Viatris Views Ophthalmology, Dermatology, and Gastroenterology as Future Pipeline Focus

Equity Analyst

Keonhee Kim

Revenue segments as reported by the company.

Brands

Complex Gx and Biosimilars

Generics

Other revenues

Revenue Segments

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

Gross Margin

Operating Margin

Profit Margin

Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Research and development

Selling, general and administrative

Litigation settlements and other contingencies, net

Acquired IPR&D

Operating Expenses

Year over year growth in Revenue and Operating Expenses.

Revenue Y/Y

OpEx Y/Y

Growth

Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Outstanding Shares

Market Cap

Also known as Price/Sales Ratio. Calculated using Average market cap for the quarter / Annualized quarterly revenue.

Revenue Multiple

Viatris is one of the largest generic drug manufacturers in the world. Viatris' generics business makes up roughly 40% of company's sales and, along with other generics manufacturers, it continues to suffer low- to mid-single-digit erosion year over year in developed markets like North America and the majority of Europe. Because price and margin 

headwinds exist predominantly in small-molecule oral tablets that are easy to produce, we expect Viatris’ future pipeline to focus more on complex generics—drugs that have complex formulations, dosage forms, or are injected or have more complex administration. 

Complex generics are more difficult to manufacture which by nature limits competition. And since price, volume, and margin are highly dependent on the competitiveness of a drug, complex generics pave an opportunistic road for Viatris. But other players in the industry are employing a similar strategy so success in this area relies on the company’s ability to seek out profitable drugs and efficiently launching them to market.

The remaining 60% of Viatris’ sales is derived from off-patent branded drugs, including Lipitor, Lyrica, and Norvasc. While macrotrends like the aging population and growing emerging markets can continue to boost sales, we still expect low- to mid-single-digit erosion in the business from pricing and volume headwinds driven from more patients opting generic versions. To combat this, Viatris has identified ophthalmology, dermatology, and gastroenterology as three key therapeutic areas of focus for future innovations. Since these areas are all specialty-driven, a small salesforce can capture a large number of doctors. And a lot of innovations usually come from smaller players, meaning there is not one big leader that Viatris has to displace to gain shares. It launched Tyrvaya, the first and only nasal spray 

for the treatment of dry eye disease at the time of launch, and it expects additional products for dry eye disease going forward. In 2023, it acquired Oyster Point and Famy Life Sciences, two companies that focus on ophthalmology, and we expect additional small tuck-in acquisitions in the three therapeutic areas to fuel its pipeline.

Business Strategy & Outlook

We assign Viatris a no-moat rating because we do not believe the company possesses any structural advantages strong enough to earn excess returns and generate return on invested capital above its cost of capital over the next 10 years. 

While generic drugs were around in the U.S. since the early 20th century, their industry experienced a significant growth following the passage of the 1984 Hatch-Waxman Act. The legislation facilitated the drug application process for generic drug manufacturers by providing them a safe harbor from patent infringement litigation from branded drug manufacturers and allowed the U.S. Food and Drug Administration to approve applications for generic drugs with abbreviated new drug applications. An ANDA requires the applicant to demonstrate its generic drug’s pharmaceutical equivalence and bioequivalence to the reference drug, but it generally does not require preclinical and clinical data to prove safety and effectiveness since it relies on the FDA’s prior approval of the reference drug’s safety and effectiveness. Overall, this legislation paved a much swifter way for generics manufacturers to get their drugs approved compared with a new drug application, which a new branded drug must go through.

The U.S. generic drug industry enjoyed another boost when Congress enacted a series of amendments named the Generic Drug User Fee Amendments (first one passed in 2012, second in 2017 and the latest in 2022), allowing the FDA to collect fees from ANDA applicants to expedite application approval process. The fees (an ANDA fee rate for 2023 was around $240,000) are not meaningful to sway big generic manufacturers away and they also provide additional revenue streams and financial support to the FDA, allowing applications to be approved more quickly and efficiently. 

These regulatory pushes by the U.S. government paved ways for the industry to be highly competitive and be filled with commoditized products, eroding a lot of pricing power that generics manufacturers once had. And although there are a few number of players that make up a relatively healthy share of the generics market, barriers to entry here is quite low, expanding possibilities for firms in the space to face additional competition going forward. This explains the hike in generic dispensing rate (percentage of prescriptions dispensed with a generic rather than a branded reference drug) which grew from 54% to 91% between 2002 and 2019. And while an average of less than 300 ANDAs were approved annually from 1985 to 2012, thanks to these changes, the FDA has averaged around 1,000 ANDA approvals per year over the last five years. 

