Viatris Inc. is a global healthcare company that is uniquely positioned to bridge the traditional divide between generics and brands, combining the best of both to more holistically address healthcare needs globally. With a mission to empower people worldwide to live healthier at every stage of life, Viatris provides access at scale, currently supplying high-quality medicines to approximately 1 billion patients around the world annually and touching all of life's moments, from birth to the end of life, acute conditions to chronic diseases.
Viatris' executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders. The Company has industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise complemented by a strong commitment to quality and an unparalleled geographic footprint to deliver high-quality medicines to patients in more than 165 countries and territories.
Viatris' portfolio is comprised of approved molecules across a wide range of key therapeutic areas, including globally recognized iconic and key brands and generics, including complex products. Following the expected imminent closing of the API divestiture, the Company will operate approximately 30 manufacturing sites worldwide that produce oral solid doses, injectables, complex dosage forms and APIs, with a global workforce of approximately 33,000.
Viatris has four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Company reports segment information on the basis of markets and geography, which reflects its focus on bringing its broad and diversified portfolio of branded and generic products, including complex products, to people in markets everywhere.
For the full year 2023, Viatris reported annual revenue of $15.38 billion and annual net income of $54.7 million. The Company generated annual operating cash flow of $2.80 billion and annual free cash flow of $2.33 billion.
In the first quarter of 2024, Viatris reported total revenues of $3.66 billion, compared to $3.73 billion in the prior year period, representing a decrease of $65.7 million, or 2%. Net sales for the current quarter were $3.65 billion, compared to $3.72 billion for the comparable prior year period, representing a decrease of $65.6 million, or 2%. The decrease in net sales was the result of the unfavorable impact of foreign currency translation of approximately $77.1 million, or 2%, primarily reflecting changes in the U.S. Dollar as compared to the currencies of subsidiaries in Japan, China, and countries in Emerging Markets. Additionally, net sales decreased by approximately $45.7 million or 1% due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. On a constant currency basis, net sales from the remaining business increased by approximately $57.2 million, or 2%, for the three months ended March 31, 2024 compared to the prior year period. The increase was driven by new product sales, primarily in the U.S., of approximately $154.5 million.
Segment Performance
Developed Markets segment net sales were essentially flat during the three months ended March 31, 2024 when compared to the prior year period. The favorable impact of foreign currency translation was approximately $14.1 million, or 1%. Net sales decreased by approximately $15.0 million or 1% due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. Constant currency net sales from the remaining business were essentially flat when compared to the prior year period.
Net sales from Greater China decreased by $20.7 million or 4% for the three months ended March 31, 2024 when compared to the prior year period. This decrease was the result of the unfavorable impact of foreign currency translation of approximately $21.5 million, or 4%. Constant currency net sales were essentially flat when compared to the prior year period.
Net sales from JANZ decreased by $24.4 million or 7% for the three months ended March 31, 2024 when compared to the prior year period. This decrease was the result of the unfavorable impact of foreign currency translation of approximately $30.8 million, or 9%. Constant currency net sales increased by approximately $6.5 million, or 2%, when compared to the prior year period, driven primarily by new product sales.
Net sales from Emerging Markets decreased by $15.5 million or 2% for the three months ended March 31, 2024 when compared to the prior year period. This decrease was driven by the unfavorable impact of foreign currency translation of approximately $38.9 million, or 6%. In addition, net sales also decreased by approximately $30.6 million, or 5%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. Constant currency net sales from the remaining business increased by $54.0 million, or 8% when compared to the prior year period, primarily driven by higher volumes of existing products in certain Middle Eastern and Asian countries.
Financial Performance
Gross profit for the three months ended March 31, 2024 was $1.50 billion and gross margins were 41%. Adjusted gross margins were approximately 59% for the three months ended March 31, 2024, compared to approximately 60% for the three months ended March 31, 2023. The decrease in adjusted gross margins was primarily due to price regulations in Japan and the increase in cost of sales.
