Viatris Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: We achieved 3% divestiture-adjusted operational revenue growth in Q2, driven by strength in Europe and Greater China, and we reiterated 2025 guidance with expectations to land in the top half on revenue and adjusted EPS.
  • Positive Sentiment: Five of six anticipated Phase III readouts showed positive results, highlighted by our fast-acting meloxicam candidate delivering superior pain control and reduced opioid use, with a planned NDA filing by year-end targeting an $80 billion U.S. acute pain market.
  • Positive Sentiment: We have returned over $630 million to shareholders year-to-date, including $350 million in share repurchases, and remain committed to dividends and buybacks alongside strategic business development to fuel growth.
  • Neutral Sentiment: Remediation at our Indo facility is nearly complete and we will request an FDA meeting this month to discuss progress and timing for reinspection; the Nashik facility actions are complete and recently received FDA approval for dorunavir tablets.
  • Neutral Sentiment: We are closely monitoring proposed U.S. tariffs on pharmaceuticals and, while assessing potential impacts on our global supply chain, currently do not anticipate any material effect on 2025 financial results.
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Earnings Conference Call
Viatris Q2 2025
00:00 / 00:00

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Operator

Good day, everyone, and welcome to the Viatris Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. Please also note today's event is being recorded. At this time, I would like to turn the floor over to Bill Cybluski, Head of Investor Relations. Sir, please go ahead.

Bill Szablewski
Bill Szablewski
Head - IR & Capital Markets at Viatris

Good morning, everyone. Welcome to our Q2 twenty twenty five earnings call. With us today is our CEO, Scott Smith CFO, Doretta Mistras Chief R and D Officer, Philippe Martin and Chief Commercial Officer, Corinne Lagoff. During today's call, we will be making forward looking statements on a number of matters, including our financial guidance for 2025 and various strategic initiatives. These statements are subject to risks and uncertainties.

Bill Szablewski
Bill Szablewski
Head - IR & Capital Markets at Viatris

We will also be referring to certain actual and projected non GAAP financial measures. Please refer to today's slide presentation and our SEC filings for more information, including reconciliations of those non GAAP measures to the most directly comparable GAAP measures. When discussing 2025 actual or reported results, we will be making certain comparisons to 2024 actual or reported results on a divestiture adjusted operational basis, which excludes the impact of foreign currency rates and also excludes the proportionate results from the divestitures that closed in 2024 from the 2024 period. We may refer to those as changes on an operational basis. When comparing our 2025 actual reported results to our expectations, we are making comparisons to our 2025 financial guidance.

Bill Szablewski
Bill Szablewski
Head - IR & Capital Markets at Viatris

With that, I'll hand the call over to our CEO, Scott Smith.

Scott Smith
Scott Smith
CEO & Director at Viatris

Good morning, everyone. We delivered strong second quarter performance and stayed sharply focused on our key 2025 strategic priorities, which are driving strong commercial execution across our global business of generics and established brands, advancing our late stage pipeline to drive future innovation, continuing to look at strategic accretive in market business development opportunities to drive near and mid term growth, progressing our enterprise wide strategic review to position Beatrice for sustainable growth in 2026 and beyond and returning capital to shareholders through dividends and share buybacks. Let me begin with a few highlights from our second quarter performance. We achieved 3% divestiture adjusted operational revenue growth, excluding the impact from Indoor, driven primarily by strength in Europe and the Greater China region. These results reflect the strength of our execution and the resilience of our diversified global business.

Scott Smith
Scott Smith
CEO & Director at Viatris

We have also made significant pipeline progress. Five of our six anticipated Phase three readouts have shown positive results. Most recently, this includes positive data from two ophthalmology programs targeting dim light disturbances and presbyopia, both of which address high unmet medical needs. With these readouts and our commercial assets, our Eye Care division remains well positioned to become a more meaningful contributor to VITRUS over the next few years. Earlier this year, we shared positive results for Effexor for generalized anxiety disorder in Japan, Zulane low dose for contraception and our fast acting formulation of meloxicam in acute pain.

Scott Smith
Scott Smith
CEO & Director at Viatris

These achievements reinforce the strength of our pipeline and lay the foundation for our future. Of particular note, the two Phase III studies for our meloxicam candidate demonstrated meaningful improvement in pain and reduced opioid use relative to placebo, a well characterized and well tolerated safety profile and superior pain control versus an opioid arm in post hoc analyses. We expect to file by year end and intend to commercialize this as a branded product tapping into an $80,000,000,000 U. S. Acute pain market.

