2024-06-13 12:38:50 ET
Summary
- Viatris presents a unique equation to prospective investors.
- The stock is cheap on a price to sales / price to earnings ratio, but the business has been shrinking.
- Debt is massive - but cash flow is strong, and divestitures have already earned >$6bn.
- Growth projections require strategic M&A in order to be achievable - can management make the right deals?
- This is a fascinating company - marketing legacy brands like Viagra and Lipitor, and generics, while attempting to build for the future, and flirting with success and failure in equal measure.
Viatris Explained - Brief Overview
I posted a detailed note to Seeking Alpha on Viatris ( VTRS ) back in January, discussing many aspects of the company and calling its stock one of the most polarizing investment opportunities in Pharma. To summarize:
- Viatris was formed in 2020 via a merger between New York Pharma giant Pfizer's ( PFE ) Upjohn legacy asset division, and Netherlands headquartered generic drug giant Mylan;
- The company serves ~1bn patients globally every year in ~165 different countries, has ~30 manufacturing sites, and ~33k staff;
- ~65% of Viatris revenues are derived from its Established Brands division, which includes highly successful, but now patent expired drugs such as Viagra, Lyrica, Lipitor, Celebrex, and Epi Pen, which continue to drive revenues in the triple-digit millions.
- The remainder comes from the generics business - ~32%, and complex generics business, 4%;
- Viatris is a heavily indebted company, reporting $17.5bn of debt outstanding as of Q1'24;
- Viatris' revenues have fallen in each of the past two years, 2022, and 2023, and look set to do so again in 2024, albeit marginally.
- Viatris is a profitable company - forecasting for free cash flow of $2.3bn - $2.7bn in 2024, or adjusted earnings per share ("EPS") of $2.7 - $2.85
- Viatris' drug development pipeline is focused on three core areas - Eye Care, dermatology, and gastrointestinal.
Read the full article on Seeking Alpha
For further details see:
Viatris: Revenues, Debt, Valuation And Strategy Under The Microscope