Viatris Inc

Previous wording

This Form 10-K contains “forward-looking statements”. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the goals or outlooks with respect to the Company’s strategic initiatives and priorities, including but not limited to divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions; the benefits and synergies of such divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs; future opportunities for the Company and its products; and any other statements regarding the Company’s future operations, financial or operating results, capital allocation, dividend policy and payments, share repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, commitments, confidence in future results, efforts to create, enhance or otherwise unlock value, and other expectations and targets for future periods. Forward-looking statements may often be identified by the use of words such as “will”, “may”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “pipeline”, “intend”, “continue”, “target”, “seek” and variations of these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

Current wording

This Form 10-K contains “forward-looking statements”. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the goals or outlooks with respect to the Company’s strategic initiatives and priorities, including but not limited to divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions; the anticipated benefits of such strategic initiatives or priorities or restructuring activities; future opportunities for the Company and its products; the outcomes of clinical trials and research studies; R&D and new product development; and any other statements regarding the Company’s future operations, financial or operating results, capital allocation, dividend policy and payments, share repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, imperatives, competitions, commitments, confidence in future results, efforts to create, enhance or otherwise unlock value, and other expectations and targets for future periods. Forward-looking statements may often be identified by the use of words such as “will”, “may”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “pipeline”, “intend”, “continue”, “target”, “seek” and variations of these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

Previous wording

•the possibility that the Company may not realize the intended benefits of, or achieve the intended goals or outlooks with respect to, its strategic initiatives and priorities (including divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions) or accelerate its growth by building on the strength of its base business with an expanding portfolio of innovative, best-in-class, patent-protected assets;

Current wording

•the possibility that the Company may not realize the intended benefits of, or achieve the intended goals or outlooks with respect to, its strategic initiatives and priorities;

Previous wording

•the possibility that the Company may be unable to achieve intended or expected benefits, goals, outlooks, synergies, growth opportunities and operating efficiencies in connection with divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs, within the expected timeframes or at all;

Current wording

•the possibility that the Company may be unable to achieve intended or expected benefits in connection with divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs, within the expected timeframes or at all;

Previous wording

•any changes in or difficulties with the Company’s manufacturing facilities, including with respect to inspections, remediation and restructuring activities, supply chain or inventory or the ability to meet anticipated demand;

Current wording

•any changes in or difficulties with the Company’s manufacturing facilities, including with respect to short- or long-term shutdowns, inspections, remediation and restructuring activities, supply chain continuity, inventory management, or the ability to meet anticipated demand;

Previous wording

•the potential impact of natural or man-made disasters, public health outbreaks, epidemics, pandemics, or social disruption in regions where we or our partners or suppliers operate;

Current wording

•the potential impact of natural or man-made disasters, public health outbreaks, fires, accidents, weather, unrest or other emergencies in regions where we or our partners or suppliers operate;

Previous wording

•any regulatory, legal or other impediments to the Company’s ability to bring new products to market, including but not limited to “at-risk launches”;

Current wording

•any regulatory, legal or other impediments to the Company’s ability to bring new products to market;

Previous wording

•uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions, tariffs and trade policies, inflation rates and global exchange rates; and

Current wording

•uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions, potential for adverse impacts from future tariffs and trade restrictions, inflation rates and global exchange rates; and

Previous wording

Viatris’ executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders. The Company operates in more than 165 countries and territories with approximately 32,000 employees. The Company has 26 manufacturing and packaging sites worldwide, more than 1,400 approved molecules, and industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise. Viatris’ portfolio consists of generics (including complex products), globally recognized iconic brands, and an expanding portfolio of innovative medicines. Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India.

Current wording

Viatris’ executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders. The Company operates in more than 165 countries and territories with more than 30,000 employees. The Company has 27 manufacturing, packaging, and distribution sites worldwide, more than 1,400 approved molecules, and what we believe is industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise. Viatris’ portfolio consists of generics (including complex products), globally recognized iconic brands, and an expanding portfolio of innovative medicines. Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India.

Previous wording

The process of obtaining regulatory approval to manufacture and market new branded and generic pharmaceutical products is rigorous, time consuming, costly, and inherently unpredictable. Complex products are more difficult, costly and time-consuming to receive regulatory approval for and bring to market. Any delay in regulatory approval could impact the commercial or financial success of a product. Regulatory approval, if and when obtained, may be limited in scope. Even if regulatory approvals for new products are obtained, the success of those products is dependent upon market acceptance.

