Viatris Earnings: Solid Results Thanks to Stable Generics and Wins in Eye Care

No-moat Viatris VTRS reported third-quarter earnings that were largely in line with our expectations. Total sales were down 3.3% year over year but up 1% excluding foreign exchange impacts and divestitures. The base business remains healthy, and prescription trends across different regions look to be generally stable. Management slightly lowered sales guidance for the year to $15.4 billion-$15.6 billion from $15.5 billion-$16.0 billion mainly due to adverse foreign exchange. After adjusting our near-term assumptions and accounting for time value of money impacts, we are maintaining our fair value estimate of $13 per share.

Branded drugs saw flat sales growth year over year as key brands, including Yupelri and Dymista, continue to offset declining sales from Viatris’s portfolio of expired innovative drugs, including Lipitor and Norvasc. Sales from new products during the quarter were around $135 million and are on track to hit the firm’s goal of $450 million for the year. The pipeline remains deep, and notable future launches include glatiramer acetate depot, which the U.S. Food and Drug Administration, or FDA, accepted an NDA for in August with an expected decision date of March 8, 2024.

The eye care division saw modest growth on prescription sales, and Tyrvaya continues to perform well. During the quarter, the FDA approved Ryzumvi, an ophthalmic solution for the reversal of pharmacologically induced mydriasis (pupil dilation) that was developed by Ocuphire and Viatris. The partnership was originally between Ocuphire and Famy, but Viatris took over when it acquired the Famy last November. The drug is expected to launch in the first half of 2024, and we have not seen any competitors, albeit we assume the market is small. While we don’t think this launch is a needle mover, we still appreciate Viatris’ continued investment and innovation into ophthalmology, which is one of three key therapeutic areas the firm identified as its future growth drivers.