D, although for the first two years of the Program, only Medicare Part D qualifying drugs will be impacted.

The Program officially began in 2023 with CMS selecting 10 drugs for direct price negotiation from a list of drugs representing the highest Medicare Part D spend.

The newly negotiated prices for the first tranche of Part D drugs will not be applicable until 2026.

If a manufacturer of a selected drug does not negotiate a Maximum Fair Price ("MFP")v with the CMS, the manufacturer must pay an excise tax of 65 to 95 percent of Medicare utilization based on the prior year.

Manufacturers that agree on an MFP, but do not honor it, will be subject to civil monetary penalties equal to 10 times the amount of the product dispensed or administered that year, as well as the difference between the reimbursed price and the MFP.

Even if a manufacturer’s drug is not selected for negotiation under the Program, its Medicare coverage could be impacted as a drug with a MFP automatically receives placement on Part D plan formularies and could usurp coverage of another therapeutic alternative in the same class of drugs as the general rule is that Medicare Part D plan formularies have at least 2 drugs per each therapeutic class outside of the 6 protected classes.

While none of our drug products have currently been selected for negotiation, we continue to monitor the process for potential impact to our business.

The Program and resulting excise tax have been challenged as unconstitutional in various lawsuits including cases brought by the National Infusion Center Association, Global Colon Cancer Association, and Pharmaceutical Research and Manufacturers of America.

In the event that the Program and resulting excise tax are struck down as unconstitutional, the Medicare Part D marketplace could be disturbed by insurers exiting the Medicare Part D market and premiums increasing.

If this occurs, it could negatively impact reimbursement and coverage for our self-administered drugs.

Lastly, the IRA imposed additional rebates on manufacturers including ANI to the extent certain drug pricing metrics are rising faster than inflation.

These new inflation rebates are similar to those imposed on manufacturers under Medicaid and could result in additional rebates due from us on Medicare utilization of our products.

Inflation rebates are accruing on Medicare Part D utilization from October 1, 2022 and on Medicare Part B utilization of drugs from January 1, 2023 forward though the CMS has deferred collection of such rebates until 2025.

Most of our products are covered by Medicaid and Medicare.

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Any determination that we have failed to comply with those obligations could subject us to penalties and sanctions, and we could be subject to federal or state false claims litigation.

There has also been recent heightened federal governmental scrutiny over the manner in which manufacturers set prices for their marketed products.

For example, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

For example, a recent Presidential administration released a “Blueprint”, or plan, to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products

paid by consumers.

For example, the Inflation Reduction Act of 2022 imposes a requirement on manufacturers to negotiate drug prices with Medicare, beginning in 2026, with negotiated prices subject to a cap.

The negotiation provision focuses on single-source drugs and biologics that represent the highest Medicare expenditure, while orphan drugs and certain other drugs are exempt.

Also, certain drugs with price increases that outpace inflation will become subject to additional rebates.

Under Medicare Part B, the rebate will first be due with respect to Q1 2023, and applies to single-source drugs and biologicals, including biosimilars.

Under Medicare Part D, the rebate will first be due with respect to the period from October 1, 2022, to September 30, 2023, and applies to brand drugs and generics that are the sole drug on the market.

The law’s expansion of inflation-based rebates in the Medicare Part B and D space, and changes to the coverage gap discount program, will further complicate pricing strategies, particularly as to the launch of new products.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Certain states have formed Prescription Drug Affordability Boards that have the authority to set reimbursement and/or drug pricing in the state.

We expect that additional state and federal health care reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and/or third party payors or purchasing customers in certain states pay for health care products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Patents, Trademarks, and Licenses

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We license the trademark names for Atacand, Atacand HCT, Arimidex, Casodex, Oxistat, and Pandel.

With the exception of a license for patent technology for Inderal XL, InnoPran XL, and Veregen, we do not own or license any patents associated with these products.

With the exception of a license for patent technology for Inderal XL, InnoPran XL, and Veregen, we do not license any patents associated with these products.

