Q1 2025 Viatris Inc Earnings Call
Good morning everyone and welcome to the Viatris Q1 2025 earnings call. All participants will be in a listen only mode. Should you do the assistance, please see no conference specialist by pressing the star key, followed by zero.
After today's presentation, there will be an opportunity to ask a question you may press star and then one, to withdraw your questions you may press star and two. Please also note today's event is being recorded.
At this time, I'd like to turn the floor over to Bill Szablewski, Head of Capital Market. Please go ahead.
Scott Smith: Good morning, everyone. Welcome to our Q1 2025 earnings call. With us today's CEO , Scott Smith, CFO , Doretta Mistras.
Scott Smith: Chief R&D Officer, Philippe Martin, and Chief Commercial Officer, Crane Goff
Scott Smith: 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 risk and uncertainties.
Scott Smith: We will also be referring to certain actual and projected non-GAAP financial measures.
Scott Smith: Please refer to today's side presentation and our SEC filings for more information, including Reconciliation of those non-GAAP measures to the most directly comparable GAAP measures .
Scott Smith: When discussing 2025 actual reported results, we will be making certain comparisons to 2024 actual or reported results on a divestiture-adjusted operational basis.
Scott Smith: which excludes the impact of foreign currency rates and also excludes the proportionate results from the procedures that closed in 2024, from the 2024 period.
Speaker Change: We may refer to those as changes on an operational basis. When comparing our 20-25 actual or reported results to our expectations, we are making comparisons to our 20-25 financial guidance. With that, I'll hand the call over to our CEO , Scott Smith.
Scott Smith: Good morning, everyone. 2025 is off to a good start as we continue to focus on executing on our strategic priorities.
Highlights include Q1 Operational Performance in Line with Expectations,
Significant Pipeline Progress, including three positive phase three data read outs.
Scott Smith: We're turning approximately $450 million in capital to shareholders with approximately $300 million of that through share repurchases.
Scott Smith: continued remediation of our indoor facility and on track to request reinspection mid-year.
Scott Smith: Significant progress on our enterprise-wide strategic review, working to set the organization up for future growth.
Scott Smith: In Q1 we delivered $3.3 billion in total revenues, down 2% on a divestiture adjusted operational basis, driven primarily by the impact of indoor.
Scott Smith: We were particularly pleased with their strong execution and growth in Europe and China this quarter.
Scott Smith: So far this year we've made tremendous progress in advancing our pipeline and Philippe will provide additional detail shortly.
Philippe Martin: This morning we announced positive data for phase three studies of our novel fast-acting in the Moxacam in moderate to severe acute pain.
Scott Smith: This is a significant advancement for Viatris in an area of high unmet medical need.
Scott Smith: We believe there's a tremendous demand for more non opioid treatment options for patients
Scott Smith: We look very much forward to progressing this treatment for registrational filings in 2025.
Scott Smith: Additionally in the quarter, we receive positive data for zoom-line low, a trans-dermal patch that is being developed to offer women a low dose estrogen combination birth control option.
Scott Smith: We plan to submit our NDA in the second half of this year.
Scott Smith: Earlier this quarter, we received positive results from the phase three open label long term extension study for effectsore, required for approval in Japan where we filed an S-N-D-A for effectsore for the treatment of generalized anxiety disorder, an indication for which no other treatment option is currently available.
Or approved in Japan. [inaudible]
Scott Smith: Today we've received three of the six A-3 data readouts that we are expecting this year importantly all other studies remain on track to read out later this year.
Dredition.
Scott Smith: We continue to make great progress on Salada Group, Scenario Mod and Sutter Goff, and these innovative assets remain on track for important data readouts beginning in 2026.
Scott Smith: As previously discussed in Q1, we entered into agreement with our partners from my Dorisia, that allows us even greater control over the salatic world's scenario mod development programs and expands our geographic ownership of scenario mod.
Speaker Change: © The Ultimate Parody Site-Limited All rights reserved. The Ultimate Parody Site-Limited All rights reserved.
Scott Smith: From a capital allocation perspective during this period of significant market and policy unpredictability, we have prioritized returning capital to shareholders. To date, we have returned approximately $450 million in capital to shareholders with approximately $300 million of that from share repurchases and $143 million from dividends.
Scott Smith: We are reaffirming our commitment to prioritize the return of capital to shareholders in 2025.
© The Bulletproof Executive 2013
Scott Smith: We continue to make progress on our remediation at our indoor facility and have engaged third-party subject matter experts to assist in this task.