Scott Smith
Scott Smith
CEO & Director at Viatris

For selatogrel and cenerimod, enrollment for the Phase III global programs for both assets is progressing well with first data readouts expected in 2026. We continue to view both of these as potentially transformational blockbuster treatments for patients in their respective therapeutic areas. For sotagliflozin, we received our first approval in The UAE earlier this year and filings are progressing well in other key countries around the world. As our pipeline advances, we remain committed to returning meaningful capital to shareholders. So far this year, we have returned more than $630,000,000 including $350,000,000 in share repurchases.

Scott Smith
Scott Smith
CEO & Director at Viatris

We continue to balance our focus on shareholder returns with strategic accretive in market business development investments that could fuel future growth. We are also making strong progress on our enterprise wide strategic review, evaluating all aspects of our business to ensure we're building a company that is both competitive today and prepared for the future. We plan to share an update of our progress during our Q3 earnings call in November. Turning to operational priorities, we remain focused on remediation efforts at our indoor facility, which are now nearly complete. Before the end of this month, we'll be asking the FDA for a meeting to discuss the progress of our remediation efforts and the potential timing for reinspection of the facility.

Scott Smith
Scott Smith
CEO & Director at Viatris

At our Nashik facility, while FDA classification is still pending, all committed actions have been completed for some time. Encouragingly, we recently received FDA approval for dorunavir tablets, an antiretroviral medicine made at our Nashik facility. Finally, I'd like to touch on recent policy developments, including proposed U. S. Tariffs, which could impact the broader pharmaceutical landscape.

Scott Smith
Scott Smith
CEO & Director at Viatris

Viatris serves approximately one billion patients worldwide each year. Our global supply chain is built to support patients where they live. Of the 37 manufacturing, distribution, R and D and packaging sites within our global network, eight are located in The United States, which should position us well to navigate the impact of any future changes to trade policy. While we're monitoring tariff developments closely in order to assess potential impact on our business, based on the available information, we do not anticipate any material effect on our 2025 financial picture. We will continue to assess the impact of any potential tariffs on patient access and company financials and we'll provide updates accordingly.

Scott Smith
Scott Smith
CEO & Director at Viatris

We also continue to advocate strongly for thoughtful policymaking that protects access to medications, especially generics, which account for 90% prescriptions filled in The United States and just 1% of the total healthcare spend. Currently, more than half of our U. S. Revenue is sourced domestically and we are currently exploring ways to further leverage and expand our network. With that said, based on the current pricing dynamics in the generics industry, we believe that moving additional manufacturing of non complex generics to The United States would be very difficult in the short term and not likely sustainable in the long term.

Scott Smith
Scott Smith
CEO & Director at Viatris

However, our move towards more complex innovative higher margin products does bring potential opportunity to further expand our domestic footprint. We are committed to evaluating all possible options. Ultimately, our goal is to ensure the right infrastructure is in place to serve patients in The United States and around the globe and maintain a sustainable business model. In closing, we have great momentum going into the second half of the year. Given the strength of the results, we are reiterating our 2025 financial guidance ranges across all key metrics and currently expect to be in the top half of the range on revenue and adjusted EPS.

Scott Smith
Scott Smith
CEO & Director at Viatris

We remain confident in the long term trajectory of Reitrus. The strength of our business, our maturing late stage pipeline, disciplined capital allocation and strategic flexibility position us well for sustainable growth in 2026 and beyond. Now, I'd like to turn it over to Philippe for more details on the pipeline.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

Thank you, Scott. We are proud of the significant progress our R and D team has made in advancing our pipeline of generics and late stage novel and innovative assets. Starting with our Phase three programs, where five of our six anticipated Phase three readouts have shown positive results. We'll be presenting detailed results from our fast acting meloxicam pivotal studies at the upcoming Pain Week Medical Congress in September. Five abstracts were accepted covering efficacy, safety and reduction in opioid use in two different surgery models as well as pharmacokinetics data.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

