Viatris Inc 10-K

ITEM 8. Financial Statements And Supplementary Data Index to Consolidated Financial Statements and Supplementary Financial Information Page Management’s Report on Internal Control over Financial Reporting 79 Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 80 Consolidated Balance Sheets as of December 31, 202 1 and 20 20 84 Consolidated Statements of Operations for the Years Ended December 31, 202 1 , 20 20 , and 201 9 85 Consolidated Statements of Comprehensive (Loss) Earnings for the Years Ended December 31, 202 1 , 20 2 0 and 201 9 86 Consolidated Statements of Equity for the Years Ended December 31, 202 1 , 20 20 and 201 9 87 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 1 , 20 20 and 201 9 88 Notes to Consolidated Financial Statements 89 78 Table of Contents Management’s Report on Internal Control over Financial Reporting Management of Viatris Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. In order to evaluate the effectiveness of internal control over financial reporting, management has conducted an assessment, including testing, using the criteria in Internal Control - Integrated Framework ( 2013) , issued by COSO. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. As a result of this assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2021 based on the criteria in Internal Control - Integrated Framework (2013) issued by COSO. Our independent registered public accounting firm, Deloitte & Touche LLP (PCAOB ID No. 34 ), has audited the effectiveness of the Company’s internal control over financial reporting. Deloitte & Touche LLP’s opinion on the Company’s internal control over financial reporting appears on page 83 of this Annual Report on Form 10-K. 79 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Viatris Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Viatris Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive (loss) earnings, equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill – Viatris Inc. Europe and JANZ Reporting Units – Refer to Note 8 to the financial statements. Critical Audit Matter Description The Company performed its annual goodwill impairment test as of April 1, 2021. As of April 1, 2021, the Company had $11.91 billion of consolidated goodwill, $5.15 billion and $0.82 billion of which was allocated to the Viatris Inc. Europe and JANZ reporting units, respectively. The Company’s evaluation of goodwill for impairment involves the comparison of the estimated fair value of each reporting unit to its carrying value. The Company performed its valuation analysis, using both income and market-based approaches, to determine the fair value of its Europe and JANZ reporting units. The determination of the fair value requires management to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 valuation inputs, primarily include, but are not limited to, market multiples, control premiums, discount rates, terminal growth rates, operating income before depreciation and amortization, and capital expenditures forecasts. The fair values of the Europe and the JANZ reporting units exceeded their carrying values by approximately $0.91 billion, or 5.8%, and $0.23 billion, or 7.0%, respectively, as of April 1, 2021 and, therefore, no impairments were recognized. 80 Table of Contents Given that the Europe and JANZ reporting unit’s revenues are sensitive to changes in consumer demand, the approval of new product launches, the expansion of existing products into new jurisdictions (which have differentiated distribution and commercialization models throughout the regions), and the impact of business development activity, auditing management’s judgments regarding forecasts of future revenues, and the selection of the discount rates and terminal growth rates required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the forecasts of future revenues (“forecasts”), and the selection of the discount rates and terminal growth rates for the Europe and the JANZ reporting units included the following procedures, among others: • We tested the effectiveness of controls over the review of the goodwill impairment test, including those over the development of the business forecasts of future revenues and the selection of the discount rates and terminal growth rates. • We evaluated management’s ability to accurately forecast future revenues of the Europe and JANZ reporting units by comparing actual results to management’s historical forecasts. • We evaluated the reasonableness of management’s revenue forecasts by comparing the projections to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases. We also considered third party reports related to macroeconomic and industry trends and made inquiries of management, including various regional commercial and operations leaders to assess key inputs in the forecast assumptions. • With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology, discount rates, and terminal growth rates, including (1) testing the source information underlying the determination of the discount rates and terminal growth rates and the mathematical accuracy of the calculations, (2) developing a range of independent estimates and comparing those to the discount rates selected by management, and (3) considering third party macroeconomic reports. Net Revenue Provisions – Chargebacks Accrual at Mylan Pharmaceuticals Inc. (“MPI”) – Refer to Note 3 to the financial statements. Critical Audit Matter Description The Company has agreements with certain indirect customers, such as independent pharmacies, retail pharmacy chains, managed care organizations, hospitals, nursing homes, governmental agencies, and pharmacy benefit managers, which establish contract prices for certain products. The indirect customers then independently select a wholesaler from which to purchase the products at these contracted prices. Alternatively, certain wholesalers may enter into agreements with indirect customers that establish contract pricing for certain products, which the wholesalers provide. Under either arrangement, Viatris will provide credit to the wholesaler for any difference between the contracted price with the indirect party and the wholesaler’s invoice price. Such credits are called chargebacks. The provision for chargebacks is the most significant and complex provision in the context of the Company’s gross-to-net adjustments in the determination of net revenue. The chargeback accrual recorded at MPI represents the majority of the global chargeback reserve as of December 31, 2021. The Company's recorded estimate is based on expected sell-through levels by the Company’s wholesaler customers to indirect customers, as well as estimated wholesaler inventory levels. Estimating the amounts to be accrued for chargebacks requires significant estimation as management’s model utilizes historical buying patterns, estimated end-user demand, estimated inventory levels in the distribution channel, contracted sales terms with customers, as well as other competitive factors. Given the volume of chargebacks and the level of estimation uncertainty involved, auditing management’s judgments required a high degree of auditor judgment and an increased extent of effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Net Revenue Provisions – Chargebacks accrual included the following, among others: • We evaluated the Company’s methodology and assumptions in developing their chargeback accruals, including assessing the completeness and accuracy of the underlying data used by management in their estimates. 81 Table of Contents • We tested the effectiveness of controls over the calculation of the chargebacks reserves. • We compared prior period chargebacks accruals to chargeback credits subsequently issued to evaluate management’s ability to accurately forecast chargeback activity. • We developed independent expectations of product-level chargeback accruals and chargeback accruals in the aggregate using the following: 1) customer contracts, 2) historical sales and chargeback activity, 3) third-party channel inventory for select wholesalers, and 4) credits subsequently issued to period end and compared those to the recorded amounts. Net Revenue Provisions – Sales Returns Accrual at MPI – Refer to Note 3 to the financial statements . Critical Audit Matter Description The Company provides customers with the ability to return product, which varies country by country in accordance with local practices, generally within a specified period prior (six months) and subsequent (twelve months) to the expiration date. The Company’s estimate of the provision for returns is generally based upon historical experience with actual returns. The returns reserve at MPI represents a significant component of the global sales returns reserve as of December 31, 2021. Estimating the amounts to be accrued for returns requires significant estimation as management’s model utilizes historical experience with actual returns and considers levels of inventory in the distribution channel, product dating and expiration period, size and maturity of the market prior to a product launch, entrance into the market of additional competitors, and changes in the regulatory environment. Given the volume of sales returns and the level of estimation uncertainty involved, auditing management’s judgments required a high degree of auditor judgment and an increased extent of effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Net Revenue Provisions – Sales Returns accrual included the following, among others: • We evaluated the Company’s methodology and assumptions in developing their sales returns accrual model, including assessing the completeness and accuracy of the underlying data used by management in their estimates. • We tested the effectiveness of controls over the calculation of the sales returns reserve at MPI. • We compared prior period sales returns accruals to sales returns credits subsequently issued to evaluate management’s ability to accurately forecast sales returns activity. • We developed independent expectations of product-level sales returns accruals and sales returns accruals in the aggregate using the following: 1) historical sales and returns activity, 2) remaining shelf life information, 3) finished goods inventory on-hand at the end of the period, and 4) adjustments for known or anticipated sales return activity based on market dynamics (market prior to Viatris launch, impact of competition, and overall regulatory environment) and compared those to the recorded amounts. /s/ DELOITTE & TOUCHE LLP Pittsburgh, Pennsylvania February 28, 2022 We have served as the Company's auditor since 1976. 82 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Viatris Inc.: Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Viatris, Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 28, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Pittsburgh, Pennsylvania February 28, 2022 83 Table of Contents VIATRIS INC. AND SUBSIDIARIES Consolidated Balance Sheets (In millions, except share and per share amounts) December 31, 2021 December 31, 2020 ASSETS Assets Current assets: Cash and cash equivalents $ 701.2 $ 844.4 Accounts receivable, net 4,266.4 4,843.8 Inventories 3,977.7 5,471.9 Prepaid expenses and other current assets 1,957.6 1,707.4 Total current assets 10,902.9 12,867.5 Property, plant and equipment, net 3,188.6 3,459.9 Intangible assets, net 26,134.2 29,683.2 Goodwill 12,113.7 12,347.0 Deferred income tax benefit 1,332.7 2,147.9 Other assets 1,170.7 1,047.5 Total assets $ 54,842.8 $ 61,553.0 LIABILITIES AND EQUITY Liabilities Current liabilities: Accounts payable $ 1,657.4 $ 1,904.2 Short-term borrowings 1,493.0 1,100.9 Income taxes payable 236.9 288.6 Current portion of long-term debt and other long-term obligations 1,877.5 2,308.5 Other current liabilities 4,619.6 4,960.7 Total current liabilities 9,884.4 10,562.9 Long-term debt 19,717.1 22,429.2 Deferred income tax liability 2,815.0 3,123.7 Other long-term obligations 1,933.6 2,483.1 Total liabilities 34,350.1 38,598.9 Equity Viatris Inc. shareholders’ equity Common stock: $ 0.01 par value, 3,000,000,000 shares authorized; shares issued and outstanding: 1,209,507,463 and 1,206,895,644 , respectively 12.1 12.1 Additional paid-in capital 18,536.1 18,438.8 Retained earnings 3,688.8 5,361.2 Accumulated other comprehensive loss ( 1,744.3 ) ( 858.0 ) Total equity 20,492.7 22,954.1 Total liabilities and equity $ 54,842.8 $ 61,553.0 See Notes to Consolidated Financial Statements 84 Table of Contents VIATRIS INC. AND SUBSIDIARIES Consolidated Statements of Operations (In millions, except per share amounts) Year Ended December 31, 2021 2020 2019 Revenues: Net sales $ 17,813.6 $ 11,819.9 $ 11,370.3 Other revenues 72.7 126.1 130.2 Total revenues 17,886.3 11,946.0 11,500.5 Cost of sales 12,310.8 8,149.3 7,602.9 Gross profit 5,575.5 3,796.7 3,897.6 Operating expenses: Research and development 751.1 555.1 639.9 Selling, general and administrative 4,529.2 3,344.6 2,563.6 Litigation settlements and other contingencies, net 329.2 107.8 ( 21.4 ) Total operating expenses 5,609.5 4,007.5 3,182.1 (Loss) earnings from operations ( 34.0 ) ( 210.8 ) 715.5 Interest expense 636.2 497.8 517.3 Other (income) expense, net ( 5.8 ) 12.6 43.8 (Loss) earnings before income taxes ( 664.4 ) ( 721.2 ) 154.4 Income tax provision (benefit) 604.7 ( 51.3 ) 137.6 Net (loss) earnings ( 1,269.1 ) ( 669.9 ) 16.8 (Loss) earnings per share attributable to Viatris Inc. shareholders Basic $ ( 1.05 ) $ ( 1.11 ) $ 0.03 Diluted $ ( 1.05 ) $ ( 1.11 ) $ 0.03 Weighted average shares outstanding: Basic 1,208.8 601.2 515.7 Diluted 1,208.8 601.2 516.5 See Notes to Consolidated Financial Statements 85 Table of Contents VIATRIS INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive (Loss) Earnings (In millions) Year Ended December 31, 2021 2020 2019 Net (loss) earnings $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8 Other comprehensive (loss) earnings, before tax: Foreign currency translation adjustment ( 1,340.9 ) 1,213.0 ( 415.5 ) Change in unrecognized loss and prior service cost related to defined benefit plans 73.9 ( 14.0 ) ( 24.8 ) Net unrecognized gain on derivatives in cash flow hedging relationships 36.1 18.2 37.1 Net unrecognized gain (loss) on derivatives in net investment hedging relationships 456.8 ( 305.2 ) 59.6 Net unrealized (loss) gain on marketable securities ( 1.1 ) 0.6 0.5 Other comprehensive (loss) earnings, before tax ( 775.2 ) 912.6 ( 343.1 ) Income tax provision (benefit) 111.1 ( 26.6 ) 9.2 Other comprehensive (loss) earnings, net of tax ( 886.3 ) 939.2 ( 352.3 ) Comprehensive (loss) earnings $ ( 2,155.4 ) $ 269.3 $ ( 335.5 ) See Notes to Consolidated Financial Statements 86 Table of Contents VIATRIS INC. AND SUBSIDIARIES Consolidated Statements of Equity (In millions, except share amounts) Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Equity Common Stock (1) Treasury Stock Shares Cost Shares Cost Balance at December 31, 2018 539,289,665 $ 6.0 $ 8,591.4 $ 6,010.7 23,490,867 $ ( 999.7 ) $ ( 1,441.3 ) $ 12,167.1 Net earnings — — — 16.8 — — — 16.8 Other comprehensive loss, net of tax — — — — — — ( 352.3 ) ( 352.3 ) Share-based compensation expense — — 56.8 — — — — 56.8 Issuance of restricted stock and stock options exercised, net 1,457,206 0.1 8.1 — — — — 8.2 Taxes related to the net share settlement of equity awards — — ( 12.8 ) — — — — ( 12.8 ) Cancellation of restricted stock — — — — 1,107,207 — — — Cumulative effect of the adoption of new accounting standards — — — 3.6 — — ( 3.6 ) — Balance at December 31, 2019 540,746,871 $ 6.1 $ 8,643.5 $ 6,031.1 24,598,074 $ ( 999.7 ) $ ( 1,797.2 ) $ 11,883.8 Net loss — $ — $ — $ ( 669.9 ) — $ — $ — $ ( 669.9 ) Other comprehensive earnings, net of tax — — — — — — 939.2 939.2 Share-based compensation expense — — 79.2 — — — — 79.2 Issuance of restricted stock and stock options exercised, net 872,802 — 0.6 — — — — 0.6 Taxes related to the net share settlement of equity awards — — ( 6.3 ) — — — — ( 6.3 ) Exchange of Mylan N.V. ordinary shares for Viatris Inc. common stock ( 541,619,673 ) ( 6.1 ) 6.1 — — — — — Issuance of common stock to Mylan N.V. shareholders 541,619,673 5.2 ( 5.2 ) — — — — — Issuance of common stock for the Combination 689,874,045 6.9 10,720.6 — — — — 10,727.5 Retirement of Mylan N.V. treasury stock, net ( 24,598,074 ) — ( 999.7 ) — ( 24,598,074 ) 999.7 — — Balance at December 31, 2020 1,206,895,644 $ 12.1 $ 18,438.8 $ 5,361.2 — $ — $ ( 858.0 ) $ 22,954.1 Net loss — $ — $ — $ ( 1,269.1 ) — $ — $ — $ ( 1,269.1 ) Other comprehensive loss, net of tax — — — — — — ( 886.3 ) ( 886.3 ) Share-based compensation expense — — 111.2 — — — — 111.2 Issuance of restricted stock and stock options exercised, net 2,611,819 — — — — — — — Taxes related to the net share settlement of equity awards — — ( 13.9 ) — — — — ( 13.9 ) Cash dividends declared, $ 0.33 per common share — — — ( 403.3 ) — — — ( 403.3 ) Balance at December 31, 2021 1,209,507,463 $ 12.1 $ 18,536.1 $ 3,688.8 — $ — $ ( 1,744.3 ) $ 20,492.7 __________________ (1) Ordinary Shares prior to November 16, 2020. See Notes to Consolidated Financial Statements 87 Table of Contents VIATRIS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In millions) Year Ended December 31, 2021 2020 2019 Cash flows from operating activities: Net (loss) earnings $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 4,506.5 2,216.1 2,019.3 Deferred income tax expense (benefit) 675.7 ( 213.2 ) ( 192.6 ) Litigation settlements and other contingencies, net 323.7 101.1 ( 11.5 ) Loss from equity method investments 61.9 48.4 62.1 Share-based compensation expense 111.2 79.2 56.8 Other non-cash items 411.8 366.4 360.6 Changes in operating assets and liabilities: Accounts receivable 59.3 78.7 ( 20.0 ) Inventories ( 427.6 ) ( 741.9 ) ( 512.9 ) Trade accounts payable ( 70.4 ) ( 82.7 ) ( 96.3 ) Income taxes ( 699.6 ) 3.6 57.9 Other operating assets and liabilities, net ( 666.5 ) 46.0 63.5 Net cash provided by operating activities 3,016.9 1,231.8 1,803.7 Cash flows from investing activities: Cash received (paid) for acquisitions, net of cash acquired 277.0 415.8 ( 148.7 ) Capital expenditures ( 457.2 ) ( 243.0 ) ( 213.2 ) Payments for product rights and other, net ( 52.2 ) ( 438.2 ) ( 192.8 ) Proceeds from sale of property, plant and equipment 18.3 2.1 — Proceeds from sale of assets and subsidiaries 96.7 20.0 28.0 Purchase of marketable securities ( 30.2 ) ( 104.8 ) ( 25.8 ) Proceeds from the sale of marketable securities 29.8 47.0 27.1 Net cash used in investing activities ( 117.8 ) ( 301.1 ) ( 525.4 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 1,710.1 983.3 7.4 Payments of long-term debt ( 4,201.3 ) ( 2,484.2 ) ( 1,108.5 ) Payments of financing fees ( 7.0 ) ( 2.0 ) ( 3.0 ) Change in short-term borrowings, net 392.1 1,099.6 ( 1.8 ) Proceeds from exercise of stock options — 0.6 8.1 Taxes paid related to net share settlement of equity awards ( 17.4 ) ( 7.9 ) ( 8.4 ) Contingent consideration payments ( 28.6 ) ( 48.5 ) ( 60.3 ) Cash dividends paid ( 399.0 ) — — Non-contingent payments for product rights ( 456.0 ) ( 143.3 ) — Other items, net ( 4.9 ) ( 3.3 ) ( 2.5 ) Net cash used in financing activities ( 3,012.0 ) ( 605.7 ) ( 1,169.0 ) Effect on cash of changes in exchange rates ( 30.9 ) 33.8 ( 7.5 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 143.8 ) 358.8 101.8 Cash, cash equivalents and restricted cash — beginning of period 850.0 491.1 389.3 Cash, cash equivalents and restricted cash — end of period $ 706.2 $ 850.0 $ 491.1 Supplemental disclosures of cash flow information — Non-cash transactions: Common stock issued for the Combination $ — $ 10,727.5 $ — Cash paid during the period for: Income taxes $ 641.7 $ 324.4 $ 278.6 Interest $ 684.8 $ 555.4 $ 470.6 See Notes to Consolidated Financial Statements 88 Table of Contents Viatris Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Nature of Operations Viatris is a global healthcare company formed in November 2020 whose mission is to empower people worldwide to live healthier at every stage of life, regardless of geography or circumstance. Improving the ability of patients to gain access to sustainable and high-quality healthcare is our relentless pursuit. One that rests on visionary thinking, determination and best-in-class capabilities that were strategically built to remove barriers across the health spectrum and advance access globally. Viatris’ portfolio comprises more than 1,400 approved molecules across a wide range of key therapeutic areas, including globally recognized iconic and key brands, generics, complex generics, and biosimilars. The Company operates approximately 40 manufacturing sites worldwide that produce oral solid doses, injectables, complex dosage forms and APIs. We conduct our business through four segments: Developed Markets, Greater China, JANZ, and Emerging Markets. Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India. In accordance with ASC 805, Business Combinations , Mylan is considered the accounting acquirer of the Upjohn Business and all historical financial information of the Company prior to November 16, 2020 represents Mylan’s historical results and the Company’s thereafter. 2. Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include the accounts of Viatris and those of its wholly owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Investments in equity method affiliates are recorded at cost and adjusted for the Company’s share of the affiliates’ cumulative results of operations, capital contributions and distributions. Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the uncertainty inherent in such estimates, actual results could differ from those estimates. Foreign Currencies. The consolidated financial statements are presented in U.S. Dollars, the reporting currency of Viatris. Statements of Operations and Cash Flows of all of the Company’s subsidiaries that have functional currencies other than U.S. Dollars are translated at a weighted average exchange rate for the period for inclusion in the consolidated statements of operations and cash flows, whereas assets and liabilities are translated at the end of the period exchange rates for inclusion in the consolidated balance sheets. Translation differences are recorded directly in shareholders’ equity as foreign currency translation adjustments. Gains or losses on transactions denominated in a currency other than the subsidiaries’ functional currency, which arise as a result of changes in foreign currency exchange rates, are recorded in the consolidated statements of operations. Cash and Cash Equivalents. Cash and cash equivalents are comprised of highly liquid investments with an original maturity of three months or less at the date of purchase. Debt and Equity Securities. Debt securities classified as available-for-sale on the date of purchase are recorded at fair value, with net unrealized gains and losses, net of income taxes, reflected in accumulated other comprehensive loss as a component of shareholders’ equity. Net realized gains and losses on sales of available-for-sale debt securities are computed on a specific security basis and are included in other expense, net, in the consolidated statements of operations. Debt securities classified as trading securities are valued using the quoted market price from broker or dealer quotations or transparent pricing sources at the reporting date, with gains and losses included in other expense, net, in the consolidated statements of operations. Fair value is determined based on observable market quotes or valuation models using assessments of counterparty credit worthiness, credit risk or underlying security and overall capital market liquidity. Debt securities are reviewed for impairment by assessing if the decline in market value of the investment below the carrying value is other than temporary. 