Viatris Inc Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Review: Progress made in analyzing the business across commercial sales/marketing, product mix, R&D, medical/regulatory activities, sourcing, manufacturing, supply chain, inventory optimization, and corporate support functions. Anticipate meaningful net cost savings over multiyear period with reinvestment in growth.
• Commercial Performance: Strong across portfolio, particularly in Europe, emerging markets, and Greater China. Delivered 1% operational revenue growth excluding Indore.
• Pipeline Progress: Fast-acting meloxicam NDA submission expected by year-end; low-dose estrogen weekly patch under FDA review; sotagliflozin filings in multiple markets; selatogrel and cenerimod Phase III enrollment progressing; acquisition of Aculys Pharma in Japan added CNS assets (pitolisant and spydia).
• Capital Allocation: Returned over $920 million to shareholders year-to-date, including $500 million in share repurchases.

Segment Performance

• Europe: Business grew approximately 1% this quarter. Generics business up 5% year-over-year due to new product revenues in key markets like France and Italy. Branded business saw solid growth in EpiPen, Creon, and Thrombosis portfolio.
• North America: Net sales decreased 12% year-over-year primarily due to Indore impact and competition on certain generic products. However, products like Breyna and Yupelri showed double-digit growth, and new product revenues such as iron sucrose provided benefits.
• Emerging Markets: Net sales increased approximately 7% year-over-year. Driven by strength in established brands across key markets (Turkey, Mexico, Emerging Asia) and stabilization of supply for certain lower-margin ARV products in the generics business.
• Janz: Net sales decreased approximately 9% year-over-year. Results were primarily due to government price regulations, reimbursement policy changes in Japan, and competition on certain products in Australia.
• Greater China: Net sales grew 9% year-over-year, exceeding expectations. Driven by diversified commercial model and increased demand for brands sensitive to proactive patient choice.

Guidance

• 2025 Financial Guidance: Raising and narrowing ranges for total revenues, adjusted EBITDA, and adjusted EPS due to foreign exchange and share repurchases.
• 2026 Outlook: Pending approvals, competitive dynamics in North America, potential loss of exclusivity for Amitiza in Japan, and progress of enterprise-wide strategic review will influence 2026 performance. Outlook for 2026 to be provided in first quarter of 2026.

Risks

• Indore Remediation: Timing of FDA reinspection is uncertain; built operational redundancies by qualifying other sites and adding third-party vendors to decouple revenues from products on the import alert list.
• Regulatory and Competitive Risks: Potential impact of government price regulations, reimbursement policy changes, and competition on sales in certain regions.

Question and Answer

Q: Update on Indore resolution and branded product performance (Lipitor, EpiPen) A: Indore remediation is progressing well; built redundancies. Lipitor performance driven by strength in China. EpiPen has stable share, with growth in Canada and Europe.

Q: Feedback from FDA on opioid-sparing label for meloxicam and partnership strategy A: FDA feedback on opioid-sparing label is being discussed; partnership discussions ongoing, focusing on efficient market reach.

Q: Enterprise-wide strategic review quantum of savings and capital allocation priorities A: Quantum of savings to be detailed in Q1 2026; capital allocation to balance return to shareholders and business development.

Q: Pipeline differentiation (meloxicam, presbyopia, cenerimod) A: Meloxicam leverages multimodal pain pathways; presbyopia commercialization to be detailed closer to launch; cenerimod study in lupus nephritis based on Phase II data showing relevance to lupus nephritis patients.