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Viatris Inc VTRS

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Stable First Quarter for Viatris Propped Up by Biosimilars

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

Viatris posted first-quarter results on track with our forecasts, and we maintain our $25 fair value estimate and no-moat rating. First-quarter revenue was $4.4 billion with a 25% adjusted net margin. Compared with a premerger-adjusted first quarter of 2020, global generics revenue declined 4% due a tough comparison period in Europe. Branded generics' revenue declined by the same amount due to a moderate slowdown in emerging markets. In contrast, complex generics and biosimilars grew 30%, driven by biosimilars including pegfilgrastim (for febrile neutropenia), trastuzumab (for cancer) and adalimumab (for immunology). We anticipate a degree of bumpiness in earnings over the next few quarters and beyond as management proceeds with its restructuring plan, but we expect that the gross margins of the component businesses will remain solid. Management reduced long-term debt by $300 million this quarter to $22.1 billion and reaffirmed last quarter’s guidance for 2021.

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Company Profile

Business Description

The new entity will largely be led by Pfizer executives and will be registered in Delaware. The new entity is anticipated to leverage the stand-alone Mylan infrastructure consisting of roughly 55 manufacturing and research and development facilities and that were largely acquired, including Matrix Laboratories and the generics business of Germany-based Merck KGaA. The combined portfolio will consist of the mature Upjohn drugs with notably better economics and Mylan's portfolio of more than 7,500 generic, specialty, and over-the-counter active ingredients and medicines, including EpiPen (treatment for anaphylaxis acquired through the Merck KGaA transaction). Unlike its generic peers, the company has made the most progress on the biosimilar front.

Contact
1000 Mylan Boulevard
Canonsburg, PA, 15317
T +1 724 514-1800
Sector Healthcare
Industry Drug Manufacturers - Specialty & Generic
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Slow Growth
Employees 45,000

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