Overall, we remain highly enthusiastic about the potential of this asset as an acute pain, non opioid treatment option with a benefit risk profile that offers potential advantages over available treatment options and may lead to a significant reduction in opioid use. We are awaiting FDA's response on the potential for an early submission and accelerated approval path given the strength of the data and the unmet public health need. We continue to target the submission of a new drug application by the end of this year. Turning to Zulane low dose, we remain on track to submit the NDA in the coming weeks and anticipate approval mid next year. Our second contraceptive patch in development, a neurogestromine only weekly patch, is more than halfway through Phase III enrollment with data expected by early twenty twenty seven.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

Now shifting to our ophthalmology programs. We are pleased with the positive results we recently shared from the second pivotal Phase III trial of MR-one hundred forty one in presbyopia. The results reinforce our confidence in MR-one hundred forty one and its benefit risk profile as a potential non invasive option to support the millions of patients impacted by this condition. We expect that this data will be presented at the American Society of Cataract and Refractive Surgery Annual Meeting in April 2026. We are targeting our application to the FDA in the 2025.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

In June, we also announced positive top line results from our pivotal Phase III trial evaluating MR142 in treating visual disturbances in low light conditions following keratorefractive surgery. The study demonstrated significant functional improvement in these patients in their ability to drive and function under low light conditions. Importantly, there are currently no FDA approved options and the FDA has granted Fast Track designation further emphasizing the unmet need. This data will be presented at the American Academy of Optometry in October 2025. We recently started our second pivotal study and expect to have results in the 2026.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

The last of the ophthalmology results that we recently announced was our Phase three study of MR-one hundred thirty nine for blepharitis. The study did not meet its primary endpoint of complete resolution of debris at week six. A nominally significant change from baseline in debris at week six was observed suggesting that this mechanism of action remains relevant for the treatment of blepharitis. MR-one hundred thirty nine was generally safe and well tolerated. Additional work is ongoing to determine the appropriate next step for this program.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

Moving to selatogrel and cenerimod. We are pleased with our recruitment efforts for these two programs. For selatorel, we have reached an enrollment rate of approximately 600 patients per month and anticipate we will reach approximately 1,000 patients per month by the end of the year and reach full enrollment in 2026. Turning to cenerimod in SLE, enrollment is nearing completion and we have started notifying sites and investigators accordingly. We anticipate the first Phase III readout near the 2026 followed shortly thereafter by the second readout.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

In an effort to explore additional value this asset can bring to patients, we have received positive feedback from FDA and EMA on our proposed Phase III registration study in lupus nephritis and anticipate having our first patient enrolled by the end of the year. We are also making great progress with the remainder of our late stage pipeline. Regarding sotagliflozin, we recently received our first approval in The UAE within a very short turnaround time. We have filed in Saudi Arabia and are expecting to file in Canada, Australia, New Zealand, Mexico and Southeast Asian countries before the end of the year. As we mentioned in our last call, the JNDA for Effexor GAD is under review by the Japanese Health Authority and is progressing well.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

We anticipate approval in the 2026. In addition, we've had two recent approvals in China for Brayna and YUPELRI demonstrating our capabilities in that market. Finally, within our generic pipeline, all products scheduled for approval in Q2 were approved except for iron sucrose. We believe our application is substantially through its scientific review and expect approval in the near future. The majority of our anticipated generics approvals are weighted toward the back half of the year.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

They remain largely on track including for octreotide. Overall, we are pleased with the strong momentum we have across our pipeline and remain focused on delivering meaningful innovation for patients that address areas of significant unmet medical need. And now, I'll turn the call to Dorita.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Thank you, Philippe, and good morning, everyone. We had another strong quarter and the underlying fundamentals of our base business of generics and established brands remain strong. Today, I'll walk you through the key highlights, the progress we've made against our capital allocation plan and our confidence in the outlook for the remainder of the year. Our second quarter results came in ahead of our expectations, reflecting our well diversified global business. Total revenues for the quarter were $3,580,000,000 which were down approximately 2% versus the prior year.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Excluding the indoor impact of approximately $160,000,000 our operational revenue growth versus the prior year would have been approximately 3%. Now let me walk you through the commercial highlights for the quarter across our segments, which includes the indoor impact. In developed markets, we saw continued strength in brands, which helped to partially offset the indoor impact. From a regional perspective, we continue to see consistent and durable growth from our European business, which grew approximately 2% this quarter, in line with our expectations. In Europe, the brands portfolio grew approximately 3%, led by EpiPen, Creon and Brufen in addition to positive contributions from key markets including Italy.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Generics performance in Europe was flat year over year despite the indoor impact and continues to benefit from the new product revenues in key markets such as France. As anticipated, our North American business decreased 11% versus the prior year, primarily as a result of the indoor impact and competition on Wixela and other products. This was partially offset by continued growth in YUPELRI and Brenna as well as contributions from new product revenues. In Emerging Markets, net sales and increased approximately 1% versus the prior year. This was primarily driven by continued strength in Turkey and our Emerging Asia region as well as stabilization in the Korean market.

