Viatris’ improving sales trends and margins, coupled with meaningful development opportunities, could help drive the company’s valuation multiple higher. Viatris combines stable cash flow from established medicines with a low-risk development strategy to provide investors with stable revenue growth with little downside. The company’s pipeline is supported by three key opportunities in diverse therapeutic areas, all of which have the potential to meaningfully accelerate long-term revenue growth. Viatris stock is already gaining momentum as the company continues to develop a drug pipeline that could accelerate sales growth, improve margins and create shareholder value in the coming years. The main pillars of the company’s growth strategy are non-opioid painkillers, a potentially blockbuster lupus drug, and a drug called the “heart attack EpiPen.” There are several near-term catalysts on the horizon that could help drive multiple further expansions as the company becomes seen as more than just a generic drug maker. At the same time, Viatris is also seeing improvement trends in existing products. After several years of slowing revenue growth, Viatrice has finally turned a corner. On an operating basis, first-quarter revenue increased 3% year-over-year and adjusted earnings per share increased 14%. Cost reductions implemented after a strategic review resulted in profits exceeding expectations and could save the company $400 million by the end of 2028. Improved execution in the Greater China business also contributed to the latest results. Shares rose more than 16% in the first week of May ahead of and following the earnings release. Viatris’ roots lie in Mylan, founded in 1961 in White Sulfur Springs, West Virginia, as a company focused on generic and specialty pharmaceuticals. Mylan merged with Pfizer’s Upjohn business in 2020, combining Upjohn’s iconic brand, commercial and medical expertise, and strong global presence, particularly in China, with Mylan’s broad portfolio, pipeline capabilities, and supply chain expertise to form a leading global pharmaceutical company. Although the deal had important strategic advantages, Mylan also acquired Upjohn’s mature portfolio of brands, including drugs such as Lyrica for nerve pain treatment, many of which were facing declining sales. The decline has finally stopped. Lipitor, Norvasc, Lyrica, EpiPen auto-injectors, and Creon experienced year-over-year sales growth in the first quarter. North America is the company’s largest market, but sales in Greater China rose 18%, higher than expected, due to an aging population and increased demand for cardiovascular drugs. Limiting Risk Viatris has built its business with a focus on reducing risk. For example, in China, where policy change is a threat, companies are shifting their sales channel focus away from vulnerable hospitals to retail and e-commerce. During the company’s first-quarter earnings call, chief research and development officer Philip Martin said sales in the e-commerce channel had doubled in the last three months. In an investor presentation on March 19, Viatris said it is targeting base-case compound annual growth rates of 3% to 4% in total revenue, 4% to 5% in adjusted EBITDA, and 6% to 7% in adjusted EPS through 2030. The company also expects annual free cash flow to exceed $2.7 billion by 2030. The company’s generic drugs and established brands support solid free cash flow and fund shareholder returns, including a dividend that currently yields 3.08%. This will also allow Viatris to invest in its own pipeline. Viatris also takes a low-risk approach to pipeline development. The company focuses on innovating medicines that are developed by modifying or improving known active ingredients or purchased in the development stage. In the second scenario, Viatris leverages its extensive experience in late-stage development and commercialization to develop drugs for Food and Drug Administration approval and rapid sales expansion. The company expects the new products to increase revenue by $450 million to $550 million annually over the long term. Fast-acting painkillers In the short term, the focus is on fast-acting meloxicam, which was accepted for review by the FDA on May 18th. A regulatory decision is expected by the end of the year. The drug’s annual revenue is expected to reach up to $500 million, William Zabruski, head of investor relations and capital markets, said May 14 at the Bank of America Annual Healthcare Conference. At the conference, Martin said he expected fast-acting meloxicam to make a “meaningful” contribution to revenue next year. It is an improvement on the older drug meloxicam and is designed to provide quick relief to patients with moderate to severe acute pain. Mylan purchased the rights to develop and commercialize the drug from Prayog Research Institute in 2018. Doctors were looking for a less addictive, non-opioid alternative to narcotics. However, so far, many non-opioid drugs are not as effective as opioids. Expectations were high last year for Vertex’s Jarnavux, the first new class of painkillers approved in more than 20 years, but rival painkillers performed worse than analysts expected. Based on data from two Phase 3 trials, UBS analyst Ashwani Verma believes that fast-acting meloxicam has a “superior efficacy profile” for Jernavs because it has a faster time to “perceptible analgesia,” is more effective in reducing pain, and more treated patients remain