Viatris CEO Michael Goettler may well consider this a “trough” year for his newly formed company. But only months after he made that declaration, Viatris reported figures that showed 2021 can be more than a baseline from which to rebuild.
Despite Viatris’ strong second-quarter showing, though, one influential biopharma analyst wonders whether Viatris can sustain the success over the long term. Over that timeframe, Viatris’ faces challenges including China price controls, biosimilar competition and the need to buy new drugs for growth, Bernstein analyst Ronny Gal wrote to clients this week.
“We don’t know when the Viatris business will take a step down, but our assumption is that one or more of these factors will eventually materialize and take a chunk of the business,” Gal wrote.
With revenue of $4.58 billion in the second quarter, Viatris topped the Wall Street consensus of $4.41 billion and adjusted its annual guidance to $17.5 billion to $17.9 billion. The range is a slight bump up from its prior estimate of $17.2 billion to $17.8 billion for the year, and Goettler said the company may update its 2021 expectations again after the third quarter.
For now, Viatris already is modeling some revenue declines in the short term. The company expects “slightly lower” sales in the second half thanks to “anticipated competition in select brands and complex generics and expected lower sales of COVID-related products,” Goettler said on a Monday conference call. In China, the company expects sales to dip slightly for the remainder of the year because of cost-control measures there, the CEO said.
But the new company impressed analysts with its second-quarter showing. Bernstein credited part of the performance to better-than-expected sales for nerve and muscle pain medicine Lyrica and blood pressure drug Norvasc in Australia and New Zealand despite their loss of exclusivity.
Viatris formed last November through the merger of Mylan with Pfizer’s generic business Upjohn. Monday’s earnings report is an indication that the company’s initial growing pains may not be as pronounced as expected.
While Gal has long-term worries, his team “would argue for continued near-term strength of the business,” Gal wrote.
“Altogether we are seeing the business bounce off the bottom without too much pain,” Gal added.
One factor that portends well for the future of Viatris is the launch of new biosimilars, especially Semglee, approved less than two weeks ago as the first interchangeable biosimilar insulin.
As an interchangeable biosimilar, Semglee can be substituted for Sanofi’s Lantus at pharmacies without a prescription. Lantus costs more than $300 for a 10-ml supply. Viatrus didn’t reveal what it would charge for its product on Monday.
“You will see some uptick in the market share around quarter four but the actual impact of interchangeability to the market share perspective and access will be seen over the next year,” Viatris president Rajiv Malik said on the call.