Doretta Mistras
Doretta Mistras
CFO at Viatris

This performance helped to more than absorb the indoor impact affecting our ARV generics business. In Jan's, net sales decreased approximately 11%. Results were primarily driven by expected government price regulations and a change in reimbursement policy impacting off patent brands in Japan and competition in Australia. This was partially offset by slight volume increases in our generics portfolio in Japan. Lastly, we continue to see positive momentum in Greater China.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Net sales exceeded expectations and grew 9%, driven by continued growth across our portfolio due to proactive patient choice. Net sales also benefited from the timing of customer purchasing patterns in the quarter, which we expect to moderate in the second half. Moving to the remainder of the P and L, adjusted gross margin of 56.6% in the quarter was in line with our expectations. As anticipated, margins were impacted versus the prior year due to the indoor impact as well as price regulations in Japan. Operating expenses were down versus the prior year as a result of the planned cost saving initiatives, which primarily benefited SG and A.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Turning to free cash flow, We generated $167,000,000 of cash in the quarter. Excluding the impact of transaction related costs, we would have generated $241,000,000 quarter. This was in line with our expectations and reflects the timing of semi annual interest payments and working capital requirements in the quarter. Moving to capital allocation. We have repurchased shares totaling $350,000,000 year to date.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Including dividends paid, we have returned more than $630,000,000 of capital this year to our shareholders. With this continued progress, we remain on track to deliver on our commitment of capital return this year. Now a few comments on our outlook and phasing for the rest of the year. Based on the strong operational performance year to date and continued visibility of the anticipated indoor impact, we are reaffirming all guidance ranges. Within total revenues, we expect to be in the top half of the guidance range as a result of positive operational momentum and the year to date benefit from foreign exchange.

Doretta Mistras
Doretta Mistras
CFO at Viatris

We also expect adjusted EPS to be in the top half of the guidance range, primarily driven by share repurchases. Some of the pushes and pulls in this outlook include our continued expectation of divestiture adjusted growth, excluding the indoor impact of approximately 2% continued growth in Europe, Greater China and emerging markets regions and delays in the anticipated timing of approvals and launches of certain generic products, which could negatively impact our new product revenues this year. Lastly, we continue to monitor foreign exchange. If current rates were to hold for the remainder of the year, it could result in an additional 1% to 2% tailwind on total revenues. This could also result in adjusted EBITDA being in the top half of our guidance range.

Doretta Mistras
Doretta Mistras
CFO at Viatris

As a reminder, any potential foreign exchange tailwind benefiting total revenue would incorporate certain hedging program costs, which could reduce the benefit to adjusted EBITDA. It is important to note that our guidance does not account for any potential impact related to industry tariffs. However, as Scott mentioned, we continue to assess the potential for future impact, but based on available information, we do not anticipate any material impact on our 2025 financial results. The following are a few points about anticipated phasing for the rest of the year. Total revenues are still expected to be slightly higher in the second half at approximately 51%.

Doretta Mistras
Doretta Mistras
CFO at Viatris

This reflects phasing of indoor, normal product seasonality and low to mid single digit growth in Greater China. Adjusted EBITDA and adjusted EPS are still expected to be higher in the second half. This incorporates the timing of spend and investments we are making to support our pipeline and upcoming launches. Last, free cash flow is also expected to be higher in the second half and is expected to benefit from the timing of net working capital and disciplined inventory management. As you heard, our results for the quarter reflect strong performance.

Doretta Mistras
Doretta Mistras
CFO at Viatris

We remain encouraged by the underlying fundamentals of our global business growth and the success of our recent pipeline readouts. With these positive trends, we are building strong momentum for the rest of the year. And with that, I'll hand it back to the operator to begin the Q and A.