Scott Smith: As stated in February , we expect to submit a request for re-inspection mid-year [inaudible]
Scott Smith: We've also kicked off our enterprise-wide strategic review and are taking the opportunity to look at our business holistically.
Scott Smith: We will do this while ensuring we continue to protect and grow the base business and further develop our innovative capabilities.
Scott Smith: This is an opportunity for us to look at streamline and cost globally to reflect our smaller and more simplified post-divesture footprint and ensure we are ready for the next stage of sustainable revenue and earnings growth.
Scott Smith: Continuing our performance in the first quarter, we are reaffirming our outlook for the year.
Scott Smith: Turning to the current discussions around tariffs at Viatris, we take seriously our mission to empower people worldwide to live healthier at every stage of life.
Scott Smith: In fact, we are very proud that we serve approximately 1 billion patients worldwide each year.
Well, take some pharmaceuticals if enacted.
Could have a negative financial impact on the organization.
Scott Smith: We are also concerned about the potential for additional supplies or shortages and disruptions.
Scott Smith: that could have a significant impact on the ability for Americans and indeed patients around the globe to access the medicines they need.
Scott Smith: We currently commercialize our products in 165 countries and have 36 manufacturing R&D and packaging sites around the globe.
A to these facilities in the United States.
Scott Smith: We have deep expertise in managing a global supply network and we are continually taking steps to be nimble and responsive to any opportunities or challenges that lie ahead.
Scott Smith: Well, our global and diverse supply chains optimized to support patients where they live. As the U.S. company, we have been in the past and continue to be today firmly committed to manufacturing in the United States.
Scott Smith: Last year we manufactured approximately 8.5 billion doses in the US, and more than 50% of our US revenue is currently sourced from the US manufacturing site.
Scott Smith: We look forward to understanding more about the specifics around the executive order issued earlier this week as we continue to explore ways to optimize the flexibility of our global network, including the potential to increase our manufacturing capacity in the US.
David Amsellem, Balaji Prasad,
Scott Smith: We were made focused on ensuring we have the right footprint and the right places so we can continue to serve our patients worldwide while also maintaining a profitable and sustainable business.
Thank you for watching!
Speaker Change: I am now very excited to talk about the most recent addition to our Executive Leadership team. Hey, Mithra Gays joined us in April as Chief Strategy Officer.
Speaker Change: He brings deep experience across the biotech and pharmaceutical industries and in every area of our portfolio, generics, complex generics, brands and innovative products. He also holds a PhD in medical biophysics, giving him a unique perspective into the healthcare industry.
Scott Smith: I look forward to working with Hameth, the rest of our leadership team, and in fact all of our colleagues globally as we continue to work to drive our base business, execute on our pipeline, return capital to shareholders and position ourselves for growth in 2026 and beyond.
Scott Smith: Now, let me turn it over to Philippe to discuss the exciting developments in our pipeline in more detail.
Philippe?
Philippe Martin: We previously mentioned that we would have six phase three readouts in 2025.
Speaker Change: We've already had the first three readouts and I'm pleased to report that all three are positive.
Speaker Change: These programs are now moving to the regulatory submission preparation phase.
Speaker Change: Let's begin with the Phase Three Readout, our investigational MR10702 program for the treatment of moderate to severe acute pain that we announced earlier today.
Speaker Change: The development of safe and effective alternative treatments to opioids is an important public health need.
Speaker Change: The improvement in pain we observed from our fast-acting meloxicum compared to placebo were statistically significant and clinically meaningful, building on an established mechanism of action and well-characterized safety profile.
Speaker Change: All primary and secondary endpoints were met in both Phase 3 studies.
Speaker Change: These results were consistent across multiple post-surgical models of moderate to severe acute pain.
Speaker Change: We believe that, when approved, this all non-opioid analgesic option for the treatment of moderate to severe acute pain will get us closer to addressing this important public health need.
Speaker Change: In addition to placebo, these trials included an opioid arm, trauma at all, 50
to confirm the sensitivity of the pain model.
Importantly, and in contrast to recently approved agents.
Speaker Change: Our fast-acting Meloxicam demonstrated superior pain control versus the opioid arm in both surgical models, further strengthening its value as a potential non-opioid option for acute moderate to severe pain.
Speaker Change: For context, this regimen of Tramadol equals 40-year-old morphine equivalence which is twofold higher
Speaker Change: Additionally, our fast-acting meloxicant demonstrated a significant reduction in opioid usage across both studies.
