Viatris(VTRS) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2023, the company reported total revenues of approximately $15.4 billion, adjusted EBITDA of approximately$ 5.1 billion, and free cash flow of approximately $2.4 billion [36][46][62] - The adjusted gross margin for the full year was at 59.1%, driven by strong brand performance [43] - The company anticipates total revenue growth of approximately 2% for 2024, with new product revenue expected to be between$ 450 million to $550 million [3][52] Business Line Data and Key Metrics Changes - The Greater China segment delivered 2% growth in 2023, primarily due to strong retail performance [1] - The JANZ segment is expected to decline by 8% in 2024 due to government-driven price regulations [2] - Developed Markets saw a 1% decline in 2023, but growth is expected to return in 2024 with both Europe and North America projected to grow by 3% [4][5] - The Eye Care portfolio is expected to see further gains in 2024, driven by prescription growth in Tyrvaya and the launch of Ryzumvi [7] Market Data and Key Metrics Changes - Emerging Markets achieved 7% year-over-year operational growth in 2023, with projections of 6% growth in 2024 [8] - The company noted strong performance in markets such as Turkey, South Korea, and Southeast Asia [8] Company Strategy and Development Direction - The company aims to leverage investments to expand the self-pay patient market and brand equity, anticipating a 2% year-over-year decline in 2024 due to healthcare policy regulations [18] - A global research and development collaboration with Idorsia was announced, focusing on two late-stage potential blockbuster assets [26][37] - The company is committed to maintaining a balanced capital allocation approach, including share repurchases and dividends while investing in future growth [24][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the core business and the potential for continued growth into 2024 and beyond [16][27] - The company expects to generate approximately$ 2.5 billion in free cash flow in 2024 before any divestiture costs and taxes [53] - Management highlighted the importance of finding impactful assets that can drive long-term revenue streams [72] Other Important Information - The company completed $250 million in share repurchases earlier in the year and has an additional$ 1 billion share repurchase authorization [28] - The anticipated driver for adjusted EBITDA includes contributions from new product launches and revenue growth, with an estimated impact from remaining divestitures [53][56] Q&A Session Summary Question: Follow-up on business development strategy - Management indicated that finding impactful assets is challenging, but building a commercial structure around them is easier if the asset is impactful [72] Question: Thoughts on the Eye Care franchise and commercial launch of Ryzumvi - Management noted that the DTC campaign for Tyrvaya has shown an 18% increase in prescriptions, and they are optimistic about the upcoming launch of Ryzumvi [112] Question: Insights on the FTC examination regarding PBMs and wholesaler practices - Management observed stabilization in pricing and emphasized the industry's shift towards quality and availability rather than just cost [120] Question: Differentiation of Selatogrel and Cenerimod - Management highlighted that Selatogrel targets a critical time in heart attack treatment where no current treatment exists, while Cenerimod shows strong Phase 2 data and fast track designation [104][105] Question: Philosophical approach to business development - Management stated that they will consider a wide range of opportunities, including licensing and partnerships, while focusing on building a strong portfolio [124]