89 Table of Contents Investments in equity securities with readily determinable fair values are recorded at fair value with changes in fair value recorded in other expense, net in the consolidated statements of operations. Investments in equity securities without readily determinable fair values are recorded at cost minus any impairment, plus or minus changes in their estimated fair value resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Investments in entities are accounted for using the equity method of accounting when the ability to exercise significant influence over the operating and financial decisions of the investee is maintained. The share of net income or losses of equity method investments are included in other expense, net in the consolidated statements of operations. Investments in equity securities without readily determinable fair values and investments in equity accounted for using the equity method are assessed for potential impairment on a quarterly basis based on qualitative factors. Concentrations of Credit Risk. Financial instruments that potentially subject the Company to credit risk consist principally of interest-bearing investments, derivatives and accounts receivable. Viatris invests its excess cash in high-quality, liquid money market instruments, principally overnight deposits and highly rated money market funds. The Company maintains deposit balances at certain financial institutions in excess of federally insured amounts. Periodically, the Company reviews the creditworthiness of its counterparties to derivative transactions, and it does not expect to incur a loss from failure of any counterparties to perform under agreements it has with such counterparties. Inventories. Inventories are stated at the lower of cost and net realizable value, with cost principally determined by the weighted average cost method. Provisions for potentially obsolete or slow-moving inventory, including pre-launch inventory, are made based on our analysis of product dating, inventory levels, historical obsolescence and future sales forecasts. Included as a component of cost of sales is expense related to the net realizable value of inventories. Property, Plant and Equipment. Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed and recorded on a straight-line basis over the assets’ estimated service lives ( 3 to 18 years for machinery and equipment and other fixed assets and 15 to 39 years for buildings and improvements). Capitalized software is included in property, plant and equipment and is amortized over estimated useful lives ranging from 3 to 7 years. Intangible Assets and Goodwill. Intangible assets are stated at cost less accumulated amortization. Amortization is generally recorded on a straight-line basis over estimated useful lives ranging from 3 to 20 years. The Company periodically reviews the estimated useful lives of intangible assets and makes adjustments when events indicate that a shorter life is appropriate. The Company accounts for acquired businesses using the acquisition method of accounting in accordance with the provisions of ASC 805, Business Combinations , which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective estimated fair values. The cost to acquire businesses is allocated to the underlying net assets of the acquired business based on estimates of their respective fair values. Amounts allocated to acquired IPR&D are capitalized at the date of acquisition and, at that time, such IPR&D assets have indefinite lives. As products in development are approved for sale, amounts are allocated to product rights and licenses and will be amortized over their estimated useful lives. Finite-lived intangible assets are amortized over the expected life of the asset. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Purchases of developed products and licenses that are accounted for as asset acquisitions are capitalized as intangible assets and amortized over an estimated useful life. IPR&D assets acquired as part of an asset acquisition are expensed immediately if they have no alternative future uses. The Company reviews goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable based on management's assessment of the fair value of the Company's reporting units as compared to their related carrying value. Under the authoritative guidance issued by the FASB, we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If we choose to use qualitative factors and determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test would be required. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the carrying amount is less than its fair value, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, an impairment charge is recorded for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. 90 Table of Contents Indefinite-lived intangibles, principally IPR&D, are tested at least annually for impairment or upon the occurrence of a triggering event. The impairment test for IPR&D consists of a comparison of the asset’s fair value with its carrying value. Impairment is determined to exist when the fair value of IPR&D assets, which is based upon updated forecasts and commercial development plans, is less than the carrying value of the assets being tested. Contingent Consideration. Viatris records contingent consideration resulting from business acquisitions at its estimated fair value on the acquisition date. Each reporting period thereafter, the Company revalues these obligations and records increases or decreases in their fair value as adjustments to litigation settlements and other contingencies, net within the consolidated statements of operations. Changes in the fair value of the contingent consideration obligations can result from adjustments to the discount rates, payment periods and adjustments in the probability of achieving future development steps, regulatory approvals, market launches, sales targets and profitability. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the assumptions utilized as of the acquisition date and for each subsequent measurement period. Accordingly, changes in the assumptions described above could have a material impact on the Company’s consolidated financial condition and results of operations. Impairment of Long-Lived Assets. The carrying values of long-lived assets, which include property, plant and equipment and intangible assets with finite lives, are evaluated periodically in relation to the expected future undiscounted cash flows of the underlying assets and monitored for other potential triggering events. The assessment for impairment is based on our ability to recover the carrying value of the long-lived assets or asset grouping by analyzing the expected future undiscounted pre-tax cash flows specific to the asset or asset grouping. If the carrying amount is greater than the undiscounted cash flows, the Company recognizes an impairment loss for the excess of the carrying amount over the estimated fair value based on discounted cash flows. Significant management judgment is involved in estimating the recoverability of these assets and is dependent upon the accuracy of the assumptions used in making these estimates, as well as how the estimates compare to the eventual future operating performance of the specific asset or asset grouping. Any future long-lived assets impairment charges could have a material impact on the Company’s consolidated financial condition and results of operations. Short-Term Borrowings. The Company’s subsidiaries in India have working capital facilities with several banks which are secured by its current assets. The Company also has the CP Notes, Receivables Facility, which will expire in April 2022 and the Note Securitization Facility, which will expire in August 2022. Under the terms of each of the Receivables Facility and Note Securitization Facility, certain of our accounts receivable secure the amounts borrowed and cannot be used to pay our other debts or liabilities. As the accounts receivable do not transfer to the banks, any amounts outstanding under the facilities are recorded as borrowings and the underlying receivables continue to be included in accounts receivable, net, in the consolidated balance sheets. Revenue Recognition. The Company recognizes revenues in accordance with ASC 606, Revenue from Contracts with Customers . Under ASC 606, the Company recognizes net revenue for product sales when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances. Accruals for these provisions are presented in the consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of our provisions for variable consideration and how such provisions are estimated: • Chargebacks : the Company has agreements with certain indirect customers, such as independent pharmacies, retail pharmacy chains, managed care organizations, hospitals, nursing homes, governmental agencies and pharmacy benefit managers, which establish contract prices for certain products. The indirect customers then independently select a wholesaler from which to purchase the products at these contracted prices. Alternatively, certain wholesalers may enter into agreements with indirect customers that establish contract pricing for certain products, which the wholesalers provide. Under either arrangement, Viatris will provide credit to the wholesaler for any difference between the contracted price with the indirect party and the wholesaler’s invoice price. Such credits are called chargebacks. The provision for chargebacks is based on expected sell-through levels by our wholesaler customers to indirect customers, as well as estimated wholesaler inventory levels. 91 Table of Contents • Rebates, promotional programs and other sales allowances : this category includes rebate and other programs to assist in product sales. These programs generally provide that the customer receives credit directly related to the amount of purchases or credits upon the attainment of pre-established volumes. Also included in this category are prompt pay discounts, administrative fees and price adjustments to reflect decreases in the selling prices of products. • Returns : consistent with industry practice, Viatris maintains a return policy that allows customers to return a product, which varies country by country in accordance with local practices, generally within a specified period prior (six months) and subsequent (twelve months) to the expiration date. The Company’s estimate of the provision for returns is generally based upon historical experience with actual returns. Generally, returned products are destroyed and customers are refunded the sales price in the form of a credit. • Governmental rebate programs : government reimbursement programs in the U.S. include Medicare, Medicaid, and State Pharmacy Assistance Programs established according to statute, regulations and policy. Manufacturers of pharmaceutical products that are covered by the Medicaid program are required to pay rebates to each state based on a statutory formula set forth in the Social Security Act. Medicare beneficiaries are eligible to obtain discounted prescription drug coverage from private sector providers. In addition, certain states have also implemented supplemental rebate programs that obligate manufacturers to pay rebates in excess of those required under federal law. Our estimate of these rebates is based on the historical trends of rebates paid as well as on changes in wholesaler inventory levels and increases or decreases in the level of sales. We estimate discounts on branded prescription drug sales to Medicare Part D participants in the Medicare “coverage gap” based on historical experience of prescriptions and utilization expected to result in the discount of the “coverage gap”. Outside the U.S., the majority of our pharmaceutical sales are contractually or legislatively governed. In certain European countries, certain rebates are calculated on the governments total pharmaceutical spending or on specific product sale thresholds. We utilize historical data and obtain third party information to determine the adequacy of these accruals. Also, this provision includes price reductions that are mandated by law outside of the U.S. Our net sales may be impacted by wholesaler and distributor inventory levels of our products, which can fluctuate throughout the year due to the seasonality of certain products, pricing, the timing of product demand, purchasing decisions and other factors. Such fluctuations may impact the comparability of our net sales between periods. Consideration received from licenses of intellectual property is recorded as other revenues. Royalty or profit share amounts, which are based on sales of licensed products or technology, are recorded when the customer’s subsequent sales or usages occur. Such consideration is included in other revenues in the consolidated statements of operations. Research and Development. R&D expenses are charged to operations as incurred. Income Taxes. Income taxes have been provided for using an asset and liability approach in which deferred income taxes reflect the tax consequences on future years of events that the Company has already recognized in the financial statements or tax returns. Changes in enacted tax rates or laws may result in adjustments to the recorded tax assets or liabilities in the period that the new tax law is enacted. Earnings per Share. Basic earnings per share is computed by dividing net earnings attributable to holders of Viatris Inc. common stock by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings attributable to holders of Viatris Inc. common stock by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive securities or instruments, if the impact is dilutive. 92 Table of Contents Basic and diluted earnings per share attributable to Viatris Inc. are calculated as follows: Year Ended December 31, (In millions, except per share amounts) 2021 2020 2019 Basic (loss) earnings attributable to Viatris Inc. common shareholders (numerator): Net (loss) earnings attributable to Viatris Inc. common shareholders $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8 Shares (denominator): Weighted average shares outstanding 1,208.8 601.2 515.7 Basic (loss) earnings per share attributable to Viatris Inc. shareholders $ ( 1.05 ) $ ( 1.11 ) $ 0.03 Diluted (loss) earnings attributable to Viatris Inc. common shareholders (numerator): Net (loss) earnings attributable to Viatris Inc. common shareholders $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8 Shares (denominator): Weighted average shares outstanding 1,208.8 601.2 515.7 Share-based awards — — 0.8 Total dilutive shares outstanding 1,208.8 601.2 516.5 Diluted (loss) earnings per share attributable to Viatris Inc. shareholders $ ( 1.05 ) $ ( 1.11 ) $ 0.03 The weighted average shares outstanding used in the computation of earnings per share for the year ended December 31, 2020 includes the effect of the 689.9 million shares issued for the closing of the Combination. Additional stock awards and restricted ordinary shares were outstanding during the years ended December 31, 2021, 2020 and 2019 but were not included in the computation of diluted earnings per share for each respective period because the effect would be anti-dilutive. Excluded shares also include certain share-based compensation awards and restricted shares whose performance conditions had not been fully met. Such excluded shares and anti-dilutive awards represented 12.7 million, 10.3 million and 9.1 million shares for the years ended December 31, 2021, 2020 and 2019, respectively . The Company paid quarterly cash dividends of $ 0.11 per share on the Company’s issued and outstanding common stock on June 16, 2021, September 16, 2021, and December 16, 2021. On January 4, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.12 per share on the Company’s issued and outstanding common stock, which will be payable on March 16, 2022 to shareholders of record as of the close of business on February 24, 2022. The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Board of Directors, and will depend upon factors, including but not limited to, the Company’s financial condition, earnings, capital requirements of its businesses, legal requirements, regulatory constraints, industry practice, and other factors that the Board of Directors deems relevant. On February 28, 2022, the Company announced that its Board of Directors had authorized a share repurchase program for the repurchase of up to $ 1.0 billion of the Company’s shares of common stock. The Company has not yet repurchased any shares of common stock under the share repurchase program and the share repurchase program does not obligate the Company to acquire any particular amount of common stock. Share-Based Compensation. The fair value of share-based compensation is recognized as expense in the consolidated statements of operations over the vesting period. Derivatives. From time to time the Company may enter into derivative financial instruments (mainly foreign currency exchange forward contracts, interest rate swaps and purchased equity call options) designed to: 1) hedge the cash flows resulting from existing assets and liabilities and transactions expected to be entered into over the next 24 months in currencies other than the functional currency, 2) hedge the variability in interest expense on floating rate debt, 3) hedge the fair value of fixed-rate notes, 4) hedge against changes in interest rates that could impact future debt issuances, 5) hedge cash or share payments required on conversion of issued convertible notes, 6) hedge a net investment in a foreign operation, or 7) economically hedge the foreign currency exposure associated with the purchase price of non-U.S. acquisitions. Derivatives are recognized as assets or liabilities in the consolidated balance sheets at their fair value. When the derivative instrument qualifies as a cash flow hedge, changes in the fair value are deferred through other comprehensive earnings. If a derivative instrument qualifies as a fair value hedge, the changes in the fair value, as well as the offsetting changes in the fair value of the hedged items, are generally included in interest expense. When such instruments do not qualify for hedge accounting the changes in fair value are recorded in the consolidated statements of operations within other expense, net . 93 Table of Contents Financial Instruments. The Company’s financial instruments consist primarily of short-term and long-term debt, interest rate swaps, forward contracts and option contracts. The Company’s financial instruments also include cash and cash equivalents as well as accounts and other receivables and accounts payable, the fair values of which approximate their carrying values. As a policy, the Company does not engage in speculative or leveraged transactions. The Company carries derivative instruments in the consolidated balance sheets at fair value, determined by reference to market data such as forward rates for currencies, implied volatilities, and interest rate swap yield curves. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. In addition, the Company has designated certain long-term debt instruments as net investment hedges. Recent Accounting Pronouncements. Adoption of New Accounting Standards In January 2020, the FASB issued Accounting Standards Update 2020-01, Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”) , which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. In addition, ASU 2020-01 states that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. The Company applied the provisions of ASU 2020-01 as of January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and disclosures. In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740) which is intended to simplify the accounting for income taxes by eliminating certain exceptions and simplifying certain requirements under Topic 740. The Company applied the provisions of ASU 2019-12 on a prospective basis as of January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and disclosures. Accounting Standards Issued Not Yet Adopted In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) , which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Entities can apply the provisions of ASU 2020-04 immediately, as applicable, and generally the provisions of the guidance are available through December 31, 2022 as entities transition away from reference rates that are expected to be discontinued. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements and disclosures. In October 2021, the FASB issued Accounting Standards Update 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires entities (acquirers) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606. ASU 2021-08 will be effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022 with early adoption permitted. The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements and disclosures. In November 2021, the FASB issued Accounting Standards Update 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”), which requires entities to provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. ASU 2021-10 will be effective for fiscal years beginning after December 15, 2021 with early adoption permitted. The Company is currently assessing the impact of the adoption of this guidance on its disclosures. 94 Table of Contents 3. Revenue Recognition and Accounts Receivable The following table presents the Company’s net sales by product category for each of our reportable segments for the years ended December 31, 2021, 2020, and 2019, respectively: (In millions) 2021 Net Sales Product Category Developed Markets Greater China JANZ Emerging Markets Total Brands 5,759.2 2,207.8 1,197.1 1,677.2 10,841.3 Complex Gx and Biosimilars 1,241.6 0.2 46.5 53.8 1,342.1 Generics 3,427.9 4.8 783.8 1,413.7 5,630.2 Total Viatris $ 10,428.7 $ 2,212.8 $ 2,027.4 $ 3,144.7 $ 17,813.6 (In millions) 2020 Net Sales Product Category Developed Markets Greater China JANZ Emerging Markets Total Brands 3,920.7 253.9 617.0 443.3 5,234.9 Complex Gx and Biosimilars 1,202.6 0.7 42.8 49.4 1,295.5 Generics 3,387.6 5.3 535.5 1,361.1 5,289.5 Total Viatris $ 8,510.9 $ 259.9 $ 1,195.3 $ 1,853.8 $ 11,819.9 (In millions) 2019 Net Sales Product Category Developed Markets Greater China JANZ Emerging Markets Total Brands 4,199.1 207.6 533.3 422.1 5,362.1 Complex Gx and Biosimilars 1,127.4 0.4 23.8 59.7 1,211.3 Generics 2,913.5 6.6 635.4 1,241.4 4,796.9 Total Viatris $ 8,240.0 $ 214.6 $ 1,192.5 $ 1,723.2 $ 11,370.3 The following table presents net sales on a consolidated basis for select key products for the year ended December 31, 2021: (In millions) Year Ended December 31, 2021 Select Key Global Products Lipitor ® $ 1,663.2 Norvasc ® 824.7 Lyrica ® 728.5 Viagra ® 533.8 EpiPen® Auto-Injectors 391.7 Celebrex ® 344.4 Effexor ® 316.8 Creon ® 309.8 Zoloft ® 284.3 Xalabrands 226.0 Select Key Segment Products Influvac ® $ 299.3 Amitiza ® 201.5 Xanax ® 185.9 Dymista ® 168.0 Yupelri ® 161.9 ____________ (a) The Company does not disclose net sales for any products considered competitively sensitive. 