Current wording

The process of obtaining regulatory approval to manufacture and market new branded and generic pharmaceutical products is rigorous, time consuming, costly, and inherently unpredictable. Complex generic products are often more difficult, costly and time-consuming to receive regulatory approval and bring to market compared with commodity generic pharmaceutical products. Any delay in regulatory approval could impact the commercial or financial success of a product. Regulatory approval, if and when obtained, may be limited in scope. Even if regulatory approvals for new products are obtained, the success of those products is dependent upon market acceptance.

Previous wording

For branded products, the majority of the product’s commercial value is usually realized during the period in which the product has market exclusivity. In the U.S. and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales. For example, generic entry may occur for Amitiza® 24 μg in Japan in December 2025 upon expiration of patent exclusivity.

Current wording

For branded products, the majority of the product’s commercial value is usually realized during the period in which the product has market exclusivity. In the U.S. and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales. For example, generic entry for Amitiza® 24 μg may occur in Japan in June 2026 depending on the outcome of patent litigation.

Previous wording

Additionally, a number of markets in which we operate outside of the U.S. have implemented, or may implement, tender systems for generic pharmaceuticals in an effort to lower prices. Generally speaking, tender systems can have an unfavorable impact on sales and profitability. Under such tender systems, manufacturers submit bids that establish prices for generic pharmaceutical products. Upon winning the tender, the winning company will receive priority placement for a period of time. The tender system often results in companies underbidding one another by proposing low pricing in order to win the tender. Sales continue to be negatively affected by the impact of tender systems in certain countries.

Current wording

Additionally, a number of markets in which we operate outside of the U.S. have implemented, or may implement, tender systems for generic pharmaceuticals in an effort to lower prices. Generally speaking, tender systems can have an unfavorable impact on sales and profitability. Under such tender systems, manufacturers submit bids that establish prices for generic pharmaceutical products. Upon winning the tender, the winning company will receive priority placement for a period of time. The tender system often results in companies underbidding one another by proposing lower pricing in order to win the tender. Sales continue to be negatively affected by the impact of tender systems in certain countries.

Previous wording

In addition to the impact of competition, government pricing actions and other measures designed to reduce healthcare costs, our results of operations, cash flows and financial condition could also be affected by other risks of doing business internationally, including the impact of inflation, elections, geopolitical events, including the ongoing conflicts in the Middle East and between Russia and Ukraine and related trade controls, sanctions, supply chain and staffing challenges and other economic considerations, supply chain disruptions, foreign currency exchange fluctuations, public health epidemics, changes in intellectual property legal protections and other regulatory changes.

Current wording

In addition to the impact of competition, government pricing actions and other measures designed to reduce healthcare costs, our results of operations, cash flows and financial condition could also be affected by other risks of doing business internationally, including the impact of inflation, elections, geopolitical events, including the ongoing conflicts in the Middle East and between Russia and Ukraine and related trade controls, sanctions, supply chain disruptions and staffing challenges and other economic considerations, longer review, response and approval times as a result of evolving regulatory priorities and reductions in personnel at health agencies, the potential for adverse impacts from future tariffs and trade restrictions, foreign currency exchange fluctuations, public health epidemics, changes in intellectual property legal protections and other regulatory changes.

Previous wording

Following an inspection by the FDA at our oral finished dose manufacturing facility in Indore, India in 2024, the FDA has issued a warning letter, and an import alert related to this facility. The import alert affects 11 actively distributed products that will no longer be accepted into the U.S. until the warning letter is lifted. It makes exceptions, subject to certain conditions, for four products based on shortage concerns. Following recently concluded discussions with the FDA, the Company does not expect additional product exceptions to be granted by the FDA.

Current wording

Following an inspection by the FDA at our oral finished dose manufacturing facility in Indore, India in 2024, the FDA issued a warning letter and an import alert related to this facility. The import alert affects 11 products that will no longer be accepted into the U.S. until the warning letter is lifted.

Previous wording

Following the substance of FDA’s original inspection observations, the Company immediately implemented a comprehensive remediation plan at the site. The necessary corrective and preventive actions are well underway, including but not limited to related personnel actions. Additionally, we have engaged independent third-party subject matter experts to support the remediation plan.

