In 2023 and 2024, Viatris substantially completed the divestitures of its over-the-counter (OTC) business, API business in India, and women's healthcare business. These actions are part of a strategy to simplify and streamline the business, accelerate debt paydown, and unlock value.

As part of expanding its innovative portfolio, Viatris acquired exclusive global development and commercialization rights to two Phase 3 assets (selatogrel and cenerimod) from Idorsia Ltd. in March 2024, and an exclusive licensing agreement for sotagliflozin from Lexicon Pharmaceuticals in October 2024. This demonstrates a clear focus on best-in-class, patent-protected assets in unmet medical needs.

The Company has laid out three strategic pillars: Diversified & Growing Base Business, Financial Strength & Significant Cash Flow, and Expanding Innovative Portfolio. These pillars aim to accelerate growth and shareholder return by leveraging the existing portfolio, maintaining strong financial health, and continuously identifying new innovative assets.

Viatris achieved above-target results for its 2024 short-term incentive program, exceeding targets for Adjusted EBITDA, Free Cash Flow, and Global Regulatory Submissions. Specifically, Adjusted EBITDA results were $4,974.5 million against a target of $4,950 million, and Free Cash Flow was $2,923.8 million against a target of $2,500 million.

Despite achieving above-target results, the Board and Compensation Committee exercised negative discretion to reduce 2024 short-term incentive program payouts from 163.92% to 140% of target. This reduction was made in light of a warning letter and import alert relating to a facility in Indore, India, demonstrating management's accountability for operational issues.

The Company appointed Theodora Mistras as Chief Financial Officer effective March 1, 2024, and Dr. Corinne Le Goff as Chief Commercial Officer effective April 15, 2024. Additionally, the transitional consulting arrangement with the former Executive Chairman was not renewed, signaling a move towards a simplified leadership structure.

The Board's decision to reduce executive incentive payouts was directly influenced by a 'warning letter and import alert relating to our facility in Indore, India,' received in late 2024. This indicates a significant operational and regulatory compliance risk that required immediate management attention and Board oversight.

Viatris maintains an enterprise-wide risk management framework, with the internal audit function coordinating quarterly reviews of key and emerging risks with executive management and the Compliance and Risk Oversight Committee. This includes oversight of IT and cybersecurity, data privacy, financial controls, and regulatory compliance.

The Company acknowledges a complex and rapidly changing global environment, citing potential risks from general political and economic conditions, tariffs, trade policies, inflation rates, and global exchange rates. Its multinational reach and supply chain expose it to a broad spectrum of external uncertainties.

Viatris believes its 'strong balance sheet and sector-leading cash flow generation differentiate it from sector peers.' The Company's 'large and diversified portfolio of generics and off-patent brands' extends across markets and therapeutic areas, providing a broad competitive base.

The Company's investments have increasingly focused on 'complex or difficult-to-formulate products, such as modified release or complex injectables,' rather than on commodity products. This strategic pivot aims to enhance its competitive advantage by moving up the value chain with patent-protected assets.

Viatris operates globally, supplying high-quality medicines to approximately 1 billion patients around the world. This extensive global commercial organization, including Developed Markets, Emerging Markets, Japan, Australia, New Zealand, and Greater China segments, provides a significant competitive footprint.

The completion of divestitures of the biosimilars, OTC, API, and women's healthcare businesses in 2022-2024 was intended to 'simplify and streamline our business.' This strategic move aims to enhance operational efficiency by focusing on core, higher-value segments.

Adjusted EBITDA, a 40% weighted metric for annual incentive compensation, measures the Company's profitability and motivates the organization to focus on 'maintaining efficiency of our operations, capturing synergies, and disciplined expense management.' This aligns management's incentives with operational improvements.

The 'warning letter and import alert relating to our facility in Indore, India,' received in late 2024, indicates an operational bottleneck or compliance issue that directly impacted executive compensation payouts. This suggests a need for enhanced focus on quality control and regulatory adherence in manufacturing operations.

Viatris acquired exclusive global development and commercialization rights to two Phase 3 assets from Idorsia Ltd. in March 2024 and an exclusive licensing agreement for sotagliflozin from Lexicon Pharmaceuticals in October 2024. These strategic transactions underscore the company's commitment to expanding its 'innovative, best-in-class, patent-protected assets.'

The Company's R&D investments have increasingly shifted towards 'complex or difficult-to-formulate products, such as modified release or complex injectables,' rather than conventional oral solid dosage forms. This strategic direction aims to build a more differentiated and sustainable product pipeline.

Viatris reported $582 million in new product revenues in 2024, which includes revenue from newly launched products and carryover impact from products launched within the last 12 months. This demonstrates the successful commercialization of its R&D and innovation pipeline.

Viatris paid down approximately $3.7 billion of debt in 2024, successfully achieving its long-term gross leverage target of 2.9x. This significant deleveraging effort strengthens the company's balance sheet and financial flexibility.

The Company returned $825 million in capital to shareholders in 2024 through dividends and share repurchases. This aligns with its long-term financial strategy to 'return capital to shareholders through dividends and share repurchases,' demonstrating a commitment to shareholder value.

While returning capital to shareholders and reducing debt, Viatris also made significant investments in its business, including acquiring global development and commercialization rights to two Phase 3 assets from Idorsia Ltd. and licensing sotagliflozin from Lexicon Pharmaceuticals. This balanced capital allocation supports both short-term returns and long-term growth.

The Board's structure includes an independent Chair (Ms. Higgins) and 10 out of 12 current Directors are independent. Key committees like Audit, Compensation, Compliance and Risk Oversight, Executive, Finance, and Governance and Sustainability are composed entirely of independent Directors, ensuring strong oversight of management and strategy.

Viatris' Board has a formal Diversity and Inclusion Policy, committed to fostering a culture of inclusion and seeking a diverse talent pool including a mix of genders, nationalities, ethnicities, races, and ages. Board refreshment efforts have resulted in four new Directors since 2021 and an independent Chair in 2023, enhancing diversity.

The Governance and Sustainability Committee oversees management's efforts on corporate environmental and social responsibility matters, receiving quarterly reports from the Head of Global Sustainability. This structured oversight ensures that sustainability is integrated into the Company's strategic priorities.

Viatris acknowledges operating in a 'complex and rapidly changing environment' with 'unpredictable market conditions.' Risk factors include 'changes in relevant laws, regulations, and policies,' 'tariffs and trade policies, inflation rates, and global exchange rates,' indicating a challenging external environment.

The Company's divestitures of certain businesses (e.g., biosimilars, OTC, API, women's healthcare) and simultaneous investments in 'best-in-class, patent-protected assets' reflect a proactive response to evolving industry trends and market demands, shifting focus to higher-value segments.

With operations and facilities 'around the world' and a mission to supply medicines to '~1 billion patients,' Viatris is inherently exposed to a wide array of macroeconomic conditions, including public health outbreaks, epidemics, and social disruption in various regions where it or its partners operate.