Company Overview
Viatris Inc. (NASDAQ:VTRS) is a global healthcare company that has uniquely positioned itself to bridge the traditional divide between generic and branded pharmaceuticals. By combining the strengths of both, Viatris aims to more holistically address the evolving healthcare needs of patients worldwide.
Founded in 2020 through the combination of Mylan N.V. and Pfizer's Upjohn business, Viatris has grown to become a diversified global pharmaceutical powerhouse. The company's mission is to empower people worldwide to live healthier at every stage of life, and it achieves this by supplying high-quality medicines to approximately 1 billion patients annually.
History and Formation
Viatris' roots can be traced back to Mylan, which was founded in 1961 as a privately-owned company and grew to become one of the largest manufacturers of generic medicines in the U.S. Mylan went public in 1973 and made several key acquisitions that shaped its growth, including Matrix Laboratories Limited and Merck KGaA's generic and specialty pharmaceutical business in 2007, the EPD Business from Abbott Laboratories in 2015, and Meda AB in 2016. These acquisitions helped create robust research, manufacturing, supply chain, and commercial platforms on a global scale, expanding Mylan's portfolio and diversifying its geographic reach and product offerings.
The formation of Viatris in 2020 was the result of a Reverse Morris Trust transaction between Mylan N.V. and Pfizer's Upjohn business. Upjohn, originally incorporated in Delaware in 2019 as a wholly-owned subsidiary of Pfizer, was established to operate Pfizer's off-patent branded and generic established medicines business. The combination of these two entities created Viatris, with Mylan ceasing to exist as a separate legal entity.
Strategic Initiatives
Since its formation, Viatris has undertaken various strategic initiatives to streamline its operations and focus on core strengths. The company has divested several business units, including its biosimilars portfolio, women's healthcare business, API business in India, and OTC business. These divestitures were aimed at simplifying operations, accelerating debt reduction, and unlocking value. However, they have also resulted in ongoing financial and operational commitments, such as guarantees, indemnification, supply and transition services obligations, stranded costs, and potential litigation.
Global Presence and Product Portfolio
Viatris operates in more than 165 countries and territories, with a workforce of around 32,000 employees. The company boasts an extensive portfolio of over 1,400 approved molecules, spanning more than 10 major therapeutic areas, including cardiovascular health, oncology, and infectious diseases. Viatris' diverse product mix includes generics, complex generics, and globally recognized iconic brands, as well as an expanding pipeline of innovative, best-in-class, patent-protected assets.
One of Viatris' key strengths is its global supply chain and manufacturing network, which comprises 26 sites worldwide. This infrastructure, combined with the company's industry-leading commercial, R&D, regulatory, and medical expertise, enables Viatris to reliably deliver medicines to patients when and where they are needed.
Financials
In 2024, Viatris reported total revenues of $14.74 billion, with adjusted EBITDA of $4.67 billion and adjusted EPS of $2.65. The company's free cash flow generation was robust at $2.6 billion, excluding divestiture-related taxes and transaction costs. Viatris has also made significant progress in reducing its debt, retiring approximately $3.7 billion in 2024 and achieving its long-term gross leverage target of around 2.9x.
For the full year 2024, Viatris reported a net loss of $634.2 million, operating cash flow of $2.30 billion, and free cash flow of $1.94 billion. The most recent quarter (Q4 2024) saw revenue of $3.53 billion, down 8.1% year-over-year, and a net loss of $516.5 million. The decrease in revenue was driven by the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024, as well as an unfavorable impact from foreign currency translation of approximately 2%.
Performance by Geographic Markets:
Developed Markets (North America and Europe): - Q4 2024 revenue: $8.96 billion, down 3% year-over-year on a divestiture adjusted operational basis - Full year 2024 revenue: $8.93 billion, down 3% year-over-year on a divestiture adjusted operational basis
Greater China: - Q4 2024 revenue: $2.17 billion, essentially flat year-over-year on a divestiture adjusted operational basis - Full year 2024 revenue: $2.17 billion, up 2% year-over-year on a divestiture adjusted operational basis
JANZ (Japan, Australia, New Zealand): - Q4 2024 revenue: $1.35 billion, down 5% year-over-year on a divestiture adjusted operational basis - Full year 2024 revenue: $1.35 billion, down 5% year-over-year on a divestiture adjusted operational basis
Emerging Markets: - Q4 2024 revenue: $2.26 billion, down 12% year-over-year on a divestiture adjusted operational basis - Full year 2024 revenue: $2.25 billion, down 12% year-over-year on a divestiture adjusted operational basis
Liquidity
Despite the challenges faced in 2024, including the regulatory issues at its Indore, India facility, Viatris continues to execute on its strategic priorities. The company remains focused on driving growth in its diverse base business, advancing its innovative pipeline, and returning capital to shareholders, while also embarking on an enterprise-wide cost optimization initiative.