Operator

And our first question today comes from Matt Della Torre from Goldman Sachs. Please go ahead with your question.

Matt Dellatorre
Matt Dellatorre
VP - Generic Pharmaceuticals & Biotechnology Equity Analyst at Goldman Sachs

Hey, guys. Good morning and thanks for the question and congrats on the progress. Maybe just on capital allocation in the context of the current split between buybacks and BD, how much of a priority is growth at this point and what level of growth are you now aiming for as we think about full year 'twenty six and beyond? And then in particular, what would make you more aggressive on the BD front? Thank you.

Scott Smith
Scott Smith
CEO & Director at Viatris

Thank you very much, Matt. I'm not going to talk specifically about '26 and a number for growth. But relative to capital allocation, our plan has not changed, staying the same. We're evenly over a period of time, over the next three to five years, we expect to both get back through dividends and share buybacks. And also, I think very importantly, we also need to build a portfolio of growth assets, use our capital to do business development.

Scott Smith
Scott Smith
CEO & Director at Viatris

And what we're really looking for here in terms of business development is strategic assets that are accretive and in market growing assets to build a growth portfolio. So we're very focused on doing both, delivering capital right back to shareholders and also finding ways to build a growth pipeline. And I will say business development is just part of that growth pipeline going forward. Again, we're focused on strategic accretive end market assets to bring into the portfolio, but we also have as we look at 26 and beyond a lot of excitement around the launches that we have, positive data readouts that we had in 25 leads and launches for example effects our GAD in Japan, which is contraceptive product in The United States, fast acting meloxicam, a couple of eye care readouts and launches in presbyopia and dimlytin also launching sotagliflozin in some key ex U. S.

Scott Smith
Scott Smith
CEO & Director at Viatris

Markets. So we've got a lot of launch in 2016, we've got some nice inflection points in terms of data readouts in 2016 as well. Neficon Japan, Progestin only patch and really importantly Senair Mod and Solatigrel. So we feel good about the growth prospects. The base of the business is very solid.

Scott Smith
Scott Smith
CEO & Director at Viatris

We've got a number of launches going into 2026 and we've got capital to deploy to build a portfolio of growth assets.

Doretta Mistras
Doretta Mistras
CFO at Viatris

And what Matt, what I'd also add is kind of we've talked about the base business growth. We continue to see visibility generally to generate low single digits from a revenue perspective for the base business. This year, for example, we're on track to deliver on that 2% operational growth ex indoor. And so the incremental investments and opportunities that Scott is mentioning would be additive to that baseline rate.

Scott Smith
Scott Smith
CEO & Director at Viatris

Absolutely. And we're looking for not just growth in one year, we're looking to put a program together to have sustainable long term revenue and EBITDA growth over.

Operator

And our next question comes from Umer Raffat from Evercore. Please go ahead with your questions.

Analyst

Morning guys. This is JP Inglue of Umer. Congrats on the strong quarter and thanks for taking our questions. So, going back to tariffs, you mentioned you have flexibility for next year. How are you thinking on the proportion of the risk India versus EU?

Analyst

It looks like we're going to have two different kind of tariffs for each region.

Scott Smith
Scott Smith
CEO & Director at Viatris

So, yes, thank you for the question, Jesus. So it's not clear to us at this point in time whether tariffs will be placed on pharmaceuticals. If they are, will it be placed on generic products? At this point, there are no tariffs and so we're monitoring the situation very, very, very carefully. About half our products in The United States from a revenue perspective are manufactured in The United States.

Scott Smith
Scott Smith
CEO & Director at Viatris

We do have some exposure in EU and India. I would say India is about 10% of our revenue, significant volume in terms of product that tends to be low margin OSD type products coming out of India, but it's 10%. So as the situation evolves, as we get more clarity on how tariffs may affect the overall industry, the generic industry etcetera, we model all kinds of things but until we have clarity on that, it's very difficult to think of an impact. And again, I think both Doretta and I in our prepared remarks mentioned that regardless of tariffs, how it evolves during the course of this year, we've put mitigations in place. We do not see any material financial impact in 2025 and we'll know more about 2026 and beyond once we get some specifics.

Operator

Our next question comes from David Amsellem from Piper Sandler. Please go ahead with your questions. And David, is it possible that your phone is on mute? All right. We'll move on to Ash Verma from UBS. Please go ahead with your questions.