Further, patent protection and market exclusivity for these branded products have expired, with the exception of the Veregen product, which has three patents.

One patent expired in 2022 and the remaining two patents expire in 2025 and 2026.

Therefore, we consider the trademark names to be of material value and we act to protect these rights from infringement.

T herefore, we consider the trademark names to be of material value and we act to protect these rights from infringement.

However, our business is not dependent upon any single trademark.

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We believe that sales of our branded products have benefited and will continue to benefit from the value of the product name.

We formerly received royalties from a license for patent rights initially owned by Cell Genesys, Inc., which merged with BioSante in 2009.

The royalties were received as a result of sales and milestones related to the Yescarta® product.

These royalties ceased after a final payment in 2021.

Description of Business and Summary of Significant Accounting Policies, in the notes to the consolidated financial statements in Part II, Item 8.

of this Annual Report on Form 10-K for further information.

We also recently acquired certain patents and patent applications relating to baclofen and a patent was granted on our hydrochlorothiazide product.

Distribution Agreements

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These products are sold under our own label.

Our customers purchase and distribute our products.

Our products are sold by three major retail pharmacy chains:

CVS, Rite Aid, and Walgreens.

Our customers include five major national wholesalers:

AmerisourceBergen, Cardinal Health, McKesson, Smith Drug Company, and Morris Dickson.

In addition, our customers include national mail order houses, including CVS Caremark, Humana, and ExpressScripts, as well as group purchasing organizations.

O ur customers purchase and distribute our products.

Our customers include major national wholesalers.

Our products are sold by major retail pharmacy chains, distributors, national mail order houses, as well as group purchasing organizations.

In recent years, the wholesale distributor network for pharmaceutical products has been subject to increasing consolidation, which has increased the concentration of our wholesale customers.

In addition, the number of retail market chains and, in particular, the number of independent drug stores and small chains, has decreased as retail consolidation has occurred, also increasing the concentration of our retail customers.

As a result of this trend toward consolidation, a smaller number of companies each control a larger share of pharmaceutical distribution channels.

For the year ended December 31, 2022, approximately 59% of our net revenues were attributable to three wholesalers:

AmerisourceBergen Corporation, 26%, McKesson Corporation, 18%, and Cardinal Health, Inc., 15%.

For the years ended December 31, 2021 and 2020, McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation, together accounted for approximately 68% and 74% of our net revenues, respectively.

For the year ended December 31, 2023, approximately 70% of our net revenues were attributable to four customers.

For the years ended December 31, 2022 and 2021, three customers, togeth er accounted for approximately 59% and 68% of our ne t revenues, respectively.

In addition, as noted below, our customers also distribute our products.

The loss of any of these customers, including in their role as distributors, could have a material adverse effect on our business.

Due to a strategic partnership between Amerisource Bergen and Walgreens, Amerisource Bergen handles product distribution for Walgreens.

Similarly, Cardinal Health and CVS established a partnership in which Cardinal performs some product distribution for CVS.

McKesson also entered into a strategic alliance with both Wal-Mart and Rite Aid.

As a result of these strategic partnerships between wholesalers and pharmacy chains, we have experienced, and expect to continue to experience, increases in net sales to the wholesalers, with corresponding decreases in net sales to the pharmacy chains.

Due to strategic partnerships between wholesalers and pharmacy chains, we have experienced, and expect to continue to experience, increases in net sales to the wholesalers, with corresponding decreases in net sales to the pharmacy chains.

In the rare disease business there is a limited distribution network and a select group of specialty pharmacies which can dispense product to appropriate patients.

We are in the process of contracting with largest health insurance payers across the appropriate channels and classes of trade.

We contract and engage with the largest health insurance payers across the appropriate channels and classes of trade.

Consistent with industry practice, we maintain a return policy that allows customers to return product within a specified period prior to and subsequent to the expiration date.

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• Wholesalers .