Current wording

Following the substance of FDA’s original inspection observations, the Company immediately implemented a comprehensive remediation plan at the site. During 2025, we made substantial progress on our remediation activities at the facility, including but not limited to related personnel actions. Additionally, we have engaged independent third-party subject matter experts to support the remediation plan.

Previous wording

We have been in regular communication with FDA during this process and will continue to work to ensure that the FDA is satisfied with the steps we have taken to resolve all the points raised. Our responses to the warning letter and import alert were submitted within the required time periods.

Current wording

We have been in regular communication with the FDA during this process and will continue to work to ensure that the FDA is satisfied with the steps we have taken to resolve all the points raised. Our responses to the warning letter and import alert were submitted within the required time periods. The facility will be subject to a reinspection by the FDA. The timing of the reinspection will be determined by the FDA; however, we anticipate that the facility will be ready for reinspection in 2026.

Previous wording

While product continues to be shipped from the Indore facility to markets outside the U.S., some impact in other markets, including the ARV business in Emerging Markets and select generic products in Europe, is anticipated. The Company currently estimates the negative impact to 2025 total revenues to be approximately $500 million and to 2025 earnings from operations to be approximately $385 million.

Current wording

While product continues to be shipped from the Indore facility to markets outside the U.S., as expected, we have also experienced a negative impact in other markets during 2025, including the ARV business in Emerging Markets and select generic products in Europe. The estimated negative impact to total revenues for the year ended December 31, 2025 versus the year ended December 31, 2024 was approximately $370 million.

Previous wording

On March 15, 2024, the Company acquired exclusive global development and commercialization rights to two Phase 3 assets from Idorsia, as well as the potential to add additional innovative assets in the future. Under the terms of the original agreements, the development programs and certain personnel for selatogrel and cenerimod were transferred to Viatris from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential contingent milestone payments (including $300 million payable upon the achievement of certain development and regulatory milestones, and $2.1 billion payable upon the achievement of certain tiered sales milestones), as well as potential contingent tiered sales royalties. Viatris has worldwide commercialization rights for both selatogrel and cenerimod (excluding, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region). A joint development committee was formed to oversee the development of the ongoing Phase 3 programs through regulatory approval. The agreements also provide Viatris a right of first refusal and a right of first negotiation for certain other assets in Idorsia’s pipeline. Viatris and Idorsia are both contractually obligated to contribute to the development costs for both programs, which are expected to be incurred through 2026. There are risks and uncertainties associated with the timely and successful completion of these programs, including but not limited to the high cost and uncertainty of conducting clinical trials (particularly with respect to new and/or complex or innovative drugs), obtaining approval by relevant regulatory bodies and our partner’s financial condition. Refer to Note 4 Acquisitions and Other Transactions included in Part II, Item 8 of this Form 10-K for more information.

Current wording

On March 15, 2024, the Company acquired exclusive global development and commercialization rights to two Phase 3 assets from Idorsia, as well as the potential to add additional innovative assets in the future. Under the terms of the original agreements, the development programs and certain personnel for selatogrel and cenerimod were transferred to Viatris from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential contingent milestone payments (including $300 million payable upon the achievement of certain development and regulatory milestones, and $2.1 billion payable upon the achievement of certain tiered sales milestones), as well as potential contingent tiered sales royalties. Viatris has worldwide commercialization rights for both selatogrel and cenerimod (which excluded, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region). A joint development committee was formed to oversee the development of the ongoing Phase 3 programs through regulatory approval. The agreements also provided Viatris a right of first refusal and a right of first negotiation for certain other assets in Idorsia’s pipeline. Viatris and Idorsia are both contractually obligated to contribute to the development costs for both programs, which are expected to be incurred through 2027. There are risks and uncertainties associated with the timely and successful completion of these programs, including but not limited to the high cost and uncertainty of conducting clinical trials (particularly with respect to new and/or complex or innovative drugs), obtaining approval by relevant regulatory bodies and our partner’s financial condition. Refer to Note 4 Acquisitions and Other Transactions included in Part II, Item 8 of this Form 10-K for more information.

Previous wording

On February 25, 2025, in order to preserve the ongoing continuity of the development programs for selatogrel and cenerimod considering certain capital structuring steps announced by Idorsia to secure its ongoing operations, Viatris and Idorsia entered into a letter agreement to amend certain terms of the original agreements described above. Under the terms of the letter agreement, Viatris will receive additional territory rights in Japan, South Korea and certain other countries in the Asia-Pacific region for cenerimod, a $250 million reduction in contingent milestone payments, including $200 million of development milestones, and additional personnel to expedite transitioning the development programs to Viatris in exchange for Viatris assuming $100 million of Idorsia’s obligation to contribute to development costs. In addition, the letter agreement provides for the replacement of the joint development committee with a transition committee to oversee the transition of both development programs to Viatris.