R&D expense for the three months ended March 31, 2024 was $199.7 million, compared to $182.9 million for the comparable prior year period, an increase of $16.8 million. This increase was primarily due to continued investment in the Company's pipeline. Acquired IPR&D expense for the three months ended March 31, 2024 was $6.1 million. SG&A expense for the current quarter was $1.02 billion, compared to $958.9 million for the comparable prior year period, an increase of $58.6 million. The increase was primarily due to higher acquisition and divestiture-related costs of approximately $25.4 million.
Interest expense for the three months ended March 31, 2024 totaled $138.4 million, compared to $147.0 million for the three months ended March 31, 2023, a decrease of $8.6 million primarily due to the impact of debt repayments. Other income, net for the three months ended March 31, 2024 totaled $139.1 million, compared to $69.9 million for the three months ended March 31, 2023. The increase in other income, net was primarily driven by the gain in the current quarter of $80.8 million from the divestiture of the women's healthcare business, which closed in March 2024, and a gain in the current quarter of $46.9 million as a result of remeasuring the CCPS in Biocon Biologics to fair value.
For the three months ended March 31, 2024, the Company recognized an income tax provision of $90.7 million, compared to $98.0 million for the comparable prior year period, a decrease of $7.3 million. The current year and prior year provisions were impacted by the levels of income and the changing mix at which it is earned in jurisdictions with differing tax rates.
Free cash flow for the first quarter of 2024 was $614.6 million, compared to $971.2 million in the prior year period. The decrease was primarily driven by lower adjusted EBITDA, the closing of divestitures and the timing of working capital. Excluding transaction costs and taxes from the divestitures, free cash flow would have been $648 million.
The Company ended the first quarter of 2024 with approximately $1 billion in cash and cash equivalents on hand. Viatris continues to execute on its balanced capital allocation framework and returned $393 million of capital to shareholders in Q1 in the form of both dividends and share repurchases.
2024 Financial Guidance
For the full year 2024, Viatris is reaffirming its financial guidance after adjusting the ranges solely due to divestitures and acquired IPR&D. These adjustments represent approximately $270 million in revenue, $86 million in adjusted EBITDA and $0.04 in adjusted EPS for the remainder of 2024. The underlying fundamentals for 2024 total revenue guidance include no change to the base business growth of approximately 2% operationally versus 2023, and continued confidence in meeting the new product revenue range of $450 million to $550 million due to the strong uptake of Breyna and the breadth of the Company's new product launches. Adjusted gross margin is expected to be higher in the first half versus second half due to product and segment mix, while operating expenses are expected to be relatively evenly phased between the first half and the second half. Adjusted EBITDA and adjusted EPS are expected to be slightly higher in the second half, and free cash flow is also expected to be more weighted to the second half.
Strategic Initiatives and Portfolio Optimization
Viatris has made significant progress on its strategic initiatives, including the closing of the Women's Healthcare Business divestiture, the completion of the Idorsia transaction, and the expected imminent closing of the API divestiture. The Company is on track to close the OTC divestiture by midyear, subject to receipt of certain regulatory approvals and consents. These divestitures are part of Viatris' ongoing efforts to optimize its portfolio and focus on higher-margin, more durable growth opportunities.
The Idorsia transaction, which closed on March 15, 2024, expanded Viatris' portfolio of innovative assets by adding two Phase 3 assets, selatogrel and cenerimod. Viatris and Idorsia are both contributing to the development costs for both programs, and Viatris has worldwide commercialization rights for both assets (excluding, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region). The Company is focused on expanding and accelerating enrollment of the Phase III studies for both selatogrel and cenerimod, leveraging its global reach and infrastructure.
Viatris' base business pipeline and portfolio is expected to continue delivering consistent results, currently reaching more than 1 billion patients a year. The Company's eye care pipeline also continues to progress, with the recent launch of Ryzumvi in the U.S. and ongoing Phase III studies for MR-139, MR-142, and MR-146. Additionally, Viatris' complex injectable pipeline has more than 50 products in total, with 15 currently under FDA review, 9 of which represent potential first-to-market opportunities.
In summary, Viatris is executing well against its strategic priorities, maintaining the stability of its base business while driving new product revenue and making strategic investments to expand its portfolio of innovative assets. The Company's globally diverse platform, strong financial position, and experienced leadership team position it well to continue delivering value to patients, shareholders, and other stakeholders.