Investors have yet to appreciate Viatris, created a year ago this week by the merger of a Pfizer spinoff and generic drugmaker Mylan, but its CEO says the company is doing well and is offering investors a extraordinarily wide product range.
“The thing that sets many companies apart is the wallet,” said
(ticker: VTRS) CEO Michael Goettler, who previously headed the
(PFE) division known as Upjohn. This company, specializing in the sale of off-patent drugs on foreign markets, finalized its merger with Mylan in November 2020.
Viatris has an extraordinarily large portfolio, encompassing the generic business of Mylan, Upjohn branded products like Xanax and Viagra, biosimilars, a number of over the counter products and an active pharmaceutical ingredients business that sells used chemicals. in the manufacture of medicines.
“It makes the company a lot stronger,” Goettler said. Barron. “All the kinds of knocks and headwinds that we get in an area or from a particular commodity, we have ways to compensate for that.”
“No single product represents more than 10% of income,” he said. “We have found a unique business model, it’s a new kind of healthcare business. “
Goettler highlighted the company’s performance over the past three quarters, in which its sales and profits have exceeded Wall Street estimates. “I think we are playing very well,” he said.
Investors are not yet convinced. Viatris stock closed at $ 15.86 on November 16 of last year, the day the combined company launched. The stock closed at $ 13.88 on Tuesday, down 12.5% over that period, while the
was up 29.6%.
Viatris shares are down 25.8% since the start of the year. Analysts are lukewarm on the stock: eight of the 17 FactSet tracked that cover Viatris give it a buy or overweight rating, while nine give it a maintenance rating. Their average target price is $ 19.08, which implies a 38.2% return on the recent share price of $ 13.80.
In recent notes, analysts have raised questions about how the merged company’s earnings will evolve over the long term. “Looking ahead, we continue to struggle with the long-term visibility of EBITDA (or lack thereof),” Piper Sandler analyst David Amsellem wrote in a November 8 note. “In other words, we ask ourselves to what extent the increasing contribution of Mylan’s generic / biosimilar / complex inheritance assets in a range of geographies over time can offset the pressure on the legacy Upjohn brands … so that EBITDA can be sustainable. ”
In other words, how the Viatris puzzle fits together is still unclear. Viatris hopes to clear up the confusion on an Investor Day scheduled for January 7. Management plans to present its financial forecast for 2022 and set targets for 2023.
“We’re going to talk about our pipeline; I think our pipeline is going to be one of the most underrated assets we have, the organic opportunities it offers, ”Goettler said.
This pipeline includes biosimilars, which are the equivalent of generics for more complex biologic drugs, but also includes complex generics and new chemical entities.
“We see a future where we go up the value chain and get into things like 505 (b) (2),” Goettler said, referring to drugs that have been given the green light under a section of federal law. which authorizes the approval of new drugs on the basis of studies conducted by other companies.
In the short term, Goettler said the company has focused on paying down debt and paying a dividend. It paid off $ 1.9 billion in debt in the first three quarters, Goettler said. Viatris announced dividends of 11 cents per share in the second and third quarters.
Corrections and amplifications: Viatris repaid $ 1.9 billion in debt in the first three quarters. An earlier version of this article incorrectly gave a total of $ 9 billion.
Write to Josh Nathan-Kazis at [email protected]