95 Table of Contents (b) Products disclosed may change in future periods, including as a result of seasonality, competition or new product launches. (c) Prior periods are not presented due to significance of products acquired as part of the Combination. Variable Consideration and Accounts Receivable The following table presents a reconciliation of gross sales to net sales by each significant category of variable consideration during the years ended December 31, 2021, 2020 and 2019, respectively: Year Ended December 31, (In millions) 2021 2020 2019 Gross sales $ 30,553.4 $ 19,899.1 $ 19,012.2 Gross to net adjustments: Chargebacks ( 5,530.1 ) ( 3,656.2 ) ( 3,309.6 ) Rebates, promotional programs and other sales allowances ( 6,135.6 ) ( 3,765.5 ) ( 3,629.3 ) Returns ( 384.6 ) ( 329.7 ) ( 237.9 ) Governmental rebate programs ( 689.5 ) ( 327.8 ) ( 465.1 ) Total gross to net adjustments $ ( 12,739.8 ) $ ( 8,079.2 ) $ ( 7,641.9 ) Net sales $ 17,813.6 $ 11,819.9 $ 11,370.3 The following is a rollforward of the categories of variable consideration during 2021: (In millions) Balance at December 31, 2020 Current Provision Related to Sales Made in the Current Period Measurement Period Adjustments and Reclasses Checks/ Credits Issued to Third Parties Effects of Foreign Exchange Balance at December 31, 2021 Chargebacks $ 585.2 $ 5,530.1 $ 63.4 $ ( 5,585.4 ) $ ( 1.6 ) $ 591.7 Rebates, promotional programs and other sales allowances 1,576.3 6,135.6 ( 57.6 ) ( 6,267.1 ) ( 14.2 ) 1,373.0 Returns 539.9 384.6 269.0 ( 499.0 ) ( 7.7 ) 686.8 Governmental rebate programs 313.3 689.5 110.6 ( 705.2 ) ( 9.0 ) 399.2 Total $ 3,014.7 $ 12,739.8 $ 385.4 $ ( 13,056.7 ) $ ( 32.5 ) $ 3,050.7 Accruals for these provisions are presented in the consolidated financial statements as reductions in determining net revenues and as a contra-asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Accounts receivable are presented net of allowances relating to these provisions, which were comprised of the following at December 31, 2021 and 2020, respectively: (In millions) December 31, 2021 December 31, 2020 Accounts receivable, net $ 1,688.6 $ 1,802.9 Other current liabilities 1,362.1 1,211.8 Total $ 3,050.7 $ 3,014.7 We have not made and do not anticipate making any significant changes to the methodologies that we use to measure provisions for variable consideration; however, the balances within these reserves can fluctuate significantly through the consistent application of our methodologies. Historically, we have not recorded in any current period any material amounts related to adjustments made to prior period reserves. 96 Table of Contents Accounts receivable, net was comprised of the following at December 31, 2021 and December 31, 2020, respectively: (In millions) December 31, 2021 December 31, 2020 Trade receivables, net $ 3,774.4 $ 3,891.3 Other receivables 492.0 952.5 Accounts receivable, net $ 4,266.4 $ 4,843.8 Total allowances for doubtful accounts were $ 154.5 million and $ 159.9 million at December 31, 2021 and 2020, respectively. Viatris performs ongoing credit evaluations of its customers and generally does not require collateral. Approximately 18 % and 12 % of the accounts receivable balances represent amounts due from three customers at December 31, 2021 and 2020, respectively. Accounts Receivable Factoring Arrangements We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S. accounts receivable. These transactions are accounted for as sales and result in a reduction in accounts receivable because the agreements transfer effective control over and risk related to the receivables to the buyers. Our factoring agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. We derecognized $ 29.6 million and $ 153.0 million of accounts receivable as of December 31, 2021 and 2020 under these factoring arrangements, respectively. 4. Acquisitions and Other Transactions Upjohn Business Combination Agreement On July 29, 2019, Mylan, Pfizer, Upjohn, a wholly-owned subsidiary of Pfizer, and certain other affiliated entities entered into a Business Combination Agreement pursuant to which Mylan would combine with the Upjohn Business in a Reverse Morris Trust transaction. The Upjohn Business was a global, primarily off-patent branded and generic established medicines business, which includes 20 primarily off-patent solid oral dose legacy brands, such as Lyrica®, Lipitor®, Celebrex® and Viagra®. The Combination was completed on November 16, 2020. Prior to the Combination and pursuant to a Separation and Distribution Agreement, Pfizer had, among other things, transferred to Viatris substantially all of the assets and liabilities comprising the Upjohn Business (the Separation) and, thereafter, Pfizer had distributed to Pfizer stockholders all of the issued and outstanding shares of Viatris (the Distribution). When the Distribution and Combination were complete, Pfizer stockholders as of the record date of the Distribution owned 57 % of the outstanding shares of Viatris common stock and Mylan shareholders as of immediately before the Combination owned 43 % of the outstanding shares of Viatris common stock, in each case on a fully diluted basis. Viatris also made a cash payment to Pfizer equal to $ 12 billion, which was funded with the proceeds of debt incurred by Upjohn prior to the Combination. The transaction involved multiple legal entity restructuring transactions and a reverse merger acquisition with Viatris representing the legal acquirer and Mylan representing the accounting acquirer of the Upjohn Business. In accordance with ASC 805, Business Combinations , Mylan is considered the accounting acquirer of the Upjohn Business and Viatris applied purchase accounting to the acquired assets and assumed liabilities of the Upjohn Business as of November 16, 2020. The debt incurred by Upjohn prior to the Combination was a liability assumed in purchase accounting. The fair value of the debt as of November 16, 2020 was $ 13.08 billion. The purchase price consists of the issuance of approximately 689.9 million Viatris shares of common stock at a fair value of approximately $ 10.73 billion based on the closing price of Mylan’s ordinary shares on November 13, 2020, as reported by the NASDAQ. In accordance with U.S. GAAP, the Company used the acquisition method of accounting to account for this transaction. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction have been recorded at their respective estimated fair values at the acquisition date. During the twelve months ended December 31, 2021 and 2020, the Company incurred acquisition related costs of approximately $ 234.6 million and $ 602.9 million, respectively. Acquisition related costs were recorded primarily in SG&A in the consolidated statements of operations for such periods. 97 Table of Contents During the year ended December 31, 2021, adjustments were made to the preliminary purchase price recorded at December 31, 2020, and are reflected as “Measurement Period and Other Adjustments” in the table below. The allocation of the $ 10.73 billion purchase price to the assets acquired and liabilities assumed under the Combination is as follows: (In millions) Preliminary Purchase Price Allocation as of December 31, 2020 (a) Measurement Period and Other Adjustments (b) Purchase Price Allocation as of December 31, 2021 (as adjusted) Current assets (excluding inventories and net of cash acquired) $ 2,841.9 $ ( 38.7 ) $ 2,803.2 Inventories 2,588.9 ( 34.2 ) 2,554.7 Property, plant and equipment 1,394.1 ( 5.0 ) 1,389.1 Identified intangible assets 18,040.0 — 18,040.0 Goodwill 2,107.5 295.6 2,403.1 Deferred income tax benefit 1,481.9 196.3 1,678.2 Other assets 792.1 ( 7.4 ) 784.7 Total assets acquired $ 29,246.4 $ 406.6 $ 29,653.0 Current liabilities 2,760.2 419.7 3,179.9 Long-term debt, including current portion 13,076.2 — 13,076.2 Deferred tax liabilities 1,656.9 1.0 1,657.9 Other noncurrent liabilities 1,441.5 ( 14.1 ) 1,427.4 Net assets acquired (net of $ 415.8 of cash acquired) $ 10,311.6 $ — $ 10,311.6 ____________ (a) As previously reported in Viatris’ Annual Report on Form 10-K for the fiscal year ended December 31, 2020. (b) The measurement period adjustments are primarily for 1) certain working capital adjustments, an increase in litigation reserves to reflect facts and circumstances that existed as of the date of the Combination, and other adjustments and 2) the tax implications of these and other adjustments. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and accordingly, the Company has not retrospectively adjusted those consolidated financial statements. The Combination enhanced each businesses’ ability to serve patients’ needs and expand their capabilities across more than 165 markets. Mylan brought a diverse portfolio across many geographies and key therapeutic areas, such as central nervous system and anesthesia, infectious disease and cardiovascular, as well as a robust pipeline, high-quality manufacturing and supply chain excellence. The Upjohn Business brought trusted, iconic brands, such as Lipitor® (atorvastatin calcium), Celebrex® (celecoxib) and Viagra® (sildenafil), and proven commercialization capabilities, including leadership positions in China and other emerging markets. The Company recorded a step-up in the fair value of inventory of approximately $ 1.43 billion at the acquisition date. During the twelve months ended December 31, 2021 and 2020, the Company recorded amortization of the inventory step-up of approximately $ 1.19 billion and $ 238.2 million, respectively, which is included in cost of sales in the consolidated statements of operations. The inventory step-up was fully amortized during 2021. In addition, a step-up in the fair value of property, plant and equipment of approximately $ 385.0 million was recognized. The related depreciation is being expensed over a service life of five years for machinery and equipment and between 10 and 20 years for buildings. The identified intangible assets of $ 18.04 billion are comprised of product rights and are being amortized over a weighted average useful life of 15 years. Significant assumptions utilized in the valuation of identified intangible assets were based on company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by U.S. GAAP. The goodwill of $ 2.40 billion arising from the Combination consisted largely of the value of the employee workforce and products to be sold in new markets leveraging the combined entity. In addition, an allocation of the goodwill was assigned to the respective segments. None of the goodwill recognized in this transaction is expected to be deductible for income tax purposes. The Company recorded a fair value adjustment of approximately $ 759.4 million related to the long-term debt assumed as part of the acquisition. The fair value of long-term debt as of the Combination date was determined by broker or dealer quotations, which is classified as Level 2 in the fair value hierarchy. The total fair value adjustment is being amortized as a reduction to interest expense over the maturity dates of the related debt instruments. 98 Table of Contents The operating results of the Upjohn Business have been included in the Company’s consolidated statements of operations since the acquisition date. The total revenues of the Upjohn Business for the period from the acquisition date to December 31, 2020, were $ 866.5 million and net loss, net of tax, was approximately $ 360.9 million. The net loss for the period includes the effect of the purchase accounting adjustments and acquisition related costs. Unaudited Pro Forma Financial Results The following table presents supplemental unaudited pro forma information for the Combination, as if it had occurred on January 1, 2019. The unaudited pro forma results reflect certain adjustments related to past operating performance and acquisition accounting adjustments, such as increased depreciation and amortization expense based on the fair value of assets acquired, the impact of transaction costs and the related income tax effects. The unaudited pro forma results do not include any anticipated synergies which may be achievable, or have been achieved, subsequent to the closing of the Combination. Accordingly, the unaudited pro forma results are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on the stated date above, nor are they indicative of the future operating results of Viatris and its subsidiaries. Year Ended December 31, (Unaudited, in millions, except per share amounts) 2020 2019 Total revenues $ 18,284.8 $ 21,582.7 Net earnings $ 1,483.7 $ 1,873.5 Earnings per share: Basic $ 1.23 $ 1.55 Diluted $ 1.23 $ 1.55 Weighted average shares outstanding: Basic 1,206.8 1,205.6 Diluted 1,207.7 1,206.4 Other Transactions In December 2020, Viatris and Pfizer terminated their strategic collaboration for generic drugs in Japan pursuant to an amendment and termination agreement. Under the prior collaboration agreement, both parties contributed products, which Pfizer distributed to third-parties in the Japan market. Under the terms of the amendment and termination agreement, Viatris purchased all collaboration related inventory held by Pfizer. As a result of the termination, and the repurchase of collaboration inventory, the Company reduced revenue by $ 86.5 million during the year ended December 31, 2020. In September 2020, the Company entered into an agreement to acquire the related intellectual property and commercialization rights of Aspen’s thrombosis product portfolio in Europe for € 641.9 million. The portfolio consists of well-established injectable anticoagulants sold in Europe under the brand names, and variations of the brand names, Arixtra®, Fraxiparine®, Mono-Embolex® and Orgaran®. Upon closing of the transaction in November 2020, the Company made a payment of € 263.2 million to Aspen and the remaining payment of € 378.7 million was made on June 25, 2021. The Company accounted for this transaction as an asset acquisition and recognized an intangible asset of € 641.9 million for the product rights, which is being amortized over a useful life of 8 years. 5. Balance Sheet Components Selected balance sheet components consist of the following: Cash and restricted cash (In millions) December 31, 2021 December 31, 2020 December 31, 2019 Cash and cash equivalents $ 701.2 $ 844.4 $ 475.6 Restricted cash, included in other current and non-current assets 5.0 5.6 15.5 Cash, cash equivalents and restricted cash $ 706.2 $ 850.0 $ 491.1 99 Table of Contents Inventories (In millions) December 31, 2021 December 31, 2020 Raw materials $ 922.4 $ 958.4 Work in process 993.3 1,438.1 Finished goods 2,062.0 3,075.4 Inventories $ 3,977.7 $ 5,471.9 Inventory reserves totaled $ 519.0 million and $ 353.6 million at December 31, 2021 and 2020, respectively. Included as a component of cost of sales is expense related to the net realizable value of inventories of $ 474.9 million, $ 206.1 million and $ 399.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. Prepaid expenses and other current assets (In millions) December 31, 2021 December 31, 2020 Prepaid expenses $ 256.7 $ 267.8 Available-for-sale fixed income securities 38.2 39.1 Fair value of financial instruments 144.6 118.6 Equity securities 51.0 45.8 Other current assets 1,467.1 1,236.1 Prepaid expenses and other current assets $ 1,957.6 $ 1,707.4 Prepaid expenses consist primarily of prepaid rent, insurance and other individually insignificant items. Property, plant and equipment, net (In millions) December 31, 2021 December 31, 2020 Machinery and equipment $ 3,054.0 $ 3,235.0 Buildings and improvements 1,808.5 1,954.8 Construction in progress 588.7 376.3 Land and improvements 137.9 155.8 Gross property, plant and equipment 5,589.1 5,721.9 Accumulated depreciation 2,400.5 2,262.0 Property, plant and equipment, net $ 3,188.6 $ 3,459.9 Capitalized software costs included in our consolidated balance sheets were $ 62.3 million and $ 70.9 million, net of accumulated depreciation, at December 31, 2021 and 2020, respectively. The Company periodically reviews the estimated useful lives of assets and makes adjustments when appropriate. Depreciation expense was approximately $ 509.5 million, $ 289.7 million and $ 256.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Other assets (In millions) December 31, 2021 December 31, 2020 Equity method investments, clean energy investments $ — $ 47.9 Operating lease right-of-use assets 290.8 323.6 Other long-term assets 879.9 676.0 Other assets $ 1,170.7 $ 1,047.5 100 Table of Contents Accounts payable (In millions) December 31, 2021 December 31, 2020 Trade accounts payable $ 1,056.1 $ 1,345.7 Other payables 601.3 558.5 Accounts payable $ 1,657.4 $ 1,904.2 Other current liabilities (In millions) December 31, 2021 December 31, 2020 Accrued sales allowances $ 1,362.1 $ 1,211.8 Payroll and employee benefit liabilities 741.9 828.2 Legal and professional accruals, including litigation accruals 715.6 362.9 Contingent consideration 66.7 100.5 Accrued restructuring 233.5 149.2 Equity method investments, clean energy investments 10.9 47.5 Accrued interest 86.6 90.9 Fair value of financial instruments 61.0 103.6 Operating lease liability 86.7 92.9 Other 1,254.6 1,973.2 Other current liabilities $ 4,619.6 $ 4,960.7 Other long-term obligations (In millions) December 31, 2021 December 31, 2020 Employee benefit liabilities $ 876.4 $ 1,020.4 Contingent consideration 133.0 123.1 Tax related items, including contingencies 426.1 469.5 Operating lease liability 200.9 229.5 Accrued restructuring 64.3 134.8 Other 232.9 505.8 Other long-term obligations $ 1,933.6 $ 2,483.1 6. Leases The Company has operating leases of real estate, consisting primarily of administrative offices, manufacturing and distribution facilities, and R&D facilities. We also have operating leases of certain equipment, primarily automobiles, and certain limited supply arrangements. We elected to apply the practical expedient to not separate lease and non-lease components for our leases except for those related to certain limited supply arrangements. We have also elected to apply the short-term lease recognition exemption which means we will not recognize ROU assets or lease liabilities for leases with an initial term of 12 months of less. As of December 31, 2021, the Company recognized ROU assets of $ 290.8 million and total lease liabilities of $ 287.6 million. The Company’s ROU assets are recorded in other assets. The related lease liability balances are recorded in other current liabilities and other long-term obligations in the consolidated balance sheets. Refer to Note 5 Balance Sheet Components for additional information. 101 Table of Contents ROU assets and liabilities are recognized at the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use an applicable incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Options to extend or terminate the ROU assets are reviewed at lease inception and these options are accounted for when they are reasonably certain of being exercised. Other information related to leases was as follows: As of December 31, 2021 Remaining lease terms 1 year to 23 years Weighted-average remaining lease term 6 years Weighted-average discount rate 2.6 % As of December 31, 2021, maturities of lease liabilities were as follows: (In millions) Year ending December 31, 2022 $ 82.0 2023 65.0 2024 42.9 2025 28.8 2026 23.9 Thereafter 68.2 Total lease payments $ 310.8 Less imputed interest 23.2 Total lease liability $ 287.6 As of December 31, 2021, we have additional operating leases, primarily for administrative offices, that have not yet commenced totaling approximately $ 13.6 million. These leases are expected to commence in 2022 and have lease terms of 5 to 9 years. For the years ended December 31, 2021, 2020 and 2019, the Company had operating lease expense of approximately $ 97.6 million, $ 80.7 million and $ 87.6 million, respectively. Operating lease costs are classified primarily as selling, general and administrative expenses and cost of sales in the consolidated statements of operations. 7. Equity Method Investments The Company had three equity method investments in limited liability companies that owned refined coal production plants whose activities qualified for income tax credits under Section 45 of the Code. The Company did not consolidate these entities as we had determined that we were not the primary beneficiary of these entities and did not have the power to individually direct the activities of these entities. Accordingly, these investments were accounted for under the equity method of accounting. For each of the clean energy investments, the Company had entered into notes payable with the respective project sponsor, which in part were paid to the sponsor as certain production levels were met. The law that provides for IRC Section 45 tax credits expired during the year ended December 31, 2021 for all three clean energy investments and all of the clean energy investments have wound down operations. During the years ended December 31, 2021, 2020, and 2019, the Company reduced its long-term obligations for its three investments as a result of lower than anticipated production levels and lower expected future variable debt payments to the respective project sponsor. The Company recognized a net gain of approximately $ 5.7 million, $ 21.4 million and $ 7.0 million, respectively, which was recognized as a component of the net loss of the equity method investments in the consolidated statements of operations. 102 Table of Contents The carrying values and respective balance sheet locations of the Company’s clean energy investments were as follows at December 31, 2021 and 2020, respectively: (In millions) December 31, 2021 December 31, 2020 Other assets $ — $ 47.9 Other current liabilities 10.9 47.5 Summarized financial information, in the aggregate, for the Company’s significant equity method investments on a 100% basis as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 are as follows: (In millions) December 31, 2021 December 31, 2020 Current assets $ 4.2 $ 38.9 Noncurrent assets 0.5 1.0 Total assets 4.7 39.9 Current liabilities 2.8 33.0 Noncurrent liabilities — 1.8 Total liabilities 2.8 34.8 Net assets $ 1.9 $ 5.1 Year Ended December 31, (In millions) 2021 2020 2019 Total revenues $ 326.7 $ 374.5 $ 385.0 Gross loss ( 4.6 ) ( 4.6 ) ( 4.4 ) Operating and non-operating expense 16.8 19.0 20.0 Net loss $ ( 21.4 ) $ ( 23.6 ) $ ( 24.4 ) The Company’s net losses from its equity method investments include amortization expense related to the excess of the cost basis of the Company’s investment over the underlying assets of each individual investee. For the years ended December 31, 2021, 2020 and 2019, the Company recognized net losses from equity method investments of $ 61.9 million, $ 48.4 million, and $ 62.1 million, respectively, which were recognized as a component of other expense, net in the consolidated statements of operations. The Company recognizes the income tax credits and benefits from the clean energy investments as part of its provision for income taxes. 103 Table of Contents 8. Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020 are as follows: (In millions) Developed Markets Greater China JANZ Emerging Markets Total Balance at December 31, 2019: Goodwill $ 8,258.0 $ 67.8 $ 584.8 $ 1,065.0 $ 9,975.6 Accumulated impairment losses ( 385.0 ) — — — ( 385.0 ) 7,873.0 67.8 584.8 1,065.0 9,590.6 Acquisitions 704.3 652.8 217.4 533.0 2,107.5 Foreign currency translation 607.2 17.7 61.8 ( 37.8 ) 648.9 9,184.5 738.3 864.0 1,560.2 12,347.0 Balance at December 31, 2020: Goodwill 9,569.5 738.3 864.0 1,560.2 12,732.0 Accumulated impairment losses ( 385.0 ) — — — ( 385.0 ) 9,184.5 738.3 864.0 1,560.2 12,347.0 Measurement period and other adjustments 67.7 220.4 ( 30.9 ) 38.4 295.6 Foreign currency translation ( 528.8 ) 10.8 ( 56.8 ) 45.9 ( 528.9 ) 8,723.4 969.5 776.3 1,644.5 12,113.7 Balance at December 31, 2021 Goodwill 9,108.4 969.5 776.3 1,644.5 12,498.7 Accumulated impairment losses ( 385.0 ) — — — ( 385.0 ) $ 8,723.4 $ 969.5 $ 776.3 $ 1,644.5 $ 12,113.7 Intangible assets consist of the following components at December 31, 2021 and 2020: (In millions) Weighted Average Life (Years) Cost Accumulated Amortization Net Book Value December 31, 2021 Product rights, licenses and other (1) 15 $ 39,006.2 $ 12,918.5 $ 26,087.7 In-process research and development 46.5 — 46.5 $ 39,052.7 $ 12,918.5 $ 26,134.2 December 31, 2020 Product rights, licenses and other (1) 15 $ 40,404.1 $ 10,801.6 $ 29,602.5 In-process research and development 80.7 — 80.7 $ 40,484.8 $ 10,801.6 $ 29,683.2 ____________ (1) Represents amortizable intangible assets. Other intangibles consist principally of customer lists and contractual rights. 