As of December 31, 2024, Viatris reported: - Debt/Equity Ratio: 0.77 - Cash and Cash Equivalents: $734.8 million - Available Credit: - $3.5 billion 2024 Revolving Facility, undrawn - $400 million Receivables Facility, undrawn - Current Ratio: 1.65 - Quick Ratio: 0.98
New Product Development and Pipeline
In 2024, Viatris delivered $582 million in new product revenues, at the high end of its increased guidance range. The company's pipeline continues to progress, with 10 unique molecules in Phase 3 clinical development and six Phase 3 readouts expected in 2025, including for the potential opioid-sparing treatment Meloxicam.
Viatris is also making significant strides in expanding its innovative portfolio, highlighted by the acquisition of the development programs for selatogrel and cenerimod from Idorsia. Selatogrel is a potential life-saving self-administered medicine for patients with a history of acute myocardial infarction, while cenerimod is a novel immunology asset that has the potential to be a first-in-class oral therapy for the treatment of systemic lupus erythematosus.
Future Outlook
Looking ahead, Viatris' 2025 guidance reflects the near-term impact of the regulatory issues at Indore, with an estimated $500 million revenue and $385 million adjusted EBITDA headwind. However, the company remains confident in the underlying strength of its base business and the long-term growth potential of its innovative pipeline.
For 2025, Viatris expects total revenues to decline approximately 1% compared to 2024 on a divestiture adjusted operational basis. The company is expecting $450 million to $550 million in new product revenues in 2025. Gross margins are expected to be impacted by the Indore issue, normal base business price erosion, and increased product supply costs, partially offset by favorable segment mix. Total operating expenses are expected to decline by approximately $150 million, predominantly in SG&A. An incremental $100 million in R&D expenses is expected in 2025 related to amendments to the Idorsia collaboration agreement.
Viatris' capital allocation strategy continues to be balanced between returning capital to shareholders and investing in the business. In 2025, the company plans to prioritize share repurchases, targeting at least $500 million to $650 million, while also maintaining its dividend program. Viatris expects to generate free cash flow of approximately $2 billion in 2025 and plans to return over $1 billion to shareholders through dividends and share repurchases.
Despite the near-term challenges, Viatris' diversified global platform, robust pipeline, and strong financial position position the company well to navigate the dynamic pharmaceutical landscape. As the company executes on its strategic initiatives and harnesses the power of its unique business model, Viatris is poised to drive sustainable growth and deliver value to its stakeholders.
Industry Trends and Competitive Landscape
The pharmaceutical industry is highly competitive, with generic products generally contributing most significantly to revenues and gross margins at the time of launch and even more so in periods of market exclusivity. Pricing pressure from government-imposed price reductions, tender systems, and consolidation across the supply chain have had a negative impact on the industry. Complex products are more difficult, costly and time-consuming to receive regulatory approval for and bring to market.
Viatris operates through four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. Each segment focuses on bringing Viatris' diverse portfolio of branded and generic products, including complex products, to patients in various markets around the world.
In the U.S., Viatris is one of the largest providers of prescription medicines and competes primarily through innovation, development, manufacturing and supply chain capabilities, product quality, marketing, portfolio size, customer service, reputation, and pricing. In Europe, where many governments provide healthcare at low direct cost to consumers and regulate pharmaceutical prices or patient reimbursement levels, Viatris maintains a leadership position in several countries.
Key products sold in the Developed Markets segment include Lyrica, Lipitor, Creon, Influvac, Wixela Inhub, EpiPen Auto-Injector, Fraxiparine, and Yupelri. In the Greater China segment, significant products include Lipitor, Norvasc, and Viagra. The JANZ segment features products such as AMITIZA, Effexor, Lipacreon, Lyrica, and EpiPen Auto-Injector. In the Emerging Markets segment, popular products include Lipitor, Lyrica, Norvasc, Celebrex, and antiretrovirals (ARVs).
As Viatris continues to navigate the complex global healthcare landscape, its diversified portfolio, strong market presence, and focus on innovation position the company to adapt to industry trends and maintain its competitive edge in the pharmaceutical market.