opioid-free. Les Sulewski, an analyst at Trust, said the drug “very likely will secure ‘opioid sparing’ language on the label,” which could help it “capture the ‘premium outpatient’ demographic that older generics simply cannot reach.” Fast-acting meloxicam is an oral outpatient therapy that takes advantage of the 2026 expansion of the NOPAIN Act and will be separately reimbursed by Medicare, making it expensive enough to avoid the 20-cent pill ‘generic anchor’. , we believe this will create a ‘Goldilocks Zone’ of pricing (estimated at $15-31 per course) that is affordable enough to ensure access for Tier 2/3 payers,” Slewski wrote in a recent note. Possible breakthroughs against lupus Longer term, Viatris has two big opportunities: senerimod and ceratogrel, which it acquired from Switzerland-based Idorsia in early 2024. Viatris expects these two drugs to drive top-line revenue CAGR of 1% above the long-term base case. “Both are high-risk, high-reward programs, but we think only one of them needs to go (+) for the stock to gap up,” Jefferies analyst Dennis Ding said in a recent note. Cenerimod is a new oral drug being studied to treat lupus, an autoimmune disease in which a patient’s immune system mistakenly attacks healthy tissues and organs. Senelimod works by trapping many of the immune cells in the lymph nodes instead of entering the bloodstream, reducing the number of immune cells that circulate in the body and cause inflammation. Viatris has two ongoing trials to study the efficacy and safety of senelimod. The first focuses on treating the most common type of systemic lupus erythematosus. Data readout from the fully enrolled Phase 3 study is expected in the first half of 2027. The second concerns the treatment of lupus nephritis, a type of kidney disease caused by SLE. Viatris plans to complete enrollment for its Phase 3 trial in the first half of 2028. Lupus is considered a “heterogeneous disease,” meaning its symptoms, severity, and response to treatment can vary widely from person to person. At the BofA Annual Healthcare Conference, Martin said Viatris anticipates that multiple treatments will be used to manage the disease, which will reduce the competitive impact of new drugs entering the category. “I believe that the drug will continue to be used in this disease in this way because there is heterogeneity in this disease. So having other assets coming in is not necessarily detrimental to senerimod,” he said. “Based on the benefit-risk observed in phase 2, senelimod may be the first treatment to precede biological treatments.” Biological treatments that are derived from living cells are different from traditional drugs like senelimod, which are chemically synthesized. “The global lupus drug market is currently estimated at $5 billion to $7 billion and is projected to grow at low-single-digit rates due to improved diagnostics and demand for oral alternatives to injectable biologics,” Argus analyst Jasper Hellweg wrote in a recent note. He expects senerimod’s annual revenue to peak at $500 million to $1 billion. An ‘EpiPen’ for heart attacks Seratogrel is an auto-injector that patients can administer at the first sign of a potential heart attack. This drug is designed to quickly block platelet aggregation and restriction of blood flow, reducing the harmful consequences of a heart attack. More than 800,000 Americans have a heart attack each year, and there are currently about 5.6 million survivors, making this a potential target market for seratogrel. This drug is positioned as a first-line treatment option. Currently, there are no treatment options between the onset of a heart attack and the first contact with a health care provider. When patients treated with seratogrel arrive at the hospital, they can be evaluated to see if angioplasty with a stent is needed. In these cases, you can still receive intravenous cangrelor, a platelet inhibitor. “Our data show that when we combine seratogrel and intravenous cangrelor, we still see synergism and increased inhibition of platelet aggregation, so they can be given together,” Martin said. Viatris estimates that seratogrel reduces the risk of more severe heart attacks by about 20%. “What we’ve also seen is that just carrying the pen itself can significantly improve a patient’s quality of life. Just knowing that they have this emergency medication improves their quality of life (in terms of),” Martin said. The stock lags most of its peers, but if Viatris can meet its targets, its valuation has room to rise. The stock trades at a trailing 12-month P/E ratio of 6.1x. “We see significant scope for rerating stock multiples from these levels,” UBS’s Verma said in a post-first-quarter note, “reflecting greater confidence in the best/worst growth profile.” UBS raised its price target to a then-high $23 per share from $20, and increased its multiple from 6.5x to 7.5x. According to LSEG, Viatris has 8 Buy ratings, 4 Hold ratings, and 1 Underperform rating, with an average analyst price target of $19.68. Given the expected growth rate, Viatris looks attractive at current multiples compared to generic and brand-focused competitors. The company’s stock could be an attractive investment as the company leverages its diversified portfolio, global scale, and disciplined development strategy to advance a promising pipeline of assets that have the potential to drive meaningful long-term growth. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