104 Table of Contents Product rights and licenses are primarily comprised of the products marketed at the time of acquisition. These product rights and licenses relate to numerous individual products, the net book value of which, by product category, is as follows: (In millions) Developed Markets Greater China JANZ Emerging Markets December 31, 2021 Brands $ 10,066.6 $ 6,102.9 $ 1,174.8 $ 3,801.7 $ 21,146.0 Complex Gx and Biosimilars 226.8 — 1.5 — 228.3 Generics 4,020.2 12.1 319.5 358.4 4,710.2 Total Product Rights and Licenses $ 14,313.6 $ 6,115.0 $ 1,495.8 $ 4,160.1 $ 26,084.5 (In millions) Developed Markets Greater China JANZ Emerging Markets December 31, 2020 Brands $ 10,988.1 $ 4,372.3 $ 2,377.0 $ 4,478.7 $ 22,216.1 Complex Gx and Biosimilars 272.5 — 2.3 — 274.8 Generics 6,253.9 12.7 423.9 417.3 7,107.8 Total Product Rights and Licenses $ 17,514.5 $ 4,385.0 $ 2,803.2 $ 4,896.0 $ 29,598.7 ____________ 2021 amounts include the finalization of the allocation of the intangible assets relating to the Combination. Amortization expense and intangible asset impairment charges, which are included as a component of amortization expense, which is classified primarily within cost of sales in the consolidated statements of operations, for the years ended December 31, 2021, 2020 and 2019 was as follows: Year ended December 31, (In millions) 2021 2020 2019 Intangible asset amortization expense $ 2,702.2 $ 1,605.8 $ 1,582.7 IPR&D intangible asset impairment charges 19.4 37.4 138.3 Finite-lived intangible asset impairment charges 83.4 45.0 42.3 Total intangible asset amortization expense (including impairment charges) $ 2,805.0 $ 1,688.2 $ 1,763.3 The assessment for impairment of finite-lived intangibles is based on our ability to recover the carrying value of the long-lived assets or asset grouping by analyzing the expected future undiscounted pre-tax cash flows specific to the asset or asset grouping. If the carrying amount is greater than the undiscounted cash flows, the Company recognizes an impairment loss for the excess of the carrying amount over the estimated fair value based on discounted cash flows. Significant management judgment is involved in estimating the recoverability of these assets and is dependent upon the accuracy of the assumptions used in making these estimates, as well as how the estimates compare to the eventual future operating performance of the specific asset or asset grouping. The fair value of finite-lived intangible assets was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated future cash flows include, among other things, the impact of the current competitive environment and future market expectations. Discount rates ranging between 9.0 % and 11.0 % were utilized in the valuations performed during the years ended December 31, 2021, 2020 and 2019. Any future long-lived assets impairment charges could have a material impact in the Company’s consolidated financial condition and results of operations. On April 30, 2021, the Company completed an agreement to divest a group of OTC products in the U.S. As a result of this transaction, the Company recognized an intangible asset impairment charge of approximately $ 83.4 million during the year ended December 31, 2021. The Company’s IPR&D assets are tested at least annually for impairment or upon the occurrence of a triggering event. Impairment is determined to exist when the fair value of IPR&D assets, which is based upon updated forecasts and commercial development plans, is less than the carrying value of the assets being tested. The fair value of IPR&D was calculated as the present value of the estimated future net cash flows using a market rate of return. The assumptions inherent in the estimated future cash flows include, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. Discount rates ranging between 7.0 % and 9.0 %, 9.0 % and 11.0 %, and 9.0 % and 11.0 % were utilized in the valuations performed during the years ended December 31, 2021, 2020 and 2019, respectively. 105 Table of Contents The fair value of both IPR&D and finite-lived intangible assets was determined based upon detailed valuations employing the income approach which utilized Level 3 inputs, as defined in Note 9, Financial Instruments and Risk Management . Changes to any of the Company’s assumptions including changes to or abandonment of development programs, regulatory timelines, discount rates or the competitive environment related to the assets could lead to future material impairment charges. The Company performed its annual goodwill impairment test as of April 1, 2021 on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China. See Note 15, Segment Information , for further discussion. Additionally, the net assets acquired as part of the Combination were included in the respective reporting units and in the annual impairment test for the first time. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing both income and market-based approaches. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, market multiples, control premiums, the discount rate, terminal growth rates, operating income before depreciation and amortization, and capital expenditures forecasts. As of April 1, 2021, the allocation of the Company’s total goodwill was as follows: North America $ 3.66 billion, Europe $ 5.15 billion, Emerging Markets $ 1.58 billion, JANZ $ 0.82 billion and Greater China $ 0.70 billion. As of April 1, 2021, the Company determined that the fair value of the North America, Emerging Markets and Greater China reporting units was substantially in excess of the respective unit’s carrying value. For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $ 0.91 billion or 5.8 % for the annual goodwill impairment test. As it relates to the income approach for the Europe reporting unit at April 1, 2021, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 3.0 %. A terminal year value was calculated with a 0.9 % revenue growth rate applied. The discount rate utilized was 10.5% and the estimated tax rate was 19.0 %. Under the market-based approach, we utilized an estimated range of market multiples of 7.5 to 8.5 times EBITDA plus a control premium of 15.0 %. If all other assumptions are held constant, a reduction in the terminal value growth rate by 2.9 % or an increase in discount rate by 1.5 % would result in an impairment charge for the Europe reporting unit. For the JANZ reporting unit, the estimated fair value exceeded its carrying value by approximately $ 0.23 billion or 7.0 % for the annual goodwill impairment test. As it relates to the income approach for the JANZ reporting unit at April 1, 2021, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately negative 1.5 %. A terminal year value was calculated with a 0.7 % revenue growth rate applied. The discount rate utilized was 8.5 % and the estimated tax rate was 30.5 %. Under the market-based approach, we utilized an estimated market multiple of 6.0 times EBITDA plus a control premium of 15.0 %. If all other assumptions are held constant, a reduction in the terminal value growth rate by 4.2 % or an increase in discount rate by 2.0 % would result in an impairment charge for the JANZ reporting unit. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. In addition, changes in underlying assumptions, especially as they relate to the key assumptions detailed, could have a significant impact on the fair value of the reporting units. Intangible asset amortization expense for the years ending December 31, 2022 through 2026 is estimated to be as follows: (In millions) 2022 $ 2,577 2023 2,414 2024 2,320 2025 2,222 2026 2,164 9. Financial Instruments and Risk Management The Company is exposed to certain financial risks relating to its ongoing business operations. The primary financial risks that are managed by using derivative instruments are foreign currency risk and interest rate risk. 106 Table of Contents Foreign Currency Risk Management In order to manage certain foreign currency risks, the Company enters into foreign exchange forward contracts to mitigate risk associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities. The foreign exchange forward contracts are measured at fair value and reported as current assets or current liabilities in the consolidated balance sheets. Any gains or losses on the foreign exchange forward contracts are recognized in earnings in the period incurred in the consolidated statements of operations. The Company has also entered into forward contracts to hedge forecasted foreign currency denominated sales from certain international subsidiaries and a portion of forecasted intercompany inventory sales denominated in Euro, Japanese Yen and Chinese Renminbi for up to eighteen months. These contracts are designated as cash flow hedges to manage foreign currency transaction risk and are measured at fair value and reported as current assets or current liabilities in the consolidated balance sheets. Any changes in the fair value of designated cash flow hedges are deferred in AOCE and are reclassified into earnings when the hedged item impacts earnings. Net Investment Hedges The Company may hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries by either borrowing directly in foreign currencies and designating all or a portion of the foreign currency debt as a hedge of the applicable net investment position or entering into foreign currency swaps that are designated as hedges of net investments. The Company has designated certain Euro and Yen borrowings as a hedge of its investment in certain Euro-functional and Yen-functional currency subsidiaries in order to manage foreign currency translation risk. Borrowings designated as net investment hedges are marked-to-market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation component of AOCE until the sale or substantial liquidation of the underlying net investments. In addition, the Company manages the related foreign exchange risk of the Euro and Yen borrowings not designated as net investment hedges through certain Euro and Yen denominated financial assets and forward currency swaps. The following table summarizes the principal amounts of the Company’s outstanding Euro and Yen borrowings and the notional amounts of the Euro and Yen borrowings designated as net investment hedges: Notional Amount Designated as a Net Investment Hedge (in millions) Principal Amount December 31, 2021 December 31, 2020 Euro 2.250 % Euro Senior Notes due 2024 € 1,000.0 € 1,000.0 € 1,000.0 3.125 % Euro Senior Notes due 2028 750.0 750.0 750.0 2.125 % Euro Senior Notes due 2025 500.0 500.0 500.0 0.816 % Euro Senior Notes due 2022 750.0 750.0 750.0 1.023 % Euro Senior Notes due 2024 750.0 750.0 750.0 1.362 % Euro Senior Notes due 2027 850.0 850.0 850.0 1.908 % Euro Senior Notes due 2032 1,250.0 1,250.0 1,250.0 Foreign currency forward contracts 105.6 — 105.6 Euro Total € 5,955.6 € 5,850.0 € 5,955.6 Yen YEN Term Loan ¥ 40,000.0 ¥ 40,000.0 ¥ — Yen Total ¥ 40,000.0 ¥ 40,000.0 ¥ — At December 31,2021, the principal amount of the Company’s outstanding Yen borrowings and the notional amount of the Yen borrowings designated as net investment hedge was $ 347.6 million. 107 Table of Contents Interest Rate Risk Management The Company enters into interest rate swaps from time to time in order to manage interest rate risk associated with the Company’s fixed-rate and floating-rate debt. Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash flow hedges. All derivative instruments used to manage interest rate risk are measured at fair value and reported as current assets or current liabilities in the consolidated balance sheets. For fair value hedges, the changes in the fair value of both the hedging instrument and the underlying debt obligations are included in interest expense. For cash flow hedges, the change in fair value of the hedging instrument is deferred through AOCE and is reclassified into earnings when the hedged item impacts earnings. Cash Flow Hedging Relationships The Company’s interest rate swaps designated as cash flow hedges fix the interest rate on a portion of the Company’s variable-rate debt or hedge part of the Company’s interest rate exposure associated with the variability in the future cash flows attributable to changes in interest rates. Any changes in fair value are included in earnings or deferred through AOCE, depending on the nature and effectiveness of the offset. Any ineffectiveness in a cash flow hedging relationship is recognized immediately in earnings in the consolidated statements of operations. Fair Value Hedging Relationships The Company's interest rate swaps designated as fair value hedges convert the fixed rate on a portion of the Company's fixed-rate senior notes to a variable rate. Any changes in the fair value of these derivative instruments, as well as the offsetting change in fair value of the portion of the fixed-rate debt being hedged, is included in interest expense. The Company’s fair value hedge was terminated during 2020. Credit Risk Management The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. Certain derivative instrument contracts entered into by the Company are governed by master agreements, which contain credit-risk-related contingent features that would allow the counterparties to terminate the contracts early and request immediate payment should the Company trigger an event of default on other specified borrowings. The Company records all derivative instruments on a gross basis in the consolidated balance sheets. Accordingly, there are no offsetting amounts that net assets against liabilities. The following table summarizes the classification and fair values of derivative instruments in our consolidated balance sheets: Asset Derivatives Liability Derivatives (In millions) Balance Sheet Location December 31, 2021 Fair Value December 31, 2020 Fair Value Balance Sheet Location December 31, 2021 Fair Value December 31, 2020 Fair Value Derivatives designated as hedges: Foreign currency forward contracts Prepaid expenses & other current assets $ 62.0 $ 28.3 Other current liabilities $ 4.3 $ 0.8 Total derivatives designated as hedges 62.0 28.3 4.3 0.8 Derivatives not designated as hedges: Foreign currency forward contracts Prepaid expenses & other current assets 82.6 90.3 Other current liabilities 56.7 102.8 Total derivatives not designated as hedges 82.6 90.3 56.7 102.8 Total derivatives $ 144.6 $ 118.6 $ 61.0 $ 103.6 108 Table of Contents The following tables summarize information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk: Amount of Gains/(Losses) Recognized in Earnings Amount of Gain Excluded from the Assessment of Hedge Effectiveness Year Ended December 31, Year Ended December 31, (In millions) Location of Gain/(Loss) 2021 2020 2019 2021 2020 2019 Derivative Financial Instruments in Fair Value Hedge Relationships (1) : Interest rate swaps Interest expense (3) $ — $ 22.1 $ 18.7 $ — $ — $ — 2023 Senior Notes (3.125% coupon) Interest expense (3) — ( 22.1 ) ( 18.7 ) — — — Derivative Financial Instruments in Cash Flow Hedging Relationships : Foreign currency forward contracts Other expense, net (5) — — — — 7.1 — Derivative Financial Instruments Not Designated as Hedging Instruments: Foreign currency option and forward contracts Other expense, net (3) 39.3 ( 10.1 ) ( 17.3 ) — — — Total $ 39.3 $ ( 10.1 ) $ ( 17.3 ) $ — $ 7.1 $ — Amount of Gains/(Losses) Recognized in AOCE (Net of Tax) on Derivatives Amount of Gains/(Losses) Reclassified from AOCE into Earnings Year Ended December 31, Year Ended December 31, (In millions) Location of Gain/(Loss) 2021 2020 2019 2021 2020 2019 Derivative Financial Instruments in Cash Flow Hedging Relationships (2) : Foreign currency forward contracts Net sales (4) $ 45.8 $ 20.6 $ 16.6 $ 30.9 $ 4.8 $ ( 0.7 ) Interest rate swaps Interest expense (4) ( 3.4 ) — 3.0 ( 4.3 ) ( 4.5 ) ( 7.1 ) Derivative Financial Instruments in Net Investment Hedging Relationships: Foreign currency borrowings and forward contracts 436.6 ( 346.4 ) 56.7 — — — Total $ 479.0 $ ( 325.8 ) $ 76.3 $ 26.6 $ 0.3 $ ( 7.8 ) ____________ (1) In the first quarter of 2020, the Company terminated interest rate swaps designated as a fair value hedge resulting in net proceeds of approximately $45 million. The amount included in the above tables represents the fair value adjustment recognized at the date the interest rate swaps were settled. (2) At December 31, 2021, the Company expects that approximately $ 21.0 million of pre-tax net gains on cash flow hedges will be reclassified from AOCE into earnings during the next twelve months. (3) Represents the location of the gain/(loss) recognized in earnings on derivatives. (4) Represents the location of the gain/(loss) reclassified from AOCE into earnings. (5) Represents the location of the gain excluded from the assessment of hedge effectiveness. Fair Value Measurement Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities. 109 Table of Contents Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value . Financial assets and liabilities carried at fair value are classified in the tables below in one of the three categories described above: December 31, 2021 (In millions) Level 1 Level 2 Level 3 Total Recurring fair value measurements Financial Assets Cash equivalents: Money market funds $ 50.9 $ — $ — $ 50.9 Total cash equivalents 50.9 — — 50.9 Equity securities: Exchange traded funds 50.3 — — 50.3 Marketable securities 0.7 — — 0.7 Total equity securities 51.0 — — 51.0 Available-for-sale fixed income investments: Corporate bonds — 16.6 — 16.6 U.S. Treasuries — 14.6 — 14.6 Agency mortgage-backed securities — 2.0 — 2.0 Asset backed securities — 4.6 — 4.6 Other — 0.4 — 0.4 Total available-for-sale fixed income investments — 38.2 — 38.2 Foreign exchange derivative assets — 144.6 — 144.6 Total assets at recurring fair value measurement $ 101.9 $ 182.8 $ — $ 284.7 Financial Liabilities Foreign exchange derivative liabilities $ — $ 61.0 $ — $ 61.0 Contingent consideration — — 199.7 199.7 Total liabilities at recurring fair value measurement $ — $ 61.0 $ 199.7 $ 260.7 110 Table of Contents December 31, 2020 (In millions) Level 1 Level 2 Level 3 Total Recurring fair value measurements Financial Assets Cash equivalents: Money market funds $ 0.9 $ — $ — $ 0.9 Total cash equivalents 0.9 — — 0.9 Equity securities: Exchange traded funds 45.1 — — 45.1 Marketable securities 0.7 — — 0.7 Total equity securities 45.8 — — 45.8 Available-for-sale fixed income investments: Corporate bonds — 17.8 — 17.8 U.S. Treasuries — 14.4 — 14.4 Agency mortgage-backed securities — 1.9 — 1.9 Asset backed securities — 4.6 — 4.6 Other — 0.4 — 0.4 Total available-for-sale fixed income investments — 39.1 — 39.1 Foreign exchange derivative assets — 118.6 — 118.6 Total assets at recurring fair value measurement $ 46.7 $ 157.7 $ — $ 204.4 Financial Liabilities Foreign exchange derivative liabilities $ — $ 103.6 $ — $ 103.6 Contingent consideration — — 223.6 223.6 Total liabilities at recurring fair value measurement $ — $ 103.6 $ 223.6 $ 327.2 For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including the LIBOR yield curve, foreign exchange forward prices, and bank price quotes. For the years ended December 31, 2021 and 2020, there were no transfers between Level 1 and 2 of the fair value hierarchy. Below is a summary of valuation techniques for Level 1 and Level 2 financial assets and liabilities: • Cash equivalents — valued at observable net asset value prices. • Equity securities, exchange traded funds — valued at the active quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in other expense, net, in the consolidated statements of operations. • Equity securities, marketable securities — valued using quoted stock prices from public exchanges at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in other expense, net, in the consolidated statements of operations. • Available-for-sale fixed income investments — valued at the quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value, net of income taxes, are included in accumulated other comprehensive loss as a component of shareholders’ equity. • Interest rate swap derivative assets and liabilities — valued using the LIBOR/EURIBOR yield curves at the reporting date. Counterparties to these contracts are highly rated financial institutions. • Foreign exchange derivative assets and liabilities — valued using quoted forward foreign exchange prices and spot rates at the reporting date. Counterparties to these contracts are highly rated financial institutions. 111 Table of Contents Contingent Consideration In December 2011, the Company completed the acquisition of the exclusive worldwide rights to develop, manufacture and commercialize a generic equivalent to GlaxoSmithKline’s Advair® Diskus incorporating Pfizer’s respiratory delivery platform. The Company accounted for this transaction as a purchase of a business and utilized the acquisition method of accounting. On January 30, 2019, the Company received FDA approval of Wixela® Inhub® (fluticasone propionate and salmeterol inhalation powder, USP), the first generic of GlaxoSmithKline’s Advair Diskus®. The commercial launch of the Wixela® Inhub® occurred in February 2019. As of December 31, 2021, the Company has a contingent consideration liability of $ 177.8 million related to the respiratory delivery platform. The fair value measurement of contingent consideration is determined using Level 3 inputs. The Company’s contingent consideration represents a component of the total purchase consideration for Pfizer’s respiratory delivery platform and certain other acquisitions. The measurement is calculated using unobservable inputs based on the Company’s own assumptions primarily related to the probability and timing of future development and commercial milestones and future profit-sharing payments which are discounted using a market rate of return. At December 31, 2021 and 2020, discount rates ranging from 8.0 % to 10.5 % were utilized in the valuations. Significant changes in unobservable inputs could result in material changes to the contingent consideration liability. A rollforward of the activity in the Company’s fair value of contingent consideration from December 31, 2019 to December 31, 2021 is as follows: (In millions) Current Portion (1) Long-Term Portion (2) Total Contingent Consideration Balance at December 31, 2019 $ 120.4 $ 130.3 $ 250.7 Payments ( 111.8 ) — ( 111.8 ) Reclassifications 58.1 ( 58.1 ) — Accretion — 11.6 11.6 Fair value loss (3) 33.8 39.3 73.1 Balance at December 31, 2020 $ 100.5 $ 123.1 $ 223.6 Payments ( 83.2 ) — ( 83.2 ) Reclassifications 49.4 ( 49.4 ) — Accretion — 9.0 9.0 Fair value loss (3) — 50.3 50.3 Balance at December 31, 2021 $ 66.7 $ 133.0 $ 199.7 ____________ (1) Included in other current liabilities in the consolidated balance sheets. (2) Included in other long-term obligations in the consolidated balance sheets. (3) Included in litigation settlements and other contingencies, net in the consolidated statements of operations. The Company expects to incur approximately $ 6 million to $ 8 million of non-cash accretion expense related to the increase in the net present value of the contingent consideration liabilities in 2022. Although the Company has not elected the fair value option for financial assets and liabilities, any future transacted financial asset or liability will be evaluated for the fair value election. 