Viatris warns war in Ukraine could squeeze future financials

Viatris’ business avoided a hit from Russia’s war in Ukraine for the first three months of 2022, but that could change later this year, the company warned.

“[T]rade controls, sanctions, supply chain and staffing challenges and other economic considerations related to the conflict have impacted our operations in these markets and may negatively impact our financial results in future periods,” the company said in its first-quarter earnings release.

“In addition, a significant escalation or expansion of the conflict's current scope may have a negative impact on our operations and financial results in future periods,” Viatris added.

Viatris' combined total revenue from both Ukraine and Russia amounted to less than 1% of total sales for the first quarter, Viatris said. But it's one of many drugmakers that have been forced to suspend or adapt operations in the area after Russia invaded its neighbor in late February.

On its website, Viatris says its main focus is the “immediate safety and protection of our colleagues and their families impacted by the crisis in Ukraine.”

As the company monitors the situation, it’s providing support at many levels, including shelter, financial aid, resources, tools and other assistance.

The company is working with partners like Direct Relief and UNAIDS to, among other things, support medical relief shipments to Ukraine and refugees fleeing the war, the company said. The company says it’s also chipping in on local product donation and giving strategies, in a bid to empower “in-market business leaders to ensure the broadest impact is made.”

Meanwhile, Viatris is doing “all we can” to maintain the supply of essential medicines “in all impacted areas, according to applicable laws and regulations.”

Viatris issued its Ukraine financial caveat on Monday alongside disclosing $4.19 billion in first-quarter revenues for 2022. Meanwhile, the company is making good on reshaping initiatives it rolled out in February and for the full year, Viatris remains confident in its operational guidance, CEO Michael Goettler said on a call with analysts.

Earlier this year, Viatris said it would sell its biosimilars franchise to Biocon subsidiary Biocon Biologics for up to $3.335 billion in a cash-and-stock deal. Upon the deal’s close, currently pegged for the second half of 2022, Viatris will receive $2 billion in cash and $1 billion worth of Biocon Biologics shares, which amount to about a 12.9% stake.

Unshackled from its biosimilars business, Viatris will focus on several established brands like Lipitor, Viagra and EpiPen, plus generics and injectables.

Many of those brands performed “better than expectations” in 2022’s first quarter, Viatris noted in its earnings release.

Over the first three months of the year, meanwhile, Viatris snagged some $120 million in new product revenue, putting it on track to hit its 2022 target of $600 million. It credited those gains in large part to the launch of generic Restasis and its interchangeable diabetes biosimilar Semglee in the U.S.

For the full year, Viatris expects to reap revenues between $17 billion and $17.5 billion.