Ashwani Verma
Ashwani Verma
Executive Director - SMID Biotech & Biopharma at UBS Group

Hi. Good morning. Thanks for taking our questions. So I wanted to ask about the China business. Seems particularly strong this quarter.

Ashwani Verma
Ashwani Verma
Executive Director - SMID Biotech & Biopharma at UBS Group

I know you called out some purchasing patterns. What's the growth excluding that? And then just more broadly, there's been a lot of biopharma de making activity in the region increasingly. How much of that is a focus for you for your BD efforts? And then the second thing, on the enterprise wide strategic review, still waiting to hear a little bit clarity in terms of what is the scope of activities that you want to showcase and what's the time line for that?

Ashwani Verma
Ashwani Verma
Executive Director - SMID Biotech & Biopharma at UBS Group

Is there any potential cost optimization that can be a part of that exercise or should we not expect that?

Scott Smith
Scott Smith
CEO & Director at Viatris

Thanks. So let me maybe address that part first and then we'll go into China. The enterprise strategic review, we're well engaged in it. We're active looking at every part of the business. And I think the reason we're doing this now is I think there's a it's a good time we've done four divestitures.

Scott Smith
Scott Smith
CEO & Director at Viatris

The company is a product of merger of two different companies and we're evolving our business model to move up the value chain, get involved in more complex and innovative products. And so now is a good time to really take a look at things. Do we have the right people in the right places to be effective? This is sort of about making sure the company is as effective and efficient as possible delivering the business today and delivering the business for the future. I believe there will be significant cost savings that come out of it as well, which will benefit the company.

Scott Smith
Scott Smith
CEO & Director at Viatris

And we don't I don't want to get ahead of myself. We're not through that full process yet. But in Q3, we have an expectation, my goal would be able to provide significant granularity relative to that program by the time we get to the Q3 call.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

So Ash, let me address your China question. So in Q2, China grew 9% operational growth and that's really the result of our diversified commercial model, which is across e commerce, retail and private hospitals. And we also benefited in the quarter from the timing of customer buying patterns and that's what Loretta mentioned in her prepared remarks. Now for the rest of the year, we expect the growth to moderate more to the low to middle digit growth. But what we're seeing is the consistent demand for our iconic brands that have very strong brand equity and notably the brands that offer patients really the trust that they need.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

So the brands that are sensitive to proactive patient demands. So the overlook is positive for China, for the rest of the year. And as a reminder, about 95% of all our brands went through the PPP process already. So that gives us some certainty on the outlook in the region.

Scott Smith
Scott Smith
CEO & Director at Viatris

And just a couple of comments on the China business for me. I think overall the market has progressed very well both in the base side and the innovative side in China. Very, very proud of the team we have there and how well they're executing. I think we see some really good momentum in our China business which we're very pleased about. And relative to your BD comment, yes, there's a lot of companies out there from a sort of biotech, small pharma perspective.

Scott Smith
Scott Smith
CEO & Director at Viatris

There's lots of discussions going on. China seems to be very active in that so far, not only sort of products in China for China, but China for the rest of the world. So lots of discussions, of interesting things happen in the China bio world for sure.

Operator

And our next question comes from David Ansellem from Piper Sandler. David, please go ahead with your questions.

David Amsellem
David Amsellem
Senior Research Analyst at Piper Sandler Companies

Thanks and sorry about that and thanks for accommodating me. So a couple for me. Number one, and sorry if I missed this. Can you just talk about contribution from new products in developed markets this year, if you can quantify that? And is that tracking to your stated expectation?

David Amsellem
David Amsellem
Senior Research Analyst at Piper Sandler Companies

Then secondly, looking beyond indoor, can you just talk about inspections at the other facilities that you've called out in the past? I think there was Nashik as well. But just wanted any color there to the extent there was anything new to add? And then lastly, on meloxicam, can you just talk about the commercial infrastructure you're going to be putting in place here? Is this going to be an office based product, a hospital product, both?

David Amsellem
David Amsellem
Senior Research Analyst at Piper Sandler Companies

I mean there's some promotion intensity here. So how are you thinking about overall level of investment given that you've got a filing coming up for that product? Thank you.