112 Table of Contents Available-for-Sale Securities The amortized cost and estimated fair value of available-for-sale fixed income securities, included in prepaid expenses and other current assets, were as follows: (In millions) Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2021 Debt securities $ 38.1 $ 0.1 $ — $ 38.2 $ 38.1 $ 0.1 $ — $ 38.2 December 31, 2020 Debt securities $ 37.5 $ 1.6 $ — $ 39.1 $ 37.5 $ 1.6 $ — $ 39.1 Maturities of available-for-sale debt securities at fair value as of December 31, 2021, were as follows: (In millions) Mature within one year $ 1.2 Mature in one to five years 19.7 Mature in five years and later 17.3 $ 38.2 10. Debt Short-Term Borrowings The Company had $ 1.49 billion and $ 1.10 billion of borrowings as of December 31, 2021 and 2020, respectively. (In millions) December 31, 2021 December 31, 2020 Commercial paper notes $ 1,173.4 $ 651.3 Receivables Facility 318.5 248.4 Note Securitization Facility — 200.0 Other 1.1 1.2 Short-term borrowings $ 1,493.0 $ 1,100.9 The following provides an overview of the Company’s short-term credit facilities. Commercial Paper Program On November 16, 2020, the Company established the Commercial Paper Program to support its working capital requirements and for general purposes. There was $ 1.17 billion and $ 651.3 million of CP Notes outstanding under this program as of December 31, 2021 and 2020, respectively. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed from time to time, with the aggregate principal amount of CP Notes outstanding at any time not to exceed $ 1.65 billion. The 2021 Revolving Facility will be available to pay the CP Notes, if necessary. The maturities of the CP Notes will vary but will not exceed 364 days from the date of issue. Receivables Facility and Note Securitization Facility The Company has a $ 400 million Receivables Facility which expires in April 2022. Under the terms of the Receivables Facility, our subsidiary, MPI, sells certain accounts receivable to Mylan Securitization, a wholly-owned special purpose entity which in turn sells a percentage ownership interest in the receivables to financial institutions and commercial paper conduits sponsored by financial institutions. Mylan Securitization’s assets have been pledged to MUFG Bank, Ltd., as agent, in support of its obligations under the Receivables Facility. Any amounts outstanding under the facility are recorded as borrowings and the underlying receivables are included in accounts receivable, net, in the consolidated balance sheets. 113 Table of Contents In August 2020, the Company entered into the Note Securitization Facility for borrowings up to $ 200 million. In July 2021, the Note Securitization Facility was amended to extend its maturity to August 2022. Under the terms of each of the Receivables Facility and Note Securitization Facility, certain of our accounts receivable secure the amounts borrowed and cannot be used to pay our other debts or liabilities. The amount that we may borrow at a given point in time is determined based on the amount of qualifying accounts receivable that are present at such point in time. Borrowings outstanding under the Receivables Facility bear interest at a commercial paper rate plus 0.925 % and under the Note Securitization Facility at a rate per annum quoted from time to time by MUFG Bank, Ltd. plus 0.85 % and are included as a component of short-term borrowings, while the accounts receivable securing these obligations remain as a component of accounts receivable, net, in our consolidated balance sheets. In addition, the agreements governing the Receivables Facility and Note Securitization Facility contain various customary affirmative and negative covenants, and customary default and termination provisions with which the Company was compliant as of December 31, 2021. As of December 31, 2021 and 2020, the Company had $ 388.9 million and $ 389.4 million, respectively, of accounts receivable balances sold to Mylan Securitization. 114 Table of Contents Long-Term Debt A summary of long-term debt is as follows: ($ in millions) Interest Rate as of December 31, 2021 December 31, 2021 December 31, 2020 Current portion of long-term debt: 2021 Senior Notes (a) ** 3.150 % — 2,249.7 2022 Euro Senior Notes **** 0.816 % 856.6 — 2022 Senior Notes *** 1.125 % 1,002.9 — Other 0.9 8.0 Deferred financing fees ( 0.1 ) ( 1.4 ) Current portion of long-term debt $ 1,860.3 $ 2,256.3 Non-current portion of long-term debt: 2022 Euro Senior Notes **** 0.816 % — 928.8 2022 Senior Notes *** 1.125 % — 1,008.8 2023 Senior Notes (b) * 3.125 % 766.1 781.6 2023 Senior Notes * 4.200 % 499.6 499.3 2024 Euro Senior Notes ** 2.250 % 1,135.8 1,219.9 2024 Euro Senior Notes **** 1.023 % 871.6 944.6 2025 Euro Senior Notes * 2.125 % 567.8 609.9 2025 Senior Notes *** 1.650 % 763.4 767.1 2026 Senior Notes ** 3.950 % 2,241.4 2,239.7 2027 Euro Senior Notes **** 1.362 % 1,013.0 1,097.4 2027 Senior Notes *** 2.300 % 780.8 786.1 2028 Euro Senior Notes ** 3.125 % 847.4 909.7 2028 Senior Notes * 4.550 % 748.7 748.6 2030 Senior Notes *** 2.700 % 1,520.5 1,528.0 2032 Euro Senior Notes **** 1.908 % 1,546.6 1,672.6 2040 Senior Notes *** 3.850 % 1,657.1 1,663.3 2043 Senior Notes * 5.400 % 497.3 497.3 2046 Senior Notes ** 5.250 % 999.9 999.9 2048 Senior Notes * 5.200 % 747.8 747.7 2050 Senior Notes *** 4.000 % 2,205.1 2,209.3 USD Term Loan Facility — 600.0 YEN Term Loan Facility 347.6 — Other 1.9 17.4 Deferred financing fees ( 42.3 ) ( 47.8 ) Long-term debt $ 19,717.1 $ 22,429.2 ____________ (a) The 2021 Senior Notes were repaid at maturity in the second quarter of 2021. (b) In the first quarter of 2020, the Company terminated interest rate swaps designated as a fair value hedge resulting in net proceeds of approximately $ 45 million. The fair value adjustment is being amortized to interest expense over the remaining term of the notes. * Instrument was issued by Mylan Inc. ** Instrument was originally issued by Mylan N.V.; now held by Utah Acquisition Sub Inc. *** Instrument was issued by Viatris Inc. 115 Table of Contents **** Instrument was issued by Upjohn Finance B.V. Senior Notes Upjohn Senior Notes In connection with the Combination, in June 2020, Viatris and Upjohn Finance B.V. completed privately placed debt offerings of $ 7.45 billion aggregate principal amount of the Unregistered Upjohn U.S. Dollar Notes and € 3.60 billion aggregate principal amount of the Upjohn Euro Notes, respectively, and entered into other financing arrangements described below under “USD Term Loan Facility, 2020 Revolving Facility, YEN Term Loan Facility and 2021 Revolving Facility”. The Unregistered Upjohn U.S. Dollar Notes were issued pursuant to an indenture dated June 22, 2020. The Unregistered Upjohn U.S. Dollar Notes were issued in a private offering exempt from the registration requirements of the Securities Act to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside of the U.S. pursuant to Regulation S under the Securities Act. Viatris entered into a registration rights agreement, dated as of June 22, 2020 pursuant to which Viatris was required to use commercially reasonable efforts to file a registration statement with respect to an offer to exchange each series of the Unregistered Upjohn U.S. Dollar Notes for new notes with the same aggregate principal amount and terms substantially identical in all material respects. In September 2021, Viatris filed a registration statement with the SEC with respect to an offer to exchange up to $ 7.45 billion aggregate principal amount of Unregistered Upjohn U.S. Dollar Notes with Registered Upjohn Notes in the same aggregate principal amount and with terms substantially identical in all material respects, which was declared effective on September 28, 2021. The exchange offer expired on October 28, 2021 and settled on October 29, 2021. More than 99.9 % of the aggregate principal amount of the Unregistered Upjohn U.S. Dollar Notes were exchanged for Registered Upjohn Notes. The Upjohn Euro Notes were issued pursuant to an indenture dated June 23, 2020. The Upjohn Euro Notes were guaranteed upon issuance by Viatris and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons outside of the U.S. pursuant to Regulation S under the Securities Act. Viatris and Upjohn Finance B.V. are U.S. dollar functional entities. The following table provides information about the Upjohn Senior Notes issued in June 2020: (In millions) Notional Value 2022 Senior Notes $ 1,000.0 2025 Senior Notes 750.0 2027 Senior Notes 750.0 2030 Senior Notes 1,450.0 2040 Senior Notes 1,500.0 2050 Senior Notes 2,000.0 2022 Euro Senior Note 916.2 2024 Euro Senior Note 916.2 2027 Euro Senior Note 1,038.4 2032 Euro Senior Note 1,527.0 Total $ 11,847.8 The net proceeds from the offerings of the Upjohn Senior Notes, together with the proceeds from the $ 600 million USD Term Loan Facility, were utilized to fund the $ 12 billion cash payment by Viatris to Pfizer as partial consideration for Pfizer’s contribution of the Upjohn Business to Viatris and related transaction fees and expenses. Assumptions and Guarantees of Senior Unsecured Notes Viatris Inc. is the issuer of the Upjohn U.S. Dollar Notes, which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc. Upjohn Finance B.V. is the issuer of the Upjohn Euro Notes, which are fully and unconditionally guaranteed on a senior unsecured basis by Viatris Inc., Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc. 116 Table of Contents Following the Combination, Utah Acquisition Sub Inc. is the issuer of the Utah U.S. Dollar Notes and the Utah Euro Notes, which are each fully and unconditionally guaranteed on a senior unsecured basis by Mylan Inc., Viatris Inc. and Mylan II B.V. Mylan Inc. is the issuer of the Mylan Inc. U.S. Dollar Notes and the Mylan Inc. Euro Notes, which are each fully and unconditionally guaranteed on a senior unsecured basis by Mylan II B.V., Viatris Inc. and Utah Acquisition Sub Inc. USD Term Loan Facility, 2020 Revolving Facility, YEN Term Loan Facility and 2021 Revolving Facility In June 2020, Viatris entered into (i) the $ 600 million USD Term Loan Facility and (ii) the $ 4.0 billion 2020 Revolving Facility with various syndicates of banks. The USD Term Loan Facility and the 2020 Revolving Facility were fully repaid and terminated in July 2021. In July 2021, Viatris entered into (i) the ¥ 40 billion YEN Term Loan Facility and (ii) the $ 4.0 billion 2021 Revolving Facility with various syndicates of banks. The 2021 Revolving Facility amended and restated the 2020 Revolving Facility and proceeds from the 2021 Revolving Facility were used to repay outstanding obligations under the 2020 Revolving Facility and the 2020 Revolving Facility was terminated. Proceeds from the YEN Term Loan Facility and the 2021 Revolving Facility were also used to repay the USD Term Loan Facility in full and the USD Term Loan Facility was terminated. The 2021 Revolving Facility and the YEN Term Loan Facility have substantially identical terms to the 2020 Revolving Facility and USD Term Loan Facility, respectively, with the following exceptions: 1) the maturity of both the YEN Term Loan Facility and the 2021 Revolving Facility is July 2026, 2) the pricing was adjusted to reflect current market prices (which were generally more favorable) and 3) the maximum leverage ratio as of the end of any quarter was set at 4.25 to 1.00 for each quarter ending after June 30, 2021 through and including June 30, 2022, 4.0 to 1.00 for each quarter ending after June 30, 2022 through and including December 31, 2022 and 3.75 to 1.00 thereafter, except in circumstances as defined in the related credit agreement. The YEN Term Loan Facility and the 2021 Revolving Facility contain customary affirmative covenants for facilities of this type, covenants pertaining to the delivery of financial statements, notices of default and certain material events, maintenance of corporate existence and rights, property, and insurance and compliance with laws, as well as customary negative covenants for facilities of this type, including limitations on the incurrence of subsidiary indebtedness, liens, mergers and certain other fundamental changes, investments and loans, acquisitions, transactions with affiliates, payments of dividends and other restricted payments and changes in our lines of business. Fair Value At December 31, 2021 and 2020, the aggregate fair value of the Company’s outstanding notes was approximately $ 22.01 billion and $ 25.90 billion, respectively. The fair values of the outstanding notes were valued at quoted market prices from broker or dealer quotations and were classified as Level 2 in the fair value hierarchy. Mandatory minimum repayments remaining on the notional amount of outstanding long-term debt at December 31, 2021 were as follows for each of the periods ending December 31: (In millions) Total 2022 $ 1,853 2023 1,250 2024 1,990 2025 1,318 2026 2,598 Thereafter 11,940 Total $ 20,949 117 Table of Contents 11. Comprehensive (Loss) Earnings Accumulated other comprehensive loss, as reflected in the consolidated balance sheets, is comprised of the following: (In millions) December 31, 2021 December 31, 2020 Accumulated other comprehensive loss: Net unrealized gain on marketable securities, net of tax $ — $ 1.2 Net unrecognized (loss) gain and prior service cost related to defined benefit plans, net of tax 32.2 ( 26.1 ) Net unrecognized loss on derivatives in cash flow hedging relationships, net of tax 9.2 ( 18.0 ) Net unrecognized loss on derivatives in net investment hedging relationships, net of tax 16.7 ( 353.6 ) Foreign currency translation adjustment ( 1,802.4 ) ( 461.5 ) $ ( 1,744.3 ) $ ( 858.0 ) Components of accumulated other comprehensive (loss) earnings, before tax, consist of the following: Year Ended December 31, 2021 Gains and Losses on Derivatives in Cash Flow Hedging Relationships Gains and Losses on Net Investment Hedges Gains and Losses on Marketable Securities Defined Pension Plan Items Foreign Currency Translation Adjustment Totals (In millions) Foreign Currency Forward Contracts Interest Rate Swaps Total Balance at December 31, 2020, net of tax $ ( 18.0 ) $ ( 353.6 ) $ 1.2 $ ( 26.1 ) $ ( 461.5 ) $ ( 858.0 ) Other comprehensive earnings (loss) before reclassifications, before tax 62.7 456.8 ( 1.1 ) 67.0 ( 1,340.9 ) ( 755.5 ) Amounts reclassified from accumulated other comprehensive earnings (loss), before tax: Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales ( 30.9 ) ( 30.9 ) ( 30.9 ) Loss on interest rate swaps classified as cash flow hedges, included in interest expense 4.3 4.3 4.3 Amortization of prior service costs included in SG&A ( 0.5 ) ( 0.5 ) Amortization of actuarial loss included in SG&A 7.4 7.4 Net other comprehensive earnings (loss), before tax 36.1 456.8 ( 1.1 ) 73.9 ( 1,340.9 ) ( 775.2 ) Income tax provision 8.9 86.5 0.1 15.6 — 111.1 Balance at December 31, 2021, net of tax $ 9.2 $ 16.7 $ — $ 32.2 $ ( 1,802.4 ) $ ( 1,744.3 ) 118 Table of Contents Year Ended December 31, 2020 Gains and Losses on Derivatives in Cash Flow Hedging Relationships Gains and Losses on Net Investment Hedges Gains and Losses on Marketable Securities Defined Pension Plan Items Foreign Currency Translation Adjustment Totals (In millions) Foreign Currency Forward Contracts Interest Rate Swaps Total Balance at December 31, 2019, net of tax $ ( 31.6 ) $ ( 74.3 ) $ 0.6 $ ( 17.4 ) $ ( 1,674.5 ) $ ( 1,797.2 ) Other comprehensive (loss) earnings before reclassifications, before tax 18.5 ( 305.2 ) 0.6 ( 12.1 ) 1,213.0 914.8 Amounts reclassified from accumulated other comprehensive (loss) earnings, before tax: Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales ( 4.8 ) ( 4.8 ) ( 4.8 ) Loss on interest rate swaps classified as cash flow hedges, included in interest expense 4.5 4.5 4.5 Amortization of prior service costs included in SG&A — — Amortization of actuarial loss included in SG&A ( 1.9 ) ( 1.9 ) Net other comprehensive (loss) earnings, before tax 18.2 ( 305.2 ) 0.6 ( 14.0 ) 1,213.0 912.6 Income tax provision (benefit) 4.6 ( 25.9 ) — ( 5.3 ) — ( 26.6 ) Balance at December 31, 2020, net of tax $ ( 18.0 ) $ ( 353.6 ) $ 1.2 $ ( 26.1 ) $ ( 461.5 ) $ ( 858.0 ) 119 Table of Contents Year Ended December 31, 2019 Gains and Losses on Derivatives in Cash Flow Hedging Relationships Gains and Losses on Net Investment Hedges Gains and Losses on Marketable Securities Defined Pension Plan Items Foreign Currency Translation Adjustment Totals (In millions) Foreign Currency Forward Contracts Interest Rate Swaps Total Balance at December 31, 2018, net of tax $ ( 53.1 ) $ ( 130.9 ) $ — $ 1.7 $ ( 1,259.0 ) $ ( 1,441.3 ) Other comprehensive earnings (loss) before reclassifications, before tax 29.3 59.6 0.5 ( 21.0 ) ( 415.5 ) ( 347.1 ) Amounts reclassified from accumulated other comprehensive (loss) earnings, before tax: Loss on foreign exchange forward contracts classified as cash flow hedges, included in net sales 0.7 0.7 0.7 Loss on interest rate swaps classified as cash flow hedges, included in interest expense 7.1 7.1 7.1 Amortization of prior service costs included in SG&A ( 0.9 ) ( 0.9 ) Amortization of actuarial loss included in SG&A ( 2.9 ) ( 2.9 ) Net other comprehensive earnings (loss), before tax 37.1 59.6 0.5 ( 24.8 ) ( 415.5 ) ( 343.1 ) Income tax provision (benefit) 12.2 3.0 ( 0.1 ) ( 5.9 ) — 9.2 Cumulative effect of the adoption of new accounting standards ( 3.4 ) — — ( 0.2 ) — ( 3.6 ) Balance at December 31, 2019, net of tax $ ( 31.6 ) $ ( 74.3 ) $ 0.6 $ ( 17.4 ) $ ( 1,674.5 ) $ ( 1,797.2 ) 120 Table of Contents 12. Income Taxes The income tax provision (benefit) consisted of the following components: Year Ended December 31, (In millions) 2021 2020 2019 U.S. Federal: Current $ 12.6 $ ( 6.4 ) $ 118.1 Deferred ( 182.7 ) ( 277.0 ) ( 165.5 ) ( 170.1 ) ( 283.4 ) ( 47.4 ) U.S. State: Current 7.7 ( 0.1 ) 21.1 Deferred ( 10.8 ) 7.7 ( 13.6 ) ( 3.1 ) 7.6 7.5 Non-U.S.: Current ( 91.3 ) 168.7 191.0 Deferred 869.2 55.8 ( 13.5 ) 777.9 224.5 177.5 Income tax provision (benefit) $ 604.7 $ ( 51.3 ) $ 137.6 Earnings before income taxes: United States ( 1,982.5 ) ( 945.5 ) ( 1,031.4 ) Foreign - Other 1,318.1 224.3 1,185.8 Total (loss) earnings before income taxes $ ( 664.4 ) $ ( 721.2 ) $ 154.4 For all periods presented, the allocation of earnings before income taxes between U.S. and non-U.S. operations includes intercompany interest allocations between certain domestic and foreign subsidiaries. These amounts are eliminated on a consolidated basis. 121 Table of Contents Temporary differences and carry-forwards that result in deferred tax assets and liabilities were as follows: (In millions) December 31, 2021 December 31, 2020 Deferred tax assets: Employee benefits $ 271.3 $ 273.0 Litigation reserves 94.4 43.5 Accounts receivable allowances 425.9 393.7 Inventory 187.8 1,187.9 Tax credit and loss carry-forwards 1,256.0 1,080.4 Operating lease assets 63.6 66.5 Interest expense 111.6 67.9 Intangible assets 151.1 156.3 Other 327.8 396.0 2,889.5 3,665.2 Less: Valuation allowance ( 780.4 ) ( 443.6 ) Total deferred tax assets 2,109.1 3,221.6 Deferred tax liabilities: Plant and equipment 19.6 50.2 Operating lease liabilities 63.6 66.5 Intangible assets and goodwill 3,468.3 4,058.6 Other 39.9 22.1 Total deferred tax liabilities 3,591.4 4,197.4 Deferred tax liabilities, net $ ( 1,482.3 ) $ ( 975.8 ) For those foreign subsidiaries whose investments are permanent in duration, income and foreign withholding taxes have not been provided on the unremitted earnings of those subsidiaries. This amount may become taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such unremitted earnings is approximately $ 3.4 billion at December 31, 2021. Determination of the amount of any unrecognized deferred income tax liability on these unremitted earnings is not practicable as such determination involves material uncertainties about the potential extent and timing of any distributions, the availability and complexity of calculating foreign tax credits, and the potential indirect tax consequences of such distributions, including withholding taxes. 122 Table of Contents Prior to the Combination, the applicable income tax rate to Mylan was the U.K. rate of 19%, and following the Combination, the statutory income tax rate applicable to Viatris Inc. is the U.S. rate of 21 % for the years ended December 31, 2021 and 2020. A reconciliation of the statutory tax rate to the effective tax rate is as follows: Year Ended December 31, 2021 2020 2019 Statutory tax rate 21.0 % 21.0 % 19.0 % United States Operations Clean energy and research credits 9.8 % 12.8 % ( 43.4 ) % U.S. rate differentials — % — % ( 3.1 ) % Impact of changes in legislation — % ( 9.2 ) % — % State income taxes and credits ( 0.6 ) % ( 1.6 ) % ( 4.1 ) % Valuation allowance ( 0.1 ) % 8.6 % ( 118.5 ) % Tax settlements and resolution of certain tax positions 0.1 % 0.1 % 199.6 % Incremental US Tax on Foreign Earnings ( 36.9 ) % ( 3.6 ) % ( 8.6 ) % Waived deductions under IRC § 59A — % ( 3.3 ) % 64.5 % Impact of the Combination and Divestitures ( 2.8 ) % 5.8 % 7.7 % Other U.S. items ( 6.1 ) % 1.5 % 6.9 % Other Foreign Operations Luxembourg ( 6.7 ) % ( 5.0 ) % ( 14.8 ) % Gibraltar 9.4 % 8.0 % ( 38.8 ) % Ireland 5.8 % 8.2 % ( 13.7 ) % France ( 1.1 ) % ( 2.8 ) % 15.2 % Puerto Rico 4.4 % ( 2.5 ) % — % Switzerland 1.0 % 2.0 % — % Singapore 28.8 % 1.0 % — % Other ( 10.2 ) % ( 0.4 ) % 12.8 % Deferred tax impact of tax law changes 7.0 % ( 0.1 ) % 36.7 % Valuation allowance ( 8.3 ) % 16.1 % ( 9.9 ) % Impact of the Combination and divestitures ( 106.9 ) % ( 42.2 ) % — % Withholding taxes ( 1.3 ) % ( 1.6 ) % 7.1 % Tax settlements and resolution of certain tax positions 0.8 % ( 3.9 ) % ( 27.6 ) % Other foreign items 1.9 % ( 1.8 ) % 2.1 % Effective tax rate ( 91.0 ) % 7.1 % 89.1 % 123 Table of Contents In all years, our effective tax rate is impacted by the jurisdictional location of earnings and the corresponding tax rates in those jurisdictions. Subsequent to the Combination, the Company realizes benefits from lower tax rates in Singapore and Puerto Rico due to manufacturing and other incentives.. Tax Act On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act makes broad and complex changes to the Code including, but not limited to, reducing the U.S. federal corporate income tax rate and requiring a one-time transition tax on certain unrepatriated earnings of non-U.S. corporate subsidiaries of large U.S. shareholders that may electively be paid over eight years. The Tax Act also puts in place new tax laws that impact our taxable income beginning in 2018, which include, but are not limited to (1) creating a BEAT, which is a new minimum tax, (2) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (3) a new provision designed to tax currently GILTI earned by non-U.S. corporate subsidiaries of large U.S. shareholders and a deduction generally equal to 50 percent of GILTI ( 37.5 percent for tax years beginning after December 31, 2025) to offset the income tax liability, (4) a provision limiting the amount of deductible interest expense in the U.S., (5) limitations on the deductibility of certain executive compensation, and (6) limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability. As of December 31, 2021, no U.S. deferred income taxes or foreign withholding taxes were recorded on earnings in the Company’s non-U.S. subsidiaries where there would be no U.S. or foreign tax upon repatriation or where the Company’s practice and intention was to reinvest the earnings outside of the U.S. The transition tax noted above resulted in the previously untaxed foreign earnings of U.S. subsidiaries being included in federal and state taxable income. We analyze on an ongoing basis our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries repatriate cash, which include potential local country withholding taxes and U.S. state taxation. The Company has elected to not record deferred taxes associated with the GILTI provision of the Tax Act. Valuation Allowance A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2021, a valuation allowance has been applied to certain deferred tax assets in the amount of $ 780.4 million. When assessing the realizability of deferred tax assets, management considers all available evidence, including historical