Speaker Change: This was demonstrated by a significant reduction in opioid use, versus placebo, and a significantly higher number of opioid-free patients on fast-acting meloxic amd and placebo.
A fast-acting menopathy can be generally well-tolerated. [inaudible]
Speaker Change: In both studies, incidents of TIEs was comparable to placebo in a post-surgical setting.
Speaker Change: Few severe TIEs and SIEs were reported with a right consistent with placebo. No TIEs leading to death were reported.
Speaker Change: These two pivotal studies, optimally positioned, are fast-acting Meloxican for potential first-line treatment for moderate to severe acute pain.
Speaker Change: The company is targeting to submit a new drug application to the FDA by the end of the year based on the positive data from these two phase three studies and the supportive positive phase two dose ranging finding data in dental pain.
Speaker Change: We also anticipate that the full day I said from both phase three studies will be presented during the pain week medical conference in September in Las Vegas.
Speaker Change: Next, let me provide more details about the positive result from our investigational Zoolemlo phase 3 readout that we have also announced today.
Speaker Change: They are three important conclusions from the study. One is confirmed the effectiveness of Zulein Low Weekly Patch for birth control in women of childbearing potential.
Speaker Change: Two, it demonstrated a favorable safety and tolerability profile with most TAs reported as malto moderate and no new safety concerns identified.
Speaker Change: And three, he demonstrated potential best-in-class patch performance with very few patches completely detaching over the seven-day wearing period, and less than 1% of trial subjects reporting severe local applications at reactions.
Speaker Change: Overall, we are pleased with the results and believe Zulein Lo also has the potential to address an important need for women seeking a reversible birth control option with a lower dose of
Speaker Change: We also design our patch with certain texture and sizing properties that we believe could be appealing to women who are seeking another weekly birth control patch option.
Speaker Change: Viatris has a long history and strong track record of developing and manufacturing dermal patches at our R&D and manufacturing facilities in Vermont. We are looking forward to progressing this product toward regulatory submission which we anticipate will be in the second half of this year.
Speaker Change: We also anticipate that the result from this Phase 3 study will be presented at the next American College of Obstetrician and Gynecologist Conference.
A Remaining Face 3 Reader of Anticipated This Year.
Relate to our homology programs.
Speaker Change: We remain on track to receive key face three original readouts in the first half of the year.
Please include
Pimicolimus for Blepharades,
Speaker Change: Phantolamin Artharmic, Solution for Presbyopia and for visual loss in low-light condition associated with character refractive surgery.
Speaker Change: As for the advancements in our pipeline, our regulatory team is hard at work, advancing key submissions.
Speaker Change: We recently filed application to the Japanese health authorities for approval of the effects or for the treatment of adults with generalized anxiety disorder.
Speaker Change: There is no other treatment option, apparently, approved for this indication in Japan.
Speaker Change: A positive result from our previously announced phase three efficacy and safety studies laid
Speaker Change: We are also pleased that these results have been accepted as a poster presentation at the Japanese Society of Neurology and Psychiatry Conference.
Speaker Change: In addition, we are focused on preparing our submissions for soda glee flows in in a number of XUS markets.
Speaker Change: Our findings in UAE and Saudi Arabia have been submitted, and we expect to submit our findings in Canada soon.
Speaker Change: Moving to Cilata Ground Scenario Mod, and a moment for both programs remain on schedule. We recently presented the data at Panlar that covered the multifaceted immunomodulatory properties of Scenario Mod.
Speaker Change: Also, we are pleased to share the acceptance of our abstracts covering data from the additional analysis of the Phase II Care Study, providing information related to fatigue and quality of life at Lupus 2025.
and Maintenance of Response at ULAR 2025.
Speaker Change: We look forward to continuing to engage with the rheumatology and lupus scientific and patient communities at several congresses throughout the year.
Speaker Change: Posilatogram, we had very productive discussions at the recent American College of Cardiology Congress and continued to see strong interest in the trial within the Cardiology community.
Speaker Change: Lastly, regarding our best business portfolio, we are on track with the approval's required efforts to deliver 150 to 550 million of new product revenue this year, including our anticipated approval for iron sucrose, acryotide and lyragritide.
Speaker Change: Of all this is a strong start to the year. I'm the Strategies Driven Bar, deep in-house development capabilities and expertise, and we are very pleased with our steady discipline progress today.
and will now turn the call to Doretta.
