Viatris’ management continues to execute on the strategic priorities previously outlined to shareholders and again achieved several notable accomplishments in 2023, furthering the Company’s strategic plan.
Financial and Operational Performance
In 2023, Viatris delivered another four quarters of consistent, solid operational performance across all segments. We:
| • | Reported total revenues of $15.4 billion; U.S. GAAP net earnings of $54.7 million; adjusted EBITDA of $5.1 billion; U.S. GAAP net cash provided by operating activities of $2.8 billion and free cash flow of $2.4 billion. |
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| • | Paid down approximately $1.25 billion of debt. |
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| • | Generated new product revenues4 of approximately $450 million. |
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| • | Maintained the quarterly dividend payment of $0.12 per share. |
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| • | Returned capital to shareholders in the form of $576 million in dividends and $250 million in share buybacks, totaling approximately $830 million. |
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| • | Supplied high-quality medicines to approximately 1 billion patients around the world.1 |
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| • | Executed on the previously announced key divestitures. |
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Science and Regulatory Achievements
Viatris has products across more than 10 therapeutic areas and has more than 250 medicines on the WHO’s EML. We have industry-leading science, development, regulatory and manufacturing capabilities complemented by a strong commitment to quality and an unparalleled geographic footprint to deliver high-quality medicines. In 2023, this included more than 3,000 scientists and medical professionals working across 11 development centers globally in multiple technology platforms and therapeutic areas, coupled within-country regulatory expertise in 55 markets. During 2023, we continued to advance key development programs across complex injectables, novel products, complex generics, as well as progressed our efforts to establish a Phase III-ready eye care pipeline. We:
| • | Launched Breyna™, the first U.S. Food and Drug Administration (“FDA”)-approved generic version of Symbicort®. |
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| • | Positive top-line results for Yupelri® (revefenacin) Phase III trial in China. |
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| • | FDA approval of RYZUMVI™ 0.75% eye drops for the treatment of pharmacologically-induced mydriasis. |
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| • | Executed successful transition of global biosimilars business to Biocon Biologics Limited. |
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| • | Integrated Oyster Point and Famy Life Sciences acquisitions and successfully created the Viatris Eye Care Division. |
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| 4 | Refers to revenue from new products launched in 2023 and the carryover impact of new products, including business development, launched within the last 12 months. |
51 | 2024 Proxy Statement
Our 2023 Annual Incentive Plan Payouts Aligned with Strong Financial and Operational Results and PRSUs Earned in 2024 Were Reduced Based on Our Relative Total Shareholder Return, Further Aligning Pay with Shareholder Outcomes
Short-term incentive compensation. Comprised approximately 17% of 2023 NEO target total compensation (excluding Mr. Goettler). While we believe that Viatris stock continues to be significantly undervalued, our management team’s operational execution resulted in strong performance results and corresponding above-target payouts under the 2023 short-term incentive program. Drivers of our 2023 short-term incentive results included:
| • | Above-target adjusted EBITDA and free cash flow for short-term incentive compensation purposes, driven by the focus and efforts of the Company’s management and the success of the Company’s cash optimization efforts. For more information on and the differences between how adjusted EBITDA and free cash flow are calculated for purposes of the Company’s 2023 short-term incentive compensation and public reporting purposes, see “Elements of 2023 Compensation – 2023 Annual Incentive Compensation Program – Annual Incentive Compensation Awards for 2023” on page 54. |
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| • | Above-target global product submissions, across broad and therapeutic-area agnostic product categories, driven by the strength of the Company’s development programs and successful acceleration of certain additional submissions. |
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The setting of the annual incentive performance metric targets was established to reflect higher expectations regarding incremental R&D expense, incremental cost inflation and expectations regarding foreign exchange rates.
Long-term incentive compensation. PRSUs that vested in 2024 were subject to a free cash flow metric, a leverage metric and relative market performance metric (i.e., relative TSR using the S&P 500 Pharmaceutical Index, which is used as a modifier to determine the final payout percentage) over a three-year time period. These awards were automatically reduced by 30% at vesting due to our stock price, which we believe is significantly undervalued. For more information on and the differences between how free cash flow and leverage ratio are calculated for purposes of long-term incentive compensation and public reporting purposes, see page 57 and Appendix B. This result demonstrates alignment of our compensation structure with shareholder outcomes.