Scott Smith
Scott Smith
CEO & Director at Viatris

Please, Loretta, why don't take

Doretta Mistras
Doretta Mistras
CFO at Viatris

I the first start on the new product revenue. So I would just say generally to your point, David, on any given year, our expectation is to generate about $450,000,000 to $550,000,000 of new product revenue. I don't want to get into mix shift between developed markets, emerging markets. We really view it as a portfolio in terms of the total revenue. This year, and you heard in our commentary, we did assume that new product revenue would be back half weighted just based on our estimated approval and launch timing of certain generics.

Doretta Mistras
Doretta Mistras
CFO at Viatris

And ultimately, that will be an impact of any potential delays of timing of approvals, such as, for example, iron sucrose and others could negatively impact our new product revenues. But overall, I would just say we've taken all of these pushes and pulls into account with respect to our guidance commentary and our kind of total revenue range and we're going to continue to monitor things as we move through the back half of the year.

Scott Smith
Scott Smith
CEO & Director at Viatris

And I'll send it over to Karine to talk about the meloxicam commercial strategy.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

Hi, David. So as you know, we are very bullish about fast paced taking meloxicam. This is moderate to severe acute pain market is large. It's $80,000,000,000 opportunity in The U.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

S. We are in the midst of our launch planning and it's progressing very nice. We're currently focusing on doing market research for positioning. We're doing our pricing and payer research. So it's a bit too early for us at the moment to give you more details on how we're going to go about launching these products, although we have some ideas.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

But what I can tell you is that it's going to be a large opportunity for Beatrice going forward. And we are very much looking forward to finding these assets before the end of the year and launching this product potentially next year.

Scott Smith
Scott Smith
CEO & Director at Viatris

Thank you, Karin. Yes, we see that as a very significant opportunity for us going forward. It will be the right time and place to go through full commercial strategy structures. Do we do partnerships? Do we not?

Scott Smith
Scott Smith
CEO & Director at Viatris

Exactly how do we approach the market and those sorts of things. But we've got some work to do to get ready for that. We just got the data again in May and we've been doing very, very a lot of work, very hard work head down figuring out what our strategies are and they'll be the right time when we can sort of unveil all that to you in a good way. But again, we think this is going to be a very significant part of our portfolio going forward. In terms of the operations update, we are approximately 80% or so remediated in our indoor facility.

Scott Smith
Scott Smith
CEO & Director at Viatris

We've got a good line of sight on completing all the remaining items. In the next couple of days, we're going to ask the FDA for a meeting to discuss not only how the remediation has been going, but also talk about timing for reinspection of that facility. We'll have more clarity on the timelines of reinspection and things once we do have that meeting, which will happen this month. The request will go in this month that meeting. In terms of Nashik, I think it was an encouraging sign that the FDA approved the product that is manufactured in Nashik.

Scott Smith
Scott Smith
CEO & Director at Viatris

Having said that, the FDA classification is still pending. We've completed all the actions for some time ago and again getting that approval of the product manufactured in NASH, I think is a positive sign there. So we're making a lot of progress on the operations front.

Operator

And our next question comes from Jason Gerberry from Bank of America. Please go ahead with your question.

Pavan Patel
Pavan Patel
Associate, Specialty Pharmaceuticals & Biotechnology Equity Research at Bank of America

Hey guys, this is Bhavan Patel on for Jason. A couple of questions from us. First on the pipeline for MR-one hundred forty one, How do you see this drug position relative to other newer eye drop therapies for the improvement of your vision? Do you expect a similar label indication? And what's the strategy to build this market where AbbVie was unable to with immunity?

Pavan Patel
Pavan Patel
Associate, Specialty Pharmaceuticals & Biotechnology Equity Research at Bank of America

And then my second question is with regards to gross margins. So we saw sequential improvement from 1Q's 56% to 2Q's 58%. Maybe if you could provide some more color on the key drivers of this improvement? Is it from the mix shift from new product launches or are cost savings initiatives and supply chain efficiencies starting to materialize earlier than expected? Thank you.

Scott Smith
Scott Smith
CEO & Director at Viatris

So for the eye care question, I'm going to ask Philippe and Corinne to address that first.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

Thank you. Yes. So let me start and then I'll ask Corinne to add. So you know MR-one hundred forty one offers a different mechanism of action than the approved meiotic products, including the recently approved one. And we believe that this will lead to important differences in safety profile between these assets.