Doretta: Thank you, Philippe, and good morning everyone. I'm glad you could join us.
Doretta: Today, I will walk you through the key drivers and takeaways for the quarter, the progress we're making against our capital allocation plan and our outlook for the remainder of the year. Our first quarter results were in line with our expectations and reflect our well-diversified global business.
Doretta: Total revenues for the quarter were 3.25 billion, down 2% versus the prior year.
Doretta: The impact from indoor in the first quarter was approximately 140 million, which was in line with our expectation.
Scott Smith: Excluding this impact, operational revenue would have increased 2% versus the prior year. As Scott mentioned, the remediation effort at Indoor is progressing as planned.
Our revenues benefited from growth in our brands of three percent.
Scott Smith: This was primarily driven by the expansion of our cardiovascular portfolio in emerging markets and growth in greater China and developed markets.
Scott Smith: In development markets, overall net sales were impacted by declines in our generic business, partially offset by growth and brand.
Scott Smith: From a regional perspective, we continue to see consistent and durable growth from our European business, growing approximately 1% this quarter.
Scott Smith: The brand portfolio grew 2%, led by Creon, Brufen, and Arthrumbosis Portfolio.
Scott Smith: Generic performance with flat year over year, despite the indoor impact, and continues to benefit from key markets such as France.
Scott Smith: Our North American business decreased 8% versus the prior year, primarily as a result of the indoor impact and competition on select generic products which was expected.
Scott Smith: This was partially offset by new product revenues and continued growth in Braynow.
Scott Smith: An emerging market, net sales decreased approximately 5% versus the prior year, primarily driven by the indoor impact and customer buying patterns affecting the Arabi generics business.
Scott Smith: Partially offsetting this performance was growth in brands across the cardiovascular portfolio in certain Latin American countries and continued strength in the Mina and Eurasia region.
In our Jan segment, net sales decreased approximately 6%.
Scott Smith: Results were primarily driven by expected government price regulations in Japan and Australia and a change in reimbursement impacting off patent brands in Japan. This was partially offset by volume increases in the generic portfolio.
Scott Smith: Lastly, we see continued positive momentum in greater China. Met sales grew 4% which was as a result of our diversified model across e-commerce, retail and private hospitals.
Scott Smith: This led to growth across the portfolio, particularly brands that are sensitive to proactive patient choice.
Scott Smith: In looking at the P&L, adjusted gross margin of approximately 56% in the quarter was in line with expectation.
Scott Smith: As anticipated, margins declined versus the prior year due to price regulations and jams, the impact of indoor and the increase in certain product supply costs.
Operating Expenses were roughly flat versus prior year. Now, let's get started.
Scott Smith: Cost Savings, Initiatives, Benefitting S-GNA, we're offset by investments in R&D to advance our innovative pipeline.
Scott Smith: Finally, the company had a triggering event for goodwill impairment testing in the first quarter due to a decline in our share price and the increased uncertainty and volatility in the geopolitical and economic environment in which we operate.
Scott Smith: As a result, for U.S. gap purposes, we recorded a non-cash goodwill impairment charge of 2.9 billion driven by an increase in discount rate assumptions reflecting the increased business risk.
Scott Smith: Despite this, we remain confident in our base business outlook and in our ability to deliver on our expectations for the year.
Scott Smith: Turning to free cash flow for the quarter, it was $493 million and would have been $535 million excluding transaction costs and taxes from the investors.
Scott Smith: Moving to capital allocation, we continue to prioritize capital return and since the beginning of the year we have repurchased over 300 million worth of shares.
Scott Smith: Including our Q1 dividend payment, we are pleased to have already returned more than 450 million of capital to our shareholders.
Scott Smith: Now, a few comments on our outlook and phasing for the rest of the year.
Scott Smith: Based on the performance in the first quarter and trends we are seeing across the business, we are reaffirming our outlook for the year.
Scott Smith: Within our guidance, the drivers of total revenue include no change to the base business outlook including the estimated financial impact from indoor and continued confidence in meeting our new product revenue range of 450 million to 550 million.
Scott Smith: While foreign exchange has been volatile, we've seen spot rates move favorably over the past month, and if current rates hold for the remainder of the year, this could offset the 2-3% headwind we had previously incorporated in our full year revenue guidance.
Scott Smith: Due to finalizing an agreement to expand our commercial rights for Scenario Mod, Adjusted EBITDA and Adjusted EPS guidance, reflects a 10 million impact from IPR&D.