Beyond government actions, generics manufacturers also face pressures from players within the drug supply chain. The formation of powerful generic sourcing groups and establishment of generic formularies by pharmacy benefit manager enabled drug distributors and drug buyers to effectively negotiate lower generic prices, hurting manufacturers’ margins.

Three large generic sourcing programs that were formed as joint ventures between large wholesalers and drug purchasers—ClarusONE (2016, McKesson and Walmart); Red Oak Sourcing (2013, Cardinal Health and CVS); and Walgreens Boots Alliance Development (2012, AmerisourceBergen and Walgreens)—have acted as additional headwind for generics manufacturers. These entities were created to lower generics acquisition costs through the aggregation of purchasing power and as a result, they can demand higher buy-side discounts and rebates from generics manufacturers, ultimately eating into their profits. They now purchase roughly 80% of all generics sold in the U.S. Additionally, the interchangeability between generics has facilitated the establishment of generic formularies, in which wholesalers can use their purchasing scale to negotiate deeper concessions for placement in the generic sourcing program. As these three players continue to make up a larger portion of generic sourcing in the country and enhance their buying power, generics manufacturers are left with no other choice but to face the burden, resulting in low- to mid-single-digit price erosion in the market year over year.

By our estimate, roughly 40% and 50% of Viatris total sales are derived from generics and off-patent branded drugs, respectively, and both areas are highly susceptible to all the pricing headwinds mentioned above. Viatris has decided to combat this by rationalizing and optimizing its portfolio, carefully deciding which drugs to continue commercializing and which drugs to discontinue. The company opted to exit spaces where it had too many existing players and discontinue small-molecule drugs that are fairly simple to be FDA-approved and to be replicated. Furthermore, Viatris has continued to pursue more opportunities into branded drugs, aiming to launch sizable novel drugs that can have a meaningful impact on the top and bottom lines. Viatris has also sought to expand its presence in complex generics. These drugs typically face limited competition due to a more complicated level of research and development required before reaching commercial stage. Instead of being available in simple oral tablets, which are relatively easy to replicate by competitors, complex generics and biosimilars usually come in injectables, inhalers, and other different forms that pose more challenges to other manufacturers to produce. 

Despite these efforts, we don’t believe Viatris has any structural advantages over other generic manufacturers. It doesn’t have a meaningfully larger number of first-to-file launches compared with other players in the space. And even if it launches a few drugs that are first to market and gain 180-day exclusivity periods in certain products, they are likely to face direct competition as soon as that period expires, leading to significant volume reductions. If Viatris continues to downsize its portfolio of commoditized and easy-to-replicate generic drugs and replace them with more innovative medicines, we could potentially revisit our analysis. For now, we do not believe Viatris earns a moat rating.

None

Economic Moat

Viatris

Viatris, Inc. is a global healthcare company, which engages in the provision of access to medicines and sustainable operations. It also offers support services such as diagnostic clinics, educational seminars, and digital tools. The firm operates through the following segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Developed Markets segment consists of operations primarily in North America and Europe. The Greater China segment includes operations in mainland China, Taiwan and Hong Kong. The JANZ segment consists of operations in Japan, Australia and New Zealand. The Emerging Markets segment encompasses operations with developing markets and emerging economies including countries in Asia, the Middle East, South and Central America, Africa and Eastern Europe. The company was founded on February 14, 2019 and is headquartered in Canonsburg, PA.

Earnings data Q1 2024

Revenue

Cost of revenue

Gross profit

Operating expenses

SG&A

Other

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

Viatris offers investors a high dividend yield of 4.7%. The company's underlying business, however, has struggled to generate growth.

1 Reason I Wouldn't Buy This High-Yielding Dividend Stock

Pfizer

Viatris has filled its pipeline with promising products -- that could add billions to revenue. Pfizer aims to launch a record number of drugs over the coming year or so.