Current wording

On February 25, 2025, in order to preserve the ongoing continuity of the development programs for selatogrel and cenerimod considering certain capital structuring steps announced by Idorsia to secure its ongoing operations, Viatris and Idorsia entered into a letter agreement to amend certain terms of the original agreements described above. Under the terms of the letter agreement, Viatris received additional territory rights in Japan, South Korea and certain other countries in the Asia-Pacific region for cenerimod, a $250 million reduction in contingent milestone payments, including $200 million of development milestones, and additional personnel to expedite transitioning the development programs to Viatris in exchange for Viatris assuming $100 million of Idorsia’s obligation to contribute to development costs. In addition, the joint development committee has been replaced with a transition committee to oversee the transition of both development programs to Viatris.

Previous wording

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The Company performed the annual goodwill impairment test as of April 1, 2024.

Current wording

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. During the first quarter of 2025, the Company experienced a sharp and sustained decline in its share price and significantly increased uncertainty and volatility in the geopolitical and economic environments in which the Company operates. As a result of these factors, the Company determined that a triggering event had occurred for each of its reporting units and performed an interim goodwill impairment test as of March 31, 2025 and recorded a non-cash goodwill impairment charge of $2.94 billion as a result of the interim goodwill impairment test performed.

Previous wording

A detailed discussion of the Company’s financial results can be found below in the section titled “Results of Operations.” As part of this discussion, we also report sales performance using the non-GAAP financial measures of “constant currency” net sales and total revenues. These measures provide information on the change in net sales and total revenues assuming that foreign currency exchange rates had not changed between the prior and current period. The comparisons presented at constant currency rates reflect comparative local currency sales at the prior year’s foreign exchange rates. We routinely evaluate our net sales and total revenues performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and believe that this presentation also provides useful information to investors for the same reason.

Current wording

A detailed discussion of the Company’s financial results can be found below in the section titled “Results of Operations.” As part of this discussion, we also report sales performance using the non-GAAP financial measures of “constant currency” net sales and total revenues. These measures provide information on the change in net sales and total revenues assuming that foreign currency exchange rates had not changed between the prior and current period. The comparisons presented at constant currency rates reflect comparative local currency sales at the prior year’s foreign exchange rates. We routinely evaluate our net sales and total revenues performance at constant currency so that these results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and believe that this presentation also provides useful information to investors for the same reason.

Previous wording

(3)Reductions were driven primarily by the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

Current wording

(3)Reductions were driven primarily by the inclusion of net sales in the prior year period related to divestitures that have closed during 2024 and the Indore Impact.

Previous wording

(4)For the year ended December 31, 2024, other revenues in Developed Markets, Greater China, JANZ, and Emerging Markets were approximately $32.0 million, $1.3 million, $3.5 million, and $9.7 million, respectively.

Current wording

(4)For the year ended December 31, 2025, other revenues in Developed Markets, JANZ, and Emerging Markets were approximately $38.1 million, $3.9 million, and $7.5 million, respectively.

Previous wording

For the year ended December 31, 2024, the Company reported total revenues of $14.74 billion, compared to $15.43 billion for the comparable prior year period, representing a decrease of $687.6 million, or 4%. Total revenues include both net sales and other revenues from third parties. Net sales for the year ended December 31, 2024 were $14.69 billion, compared to $15.39 billion for the comparable prior year period, representing a decrease of $695.6 million, or 5%. Other revenues for the year ended December 31, 2024 were $46.5 million, compared to $38.5 million for the comparable prior year period.

Current wording

For the year ended December 31, 2025, the Company reported total revenues of $14.30 billion, compared to $14.74 billion for the comparable prior year period, representing a decrease of $439.4 million, or 3%. Total revenues include both net sales and other revenues from third parties. Net sales for the year ended December 31, 2025 were $14.25 billion, compared to $14.69 billion for the comparable prior year period, representing a decrease of $442.4 million, or 3%. Other revenues for the year ended December 31, 2025 were $49.5 million, compared to $46.5 million for the comparable prior year period.