Scott Smith: Adjusted EPS also reflects the benefit from share of purchases executed to date.
Scott Smith: It's important to note that our guidance does not account for any potential impact related to industry terror.
Scott Smith: with regards to anticipated phasing for the rest of the year.
Scott Smith: Total revenues are still expected to be higher in the second half at approximately 52% of our full year outlook.
Scott Smith: This reflects the estimated impact of indoor, normal product seasonality, and back-weighted launches of new products.
Scott Smith: Adjusted EBITDA and Adjusted EPS are still expected to be higher in the second half.
Scott Smith: and as a reminder, free cash flow is expected to be lowest in Q2 due to timing of semi-annual interest payments and working capital requirement.
Scott Smith: In conclusion, I want to take the opportunity to reiterate our confidence in the fundamentals of our business and the progress we continue to make executing against our strategic priorities.
Scott Smith: Our well-diversified global business and our strong cash flow enables us to continue delivering on returning capital to our shareholders.
Scott Smith: We believe we are well positioned to meet our expectations for the remainder of this year. And with that, I'll hand it back to the operator to begin the Q&A.
© The Bulletproof Executive 2013
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session to ask a question you may press star and then one on your touch tone phones. If you are using a speaker phone, we do ask that you please pick up the handset before pressing the keys.
Withdraw your questions you may press star and two.
Speaker Change: But again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster.
Speaker Change: Our first question today comes from Chris Schott from JC Morgan. Please go ahead with your question.
Chris Schott: Great. Thanks so much, just two questions for me. Maybe first on the Miloxicam opportunity. Can you just help us frame out how you're thinking about the peak sales opportunity and kind of the ramp once approved for this drug and how much of your existing infrastructure can you leverage to launch the product? Thank you very much.
Chris Schott: And then my second question was just on tariffs. Scott appreciates some of the comments in the opening remarks, but for the 50% of your sales in the US that aren't manufactured domestically.
Chris Schott: How should we think about the company's ability to mitigate the impact there, specifically, is there opportunity to take price tops up some of this and is there capacity within the U.S. manufacturing network to shift things to the U.S. if needed? Thanks so much.
Speaker Change: Good morning, Chris, and thank you for the question. Let me answer the tariff question first and then I'll kick it over to...
Speaker Change: Takaran and to potentially Philippe to talk a little bit about Moax scams. So more than 50% of our U.S. revenues come from U.S. based manufacturing. We have eight manufacturing R&D packaging sites here. We already produce 8.5 billion doses here annually. The countries we import from.
Speaker Change: into the U.S. where we don't manufacture in the U.S. or Ireland, the UK and India.
Speaker Change: And obviously, we don't know where tariffs are going to land, but we've been involved in a lot of mitigation strategies, both short-term and long-term, thinking about what it is that we can do. And so we're focused on, of course, increasing production within the US network that we have already.
Speaker Change: We're looking at adjusting our inventory levels for the US market, and longer term, we're looking at things like transfers, leveraging third-priorities here in the US.
Speaker Change: Investment, potentially, in a larger US network and manufacturing facility. So, you know, we can control, we can only what we can control. I don't know where the tariffs are going to land, but we're looking at a wide variety of mitigation strategies to be able to handle any whatever comes at us from the tariffs. And I will say, though, that, you know, if there are significant tariffs enacted in the farmer sectors, likely to have the financial impact on the company. [inaudible]
Speaker Change: And I think the discussions that we're having with the administration and with Congress are around the ability of the generic industry particularly to be able to continue to provide access to patients for all medications. So, you know, we're trying to get our messages across, but in the meantime, we're very, very involved, I would say, in a daily basis talking about mitigation strategies too.
Speaker Change: to minimize any impact that may come both financial information.
Chris Schott: So, okay, get over to Karim. Yeah, so good morning, Chris. Before I give you a bit of some color on how we see the positioning of fast-taking meloxic am, I just would like to ask for a CDP to connect a bit on the data.
Philippe Martin: Yeah, so thank you. I think the profile that we've seen, we're very happy with from both space-free studies.
Philippe Martin: The results were very consistent in the process of studies. We made all the primary and key studies in their end point. And importantly, we want you to show us, able to show a severe profile of our system.
Philippe Martin: and our opioid comparator, which as I said in my remarks is an important comparator which has been shown.
Philippe Martin: to be highly fictitious in these two models of earlier and been anectomy in chemical trials.
