The operator, Travis, welcomes everyone to the Viatris 2023 Third Quarter Earnings Call and introduces the speakers, including CEO Scott Smith, President Rajiv Malik, and CFO Sanjeev Narula. They will discuss forward-looking statements and non-GAAP financial measures, and comparisons will be made on an operational basis. The presentation and other materials will be available on the company's website after the call. CEO Scott Smith then greets the audience.

In the third quarter, Viatris had a strong performance with operational revenues of $3.94 billion, adjusted EBITDA of $1.36 billion, and free cash flow of $738 million. They are reaffirming their 2023 financial guidance ranges for adjusted EBITDA and free cash flow, but making a modest adjustment to their total revenue guidance range due to foreign exchange headwinds. They have also announced agreements to divest several businesses as part of their Phase 1 strategic plan and are confident in meeting their long-term goals.

The company is confident in its existing business and plans to add new avenues for growth to accelerate future growth. They have a clear plan to reach their leverage target ratio and will return capital to shareholders while also investing in the business. They believe this focus on growth and shareholder value will help achieve long-term goals. The company is also focusing on business development through M&A, licensing, and partnerships to bring access to high-quality medicines to more patients worldwide. The company's executive, Rajiv, will be retiring next April.

The speaker expresses gratitude for his retiring partner and looks forward to continuing their partnership in a different capacity. They thank their employees for helping to build a strong global platform and report a second consecutive quarter of operational top-line growth. The speaker also discusses the success of their well-balanced business in developed markets, particularly in Europe and North America, driven by new product launches and strong performance in the generics portfolio.

In addition to the strong performance of key products like YUPELRI, glatiramer acetate, vancomycin, and Xulane, the brand business was also supported by demand for epinephrine. Emerging markets also had a strong quarter, with operational growth of 2% led by generics and brands like Lyrica, Zoloft, and Effexor. JANZ segment performed in line with expectations, with slight underperformance in generics due to customer buying patterns. Greater China had a solid quarter, driven by strong retail channel performance, and the segment is expected to perform slightly better than expectations for the full year. The pipeline in this region is also progressing well, with positive results for YUPELRI in Phase III clinical trials and 10 other products under health authority review. In the Eye Care division, non-bridge prescription growth was almost 9% this quarter, and the company plans to focus on prescription growth in the future with the support of their first direct-to-consumer marketing campaign for Tyrvaya.

The company has had $345 million in new product revenue so far this year and is on track to reach $450 million for the full year. They are pleased with the progress of their eye care pipeline and have received FDA approval for Ryzumvi. The FDA has accepted their NDA for Glatiramer Acetate and assigned a PDUFA date of March 8, 2024. They are also working on a Botox biosimilar program and expect to file their IND by the end of the year. Their Phase III study for Xulane Low Dose is on track and they are working with the FDA to initiate a Phase III program for their Opioid Sparing Meloxicom product in late December.

The company's Phase III study for Effexor in Japan is progressing as planned and the NDA filing is expected in the first half of 2025. Their complex injectable programs are also on track and hold potential for a $1 billion franchise. The company's CFO congratulates their outgoing leader and expresses confidence in their global platform and free cash flow generation. They expect at least $2.3 billion in free cash flow in 2024 and saw 2% growth in net sales from developed and emerging markets, driven by a positive mix of brands, generics, and new launches.

The company's net sales for the quarter met expectations and grew 1% compared to the previous year, with strong performance in emerging markets, Europe, and Greater China. This positive momentum is expected to continue due to the strength of the company's global generic portfolio and new products. Adjusted gross margin was higher than expected, and strong adjusted EBITDA and cash flow were reported. The company has been able to generate significant free cash flow and pay down debt, while also returning capital to shareholders. In the fourth quarter, adjusted EBITDA is expected to be lower due to less favorable portfolio mix and increased investment in marketing and future growth.

The company anticipates a lower free cash flow in Q4 due to various factors, but their outlook for 2024 remains positive. They are actively looking for innovative assets in their verticals, but are open to opportunities outside of those as well.

The speaker discusses the company's plans for leveraging their global strength and pursuing business development through M&A, licensing, and partnerships. They do not want to speculate on timing, but are actively pursuing opportunities. The speaker also mentions the company's divestitures and their confidence in meeting long-term goals and generating free cash flow in 2024 and beyond.

The speaker believes that the company has a strong base business and expects to see growth in the 3% range. They also plan to invest in business development and other assets to further increase revenue. The divested businesses are performing as expected and their margins are lower than the company average. The company plans to buy back shares to further drive growth.

The speaker discusses the company's China business, which has remained stable despite fluctuations in the market. They attribute this to their shift towards a private paid channel and investments in their pipeline. They express excitement about the positive data for their products Yupelri and Dymista, and the potential for growth in emerging markets.

The speaker discusses the success of their hybrid business model between brand and generic products, with both performing better than expected. They express confidence and optimism in this business, which is contributing to stability and growth. The speaker also mentions new launches as a driving force for growth. In response to a question about pricing trends in the generics business, they note a longer stretch of stability and supply disruptions, but do not see any concerning trends at the moment. A question from another participant is then addressed.

The speaker is asking about the inflationary pressures on cost of goods that were flagged last quarter and how they may manifest in the future. The speaker notes that the impact of inflation was less than anticipated in the current quarter and attributes this to effective cost management. The speaker also mentions that emerging markets have been impacted by customer buying patterns and that key brands are performing well. The speaker also addresses the impact of foreign exchange on revenue.

The speaker discusses the performance of emerging markets, particularly in Turkey and Asia, and predicts continued growth. Another speaker, Sanjeev Narula, discusses the impact of foreign currencies on the company's business, particularly the weakening of the euro. A question is asked about the FTC's recent challenge of patents listed in the FDA's Orange Book and the company's response is that they have been leaders in challenging improper listings.

The speaker discusses the issue of generic competition for epinephrine auto-injectors and expresses frustration at not receiving information from QC about their concerns with certain patents. They then address product-specific questions, including the contribution of generic Symbicort next year and willingness to consider assets outside of their current focus areas. They also mention the successful launch of a generic Breyna and potential market share growth.

The speaker believes that there is no competition in the next year and that their company will be a significant contributor to the market. They have already captured $345 million in new launches and are on track to reach $450 million. Their launch is planned for the first quarter of next year and they are on track to meet their goals. The speaker is pleased with their execution and is looking forward to the future of the company. The call has ended.

This summary was generated with AI and may contain some inaccuracies.