Previous wording

Net sales decreased by approximately $732.2 million, or 5%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $239.5 million, or 2%, primarily reflecting changes in the U.S. Dollar as compared to the currencies of subsidiaries in Japan, China, and countries in Emerging Markets. On a constant currency basis, net sales from the remaining business increased by approximately $276.1 million, or 2%, for the year ended December 31, 2024 compared to the prior year period, driven by new product sales, primarily in Developed Markets, of approximately $582.4 million. New product sales include new products launched in 2024 and the carryover impact of new products, including business development, launched within the last twelve months. The increase was partially offset by base business erosion of approximately $306.3 million.

Current wording

Net sales decreased by approximately $478.0 million, or 3%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The favorable impact of foreign currency translation was approximately $177.7 million, or 1%, primarily reflecting changes in the U.S. Dollar as compared to the currencies of subsidiaries in the EU. On a constant currency basis, net sales from the remaining business decreased by approximately $142.1 million, or 1%, for the year ended December 31, 2025 compared to the prior year period, driven by net base business erosion of approximately $465.8 million, of which approximately $370 million related to the Indore Impact. This decrease was partially offset by new product sales, primarily in Developed Markets, of approximately $323.7 million. New product sales include new products launched in 2025 and the carryover impact of new products, including business development, launched within the last twelve months.

Previous wording

From time to time, a limited number of our products may represent a significant portion of our net sales, gross profit and net earnings. Generally, this is due to the timing of new product introductions, seasonality, and the amount, if any, of additional competition in the market. Our top ten products in terms of net sales, in the aggregate, represented approximately 33% for each of the years ended December 31, 2024 and 2023.

Current wording

From time to time, a limited number of our products may represent a significant portion of our net sales, gross profit and net earnings. Generally, this is due to the timing of new product introductions, seasonality, and the amount, if any, of additional competition in the market. Our top ten products in terms of net sales, in the aggregate, represented approximately 36% and 33% for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Net sales from Developed Markets decreased by $322.5 million, or 3%, for the year ended December 31, 2024 when compared to the prior year. Net sales decreased by approximately $421.1 million, or 5%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The favorable impact of foreign currency translation was approximately $5.3 million, or less than 1%. Constant currency net sales from the remaining business increased by approximately $93.3 million, or 1%, driven primarily by new product sales throughout Developed Markets, including Breyna™ and lisdexamfetamine in the U.S. This increase was partially offset by anticipated lower net sales of certain existing products within the U.S., including EpiPen® Auto-Injector and Perforomist®, as a result of lower pricing and volumes due to additional competition and increased utilization within government channels. Net sales within North America totaled approximately $3.78 billion and net sales within Europe totaled approximately $5.15 billion.

Current wording

Net sales from Developed Markets decreased by $415.4 million, or 5%, for the year ended December 31, 2025 when compared to the prior year. Net sales decreased by approximately $372.7 million, or 4%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The favorable impact of foreign currency translation was approximately $213.2 million, or 2%. Constant currency net sales from the remaining business decreased by approximately $255.9 million, or 3%, driven primarily by lower net sales of certain existing products, including lenalidomide and everolimus in the U.S., as a result of the Indore Impact of approximately $283 million, partially offset by new product sales. Net sales within North America totaled approximately $3.39 billion and net sales within Europe totaled approximately $5.12 billion.

Previous wording

Net sales from Greater China were essentially flat for the year ended December 31, 2024 when compared to the prior year. The unfavorable impact of foreign currency translation was approximately $47.2 million, or 2%. Constant currency net sales increased by approximately $53.4 million, or 2%, when compared to the prior year, driven primarily by increased volumes of existing products. Divestitures did not have a significant impact on the net sales during the years ended December 31, 2024 and 2023.

Current wording

Net sales from Greater China increased by $166.0 million, or 8%, for the year ended December 31, 2025 when compared to the prior year. The unfavorable impact of foreign currency translation was approximately $1.5 million. Constant currency net sales increased by approximately $168.2 million, or 8%, when compared to the prior year, driven primarily by strong growth across multiple channels, including e-commerce, retail, and private hospitals, as well as benefits of timing of customer purchasing patterns. Divestitures did not have a significant impact on net sales in either period and the Indore Impact during the year ended December 31, 2025 was not significant.