Philippe Martin: and it's about twofold more potent than on the Chicodon 20-member. So, we feel very strongly about our data versus its comparator.
Philippe Martin: On top of it, we were able to be on straight-up, seeing any lower opioid usage, Dr. Sibo and his study, which were extremely important going forward. [inaudible]
Philippe Martin: The safety profile was also well-terrated in CNNs of TEEs, where comparable to placebo, puer TEEs and ACs were reported with a regular system with placebo as well. So, although the benefit risk profile emerging from this is 3 study positions is very well for first-line treatment.
Philippe Martin: You know, obviously we are very pleased with the data just to give you an idea of how we look at the potential of these assets. It is potentially a large, addressable market. There are about over 70 million, I could paint cases annually in the United States.
Philippe Martin: So the market demand for safer alternatives, non-settling alternatives, strong efficacy products with an established sector profile, and we believe that the novel fat-decking monopsicum can fit what the market is asking for.
Philippe Martin: So, potentially, this asset could fit seamlessly, both into the inpatient and outpatient care pathways. It would be a good treatment alternative for I could care management and has a very competitive profile.
Philippe Martin: and we are in the process of refining our forecasts, so I cannot disfuse any data at this point, but we will make sure that we will keep you abreast of our progress.
David Amsellem, Balaji Prasad,
Thank you. Thank you.
Speaker Change: Our next question comes from Ash Verma, from UBS. Please go ahead with your question.
Speaker Change: And then secondly, on MR107, can you help us understand how fast acting is this? For example, how quickly does this...
Speaker Change: Get static benefit in terms of hours, let's say on the primary end point on the slide 15, and then can you get a fast acting claim on the label, was let's say, Mobyk.
Thanks.
Speaker Change: So, good morning, Ash, and thanks for the question, and I'll take the first on the capital allocation, Philippe can talk a little bit more about MoxCAM and the data. We've already, as you noted, repurchased more than 300 million to this point in time.
Speaker Change: We're firmly committed to our goal of 500 to 650. Given the environment and the volatility and the macro environment, we want to interpret certain things. We want to keep a little bit of strategic flexibility in terms of our capital allocation. It's potentially, we may have leaned in even more and do more than 650, but we're going to sort of let the year play out, given the uncertainty and see where we are, but give them where the share price is. This is
Speaker Change: This is a year where we've talked about really leaning into the shared repurchases as an important part of our capital allocation plan.
Speaker Change: The ability to generate pre-cash flow for the year and have about 1.7 billion of deployable cash flow and so...
Speaker Change: Scott's point, we do have the strategic flexibility as we move forward to the year we have multiple lovers that we can push and play with.
Speaker Change: Okay, thank you Ash on the question about our fast-acting menopsy camp in terms of time of response. We measured it in both phase three studies, we looked at medium time to meaningful pain relief.
Speaker Change: A fast-acting manoxicum to put this data in context against others.
Speaker Change: and you have that data in the slide that was already, but to put that data in context, we also did a post-doc analysis where we looked at two points of more reduction in NPRs from baseline.
Speaker Change: which has been demonstrated with others, and we were very fast with 95 minutes versus the placebo of...
338 minute
Speaker Change: Properties of our fast acting meloxicum have been demonstrated in phase three twice.
Speaker Change: In both studies, as to whether we are able to get a claim, I think I don't want to speculate on what a DMA may not do, but we certainly have the conversation with the agency.
Speaker Change: Our next question comes from David Amsellem from Piper Sandler. Please go ahead with your question.
David Amsellem, David Amsellem,
The Potential for Impact.
Speaker Change: to spill over into 26. How should we think about that? Also, there's another facility in India, and I apologize if I missed any commentary on this. But you can talk about your inspection at the other facility in India that happened last year and where things stand on that.
Speaker Change: and then switching gears regarding strategic priorities and business, M&A. Can you talk to your appetite for taking on assets that are in mid to late-stage development along the lines of St. Irma and Salad Agrell? How are you thinking about development stage assets versus your appetite for commercial stage brand assets? Thank you. Thank you very much.
Speaker Change: So, thank you, good morning, David. Yes, so the remediation and indoor is coming along fine. We are at progress as expected. We expect to submit a request for re-inspection mid-year.