Philippe Martin
Philippe Martin
Chief R&D Officer at Viatris

The meiotic effect on ciliary body leads to significant risk, blurry vision, headaches and risk of retinal detachment or tear. So we don't expect that kind of labeling for MR-one hundred forty one based on the mechanism of action and the data that we generated in Phase III. Now importantly, you will remember that this asset was designed to reduce the pupil size to no less than two millimeters, which if you go below two millimeters, which is the case with the meiotic asset, you will that will lead to reduced vision in dim light setting. So also a significant difference between these two assets. So we'll present our data in medical meeting very soon in April 2026 and anticipate that we'll be able to file by the 2025. I can turn it to Corinna.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

So to your question about how this market is going to evolve, it's a very large addressable market in The U. S. We have about one hundred and twenty eight million patients who suffer from presbyopia. And we really believe that this market is opening up to therapeutics. We now have two approved agents in this market.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

As Philippe mentioned, we believe that our asset, Phentolamine, can play a very important role in addressing the unmet needs in this market and it's very unique patient population. It's a different mechanism of action. We expect a very different efficacy and safety profile than the assets that are currently approved. And we think it's a great opportunity as we build and continue to build our Eye Care business. As you know, we have already an Eye Care division with capabilities in The U.

Corinne Le Goff
Corinne Le Goff
Chief Commercial Officer at Viatris

S. And we're looking forward to having Fentanylamin contribute to the revenues of the eye care business going forward.

Scott Smith
Scott Smith
CEO & Director at Viatris

I'll just make a comment on eye care business in general. We've had some significant management changes. We've changed the footprint and the approach a little I think we have now in place a world class team of people who have developed and marketed and sold blockbuster products, innovative products that really understand the marketplace very, very well. Again, some real world class talent in that group. I think as I take a look at it, the world class group, the people that we have in place, the changes that we made, two positive readouts recently for again Presbyopia and DimLight.

Scott Smith
Scott Smith
CEO & Director at Viatris

I look for IBICare division to become a significant contributor, a much more significant contributor than it is today to our overall business. We're putting the efforts in there and hopefully we'll see some good return. And again, I expect more positive contribution from the Eye Care division as we move forward. And I'll turn it over to Duretta to answer the gross margin question.

Doretta Mistras
Doretta Mistras
CFO at Viatris

Great. So with respect to gross margins, gross margins came in for the quarter in line with our expectations. The primary driver of the step up versus Q1 was a couple fold. One, we did see a slightly less mix shift impact from indoor specifically as it relates to some of the penalties. And then we also saw some improved product and segment mix that impacted the quarter.

Doretta Mistras
Doretta Mistras
CFO at Viatris

But generally, was in line with our expectations. As we look in the second half, however, I would also say that from a second half perspective, I would say gross margins, we expect to be consistent from a phasing perspective as what we saw in the first half.

Operator

And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the call back over to Scott Smith for closing remarks.

Scott Smith
Scott Smith
CEO & Director at Viatris

Thank you very much and thank you to everybody on the call. 2025 is shaping up to be an important year for Beatrice. We are executing with purpose and precision, driving our business, advancing a high potential pipeline and returning meaningful value to shareholders. At the same time, we're planning for long term success. I'd like to add my sincere thank you to the more than 30,000 Viasys employees around the world for delivering an exceptional quarter in a challenging global environment. Thank you everybody.

Operator

Ladies and gentlemen, that does conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Executives
    • Bill Szablewski
      Bill Szablewski
      Head - IR & Capital Markets
    • Scott Smith
      Scott Smith
      CEO & Director
    • Philippe Martin
      Philippe Martin
      Chief R&D Officer
    • Doretta Mistras
      Doretta Mistras
      CFO
    • Corinne Le Goff
      Corinne Le Goff
      Chief Commercial Officer
Analysts
    • Matt Dellatorre
      VP - Generic Pharmaceuticals & Biotechnology Equity Analyst at Goldman Sachs
    • Analyst
    • Ashwani Verma
      Executive Director - SMID Biotech & Biopharma at UBS Group
    • David Amsellem
      Senior Research Analyst at Piper Sandler Companies
    • Pavan Patel
      Associate, Specialty Pharmaceuticals & Biotechnology Equity Research at Bank of America
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