Previous wording

Net sales from JANZ decreased by $78.3 million, or 5%, for the year ended December 31, 2024 when compared to the prior year. This decrease was the result of the unfavorable impact of foreign currency translation of approximately $81.4 million, or 6%. Net sales also decreased by approximately $16.4 million, or 1%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. Constant currency net sales from the remaining business increased by approximately $19.5 million, or 1%, when compared to the prior year, driven primarily by new product sales in Australia. This increase was partially offset by lower net sales of existing products mainly driven by lower pricing in Japan as a result of government price reductions and additional competition.

Current wording

Net sales from JANZ decreased by $152.4 million, or 11%, for the year ended December 31, 2025 when compared to the prior year. Net sales decreased by approximately $24.0 million, or 2%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The decrease was also partially driven by the unfavorable impact of foreign currency translation of approximately $15.5 million, or 1%. Constant currency net sales from the remaining business decreased by approximately $112.9 million, or 8%, when compared to the prior year, driven primarily by lower net sales of existing products in Japan and Australia due to government price reductions and additional competition, and by the Indore Impact of approximately $9 million.

Previous wording

Net sales from Emerging Markets decreased by $300.9 million or 12% for the year ended December 31, 2024 when compared to the prior year. Net sales decreased by approximately $294.6 million, or 12%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $116.2 million, or 5%. Constant currency net sales from the remaining business increased by approximately $109.9 million, or 4%, when compared to the prior year, primarily driven by new products and higher net sales of existing products in certain Latin American, Middle Eastern and Asian countries.

Current wording

Net sales from Emerging Markets decreased by $40.6 million, or 2%, for the year ended December 31, 2025 when compared to the prior year. Net sales decreased by approximately $80.6 million, or 4%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $18.5 million, or 1%. Constant currency net sales from the remaining business increased by approximately $58.5 million, or 3%, when compared to the prior year, primarily driven by new products in certain Latin American countries and higher volumes and pricing of existing products in certain Middle Eastern and Asian countries. These increases were partially offset by lower volumes in our ARV business, mainly as a result of the Indore Impact of approximately $77 million.

Previous wording

Cost of sales increased from $8.99 billion for the year ended December 31, 2023 to $9.12 billion for the year ended December 31, 2024. The increase in cost of sales was largely driven by IPR&D intangible asset impairment charges of $177.1 million. Refer to Note 8 Goodwill and Intangible Assets included in Part II, Item 8 of this Form 10-K for more information. This increase was partially offset by the impact of the decrease in net sales, including as a result of the divestitures that have closed in 2023 and 2024.

Current wording

Cost of sales increased from $9.12 billion for the year ended December 31, 2024 to $9.29 billion for the year ended December 31, 2025. The increase in cost of sales was largely driven by higher costs associated with other special items, which are described further in the section titled Use of Non-GAAP Financial Measures, and by product mix as a result of the Indore Impact. These increases were partially offset by the impact of the decrease in net sales, and lower IPR&D intangible asset impairment charges. Refer to Note 8 Goodwill and Intangible Assets included in Part II, Item 8 of this Form 10-K for more information.

Previous wording

Gross profit for the year ended December 31, 2024 was $5.62 billion and gross margins were 38%. For the year ended December 31, 2023, gross profit was $6.44 billion and gross margins were 42%. The changes in gross profit and gross margins are primarily related to the impact of the divestitures and the IPR&D intangible asset impairment charges. Adjusted gross margins were approximately 58% for the year ended December 31, 2024, essentially flat when compared to the year ended December 31, 2023.

Current wording

Gross profit for the year ended December 31, 2025 was $5.01 billion and gross margins were 35%. For the year ended December 31, 2024, gross profit was $5.62 billion and gross margins were 38%. The changes in gross profit and gross margins are primarily related to the increase in cost of sales. Adjusted gross margins were approximately 56% for the year ended December 31, 2025, compared to 58% for the year ended December 31, 2024.

Previous wording

R&D expense for the year ended December 31, 2024 was $808.7 million, essentially flat compared to R&D expense of $805.2 million for the prior year. An increase in spend on the selatogrel and cenerimod programs was partially offset by lower spending on base business programs. We expect R&D expense to increase in excess of $100 million in 2025 as compared to 2024 primarily as a result of increased expenses for the selatogrel and cenerimod development programs.

Current wording

R&D expense for the year ended December 31, 2025 was $965.9 million, compared to $808.7 million for the prior year, an increase of $157.2 million. This increase was primarily the result of higher expenses for the selatogrel and cenerimod development programs.