Speaker Change: We can only control, we can control, we can control, we can't control the timing of that inspection, so we're making sure that we also qualify other plans in the network outside of indoor to be able to supply the US network. I think we'll see significant rebound in indoor related products as we move into, as we move into 26. Some, like I know one of mine, sort of go away as we get into 26, but we should see, we'll see, we'll see, we'll see, we'll see, we'll see, we'll see,
Speaker Change: Some restoration of our products from Indoor in 26 and we don't think it will have a significant impact on our overall financials.
Speaker Change: In terms of Nashik, the same status of spin, that inspection happened approximately a year ago, we got a 483, we have not heard from the FDA relative to the classification of that inspection.
Speaker Change: and we have importantly completed all committed actions that we agreed to with the FDA on that plan so we're waiting to see we've also qualified other other facilities in the network as well in case there is any action in the Nashik, we're waiting to hear back from.
Speaker Change: from the FDA on that, and again, we've completed all committed actions at this point in time.
Speaker Change: And just to add some color and contextualized on the potential <unk> impact we've talked about it.
Speaker Change: <unk> $500 million revenue impact from indoor as Scott mentioned about 41% of that is one of them none of them Mike related and so we don't anticipate that to come back, but about $100 million of that is due to penalties and short term supply disruptions, which we don't anticipate occurring.
Speaker Change: And in 2026, and the remainder to Scott's point, we're in the process of either.
Speaker Change: Moving and is subject to that.
Speaker Change: Section.
Speaker Change: Indore.
Speaker Change: And your second question was relative to our BD priorities.
Speaker Change: And I believe you said mid to late stage development assets and first of all I'd like to say that we could not be more excited to have some are modest lot of our loan portfolio and the pipeline and the development of them is going very well, we've been able to accelerate.
Speaker Change: The development and the timing of those assets, we've taken more control over the development programs, we will expand the geography for scenario.
Speaker Change: We're very very excited about those assets. However, our business development focus right now is were in market or very near to market assets, we want to be able to build short term revenue and EBITDA.
Speaker Change: So we're looking at assets that are closest rather in mid stage development, either very very late stages that are close to launch or end market is what our focus is right now.
Speaker Change: Our next question comes from Jason <unk> from Bank of America. Please go ahead with your question.
Speaker Change: Hey, guys. This is Bob Patel on for Jason their very first question is that the first quarter showed brand resilience.
Speaker Change: Generic weakness so maybe if you can elaborate on the volume versus price drivers for key brands like lipitor in developed markets in greater China, and then for generics beyond the quantified indoor impact what drove the decline there and how sustainable is the overall, 2% underlying core business ex divestitures <unk>.
Speaker Change: Or that you saw this quarter.
Speaker Change: And then my second question is that the guidance assumes a significant second half ramp in revenue EBITDA and earnings per share. So maybe if you can provide some more color on the expected timing and contribution cadence within the second half from the key launches, including Iron sucrose, Octreotide, <unk>, glucagon, which may or may not be.
Speaker Change: Needed to hit the $4 50 to 550, new product revenue target. Thank you.
Speaker Change: Yes.
Speaker Change: So thank you very much for the question <unk> do you want to.
Speaker Change: Take the questions Yeah, so, let's let's start with the brand.
Brazil Lance: Brazil Lance.
Chris Schott: To your point, we feel good about the momentum that we've seen on the brand side I would say it was a.
Brazil Lance: Really driven and a couple of pieces number one in China.
Chris Schott: We continue to see.
Chris Schott: Good momentum and uptake in our brand portfolio. There, we reported 4% growth this quarter. The other area is in Europe, we saw a great.
Chris Schott: Great growth and.
Chris Schott: And our portfolio, there with creon, Brooklyn, as well as our combo with it a portfolio and so overall to your point, we are seeing good momentum in and brands are on the generic.
Chris Schott: Portfolio that are part of our portfolio has been the most impacted by indoor if you ex the impact of of indoor I would say expectations in the performance of our generics portfolio is actually performing in line with with what we expect.
Chris Schott: <unk>.
Chris Schott: With respect to guidance in the second half.
Chris Schott: As we mentioned we do expect.
Chris Schott: Our performance to be second half weighted about 52% of our revenue we expect to hit in the second half there was a couple of pieces to that number one the <unk> impact is expected to be more acute in the first half versus the second half the second piece of that is it just.
Philippe Martin: That the ramp of new product launches I'll have phillipe talk a little bit about how we think about that but we do expect our new product launches to be slightly more second half weighted and we do have normal products seasonality that occurs in the second half.
Philippe Martin: Especially as it relates to some of our portfolio and in Europe, and that's what's leading us to some of the trends that we're seeing between the first half in the second half.