We conduct business with five major wholesalers in the United States:

AmerisourceBergen, Cardinal, McKesson, Smith Drug Company, and Morris Dickson.

We conduct business with the three major wholesalers in the United States:

Cencora, Inc., Cardinal Health, and McKesson.

• Retail Market Chains .

We conduct business with three major retail chains in the United States:

CVS, Rite Aid, and Walgreens.

We conduct business with all the major retail chains in the United States which includes CVS, Rite Aid, Kroger, Walmart, and Walgreens.

• Distributors and Mail Order Pharmacies .

We have contracts with several major distributors and mail order pharmacies in the United States, including Anda, CVS Caremark, Humana, and ExpressScripts.

We have contracts with several major distributors and mail order pharmacies in the United States, including Anda, Smith Drug Company, Morris Dickson, CVS Caremark, Centerwell, and ExpressScripts.

• Group Purchasing Organizations .

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In our Rare Disease segment we contract with specialty pharmacies.

• Hospitals .

In our Rare Disease segment we contract with certain hospital systems.

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If competitors introduce new products with therapeutic or cost advantages, our products can be subject to progressive price reductions and/or decreased volume of sales.

Principal competitors for the pharmaceutical market in which we do business include Amneal Pharmaceuticals, Inc., Alvogen, Inc., Apotex Inc., Glenmark Pharmaceuticals Ltd, Hikma Pharmaceuticals plc, Mallinckrodt Pharmaceuticals, Par Pharmaceutical, Inc., Padagis LLC., Rising Pharmaceuticals, Inc., Sun Pharmaceutical Industries Ltd., and Teva Pharmaceuticals USA, Inc., and Viatris Inc.

Principal competitors for the pharmaceutical market in which we do business include, but are not limited to, Amneal Pharmaceuticals, Inc., Apotex Inc., Aurobindo Pharma, Camber Pharmaceuticals Inc., Hikma Pharmaceuticals plc, Lupin Pharmaceuticals, Inc., Mallinckrodt Pharmaceuticals, Rising Pharmaceuticals, Inc., Strides Pharma Inc., Sun Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc., Viatris Inc., and Zydus Pharmaceuticals USA.

Product Liability

Product liability litigation represents an inherent risk to all firms in the pharmaceutical industry.

We utilize traditional third-party insurance policies with regard to our product liability claims.

We utilize traditional third-party insu rance policies with regard to our product liability claims.

Such insurance coverage at any given time reflects current market conditions, including cost and availability, when the policy is written.

Human Capital

As of January 2023, we have 600 employees, of which 496 are located in the United States, including Puerto Rico, 48 are located in Canada, and 56 are located in India.

We occasionally use a small number of part-time and consultant

resources to meet our operational needs and our turnover is in line with similar businesses in our industry and locations.

We are committed to creating a diverse and inclusive work environment within all levels of the business.

Attracting and retaining talented employees is critical to the success of our business, especially at our manufacturing operations in Baudette, Minnesota, which is located in a sparsely populated area of Northern Minnesota, with a population of approximately 1,100.

As a result, it can be challenging to find sufficiently qualified personnel in all functional areas.

To address this, we support remote working arrangements for a number of employees in several functions throughout the business, including at the executive level.

In September 2023, we opened a corporate office in Princeton, NJ which houses certain employees in our corporate, legal, and business functions.

Additionally, our compensation plans are designed to be competitive within the pharmaceuticals industry as well as competitive with local employers for jobs of a cross-industry nature.

Our approach provides ANI with the resources to recognize and reward employee performance, productivity, and quality commitment.

Our total compensation program includes competitive base salaries, comprehensive benefits, and employee equity programs.

and India facilities are committed to the safety and health of our employees, patient-customers, and the general public.

It is critical within our mission to ensure we keep our employees and customers safe while accomplishing our business goals.

We accomplish these initiatives through the following:

As of January 2024, we have 642 employees, of which 569 are located in the United States, including Puerto Rico, 1 is located in Canada, and 72 are located in India.