Better Pharma Buy: Viatris vs. Pfizer

Viatris Inc. has a low valuation with a forward P/E of under 4 and a market cap of over $12 billion, predicted to reach $15.75 billion in revenues by 2023. The company recently acquired Oyster Point Pharma and Famy Life Sciences, expanding its exposure to the eye care market, and has a strong free cash flow (FCF) for further acquisitions. Despite a significant debt burden, Viatris has managed to reduce its long-term debt by over 25% through strategic divestitures and strong FCF generation.

Viatris: Developing Into A Fantastic Investment Opportunity

Altria

Tobacco giant Altria and generic drug specialist Viatris sport enormous dividend yields right now. In this head-to-head comparison, Viatris stands out as the better overall buy.

Better High-Yield Dividend Stock: Altria or Viatris?

Viatris is making good progress on its strategic plan to cut its debt. It's also going to have more money to give back to investors relatively soon.

3 Reasons to Buy Viatris Stock, and 1 Reason to Sell

NEW YORK , July 14, 2023 /PRNewswire/ -- The Klein Law Firm announces that a class action complaint has been filed on behalf of shareholders of Viatris Inc. (NASDAQ: VTRS) alleging that the Company violated federal securities laws. Class Period: March 1, 2021 to February 25, 2022 Lead Plaintiff Deadline: July 14, 2023 No obligation or cost to you.

VTRS ALERT: The Klein Law Firm Announces a Lead Plaintiff Deadline of July 14, 2023 in the Class Action Filed on Behalf of Viatris Inc. Shareholders

NEW YORK , July 14, 2023 /PRNewswire/ -- Jakubowitz Law announces that a securities fraud class action lawsuit has commenced on behalf of shareholders of Viatris Inc. (NASDAQ: VTRS). To receive updates on the lawsuit, fill out the form: https://claimyourloss.com/securities/viatris-inc-class-action-loss-submission-form/?id=42074&from=4 The lawsuit seeks to recover losses for shareholders who purchased Viatris between March 1, 2021 and February 25, 2022.

VTRS SHAREHOLDER ALERT: Jakubowitz Law Reminds Viatris Shareholders of a Lead Plaintiff Deadline of July 14, 2023

LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz reminds investors of the upcoming July 14, 2023 deadline to file a lead plaintiff motion in the class action filed on behalf of investors who acquired Viatris Inc. (“Viatris” or the “Company”) (NASDAQ: VTRS) common stock between March 1, 2021 and February 25, 2022, inclusive (the “Class Period”). If you are a shareholder who suffered a loss, click here to participate. On February 28, 2022, before the market opened, Viatris revealed.

The Law Offices of Frank R. Cruz Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Viatris Inc. (VTRS)

Seagen

The stocks' shares have all declined to begin the year. Each company had a sluggish first quarter, but has a pipeline with plenty of potential.

3 Healthcare Stocks With Healthy Dividends

NEW YORK , July 13, 2023 /PRNewswire/ -- Levi & Korsinsky, LLP notifies investors in Viatris Inc. ("Viatris" or the "Company") (NASDAQ: VTRS) of a class action securities lawsuit. CLASS DEFINITION: The lawsuit seeks to recover losses on behalf of Viatris investors who were adversely affected by alleged securities fraud between March 1, 2021 and February 25, 2022.

VTRS LAWSUIT ALERT: Levi & Korsinsky Notifies Viatris Inc. Investors of a Class Action Lawsuit and Upcoming Deadline

BENSALEM, Pa. , July 12, 2023 /PRNewswire/ -- Law Offices of Howard G.

VTRS Investors Have Opportunity to Lead Viatris Inc. Securities Fraud Lawsuit

NEW YORK , July 12, 2023 /PRNewswire/ -- The Gross Law Firm issues the following notice to shareholders of Viatris Inc.. Shareholders who purchased shares of VTRS during the class period listed are encouraged to contact the firm regarding possible lead plaintiff appointment.

SHAREHOLDER ALERT: The Gross Law Firm Notifies Shareholders of Viatris Inc. of a Class Action Lawsuit and a Lead Plaintiff Deadline of July 14, 2023 - (NASDAQ: VTRS)

NEW YORK , July 11, 2023 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Viatris, Inc. ("Viatris" or the "Company") (NASDAQ: VTRS), and certain officers. The class action, filed in the United States District Court for the Western District of Pennsylvania and docketed under 23-cv-01098, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Viatris common stock between March 1, 2021 and February 25, 2022, inclusive (the "Class Period"), seeking remedies under the Securities Exchange Act of 1934 (the "Exchange Act").

SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Viatris, Inc. of Class Action Lawsuit and Upcoming Deadline - VTRS

NEW YORK , July 10, 2023 /PRNewswire/ -- Attention Viatris Inc. ("Viatris") (NASDAQ: VTRS) shareholders: The Law Offices of Vincent Wong announce that a class action lawsuit has commenced on behalf of investors who purchased between March 1, 2021 and February 25, 2022. If you suffered a loss on your investment in Viatris, contact us about potential recovery by using the link below.

CLASS ACTION ALERT: The Law Offices of Vincent Wong Remind Viatris Investors of a Lead Plaintiff Deadline of July 14, 2023

CVS Health

Truist Financial

Viatris is a generic drugmaker formed from a merger between Pfizer's generic drug division and Mylan. CVS Health is famous for its pharmacy chain, but it's the parts of its business you might not know about that make it a great dividend stock.

3 Beaten-Down Dividend Stocks That Look Like Bargains Right Now

NEW YORK , July 7, 2023 /PRNewswire/ -- WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Viatris Inc. (NASDAQ: VTRS) between March 1, 2021 and February 25, 2022, both dates inclusive (the "Class Period"), of the important July 14, 2023 lead plaintiff deadline. SO WHAT: If you purchased Viatris common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.

ROSEN, NATIONAL TRIAL LAWYERS, Encourages Viatris Inc. Investors to Secure Counsel Before Important July 14 Deadline in Securities Class Action - VTRS

Loews

WestRock

The move to share repurchases over the last few years has made the price-to-book ratio less reliable for finding hidden opportunities in stocks. How's that, you ask?

3 Stocks to Snag for Less Than Book Value

AbbVie

CareTrust REIT

If you worry you won't have enough saved up by retirement, dividend stocks can help boost your income. Allocating part of your retirement savings to such equities can reduce depletion of your savings.

Why Dividend Stocks Should Be a Key Part of Your Retirement Plan

Viatris is growing while slashing costs and returning capital to investors. It has plans to onboard even more new sources of revenue, but it'll take a while.

Wall Street Thinks Viatris Stock Will Rise 25% -- Could It Grow Even More?

NEW YORK , June 30, 2023 /PRNewswire/ -- WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Viatris Inc. (NASDAQ: VTRS) between March 1, 2021 and February 25, 2022, both dates inclusive (the "Class Period"), of the important July 14, 2023 lead plaintiff deadline. SO WHAT: If you purchased Viatris common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.

ROSEN, A LEADING AND LONGSTANDING FIRM, Encourages Viatris Inc. Investors to Secure Counsel Before Important July 14 Deadline in Securities Class Action - VTRS

PITTSBURGH , June 28, 2023 /PRNewswire/ -- Viatris Inc. (NASDAQ: VTRS) plans to report its second quarter 2023 financial results on Monday, August 7 before the open of the U.S. financial markets. Chief Executive Officer  Scott A.

Viatris to Report Second Quarter 2023 Financial Results on August 7, 2023

V.F.

Warner Bros Discovery Inc

In recent years, S&P 500 companies with new chief executive officers (CEOs) have become a regular occurrence. That's because CEOs are moving on more quickly — both by choice and because of activist investors — and that means there are always interesting possibilities for stocks set to rally under new CEOs.

Fresh Blood: 3 Stocks Ready to Rally Under New CEOs

Viatris (VTRS) closed the most recent trading day at $9.85, making no change from the previous trading session.

Viatris (VTRS) Flat As Market Gains: What You Should Know

Fintel reports that on June 23, 2023, Barclays downgraded their outlook for Viatris (NASDAQ:VTRS) from Equal-Weight to Underweight.

Barclays Downgrades Viatris

NEW YORK , June 20, 2023 /PRNewswire/ --  WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of common stock of Viatris Inc. (NASDAQ: VTRS) between March 1, 2021 and February 25, 2022, both dates inclusive (the "Class Period"), of the important July 14, 2023 lead plaintiff deadline. SO WHAT: If you purchased Viatris common stock during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.

ROSEN, A LEADING INVESTOR RIGHTS LAW FIRM, Encourages Viatris Inc. Investors with Losses to Secure Counsel Before Important Deadline in Securities Class Action - VTRS

News for Viatris Stock (VTRS)