information, long-term forecasts of future taxable income and possible tax planning strategies. Amounts recorded for valuation allowances can result from a complex series of estimates, assumptions and judgments about future events. Due to the inherent uncertainty involved in making these estimates, assumptions and judgments, actual results could differ materially. Any future increases to the Company’s valuation allowances could materially impact the Company’s consolidated financial condition and results of operations. Net Operating Losses As of December 31, 2021, the Company had the following carryforwards and attributes: • U.S. federal net operating loss carryforwards of $ 7.9 million. • U.S. state income tax loss carryforwards of approximately $ 3.10 billion, which are largely offset by a valuation allowance. • Non-U.S. net operating loss carryforwards of approximately $ 1.57 billion, of which $ 748.4 million can be carried forward indefinitely, with the remaining $ 817.8 million expiring in years 2022 through 2041. • Foreign deductible attributes of $ 39.6 million that can be carried forward indefinitely, which are offset by a full valuation allowance. • U.S. and foreign credit carryovers of $ 329.2 million, expiring in various amounts through 2041. • Anticipatory foreign tax credits of $ 230.3 million which will generate from the reversal of future taxable income in certain non-U.S. jurisdictions which are taxed both in their local jurisdictions and in the U.S. 124 Table of Contents On November 16, 2020, the Company had a change in ownership pursuant to Section 382 of the Code. Under this provision of the Code, the utilization of any NOL or tax credit carryforwards incurred prior to the date of ownership change may be limited. Analyses of the limits for each ownership change indicates the annual limitation would not impair the Company's ability to utilize our U.S. federal credit carryovers. While state loss carryforwards may be limited by Section 382 of the Code, the carryforwards are largely offset by a valuation allowance. CARES Act On March 27, 2020, the CARES Act was enacted and signed into law. The CARES Act includes several provisions, including increasing the amount of deductible interest, allowing companies to carryback certain NOLs, and increasing the amount of NOLs that corporations can use to offset income.During the year ended December 31, 2020, the CARES Act reduced the Company’s 2020 income tax expense by $ 22.1 million resulting from additional deductible interest. Tax Examinations The Company is subject to income taxes and tax audits in many jurisdictions. A certain degree of estimation is thus required in recording the assets and liabilities related to income taxes. Tax audits and examinations can involve complex issues, interpretations, and judgments and the resolution of matters that may span multiple years, particularly if subject to litigation or negotiation. Although the Company believes that adequate provisions have been made for these uncertain tax positions, the Company’s assessment of uncertain tax positions, including those arising from legal entity restructuring transactions in connection with the Combination, is based on estimates and assumptions that the Company believes are reasonable but the estimates for unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variations from such estimates could materially affect the Company’s financial condition, results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire. The Company is subject to ongoing IRS examinations. The years 2015 through 2018 are open years under examination. The years 2012, 2013 and 2014 have one matter open, and a Tax Court petition was filed regarding the matter and a trial was held in December 2018 and is discussed further below. During the year ended December 31, 2019, Mylan reached an agreement in principle with the IRS to resolve all issues relating to our positions on the February 27, 2015 acquisition by Mylan N.V. of Mylan Inc. and Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business. Under the agreement in principle, which was finalized as part of a closing agreement with the IRS on October 11, 2019, Mylan’s status as a non-U.S. corporation for U.S. Federal income tax purposes was confirmed, and we have adjusted the interest rates used for intercompany loans as necessary. During the year ended December 31, 2019, the Company recorded a reserve of approximately $ 155.0 million as part of its liability for uncertain tax positions, with a net impact to the income tax provision of approximately $ 144.9 million related to this matter. Several international audits are currently in progress. In some cases, the tax auditors have proposed adjustments or issued assessments to our tax positions, including with respect to intercompany transactions, and we are in ongoing discussions with some of the auditors regarding the validity of their positions. In instances where assessments have been issued, we disagree with these assessments and believe they are without merit and incorrect as a matter of law. As a result, we anticipate that certain of these matters may become the subject of litigation before tax courts where we intend to vigorously defend our position. In Australia, the tax authorities have issued notices of assessments to the Company for the years ended December 2009 to December 2019, subject to additional interest and penalties, concerning our tax position with respect to certain intercompany transactions. The tax authorities denied our objections to the assessments and we have commenced litigation in the Australian Federal Court challenging that decision. During 2021, the Company made a partial payment of $ 56.0 million in order to stay potential interest and penalties resulting from this litigation. In France, the tax authorities have issued notices of assessments to the Company for the years ended December 2013 to December 2016 concerning our tax position with respect to (i) certain intercompany transactions and (ii) whether income earned by a Company entity not domiciled in France should be subject to French tax. We have resolved our position concerning certain intercompany transactions with the tax authorities. Concerning the remaining issue, we have commenced litigation before the French tax courts where the tax authorities will seek unpaid taxes, penalties, and interest. 125 Table of Contents In India, the tax authorities have issued notices of assessments to the Company seeking unpaid taxes and interest for the financial years covering 2013 to 2018 concerning our tax position with respect to certain corporate tax deductions and certain intercompany transactions. Some of these assessments remain in the audit phase where we are challenging them before the tax authorities while we are challenging some of the other assessments in the Indian tax courts. The Company has recorded a net reserve for uncertain tax positions of $ 315.6 million, including interest and penalties, in connection with its international audits at December 31, 2021. The reserve balance at December 31, 2021 reflects the impact of current year settlement payments. In connection with our international tax audits, it is possible that we will incur material losses above the amounts reserved. The Company’s major U.S. state taxing jurisdictions remain open from fiscal year 2013 through 2020, with several state audits currently in progress. The Company’s major international taxing jurisdictions remain open from 2012 through 2020. Tax Court Proceedings The Company's U.S. federal income tax returns for 2012 through 2014 had been subject to proceedings in U.S. Tax Court involving a dispute with the IRS regarding whether certain costs related to ANDAs were eligible to be expensed and deducted immediately or required to be amortized over longer periods. A trial was held in U.S. Tax Court in December 2018 and on April 27, 2021, the Court affirmed Mylan’s position and held that patent litigation expenses related to ANDAs are immediately deductible. The IRS has appealed this decision. Accounting for Uncertainty in Income Taxes The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. As of December 31, 2021 and 2020, the Company’s consolidated balance sheets reflect net liabilities for unrecognized tax benefits of $ 322.9 million and $ 391.1 million, respectively, of which $ 230.2 million as of December 31, 2021 would affect the Company’s effective tax rate if recognized, with the remainder being offset by potential correlative adjustments. Related accrued interest and penalties included in the consolidated balance sheets were $ 96.8 million and $ 86.7 million as of December 31, 2021 and 2020, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 18.5 million of tax expense, $ 6.0 million, and $ 35.2 million of tax benefits, respectively, related to interest and penalties on uncertain tax positions. Interest and penalties related to income taxes are included in the tax provision. A reconciliation of the unrecognized tax benefits is as follows: Year Ended December 31, (In millions) 2021 2020 2019 Unrecognized tax benefit — beginning of year $ 391.1 $ 92.1 $ 96.3 Additions for current year tax positions — 13.4 — Additions for prior year tax positions — 35.7 154.9 Reductions for prior year tax positions ( 9.1 ) ( 5.2 ) ( 11.7 ) Settlements ( 47.3 ) ( 8.9 ) ( 112.5 ) Reductions due to expirations of statute of limitations ( 7.0 ) — ( 34.9 ) (Reduction) addition due to acquisition ( 4.8 ) 264.0 — Unrecognized tax benefit — end of year $ 322.9 $ 391.1 $ 92.1 The Company believes that it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next twelve months by approximately $ 55.0 million, involving international and state audits and settlements and expiring statutes of limitations. The Company does not anticipate significant increases to the reserve within the next twelve months. 126 Table of Contents 13. Share-Based Incentive Plan Prior to the Distribution, Viatris adopted and Pfizer, in the capacity as Viatris’ sole stockholder at such time, approved the Plan (the Viatris Inc. 2020 Stock Incentive Plan) which became effective as of the Distribution. In connection with the Combination, as of November 16, 2020, the Company assumed the 2003 LTIP ( Mylan N.V. Amended and Restated 2003 Long-Term Incentive Plan) , which had previously been approved by Mylan shareholders. The Plan and 2003 LTIP include (i) 72,500,000 shares of Common Stock authorized for grant pursuant to the Plan, which may include dividend payments payable in Common Stock on unvested shares granted under awards, (ii) 6,757,640 shares of Common Stock to be issued pursuant to the exercise of outstanding stock options granted to participants under the 2003 LTIP and assumed by Viatris in connection with the Combination and (iii) 13,535,627 shares of Common Stock subject to outstanding equity-based awards, other than stock options, assumed by Viatris in connection with the Combination, or that otherwise remain available for issuance under the 2003 LTIP. Under the Plan and 2003 LTIP, shares are reserved for issuance to key employees, consultants, independent contractors and non-employee directors of the Company through a variety of incentive awards, including: stock options, SARs, restricted stock and units, PSUs, other stock-based awards and short-term cash awards. Stock option awards are granted with an exercise price equal to the fair market value of the shares underlying the stock options at the date of the grant, generally become exercisable over periods ranging from three to four years , and generally expire in ten years . The following table summarizes stock awards (stock options and SARs) activity under the Plan and 2003 LTIP: Number of Shares Under Stock Awards Weighted Average Exercise Price per Share Outstanding at December 31, 2018 6,815,278 $ 36.61 Granted 829,322 26.18 Exercised ( 580,950 ) 14.40 Forfeited ( 715,941 ) 39.40 Outstanding at December 31, 2019 6,347,709 $ 36.97 Granted 814,351 17.37 Exercised ( 27,615 ) 21.13 Forfeited ( 422,714 ) 25.74 Outstanding at December 31, 2020 6,711,731 $ 35.36 Forfeited ( 1,135,241 ) 26.39 Outstanding at December 31, 2021 5,576,490 $ 37.19 Vested and expected to vest at December 31, 2021 5,487,788 $ 37.45 Exercisable at December 31, 2021 4,969,602 $ 39.21 As of December 31, 2021, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had average remaining contractual terms of 4.6 years, 4.6 years and 4.2 years, respectively. Also, at December 31, 2021, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had no aggregate intrinsic value. A summary of the status of the Company’s nonvested restricted stock awards (restricted stock and restricted stock unit awards, including PSUs), as of December 31, 2020 and the changes during the year ended December 31, 2021 are presented below: Number of Restricted Stock Awards Weighted Average Grant-Date Fair Value Per Share Nonvested at December 31, 2020 12,073,790 $ 18.34 Granted 9,850,443 14.46 Released ( 3,168,152 ) 24.65 Forfeited ( 1,897,953 ) 15.33 Nonvested at December 31, 2021 16,858,128 $ 15.12 127 Table of Contents Of the 9,850,443 restricted stock awards granted during the year ended December 31, 2021, 6,057,602 vest ratably in three years or less and are not subject to market or performance conditions. Of the remaining restricted stock awards granted, 587,025 are not subject to market conditions and will cliff vest within a three -year period, and 3,205,816 are subject to market or performance conditions and will cliff vest in three years or less. As of December 31, 2021, the Company had $ 143.1 million of total unrecognized compensation expense, net of estimated forfeitures, related to all of its stock-based awards, which we expect to recognize over the remaining weighted average vesting period of 1.7 years. The total intrinsic value of stock awards exercised and restricted stock units released during the years ended December 31, 2021 and 2020 was $ 78.1 million and $ 20.9 million, respectively. With respect to options granted under the Plan and 2003 LTIP, the fair value of each option grant was estimated at the date of grant using the Black-Scholes option pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield and employee exercise behavior. Expected volatilities utilized in the model are based mainly on the implied volatility of the Company’s stock price and other factors. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The model incorporates exercise and post-vesting forfeiture assumptions based on an analysis of historical data. The expected lives of the grants are derived from historical and other factors. There were no options granted during the year ended December 31, 2021. The assumptions used for options granted under the Plan and 2003 LTIP during the years ended December 31, 2020 and 2019, respectively, are as follows: Year Ended December 31, 2020 2019 Volatility 46.7 % 38.1 % Risk-free interest rate 1.0 % 2.5 % Expected term (years) 6.5 6.5 Forfeiture rate 5.5 % 5.5 % Weighted average grant date fair value per option $ 8.07 $ 11.03 14. Employee Benefit Plans Defined Benefit Plans The Company sponsors various defined benefit pension plans in several countries. Benefits provided generally depend on length of service, pay grade and remuneration levels. Employees in the U.S., Puerto Rico and certain international locations are also provided retirement benefits through defined contribution plans. The Company also sponsors other postretirement benefit plans including plans that provide for postretirement supplemental medical coverage. Benefits from these plans are provided to employees and their spouses and dependents who meet various minimum age and service requirements. In addition, the Company sponsors other plans that provide for life insurance benefits and postretirement medical coverage for certain officers and management employees. In connection with the Combination, the Company assumed certain post retirement defined benefit pension plans sponsored by Upjohn. The most significant plans include those in Puerto Rico, Ireland and Japan. Upjohn is also the sponsor of one postretirement medical plan in Puerto Rico. As part of the acquisition accounting, the Company has recorded the fair value of these plans. Upon completion of the Combination, the excess of projected benefit obligation over the plan assets was recognized as a liability and any existing unrecognized actuarial gains or losses and unrecognized service costs or benefits were eliminated in purchase accounting. Accounting for Defined Benefit Pension and Other Postretirement Plans The Company recognizes on its balance sheet an asset or liability equal to the over- or under-funded benefit obligation of each defined benefit pension and other postretirement plan. Actuarial gains or losses and prior service costs or credits that arise during the period are not recognized as components of net periodic benefit cost, but are recognized, net of tax, as a component of other comprehensive (loss) earnings. 128 Table of Contents Included in accumulated other comprehensive loss as of December 31, 2021 and 2020 are: Pension Benefits Other Postretirement Benefits December 31, December 31, (In millions) 2021 2020 2021 2020 Unrecognized actuarial (gain) loss $ ( 59.9 ) $ 33.9 $ 21.7 $ 5.7 Unrecognized prior service cost (credit) 6.6 ( 1.4 ) ( 3.7 ) 0.6 Total $ ( 53.3 ) $ 32.5 $ 18.0 $ 6.3 The unrecognized net actuarial losses exceeded 10 % of the higher of the market value of plan assets or the projected benefit obligation at the beginning of the year for certain of the plans, therefore, amortization of such excess has been included in net periodic benefit costs for pension and other postretirement benefits in each of the last three years. The amortization period is the average remaining service period that active employees are expected to receive benefits, unless a plan is mostly inactive in which case the amortization period is the average remaining life expectancy of the plan participants. Unrecognized prior service cost is amortized over the future service periods of those employees who are active at the dates of the plan amendments and who are expected to receive benefits. If all or almost all of a plan's participants are inactive, unrecognized prior service cost is amortized over the remaining life expectancy of those participants. The increase in accumulated other comprehensive loss in 2021 relating to pension benefits and other postretirement benefits consists of: (In millions) Pension Benefits Other Postretirement Benefits Unrecognized actuarial (gain) loss $ ( 102.2 ) $ 16.2 Amortization of actuarial gain/(loss) 7.6 ( 0.2 ) Unrecognized prior service credit (cost) 8.0 ( 4.3 ) Amortization of prior service costs ( 0.5 ) — Impact of foreign currency translation 1.3 — Net change $ ( 85.8 ) $ 11.7 Components of net periodic benefit cost, change in projected benefit obligation, change in plan assets, funded status, fair value of plan assets, assumptions used to determine net periodic benefit cost, funding policy and estimated future benefit payments are summarized below for the Company’s pension plans and other postretirement plans. Net Periodic Benefit Cost Components of net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 were as follows: Pension Benefits Other Postretirement Benefits December 31, December 31, (In millions) 2021 2020 2019 2021 2020 2019 Service cost $ 38.6 $ 23.5 $ 20.7 $ 3.4 $ 1.2 $ 0.6 Interest cost 31.6 13.5 13.6 2.6 1.4 1.5 Expected return on plan assets ( 66.1 ) ( 19.9 ) ( 12.1 ) — — — Plan curtailment, settlement and termination ( 16.5 ) 1.1 ( 0.3 ) — — 3.2 Amortization of prior service costs 0.9 — 0.9 — — — Recognized net actuarial losses (gains) 1.3 0.4 ( 0.8 ) 0.2 0.3 0.2 Net periodic benefit cost $ ( 10.2 ) $ 18.6 $ 22.0 $ 6.2 $ 2.9 $ 5.5 During the year ended December 31, 2021, the Company recognized a settlement gain as a result of cash payments from lump sum elections related to the U.S. and Puerto Rico pension plans. 129 Table of Contents Change in Projected Benefit Obligation, Change in Plan Assets and Funded Status The table below presents components of the change in projected benefit obligation, change in plan assets and funded status at December 31, 2021 and 2020. Pension Benefits Other Postretirement Benefits (In millions) 2021 2020 2021 2020 Change in Projected Benefit Obligation Projected benefit obligation, beginning of year $ 2,145.8 $ 674.7 $ 188.8 $ 33.8 Service cost 38.6 23.5 3.4 1.1 Interest cost 31.6 13.5 2.6 1.4 Participant contributions 2.0 1.8 2.4 0.1 Acquisitions 4.0 1,389.4 — 153.1 Plan settlements and terminations ( 128.6 ) ( 23.1 ) ( 4.3 ) ( 0.2 ) Actuarial (gains) losses ( 26.1 ) 37.2 16.2 1.1 Benefits paid ( 52.8 ) ( 24.6 ) ( 20.7 ) ( 1.6 ) Impact of foreign currency translation ( 67.9 ) 53.4 — — Projected benefit obligation, end of year $ 1,946.6 $ 2,145.8 $ 188.4 $ 188.8 Change in Plan Assets Fair value of plan assets, beginning of year $ 1,354.6 $ 315.7 $ — $ — Actual return on plan assets 141.7 46.0 — — Company contributions 97.0 58.2 18.3 1.7 Participant contributions 2.0 1.8 2.4 0.1 Acquisitions ( 2.1 ) 959.3 — — Plan settlements ( 128.9 ) ( 23.1 ) — ( 0.2 ) Benefits paid ( 52.8 ) ( 24.6 ) ( 20.7 ) ( 1.6 ) Impact of foreign currency translation ( 45.1 ) 21.3 — — Fair value of plan assets, end of year 1,366.4 1,354.6 — — Funded status of plans $ ( 580.2 ) $ ( 791.2 ) $ ( 188.4 ) $ ( 188.8 ) Net accrued benefit costs for pension plans and other postretirement benefits are reported in the following components of the Company’s consolidated balance sheets at December 31, 2021 and 2020: Pension Benefits Other Postretirement Benefits December 31, December 31, (In millions) 2021 2020 2021 2020 Noncurrent assets $ 117.2 $ 70.7 $ — $ — Current liabilities ( 14.6 ) ( 15.1 ) ( 16.1 ) ( 16.3 ) Noncurrent liabilities ( 682.8 ) ( 846.8 ) ( 172.3 ) ( 172.5 ) Net accrued benefit costs $ ( 580.2 ) $ ( 791.2 ) $ ( 188.4 ) $ ( 188.8 ) The projected benefit obligation is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation is the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases. The accumulated benefit obligation for the Company’s pension plans was $ 1.86 billion and $ 2.04 billion at December 31, 2021 and 2020, respectively. 