As of January 2023, we had 600 employees, of which 496 are located in the United States, including Puerto Rico, 48 located in Canada, and 56 are located in India.

We occasionally use a small number of part-time and consultant resources to meet our operational needs a nd our turnover is in line with similar businesses in our industry and locations.

Our Purpose and Core Values

Our human capital management strategy is guided by our purpose and core values.

Our purpose is Serving Patients, Improving Lives.

Our core values are Patient First, Teamwork, Innovation, Integrity & Compliance, Accountability & Transparency, and Commitment to Excellence.

We believe that our purpose and core values provide clarity, a shared language, and ultimately create what is distinctive about our company and our culture.

We are motivated to bring our best to ANI every day by the patients we serve, the people we work with, the direct impact we have on the work, and the learning, growth and development opportunities we provide.

Culture, Engagement, and Diversity, Equity, and Inclusion

We believe that attracting, retaining, and promoting engagement for talented employees is critical to the success of our business, and we take pride in our values, culture, and communities.

We are committed to creating a diverse, equitable, and inclusive work environment within all levels of the business.

As of the end of 2023, approximately 41% of our workforce identified as female and approximately 59% identified as male.

In the same period, approximately 45% of our workforce identified as a person of color or indigenous person, with approximately 55% identifying as white.

Furthermore, we do not tolerate discrimination or harassment on the basis of gender, race, or ethnicity, or the use of child or forced labor.

We value employee input, and conduct focus groups and survey employees on specific topics (e.g.

approximately 25% of our employees participated in a benefits satisfaction survey in 2023).

We offer ongoing training and career development to all employees, both through curriculum developed internally, and through external resources (e.g.

LinkedIn Learning).

Together, we own our culture and participate in ongoing open dialogue as we strive for continued growth.

At ANI, we believe that no one should go without medicines that they need.

In December 2022, we formed the ANI Rare Disease Patient Assistance Program, Inc.

(“ANI PAP”) for the purpose of providing certain medicine for free to patients in the United States who do not have prescription drug or health insurance coverage and who, without assistance, cannot afford their medicine.

In addition, ANI has provided patient-related financial support to nonprofit organizations that are aligned with ANI’s mission to address unmet needs.

Our charitable contributions support initiatives and programs that advance medical care or patient care within the Company's therapeutic areas of focus.

Total Rewards

ANI’s Total Rewards Philosophy is grounded in pay for performance and seeks to provide compensation and benefits that are competitive within the pharmaceuticals industry, as well as competitive with local employers for jobs of a cross-industry nature.

We pay fair and competitive salaries, short-term incentives, and long-term incentives that are informed by external market rates and internal equity.

We recognize and reward employee performance, productivity, and alignment with ANI’s Core Values.

We believe that a holistic rewards strategy should also go beyond compensation and benefits to consider elements such as wellness and recognition.

We support flexible and remote working arrangements throughout the business.

Health and Safety Management and Training

We are committed to the safety and health of our employees, patient-customers, and the public.

It is critical within our mission to ensure we keep our employees and customers safe while accomplishing our business goals.

ANI has established a health and safety program with a focus on continuous improvement and employee engagement.

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The goal of the safety training programs is to ensure that our staff are well informed on the subject matters and have the appropriate tools to make sound health and safety decisions in our day-to-day operations.

Environmental Stewardship

ANI is committed to minimizing waste and emissions, promoting reuse and recycling and conserving resources, where feasible, to reduce our environmental footprint on our environment.

Environmental Stewardship and Sustainability

ANI is committed to Serving Patients, Improving Lives, both directly though our high-quality products, and through our environmental stewardship and sustainability practices.

We strive to minimize waste and emissions, promote reuse and recycling, and conserve resources.

We continue to increase our efforts and have formed an Environmental, Social, and Governance ("ESG") Steering Committee to oversee cross-functional initiatives.

The ESG Steering Committee reports to our Board of Directors through our Nominating and Governance Committee and is committed to providing progress updates at least twice per year.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business