Viatris(VTRS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2024, the company reported total revenues of approximately $14.7 billion, reflecting a 2% growth year-over-year on a divestiture adjusted operational basis [8][46] - Adjusted EBITDA was approximately$ 4.7 billion, with adjusted EPS at $2.65 per share [9][46] - Free cash flow for the year was approximately$ 2.6 billion, excluding divestiture-related taxes and transaction costs [9][46] Business Line Data and Key Metrics Changes - New product revenues increased to $582 million in 2024, setting a target range of$ 450 million to $550 million for 2025 [7][21] - The global generics business grew by 2%, driven by new product launches and complex products [47] - The company expanded its innovative portfolio with three new products: Selatogrel, Cenerimod, and Sotagliflozin [7][8] Market Data and Key Metrics Changes - The North American market is expected to decline year-over-year due to the impact of the Indore facility and increased competition on certain generics [40][41] - Emerging markets are anticipated to grow year-over-year, primarily driven by the expansion of the cardiovascular portfolio in Latin America and key markets like Turkey and India [41][43] - Developed markets, particularly Europe, are expected to grow due to new product launches and strong performance in key brands [39][40] Company Strategy and Development Direction - The company aims to balance capital return and business investment over the next three to five years, with a focus on returning capital to shareholders in 2025 [16][17] - An enterprise-wide initiative has been launched to review global infrastructure and identify additional cost savings, expected to deliver operational expense savings in 2026 and beyond [18][19] - The company plans to hold an Investor Day later in the year to discuss long-term outlook and pipeline advancements [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the remediation efforts at the Indore facility, expecting completion in a few months and a subsequent FDA re-inspection [12][19] - The anticipated negative impact on 2025 total revenues due to the Indore facility is estimated at approximately$ 500 million [14][52] - Management remains optimistic about the company's ability to drive base business and execute on the pipeline, positioning for growth in 2026 and beyond [20][19] Other Important Information - The company retired approximately $3.7 billion of debt in 2024, achieving its long-term gross leverage target [7] - The FDA issued a warning letter and import alert affecting 11 products, with lenalidomide being the most significantly impacted [12][53] - The company expects to repurchase between$ 500 million and $650 million in shares throughout 2025 [17][58] Q&A Session Summary Question: Concerns about quality control at other facilities - Management confirmed that only the Indore facility received a warning letter, while other facilities are in compliance [67][69] Question: Timing of Phase 3 data for cenerimod and selatogrel - Data is expected in late 2026, but enrollment is progressing well, potentially allowing for earlier data [75] Question: Implications for 2026 and lenalidomide competition - The lenalidomide product is expected to face significant competition in early 2026, with the impact of the Indore situation bringing this event forward by 10 to 12 months [81] Question: Scope and timing of the enterprise review - The review is focused on optimizing cost structure and resource allocation, expected to yield benefits in 2026 [92][95] Question: Impact of Indore issues on revenues outside the U.S. - Active remediation may cause supply issues, affecting certain products in international markets [99] Question: Confidence in new product revenue estimates - The company is confident in achieving$ 450 million to $550 million in new product revenues, with a diverse portfolio supporting this range [101] Question: Performance of generic Symbicort - The company remains optimistic about the performance of Breyna, which is expected to contribute positively to revenues [103]