130 Table of Contents The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of the fair value of plan assets at December 31, 2021 and 2020 were as follows: December 31, (In millions) 2021 2020 Plans with accumulated benefit obligation in excess of plan assets: Projected benefit obligation $ 1,591.8 $ 1,747.2 Accumulated benefit obligation 1,546.4 1,678.2 Fair value of plan assets 904.1 893.9 Fair Value of Plan Assets The Company measures the fair value of plan assets based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy described in Note 9 Financial Instruments and Risk Management . The table below presents total plan assets by investment category as of December 31, 2021 and 2020 and the classification of each investment category within the fair value hierarchy with respect to the inputs used to measure fair value: December 31, 2021 (In millions) Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 63.1 $ 1.9 $ — $ 65.0 Equity securities 53.9 497.2 — 551.1 Fixed income securities 211.4 405.5 — 616.9 Assets held by insurance companies and other 10.2 41.6 81.6 133.4 Total $ 338.6 $ 946.2 $ 81.6 $ 1,366.4 December 31, 2020 (In millions) Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 51.2 $ 0.6 $ — $ 51.8 Equity securities 145.3 468.1 — 613.4 Fixed income securities 292.6 299.4 — 592.0 Assets held by insurance companies and other 4.0 20.0 73.4 97.4 Total $ 493.1 $ 788.1 $ 73.4 $ 1,354.6 Risk tolerance on invested pension plan assets is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. Investment risk is measured and monitored on an ongoing basis through annual liability measures, periodic asset/liability studies and investment portfolio reviews. The Company’s investment strategy is to maintain, where possible, a diversified investment portfolio across several asset classes that, when combined with the Company’s contributions to the plans, will ensure that required benefit obligations are met. Assumptions The following weighted average assumptions were used to determine the benefit obligations for the Company’s defined benefit pension and other postretirement plans as of December 31, 2021 and 2020: Pension Benefits Other Postretirement Benefits 2021 2020 2021 2020 Discount rate 2.3 % 1.9 % 2.5 % 1.9 % Expected return on plan assets 5.1 % 4.3 % — % — % Rate of compensation increase 3.1 % 2.9 % — % — % 131 Table of Contents The following weighted average assumptions were used to determine the net periodic benefit cost for the Company’s defined benefit pension and other postretirement benefit plans for the three years in the period ended December 31, 2021: Pension Benefits Other Postretirement Benefits 2021 2020 2019 2021 2020 2019 Discount rate 1.9 % 1.6 % 2.3 % 1.9 % 3.3 % 4.3 % Expected return on plan assets 5.1 % 4.3 % 4.3 % — % — % — % Rate of compensation increase 2.9 % 2.7 % 2.9 % — % — % — % The assumptions for each plan are reviewed on an annual basis. The discount rate reflects the current rate at which the pension and other benefit liabilities could be effectively settled at the measurement date. In setting the discount rates, we utilize comparable corporate bond indices as an indication of interest rate movements and levels. Corporate bond indices were selected based on individual plan census data and duration. The expected return on plan assets was determined using historical market returns and long-term historical relationships between equities and fixed income securities. The Company compares the expected return on plan assets assumption to actual historic returns to ensure reasonableness. Current market factors such as inflation and interest rates are also evaluated. The weighted-average healthcare cost trend rate used for 2021 was 5.7 % declining to a projected 4.5 % in the year 2037. For 2022, the assumed weighted-average healthcare cost trend rate used will be 6.3 % declining to a projected 4.0 % in the year 2045. In selecting rates for current and long-term healthcare cost assumptions, the Company takes into consideration a number of factors including the Company’s actual healthcare cost increases, the design of the Company’s benefit programs, the demographics of the Company’s active and retiree populations and external expectations of future medical cost inflation rates. Estimated Future Benefit Payments The Company’s funding policy for its funded pension plans is based upon local statutory requirements. The Company’s funding policy is subject to certain statutory regulations with respect to annual minimum and maximum company contributions. Plan benefits for the non-qualified plans are paid as they come due. Estimated benefit payments over the next ten years for the Company’s pension plans and retiree health plan are as follows: (In millions) Pension Benefits Other Postretirement Benefits 2022 $ 101.8 $ 16.1 2023 97.1 16.5 2024 103.0 16.9 2025 100.7 16.8 2026 104.3 16.6 Thereafter 528.5 73.0 Total $ 1,035.4 $ 155.9 Defined Contribution Plans The Company sponsors defined contribution plans covering its employees in the U.S. and Puerto Rico, as well as certain employees in a number of countries outside the U.S. The Company’s domestic defined contribution plans consist primarily of a Profit Sharing 401(k) Plan and a 401(k) retirement plan for union-represented employees. Profit sharing contributions are made at the discretion of the Board of Directors. The Company’s non-domestic plans vary in form depending on local legal requirements. The Company’s contributions are based upon employee contributions, service hours, or pre-determined amounts depending upon the plan. Obligations for contributions to defined contribution plans are recognized as expense in the consolidated statements of operations when they are earned. 132 Table of Contents The Company maintains a 401(k) Restoration Plan, which permits employees who earn compensation in excess of the limits imposed by Section 401(a)(17) of the Code to (i) defer a portion of base salary and bonus compensation, (ii) be credited with a Company matching contribution in respect of deferrals under the Restoration Plan, and (iii) be credited with Company non-elective contributions (to the extent so made by the Company), in each case, to the extent that participants otherwise would be able to defer or be credited with such amounts, as applicable, under the Profit Sharing 401(k) Plan if not for the limits on contributions and deferrals imposed by the Code. The Company maintains an Income Deferral Plan, which permits certain management or highly compensated employees who are designated by the plan administrator to participate in the Income Deferral Plan to elect to defer up to 50 % of base salary and up to 100 % of bonus compensation, in each case, in addition to any amounts that may be deferred by such participants under the Profit Sharing 401(k) Plan and the Restoration Plan. In addition, under the Income Deferral Plan, eligible participants may be granted employee deferral awards, which awards will be subject to the terms and conditions (including vesting) as determined by the plan administrator at the time such awards are granted. Total employer contributions to defined contribution plans were approximately $ 107.4 million, $ 115.5 million and $ 95.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. Other Benefit Arrangements The Company participated in a multi-employer pension plan under previous collective bargaining agreements. The PACE Industry Union-Management Pension Fund (the “PACE Plan”) provides defined benefits to certain retirees and certain production and maintenance employees at the Company’s manufacturing plant in Morgantown, West Virginia who were covered by the previous collective bargaining agreements. Pursuant to a collective bargaining agreement entered into on April 16, 2012, the Company withdrew from the PACE Plan effective May 10, 2012. In 2013, the PACE Plan trustee notified the Company that its withdrawal liability was approximately $ 27.3 million, which was accrued by the Company in 2013. The withdrawal liability is being paid over a period of approximately nine years; payments began in March 2014. The withdrawal liability was approximately $ 5.5 million and $ 8.9 million at December 31, 2021 and 2020, respectively. The Employer Identification Number for the PACE Plan is 11-6166763. 15. Seg ment Information Viatris has four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Company reports segment information on the basis of markets and geography, which reflects its focus on bringing its broad and diversified portfolio of branded, complex generics and biosimilars, and generic products to people in markets everywhere. Our Developed Markets segment comprises our operations primarily in North America and Europe. Our Greater China segment includes our operations in China, Taiwan and Hong Kong. Our JANZ segment reflects our operations in Japan, Australia and New Zealand. Our Emerging Markets segment encompasses our presence in more than 125 countries with developing markets and emerging economies including in Asia, Africa, Eastern Europe, Latin America and the Middle East as well as the Company’s ARV franchise. The Company’s chief operating decision maker is the Chief Executive Officer, who evaluates the performance of its segments based on total revenues and segment profitability. Certain costs are not included in the measurement of segment profitability, such as costs, if any, associated with the following: ◦ Intangible asset amortization expense and impairments of intangible assets; ◦ R&D expense; ◦ Net charges or net gains for litigation settlements and other contingencies; ◦ Certain costs related to transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory and property, plant and equipment; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) other significant items, which are substantive and/or unusual, and in some cases recurring, items (such as restructuring) that are evaluated on an individual basis by management and that either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such special items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities. 133 Table of Contents ◦ Corporate and other unallocated costs associated with platform functions (such as digital, facilities, legal, finance, human resources, insurance, public affairs and procurement), patient advocacy activities and certain compensation and other corporate costs (such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our manufacturing, which include manufacturing variances associated with production) and operations that are not directly assessed to an operating segment as business unit (segment) management does not manage these costs. The Company does not report depreciation expense, total assets and capital expenditures by segment, as such information is not used by the chief operating decision maker. The accounting policies of the segments are the same as those described in Note 2 Summary of Significant Accounting Policies. Presented in the table below is segment information for the periods identified and a reconciliation of segment information to total consolidated information. Net Sales Segment Profitability Years Ended December 31, Years Ended December 31, (in millions) 2021 2020 2019 2021 2020 2019 Reportable Segments: Developed Markets $ 10,428.7 $ 8,510.9 $ 8,240.0 $ 5,143.1 $ 4,243.9 $ 4,137.3 Greater China 2,212.8 259.9 214.6 1,397.1 52.7 89.9 JANZ 2,027.4 1,195.3 1,192.5 762.4 364.6 323.2 Emerging Markets 3,144.7 1,853.8 1,723.2 1,402.4 610.4 561.9 Total reportable segments $ 17,813.6 $ 11,819.9 $ 11,370.3 $ 8,705.0 $ 5,271.6 $ 5,112.3 Reconciling items: Intangible asset amortization expense ( 2,702.2 ) ( 1,605.8 ) ( 1,582.7 ) Intangible asset impairment charges ( 102.8 ) ( 82.4 ) ( 180.6 ) Globally managed research and development costs ( 751.1 ) ( 555.1 ) ( 639.9 ) Litigation settlements & other contingencies ( 329.2 ) ( 107.8 ) 21.4 Transaction related and other special items ( 2,832.2 ) ( 1,739.7 ) ( 682.2 ) Corporate and other unallocated ( 2,021.5 ) ( 1,391.6 ) ( 1,332.8 ) (Loss) earnings from operations $ ( 34.0 ) $ ( 210.8 ) $ 715.5 The following table represents the percentage of consolidated net sales to Viatris’ major customers during the years ended December 31, 2021, 2020, and 2019: Percentage of Consolidated Net Sales 2021 2020 2019 McKesson Corporation 9 % 13 % 15 % AmerisourceBergen Corporation 9 % 10 % 9 % Cardinal Health, Inc. 5 % 8 % 8 % 134 Table of Contents Sales by Country Information Net sales by country are presented on the basis of geographic location of our subsidiaries: Year Ended December 31, (In millions) 2021 2020 2019 United States $ 4,176.4 $ 3,746.1 $ 3,965.9 China 1,981.5 216.1 171.1 ____________ No other country’s net sales represents more than 10% of consolidated net sales. 16. Commitments The Company has entered into employment and other agreements with certain executives and other employees that provide for compensation, retirement and certain other benefits. These agreements provide for severance payments under certain circumstances. Additionally, the Company has split-dollar life insurance agreements with certain retired executives. In conjunction with the Combination, Viatris entered into a TSA with Pfizer pursuant to which each party will provide certain limited transition services to the other party generally for an initial period of 24 months from closing date. In addition to the monthly service fees under the TSA, Viatris has agreed to reimburse Pfizer for fifty percent of the costs, up to the first $ 380 million incurred, to establish and wind down the TSA services. Viatris will be required to fully reimburse Pfizer for total costs in excess of $ 380 million. During the years ended December 31, 2021 and 2020, the Company incurred $ 30.4 million and $ 53.1 million, respectively, related to this provision of the TSA. In conjunction with the Combination, during the year ended December 31, 2020, the Company accrued approximately $ 26.9 million due to change in control clauses in employment arrangements for certain former Mylan employees, which was paid during 2021. In addition, the Company entered into retention agreements with certain key employees, whereby they agreed to continue to provide service to the Company for a period of time after the Combination. The Company is recording the expense for these agreements over the applicable service periods. In the normal course of business, Viatris periodically enters into employment, legal settlement and other agreements which incorporate indemnification provisions. While the maximum amount to which Viatris may be exposed under such agreements cannot be reasonably estimated, the Company maintains insurance coverage, which management believes will effectively mitigate the Company’s obligations under these indemnification provisions. No amounts have been recorded in the consolidated financial statements with respect to the Company’s obligations under such agreements. 17. Restructuring 2020 Restructuring Program During the fourth quarter of 2020, Viatris announced a significant global restructuring program in order to achieve synergies and ensure that the organization is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers, and other stakeholders. Viatris’ restructuring initiative incorporates and expands on the restructuring program announced by Mylan N.V. earlier in 2020 as part of its business transformation efforts. As part of the restructuring, the Company is optimizing its commercial capabilities and enabling functions, and closing, downsizing or divesting certain manufacturing facilities globally that are deemed to be no longer viable either due to surplus capacity, challenging market dynamics or a shift in its product portfolio toward more complex products. For the committed restructuring actions, the Company expects to incur total pre-tax charges of up to approximately $ 1.4 billion. Such charges are expected to include up to approximately $ 450 million of non-cash charges mainly related to accelerated depreciation and asset impairment charges, including inventory write-offs. The remaining estimated cash costs of up to approximately $ 950 million are expected to be primarily related to severance and employee benefits expense, as well as other costs, including those related to contract terminations and other plant disposal costs. In addition, management believes the potential annual savings related to these committed restructuring activities to be up to approximately $ 900 million once fully implemented, with most of these savings expected to improve operating cash flow. 135 Table of Contents The following table summarizes the restructuring charges and the reserve activity for the 2020 restructuring program: (In millions) Employee Related Costs Other Exit Costs Total Charges (2) $ 195.6 $ 75.7 $ 271.3 Acquired in the Combination 91.7 0.3 92.0 Cash payment ( 25.1 ) ( 0.4 ) ( 25.5 ) Utilization — ( 70.8 ) ( 70.8 ) Foreign currency translation 0.4 — 0.4 Balance at December 31, 2020 $ 262.6 $ 4.8 $ 267.4 Charges (1) 396.1 496.1 892.2 Reimbursable restructuring charges 26.4 — 26.4 Cash payment ( 385.5 ) ( 151.7 ) ( 537.2 ) Utilization — ( 345.0 ) ( 345.0 ) Foreign currency translation ( 7.0 ) ( 0.1 ) ( 7.1 ) Balance at December 31, 2021 $ 292.6 $ 4.1 $ 296.7 As part of the Combination, the Company acquired reserve balances related to restructuring activities initiated by the Upjohn Business prior to the Combination, primarily related to accrued severance. 2016 Restructuring Program Mylan previously announced a restructuring program representing a series of actions in certain locations to further streamline its operations globally. We incurred total restructuring related costs of approximately $ 733.0 million through December 31, 2020. The 2016 Restructuring Program was substantially completed at December 31, 2020. In April 2018, the FDA completed an inspection at Mylan’s plant in Morgantown, West Virginia and made observations through a Form 483. In the fourth quarter of 2018, Mylan received a warning letter related to the previously disclosed observations at the plant. The issues raised in the warning letter were addressed within the context of the Mylan’s comprehensive restructuring and remediation activities. On May 11, 2020, Mylan received the close-out of the warning letter. On December 11, 2020, the Company announced that it expects the Morgantown plant to be closed or divested as part of the 2020 Restructuring Program. The Morgantown plant was closed during the third quarter of 2021. The following table summarizes the restructuring charges and the reserve activity for the 2016 restructuring program from December 31, 2018 to December 31, 2020: (In millions) Employee Related Costs Other Exit Costs Total Balance at December 31, 2018: $ 60.8 $ 11.8 $ 72.6 Charges (3) 16.6 88.0 $ 104.6 Cash payment ( 48.9 ) ( 10.5 ) $ ( 59.4 ) Reclassifications — ( 8.1 ) $ ( 8.1 ) Utilization — ( 78.3 ) $ ( 78.3 ) Foreign currency translation ( 2.1 ) ( 0.1 ) $ ( 2.2 ) Balance at December 31, 2019: $ 26.4 $ 2.8 $ 29.2 Charges (2) 9.9 40.6 50.5 Cash payment ( 18.1 ) ( 7.6 ) ( 25.7 ) Utilization — ( 32.9 ) ( 32.9 ) Foreign currency translation $ 1.8 $ ( 0.1 ) $ 1.7 Balance at December 31, 2020: $ 20.0 $ 2.8 $ 22.8 136 Table of Contents (1) For the year ended December 31, 2021, total restructuring charges for the 2020 Restructuring Program, in Developed Markets, Greater China, JANZ, Emerging Markets, and Corporate/Other were approximately $ 623.8 million, $ 5.8 million, $ 138.1 million, $ 94.1 million, and $ 30.4 million, respectively. (2) For the year ended December 31, 2020, total restructuring charges, for both programs, in Developed Markets, Greater China, JANZ, and Emerging Markets were approximately $ 292.1 million, $ 18.4 million, $ 2.9 million, and $ 8.4 million, respectively. (3) For the year ended December 31, 2019, total restructuring charges for the 2016 Restructuring Program in Developed Markets and JANZ were approximately $ 100.4 million and $ 4.2 million, respectively. At December 31, 2021 and 2020, accrued liabilities for restructuring and other cost reduction programs were primarily included in other current liabilities and other long-term obligations in the consolidated balance sheets. 18. Licensing and Other Partner Agreements We periodically enter into licensing and other partner agreements with other pharmaceutical companies for the development, manufacture, marketing and/or sale of pharmaceutical products. Our significant licensing and other partner agreements are primarily focused on the development, manufacturing, supply and commercialization of multiple, high-value generic biologic compounds, insulin analog products and respiratory products, among other complex products. Under these agreements, we have future potential milestone payments and co-development expenses payable to third parties as part of our licensing, development and co-development programs. Payments under these agreements generally become due and are payable upon the satisfaction or achievement of certain developmental, regulatory or commercial milestones or as development expenses are incurred on defined projects. Milestone payment obligations are uncertain, including the prediction of timing and the occurrence of events triggering a future obligation and are not reflected as liabilities in the consolidated balance sheets, except for obligations reflected as acquisition related contingent consideration. Refer to Note 9 Financial Instruments and Risk Management for further discussion of contingent consideration. Our potential maximum development milestones not accrued for at December 31, 2021 totaled approximately $ 351 million. We estimate that the amounts that may be paid during the next twelve months to be approximately $ 18 million. These agreements may also include potential sales-based milestones and call for us to pay a percentage of amounts earned from the sale of the product as a royalty or a profit share. The amounts disclosed do not include sales-based milestones or royalty or profit share obligations on future sales of product as the timing and amount of future sales levels and costs to produce products subject to these obligations is not reasonably estimable. These sales-based milestones or royalty or profit share obligations may be significant depending upon the level of commercial sales for each product. Revance On February 28, 2018, the Company and Revance entered into an agreement with Revance pursuant to which the Company and Revance are collaborating exclusively, on a world-wide basis (excluding Japan), to develop, manufacture and commercialize a biosimilar to the branded biologic product (onabotulinumtoxinA) marketed as BOTOX®. Under the agreement, the Company is primarily responsible for (a) clinical development activities outside of North America (excluding Japan) (b) regulatory activities, and (c) commercialization for any approved product. Revance is primarily responsible for (a) non-clinical development activities, (b) clinical development activities in North America, and (c) manufacturing and supply of clinical drug substance and drug product; Revance is solely responsible for an initial portion of non-clinical development costs. The remaining portion of any non-clinical development costs and clinical development costs for obtaining approval in the U.S. and Europe is being shared equally between the parties, and the Company is responsible for all other clinical development costs and commercialization expenses. During the year ended December 31, 2020, the Company recorded $ 30 million of R&D expense for a milestone payment that was due upon the decision to continue the development program. Momenta On January 8, 2016, the Company entered into an agreement with Momenta to develop, manufacture and commercialize up to six of Momenta’s biosimilar candidates. Under the terms of the agreement, the Company and Momenta were jointly responsible for product development and equally shared in the costs and profits of the products with Viatris leading the worldwide commercialization efforts. In January 2019, the parties agreed to the termination of all collaboration activities, except for the continued development of M710, a proposed biosimilar to EYLEA®. In October 2020, Momenta was acquired by Johnson & Johnson. The parties continue to collaborate on the development of M710. 