Previous wording

Acquired IPR&D expense for the year ended December 31, 2024 was $28.3 million, compared to $105.5 million for the prior year, a decrease of $77.2 million. The decrease was primarily due to upfront licensing payments to Mapi of $75.0 million related to additional products under development recorded during the prior year. This was partially offset by an upfront licensing payment of $25.0 million to Lexicon related to sotagliflozin recorded during the fourth quarter of 2024.

Current wording

Acquired IPR&D expense for the year ended December 31, 2025 was $48.3 million, compared to $28.3 million for the prior year, an increase of $20.0 million. The increase was primarily due to an upfront payment related to the acquisition of Aculys Pharma of $35.0 million recorded during the fourth quarter of 2025, and an upfront licensing payment for rights to cenerimod in Japan, South Korea and certain countries in the Asia-Pacific region during the first quarter of 2025. This was partially offset by an upfront licensing payment of $25.0 million to Lexicon related to sotagliflozin recorded during the fourth quarter of 2024.

Previous wording

In conjunction with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $321.0 million during the second quarter of 2024 related to its JANZ reporting unit, which was recorded within SG&A in the consolidated statement of operations. The impairment charge was primarily the result of a 1.0% increase in the discount rate and a 0.5% reduction in the terminal growth rate assumption for the reporting unit.

Current wording

During the prior year, the Company recorded a goodwill impairment charge of $321.0 million related to its JANZ reporting unit in conjunction with its annual goodwill impairment test performed as of April 1, 2024.

Previous wording

The following table includes the losses recognized in litigation settlements and other contingencies, net during the years ended December 31, 2024 and 2023, respectively:

Current wording

The following table includes the (gains)/losses recognized in litigation settlements and other contingencies, net during the years ended December 31, 2025 and 2024, respectively:

Previous wording

The contingent consideration adjustment for the year ended December 31, 2024 was primarily due to fair value adjustments related to the Respiratory Delivery Platform and the Idorsia contingent consideration liabilities. Refer to Note 9 Financial Instruments and Risk Management included in Part II, Item 8 of this Form 10-K for more information.

Current wording

Refer to Note 4 Acquisitions and Other Transactions and Note 9 Financial Instruments and Risk Management included in Part II, Item 8 of this Form 10-K for more information with respect to the contingent consideration adjustment.

Previous wording

Also refer to Note 19 Litigation included in Part II, Item 8 of this Form 10-K for more information.

Current wording

Also refer to Note 20 Litigation included in Part II, Item 8 of this Form 10-K for more information on litigation settlements, net.

Previous wording

Interest expense for the year ended December 31, 2024 totaled $550.0 million, compared to $573.1 million for the year ended December 31, 2023, a decrease of $23.1 million. The decrease was primarily due to the impact of debt repayments, partially offset by the non-cash accretion of the contingent consideration liability related to the Idorsia Transaction.

Current wording

Interest expense for the year ended December 31, 2025 totaled $471.3 million, compared to $550.0 million for the year ended December 31, 2024, a decrease of $78.7 million. The decrease was primarily due to the impact of 2024 debt repayments.

Previous wording

Other expense (income), net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, extinguishment of debt, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income. Other expense (income), net for the year ended December 31, 2024 totaled $83.3 million of expense, compared to $(9.8) million of income for the year ended December 31, 2023, a decrease of $93.1 million.

Current wording

Other expense (income), net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, extinguishment of debt, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income. Other expense, net for the year ended December 31, 2025 totaled $530.6 million, compared to $83.3 million for the year ended December 31, 2024, an increase of $447.3 million.

Previous wording

(g) Includes: (1) a gain of approximately $373.5 million as a result of remeasuring the CCPS in Biocon Biologics to fair value; (2) a gain on the extinguishment of debt of $16.5 million; and (3) charges of $184.6 million related to the impairment of our equity investment in Mapi and advances for GA Depot inventory (refer to Note 18 Licensing and Other Partner Agreements included in Part II, Item 8 of this Form 10-K for more information).

Current wording

This was partially offset by: (1) a decrease in loss on divestitures of $298.5 million compared to the prior year period; (2) charges of $184.6 million recorded in the prior year related to the impairment of our equity investment in Mapi and advances for GA Depot inventory (refer to Note 19 Licensing and Other Partner Agreements included in Part II, Item 8 of this Form 10-K for more information); and (3) a gain on debt extinguishments of $16.5 million recorded in the prior year.