Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Viatris Inc (VTRS, Financial) reported its fifth consecutive quarter of operational revenue growth, with total revenues of $3.8 billion and operational revenue growth of approximately 2%.
- The company has successfully completed its divestitures, which has streamlined operations and strengthened its balance sheet through significant debt paydown.
- Viatris Inc (VTRS) has a strong global footprint, reaching over 1 billion patients annually, and a diversified portfolio across generics and off-patent brands.
- The company is expanding its innovative portfolio with investments in assets like selatogrel and cenerimod, which have received fast track designation from the FDA.
- Viatris Inc (VTRS) has increased its expected 2024 new product revenue range to $500 million to $600 million, driven by strong new product performance across multiple regions.
Negative Points
- The company faces ongoing challenges from government price regulations in markets like Japan and Australia, impacting its base business.
- There is uncertainty regarding the long-term EBITDA margins, with comparisons being drawn to peers like Organon, which have lower margins.
- Viatris Inc (VTRS) is still in the early stages of its innovative brand strategy, and there is a need for disciplined business development to ensure growth.
- The company is experiencing increased Medicaid utilization in certain non-promoted brands and lower EpiPen volumes due to formulary changes.
- Despite the strong performance, there is still uncertainty about the specific timelines for the development and commercialization of new innovative assets like selatogrel and cenerimod.
Q & A Highlights
Q: Can you discuss the 2025 dynamics, particularly regarding the $2.3 billion free cash flow guide and its translation into EBITDA? Also, what's driving the increase in new product revenues?
A: Theodora Mistras, CFO, explained that the strong momentum in new product revenue is not dependent on a single product or region, with growth seen in Breyna, lisdexamfetamine, and other generics across North America, Europe, and emerging markets. For 2025, while it's early to specify dynamics, the company is focused on maintaining revenue growth and investing in R&D to fuel future growth.
Q: With the divestiture process complete, how do you view the company's long-term profile, especially regarding margins and top-line growth? What are your thoughts on business development?
A: Scott Smith, CEO, emphasized a disciplined approach to business development, focusing on assets that can enhance growth and address unmet medical needs. The company aims to strengthen its base business and expand its innovative portfolio, ensuring a balanced approach to both current market opportunities and future growth.
Q: What is your strategy for innovative brands, and how aggressive do you plan to be in adding these in the US and developed markets? Also, what should we expect from complex generics in 2025?
A: Scott Smith, CEO, stated that the company plans to be disciplined in adding innovative brands, focusing on assets that can drive growth and address unmet needs. Philippe Martin, Chief R&D Officer, added that the company has a robust pipeline of over 250 products, ensuring a steady flow of complex generics in 2025 and beyond.
Q: What are your GLP-1 aspirations, and what investments are you making in this area? How does cenerimod fit into the current therapeutic landscape for lupus?
A: Philippe Martin, Chief R&D Officer, mentioned that Viatris is developing multiple GLP-1s and has secured API supply for these assets. Regarding cenerimod, it is expected to offer a differentiated benefit-risk profile compared to CAR-Ts and bispecifics, with a focus on efficacy and safety, positioning it favorably in the treatment landscape.
Q: Can you comment on the expected base business erosion due to government price regulations in Japan and Australia? How do you plan to allocate R&D spending between innovative and non-innovative pipelines?
A: Theodora Mistras, CFO, noted that price declines in Japan and Australia are ongoing but offset by better volume in Japan. Scott Smith, CEO, added that R&D investments will continue in both the base business and innovative assets, with potential shifts in spending as more innovative assets are developed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
