Viatris' Growth: Strategic Divestitures and New Product Launches

Rationale Behind Strategic Divestitures

Viatris' strategic divestitures aim to reduce debt, enhance shareholder returns, and fund future growth through disciplined investments. The proceeds from these divestitures are being utilized to achieve these key priorities, ensuring a strong base business and driving future revenue growth.

"The Company reiterated that the proceeds from its divestitures and its sector-leading cash flow generation gives it line of sight to achieving its key priorities, including: achieving its long-term gross leverage target, increasing shareholder return through share buybacks and dividends, fueling its base business and, importantly, making disciplined, strategic investments to identify, acquire, develop and commercialize innovative assets that can build off its very strong base business and drive future revenue growth." --- (VTRS, press release, 2024/07/03)

"In terms of our key strategic priorities, you mentioned a few of them in terms of continuing to focus on closing our divestitures, repaying down our debt, continuing to deliver capital to shareholders, driving growth in the base business and continuing to invest to drive that growth." --- (VTRS, conference, 2024/05/14)

"We are making progress on all our key priorities, including completing planned divestitures, continuing to pay down debt, increasing shareholder return, fueling our base business, and importantly, making strategic investments in future growth." --- (VTRS, earning call, 2024/Q1)

"In the quarter, we made great progress on our strategic initiatives. We closed the Women's Healthcare business divestiture, completed the Idorsia transaction and expect to close the divestiture of the API business imminently." --- (VTRS, earning call, 2024/Q1)

"We are executing on all our strategic imperatives, right? We're close to getting our divestitures done." --- (VTRS, conference, 2024/06/11)

Financial Impact of Divestitures

Viatris' divestitures have led to adjustments in financial guidance, impacted the comparability of financial results, and decreased net cash from operating activities due to lower earnings and higher transaction costs. The OTC business divestiture, completed on July 3, 2024, exemplifies these financial impacts.

"As previously indicated, Viatris' next update with respect to 2024 financial guidance will reflect the impact of the OTC divestiture, including adjustments to exclude the expected performance of the OTC business from the closing date of the transaction through the end of 2024." --- (VTRS, press release, 2024/07/03)

"Primarily due to acquisitions, divestitures and other significant events which may impact comparability of our periodic operating results, Viatris believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results was limited to financial measures prepared only in accordance with U.S. GAAP." --- (VTRS, press release, 2024/08/08)

"(3) With respect to the impact of divestitures, the OTC business divestiture closed on July 3, 2024." --- (VTRS, press release, 2024/08/08)

"Okay. Now there's a lot of moving parts with divestitures, with scaling up a brand business and investing in that and then potentially even overlay with future BD." --- (VTRS, conference, 2024/05/14)

"The decrease in net cash provided by operating activities was principally due to lower operating earnings, including as a result of divestitures in 2023 and 2024, higher transaction costs associated with the divestitures, and the timing of cash payments and collections." --- (VTRS, sec filing, 2024/Q2)

Strategy for New Product Launches

Viatris' strategy for new product launches focuses on leveraging licensing partnerships, investing in complex generics, and adding innovative and patented products to their portfolio. They also develop lifecycle strategies to maximize opportunities by expanding indications, patient populations, and optimizing global launch sequencing.

"Certainly, I like the licensing partnership route for a lot of it. Given the strong global company we have and the base we have worldwide that I think we're a very favorable partner for people with good technologies and products to be able to launch their products globally." --- (VTRS, earning call, 2024/Q1)

"We see important products in the future from it. So it's a very sort of important part of our base business mix and important to continue to invest in the complex generics as we move forward and add other new products, innovative products, patented products to the portfolio to accelerate that growth." --- (VTRS, earning call, 2024/Q1)

"We have initiated the development of lifecycle strategies for both assets looking to maximize these opportunities by developing additional indications or expanding into broader patients' populations as well as optimizing labeling and launch sequencing globally." --- (VTRS, earning call, 2024/Q1)

"So again, I see all the hard work that's been done and the way how stable the company is gives us a very, very nice launch pad as we move into 2025 and beyond and get into really sort of part 2 of our strategic plan." --- (VTRS, conference, 2024/06/11)

"So that's number one. Then number two, can you just talk generally about complex generics and how we should think about contribution from complex products or new launches as we move through '25?" --- (VTRS, earning call, 2024/Q2)

Performance Metrics of New Products

Viatris' new products have shown strong performance, driving net sales growth in developed markets by 1%, with significant contributions from Breyna, Lisdexamfetamine, and other generics. The company is confident in achieving $450 million to $550 million from new product launches, reflecting positive momentum and robust financial metrics.

"The financial performance of the Company is measured by senior management, in part, using adjusted metrics as described below, along with other performance metrics." --- (VTRS, sec filing, 2024/Q2)

"Doretta Mistras: Great. Thanks, Ash. So, yes, on new products, to your point, we feel great about the momentum we've seen from the new product perspective this year." --- (VTRS, earning call, 2024/Q2)

"In developed markets, net sales grew 1% and was driven by strong new product performance, including contributions from Breyna, Lisdexamfetamine and other generics in North America and Europe." --- (VTRS, earning call, 2024/Q2)

"And then specifically also just to add a little bit to what Scott said around new products, we have great confidence in our $450 million to $550 million of new product launches." --- (VTRS, earning call, 2024/Q1)

"It's because of our brands in YUPELRI and Terrvia, it's existing complex generics like Wixela and its strong contribution from new products like BRAENA and Liz dexamethidine, as well as expected new product contributions from our complex pipeline, which we expect to come over the next couple of years." --- (VTRS, conference, 2024/05/14)

Competitive Landscape Analysis

Viatris faces a complex competitive landscape, influenced by geopolitical factors and VBP exposure. Major players like Pfizer and Merck are advancing in rapidly growing markets and specific treatments, while Johnson & Johnson navigates patient access and insurance challenges. Competitive pressures are evident across various segments, impacting strategic decisions.

"I mean, how do you feel about the geopolitical landscape, VBP exposure and then the appetite to as you look to acquire more innovation in the portfolio, the ability to get properly kind of a good return on investment in that market." --- (VTRS, conference, 2024/05/14)

"We believe these study results, along with learnings from our previous Phase 2 studies and data that we have accumulated from 1,400 participating patients, leave us well positioned to execute on a registration-enabling study as we work to deliver a competitive product in a rapidly growing market." --- (PFE, earning call, 2024/Q2)

"And so that is really across the payer landscape and then also what we're doing with patient services and ensuring that patients who the physicians want to prescribe it for have the ability to get access and to navigate through the whole insurance maze and everything and come out on the other end very successfully on the product." --- (JNJ, conference, 2024/06/12)

"how we've moved the needle for non small cell lung cancer. Period, paragraph, TROP-two ADCs, little tough sledding across the competitive landscape." --- (MRK, conference, 2024/06/11)

"I’m assuming mapping growth was strong, but maybe -- I don't know, maybe the catheter business was pressured by the competitive system." --- (JNJ, earning call, 2024/Q2)