Philippe Martin: Yeah, and you mentioned a number of key launches just want to remind you that glucagon has been launched already.
Philippe Martin: Iron sucrose.
Philippe Martin: Tied in North Korea side are all.
Philippe Martin: Schedule for the second half of this year and so that's.
Philippe Martin: We are on schedule with these three assets to get them approved.
Philippe Martin: In this in the second half.
Speaker Change: Our next question comes from Robert from Evercore. Please go ahead with your question.
Speaker Change: Hi, guys. Thanks for taking my questions I have a few here if I may 1st if you could just remind us about your manufacturing network for your U S business, the India facilities versus Morgan town, and what percentages made in U S.
Speaker Change: On Meloxicam I had a couple of questions if I may 1st.
Speaker Change: Your trials are obviously in acute setting and surgery setting where traditionally meloxicam takes a few hours to kick in so congrats to you on the data. My question to you is surgeons have historically hesitated doing nsaids in for bleeding reasons and surgery setting and to what extent do you see your products usage in acute setting versus and chronic settings like arthritis.
Speaker Change: We're meloxicam has been used secondly, how.
Speaker Change: How do you think about potential risks with the C. Max because it definitely goes higher than the traditional meloxicam.
Speaker Change: And if theres any potential bleeding risks and finally do you anticipate this being a hospital drug or not thank you.
Speaker Change: Thank you for the questions and nice to hear from you. The first one was relative to here are some facts around our U S manufacturing network, we have 26 facilities.
Speaker Change: Network globally, we have eight facilities manufacturing packaging R&D in the U S. We manufacture approximately greater than 50% of our total revenues come from the U S. The rest comes from combination of Ireland, the UK and India. So thats a little bit of just the fact of what our manufacturing.
Speaker Change: It looks like.
Speaker Change: And obviously given given tariffs we're looking at a number of short and long term remediation of tear film and where they come from them. So we're doing a lot of significant planning we've talked about on daily basis on things, we can do to remediate, but including.
Speaker Change: Including taking a look at expanding our our current U S network, which again produces greater than 50% of our revenues.
Speaker Change: Yes, and I will cover the three questions I believe on the Meloxicam first of all so first about the surgery setting.
Speaker Change: We studied in three clinical trials, one phase two in a post surgery dental pain Bunionectomy and.
Speaker Change: On your fee.
Speaker Change: Post surgery.
Speaker Change: And we've.
Speaker Change: We've seen no increased risk of bleeding as part of these three studies in clinical studies.
Speaker Change: As a matter of fact, the safety profile was very much consistent with.
Speaker Change: Placebo.
Speaker Change: So we saw no no increased risk in this post surgery population in terms of C. Max Youre correct. If you match.
Speaker Change: The C. Max is higher however, as I just said it did not lead to.
Speaker Change: Cute setting.
Speaker Change: Lead to.
Speaker Change: Additional.
Speaker Change: Any additional risk of beating.
Speaker Change: Not seen any of it in our in the phase II and the phase III program so to.
Speaker Change: The last question about hospital drug.
Speaker Change: Im going to answer yes, so we believe that this.
Speaker Change: Mexican definitely.
Speaker Change: B use already in the hospital as it was done in the clinical trial.
Speaker Change: I think but also of course.
Speaker Change: For Ah.
Speaker Change: Ah patients.
Speaker Change: And we're also looking at not only.
Speaker Change: Utilization of the product with surgery, but also in any of these are though I could care and that could be.
Speaker Change: Dental acute pain or other type of thing.
Speaker Change: <unk> also demonstrated positive data in phase two model in our inventory.
Speaker Change: Yeah.
Speaker Change: And ladies and gentlemen, with that we'll conclude today's question and answer session I'd like to turn the floor back over to Scott Smith CEO for any closing remarks.
Speaker Change: Thank you very much sure and closing.
Speaker Change: Had a really good start to the year.
Speaker Change: We've got operational performance in line with our expectations significant pipeline progress continued capital return to our shareholders. We remain very optimistic about the future of the interests are.
Speaker Change: Our growing pipeline capital discipline operational excellence and significant global scope.
Speaker Change: US confidence in our ability to navigate through periods of volatility and uncertainty that industry has been experienced for much of the year.
Speaker Change: Thank you all very much for your attention this morning.
Speaker Change: Ladies and gentlemen, the conference has now concluded we do thank you for attending today's presentation. You may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].