137 Table of Contents Theravance Biopharma On January 30, 2015, the Company entered into a development and commercialization collaboration with Theravance Biopharma, for revefenacin. On November 9, 2018, the Company announced that the FDA approved the NDA for YUPELRI® (revefenacin) inhalation solution for the maintenance treatment of patients with COPD. YUPELRI®, a LAMA, is the first and only once-daily, nebulized bronchodilator approved for the treatment of COPD in the U.S. Viatris is responsible for commercial manufacturing and commercialization. Theravance Biopharma is co-promoting the product in the hospital channel under a profit-sharing arrangement. In 2019, the Company acquired exclusive development and commercialization rights to nebulized revefenacin in China and adjacent territories, which include Hong Kong SAR, the Macau SAR and Taiwan. Theravance Biopharma received an upfront payment of $ 18.5 million and will be eligible to receive additional potential development and sales milestones together with tiered royalties on net sales of nebulized revefenacin, if approved. Viatris is responsible for all aspects of development and commercialization in the partnered regions, including pre- and post-launch activities and product registration and all associated costs. The upfront payment was recorded as R&D expense during the year ended December 31, 2019. Under the terms of the agreements, Theravance Biopharma is eligible to receive potential development and sales milestone payments totaling approximately $ 293 million in the aggregate. As of December 31, 2021, the Company has paid a total of $ 50.0 million in milestone payments to Theravance Biopharma. Biocon The Company has entered into exclusive collaborations with Biocon on the development, manufacturing, supply and commercialization of multiple, high value biosimilar compounds and three insulin analog products for the global marketplace. Under the agreements with Biocon, the Company has exclusive commercialization rights for the products under the collaborations in the U.S., Canada, Japan, Australia, New Zealand and in the EU and European Free Trade Association countries. In December 2017, the FDA approved Ogivri ® (trastuzumab-dkst), a biosimilar to Herceptin® (trastuzumab). Ogivri ® has been approved for all indications included in the label of the reference product, Herceptin, including for the treatment of HER2-overexpressing breast cancer and metastatic stomach cancer (gastric or gastroesophageal junction adenocarcinoma). On December 2, 2019, the Company and Biocon announced the U.S. launch of Ogivri ® In June 2018, the Company and Biocon announced that the FDA approved Fulphila ® (pegfilgrastim-jmdb), a biosimilar to Neulasta ® (pegfilgrastim). Fulphila ® has been approved to reduce the duration of febrile neutropenia (fever or other signs of infection with a low count of neutrophils, a type of white blood cells) in patients treated with chemotherapy in certain types of cancer. The commercial launch of Fulphila ® occurred in 2018. In August, 2020, the Company and Biocon announced the U.S. launch of SEMGLEE® (insulin glargine injection) in vial and pre-filled pen presentations, approved to help control high blood sugar in adult and pediatric patients with type 1 diabetes and adults with type 2 diabetes. On July 28, 2021, Viatris and Biocon announced that the FDA had approved SEMGLEE® (insulin glargine-yfgn) injection as the first interchangeable biosimilar product under the 351(k) regulatory pathway. The interchangeable SEMGLEE® product, which allows substitution of SEMGLEE® for the reference product, Lantus®. The commercial launch occurred in the fourth quarter of 2021. The Company has exclusivity for 12 months from launch before the FDA can approve another biosimilar interchangeable to Lantus®. In addition to profit sharing payments to Biocon for the commercialized products, the Company continues to provide development funding related to this collaboration. As the timing of cash expenditures is dependent upon a number of factors, many of which are out of the Company’s control, it is difficult to forecast the amount of payments to be made over the next few years, which could be significant. 138 Table of Contents FKB On February 22, 2018, the Company entered into a collaboration license and distribution agreement with FKB for the distribution of Hulio®, a biosimilar to AbbVie's Humira® (adalimumab). Under the agreement, the Company has exclusive commercialization rights for the product in the EU and the European Economic Area countries and FKB is responsible for development, manufacturing and supply of the product. On September 20, 2018, the Company received final approval from the Commission to market Hulio® for all adalimumab indications in all 28 EU member states and the European Economic Area. Under the agreement, FKB received an upfront payment of $ 25.0 million, an approval milestone of $ 10.0 million and is eligible for a royalty based upon net sales. On February 27, 2019, the Company amended its agreements with FKB for the commercialization of Hulio®. Under the amended agreements, the Company received the exclusive global commercialization rights for Hulio® and FKB received an additional upfront payment of $ 33.0 million, of which $ 23.3 million was recorded as a component of R&D expense during the year ended December 31, 2019. In addition, FKB is eligible to receive additional commercial milestones and royalty payments under the amended agreements. On July 9, 2020, the Company announced that the FDA approved Hulio® (adalimumab-fkjp), a biosimilar to AbbVie's Humira® (adalimumab), for the treatment of rheumatoid arthritis, juvenile idiopathic arthritis (4 years and older), psoriatic arthritis, ankylosing spondylitis, adult Crohn's disease, ulcerative colitis and plaque psoriasis, in both prefilled syringe and auto-injector presentations. In accordance with its patent license agreement with AbbVie, the Company will be able to launch Hulio® in the U.S. in July 2023. Other Development Agreements On December 20, 2019, the Company entered into a Master Development Agreement with a privately owned research company to grant the Company rights with respect to acquiring certain pharmaceutical products. The Company expects to provide funding for select programs through upfront payments and development milestones and the Company will have the right and obligation to acquire the products at fair market value upon regulatory approval or other regulatory trigger dates. The Company made an initial upfront payment of $ 10.0 million which was accounted for as R&D expense during the year ended December 31, 2019. Additionally, under the terms of the agreement, the Company acquired $ 25.0 million worth of equity shares in the privately owned research company during the year ended December 31, 2020. The investment is accounted for in accordance with ASC 321, Investments - Equity Securities . During the year ended December 31, 2021, the Company entered into an agreement with this entity for the future development of an ophthalmic product. The agreement included an upfront payment of $ 40.0 million which was accounted for as R&D expense. We are actively pursuing, and are currently involved in, joint projects related to the development, distribution and marketing of both generic and branded products. Many of these arrangements provide for payments by us upon the attainment of specified milestones. While these arrangements help to reduce the financial risk for unsuccessful projects, fulfillment of specified milestones or the occurrence of other obligations may result in fluctuations in cash flows and R&D expense. Biocon Biologics Agreement On February 28, 2022, the Company entered into an agreement to contribute its biosimilars business to Biocon Biologics. Under the terms of the Biocon Agreement, at closing Viatris will receive an up-front cash payment of $ 2.0 billion, $ 1.0 billion of convertible preferred equity and up to $ 335 million as additional cash payments that are expected to be paid in 2024. Viatris will own a stake of at least 12.9 % of Biocon Biologics, on a fully-diluted basis, and will have certain priority rights with respect to certain liquidity events. The companies will also enter into a two-year transition services agreement, subject to extension in certain circumstances, during which time Viatris will provide certain commercial and administrative services for an applicable service fee. The transaction is expected to close in the second half of 2022 and is subject to customary closing conditions (including regulatory approvals). 19. Litigation The Company is involved in various disputes, governmental and/or regulatory inquiries, investigations and proceedings, tax proceedings and litigation matters, both in the U.S. and abroad, that arise from time to time, some of which could result in losses, including damages, fines and/or civil penalties, and/or criminal charges against the Company. These matters are often complex and have outcomes that are difficult to predict. 139 Table of Contents In addition, in connection with the Combination, the Company has generally assumed liability for, and control of, pending and threatened legal matters relating to the Upjohn Business – including certain matters initiated against Pfizer described below – and has agreed to indemnify Pfizer for liabilities arising out of such assumed legal matters. Pfizer, however, has agreed to retain various matters – including certain specified competition law matters – to the extent they arise from conduct during the pre-Distribution period and has agreed to indemnify the Company for liabilities arising out of such matters. While the Company believes that it has meritorious defenses with respect to the claims asserted against it and the assumed legal matters referenced above, and intends to vigorously defend its position, the process of resolving these matters is inherently uncertain and may develop over a long period of time, and so it is not possible to predict the ultimate resolution of any such matter. It is possible that an unfavorable resolution of any of the ongoing matters could have a material effect on the Company’s business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price. Some of these governmental inquiries, investigations, proceedings and litigation matters with which the Company is involved are described below, and unless otherwise disclosed, the Company is unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. The Company records accruals for loss contingencies to the extent we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is also involved in other pending proceedings for which, in the opinion of the Company based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s business, financial position, results of operations, cash flows, ability to pay dividends and/or stock price. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in the opinion of the Company, become material, the Company will disclose such matters. Legal costs are recorded as incurred and are classified in SG&A in the Company’s consolidated statements of operations. EpiPen® Auto-Injector Litigation The Company and a former Mylan N.V. officer (collectively the “Mylan Defendants”) have been named as defendants in indirect purchaser class actions relating to the pricing and/or marketing of the EpiPen® Auto-Injector. The plaintiffs in these cases asserted violations of various federal and state antitrust and consumer protection laws, RICO as well as common law claims. Plaintiffs’ seek monetary damages, attorneys’ fees and costs. These lawsuits were filed in various federal and state courts and have either been dismissed or transferred into a MDL in the U.S. District Court for the District of Kansas and have been consolidated or centralized. The District Court initially certified an antitrust class that applied to 17 states and a RICO class. On June 23, 2021, the Court granted – in substantial part – the Mylan Defendants’ motion for summary judgment by dismissing certain antitrust claims and the RICO claims, which included RICO claims asserted against the former Mylan N.V. officer. Plaintiffs’ motions for reconsideration and to certify an interlocutory appeal of the summary judgment decision with respect to the RICO claims were denied. On July 8, 2021, the Mylan Defendants filed a motion to decertify the class action with respect to the remaining antitrust theory, which concerns a patent settlement between Pfizer and Teva and other alleged actions regarding the launch of Teva’s generic epinephrine auto-injector. The motion to decertify was granted in part, decertifying portions of the class action asserting claims under the laws of certain states and dismissing one named plaintiff, and was denied in all other respects. The Mylan Defendants had filed a motion for reconsideration of this decision, which was pending. In February 2022, the parties reached an agreement to fully resolve this matter for $ 264 million. The settlement is subject to court approval and contains an express provision disclaiming and denying any wrongdoing or liability by the Mylan Defendants. During the year ended December 31, 2021, the Company recognized an accrual of approximately $ 264.0 million related to this litigation. On February 14, 2020, the Company, together with other non-Viatris affiliated companies, were named as defendants in a putative direct purchaser class action filed in the U.S. District Court for the District of Kansas relating to the pricing and/or marketing of the EpiPen® Auto-Injector. On September 21, 2021, after Plaintiffs’ then operative complaint was dismissed with an option to file a limited amended complaint, Plaintiffs filed an amended complaint asserting federal antitrust claims which are based on allegations that are similar to those in the putative indirect purchaser class actions discussed above. Plaintiffs’ seek monetary damages, declaratory relief, attorneys’ fees and costs. 140 Table of Contents Beginning in March 2020, the Company, together with other non-Viatris affiliated companies, were named as defendants in putative direct purchaser class actions filed in the U.S. District Court for the District of Minnesota relating to contracts with certain pharmacy benefit managers concerning EpiPen® Auto-Injector. The plaintiffs claim that the alleged conduct resulted in the exclusion or restriction of competing products and the elimination of pricing constraints in violation of RICO and federal antitrust law. These actions have been consolidated. Plaintiffs’ seek monetary damages, attorneys’ fees and costs. On April 24, 2017, Sanofi Aventis U.S., LLC (“Sanofi”) filed a lawsuit against the Company in the U.S. District Court for the District of New Jersey. This lawsuit has been transferred into the aforementioned MDL and alleges exclusive dealing and anti-competitive marketing practices in violation of the antitrust laws in connection with the sale and marketing of the EpiPen® Auto-Injector. Sanofi seeks monetary damages, declaratory relief, attorneys’ fees and costs. The Court granted the Company’s motion for summary judgment and dismissed Sanofi’s claims. Sanofi’s appeal is pending. The Company has a total accrual of approximately $ 274.0 million related to these matters at December 31, 2021, which is included in other current liabilities in the consolidated balance sheets. Although it is reasonably possible that the Company may incur additional losses from these matters, any amount cannot be reasonably estimated at this time. In addition, the Company expects to incur additional legal and other professional service expenses associated with such matters in future periods and will recognize these expenses as services are received. The Company believes that the ultimate amount paid for these services and claims could have a material effect on the Company's business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price in future periods. Drug Pricing Matters Department of Justice On December 3, 2015, the Company received a subpoena from the Antitrust Division of the DOJ seeking information relating to the marketing, pricing, and sale of certain of our generic products and any communications with competitors about such products. On September 8, 2016, the Company, as well as certain employees and a member of senior management, received subpoenas from the DOJ seeking similar information. Related search warrants also were executed. On May 10, 2018, the Company received a civil investigative demand from the Civil Division of the DOJ seeking information relating to the pricing and sale of its generic drug products. We are fully cooperating with these investigations, which we believe are related to a broader industry-wide investigation of the generic pharmaceutical industry. Civil Litigation Beginning in 2016, the Company, along with other manufacturers, has been named as a defendant in lawsuits generally alleging anticompetitive conduct with respect to generic drugs. The lawsuits have been filed by plaintiffs, including putative classes of direct purchasers, indirect purchasers, and indirect resellers, as well as individual direct and indirect purchasers and certain cities and counties. They allege harm under federal and state laws, including federal and state antitrust laws, state consumer protection laws and unjust enrichment claims. Some of the lawsuits also name as defendants the Company’s President, including allegations against him with respect to a single drug product, and one of the Company’s sales employees, including allegations against him with respect to certain generic drugs. The vast majority of the lawsuits have been consolidated in an MDL proceeding in the Eastern District of Pennsylvania (“EDPA”). Plaintiffs generally seek monetary damages, restitution, declaratory and injunctive relief, attorneys’ fees and costs. The Court has ordered certain plaintiffs’ complaints regarding two single-drug product cases to proceed as bellwethers. The Company is named in those plaintiffs’ complaints that regard one of the two individual drug products. 141 Table of Contents Attorneys General Litigation On December 21, 2015, the Company received a subpoena and interrogatories from the Connecticut Office of the Attorney General seeking information relating to the marketing, pricing and sale of certain of the Company’s generic products and communications with competitors about such products. On December 14, 2016, attorneys general of certain states originally filed a complaint in the United States District Court for the District of Connecticut against several generic pharmaceutical drug manufacturers, including the Company, alleging anticompetitive conduct with respect to, among other things, a single drug product. The complaint has subsequently been amended, including on June 18, 2018, to add attorneys general alleging violations of federal and state antitrust laws, as well as violations of various states’ consumer protection laws. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA. The operative complaint includes attorneys general of forty-seven states, the District of Columbia and the Commonwealth of Puerto Rico. The Company is alleged to have engaged in anticompetitive conduct with respect to four generic drug products. The amended complaint also includes claims asserted by attorneys general of thirty-seven states and the Commonwealth of Puerto Rico against certain individuals, including the Company’s President, with respect to a single drug product. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, and restitution. On May 10, 2019, certain attorneys general filed a new complaint in the United States District Court for the District of Connecticut against various drug manufacturers and individuals, including the Company and one of its sales employees, alleging anticompetitive conduct with respect to additional generic drugs. On November 1, 2019, the complaint was amended, adding additional states as plaintiffs. The operative complaint is brought by attorneys general of forty-eight states, certain territories and the District of Columbia. The amended complaint also includes claims asserted by attorneys general of forty-three states and certain territories against several individuals, including a Company sales employee. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, and restitution. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA. On June 10, 2020, certain attorneys general filed a new complaint in the United States District Court for the District of Connecticut against drug manufacturers, including the Company, and individual defendants (none from the Company), alleging anticompetitive conduct with respect to additional generic drugs. On September 9, 2021, the complaint was amended, adding an additional state as a plaintiff. The operative complaint is brought by attorneys general of forty-seven states, certain territories and the District of Columbia. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, and restitution. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA and has been ordered to proceed as a bellwether. Securities Related Litigation Purported class action complaints were filed in October 2016 against Mylan N.V. and Mylan Inc. (collectively “Mylan”), certain of Mylan’s former directors and officers, and certain of the Company’s current directors and officers (collectively, for purposes of this paragraph, the “defendants”) in the United States District Court for the Southern District of New York (“SDNY”) on behalf of certain purchasers of securities of Mylan on the NASDAQ. The complaints alleged that defendants made false or misleading statements and omissions of purportedly material fact, in violation of federal securities laws, in connection with disclosures relating to the classification of their EpiPen® Auto-Injector as a non-innovator drug for purposes of the Medicaid Drug Rebate Program. On March 20, 2017, a consolidated amended complaint was filed alleging substantially similar claims, but adding allegations that defendants made false or misleading statements and omissions of purportedly material fact in connection with allegedly anticompetitive conduct with respect to EpiPen® Auto-Injector and certain generic drugs. The operative complaint is the third amended consolidated complaint, which was filed on June 17, 2019, and contains the allegations as described above against Mylan, certain of Mylan’s former directors and officers, and certain of the Company’s current directors, officers, and employees (collectively, for purposes of this paragraph, the “defendants”). A class has been certified covering all persons or entities that purchased Mylan common stock between February 21, 2012 and May 24, 2019 excluding defendants, certain of the Company’s current directors and officers, former directors and officers of Mylan, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which defendants have or had a controlling interest. Plaintiffs seek damages and costs and expenses, including attorneys’ fees and expert costs. A decision on Defendants’ motion for summary judgment seeking to dismiss the case in its entirety and Plaintiffs’ cross-motion for partial summary judgment as to portions of certain claims is pending. 142 Table of Contents On April 30, 2017, a similar lawsuit was filed in the Tel Aviv District Court (Economic Division) in Israel, which has been stayed pending a decision in the SDNY class action litigation. On February 14, 2020, the Abu Dhabi Investment Authority filed a complaint against Mylan in the SDNY asserting allegations pertaining to EpiPen® Auto-Injector and certain generic drugs under the federal securities laws that overlap with those asserted in the third amended complaint identified above. The Abu Dhabi Investment Authority’s complaint seeks monetary damages as well as the plaintiff’s fees and costs. On February 26, 2019, MYL Litigation Recovery I LLC (“MYL Plaintiff”) (an assignee of entities that purportedly purchased stock of Mylan N.V.) filed an additional complaint in the SDNY against Mylan, certain of Mylan’s former officers and directors, and an officer of the Company asserting allegations pertaining to EpiPen® Auto-Injector under the federal securities laws that overlap in part with those asserted in the third amended complaint identified above. On May 6, 2020, MYL Plaintiff filed an amended complaint including additional allegations in connection with purportedly anticompetitive conduct with respect to EpiPen® Auto-Injector. MYL Plaintiff subsequently filed a summons on October 30, 2020, naming Mylan, certain of Mylan’s former officers and directors, and certain of the Company’s current officers, directors, and employees in New York State Court, County of New York, claiming investment losses suffered as a result of purportedly false and misleading statements in connection with allegedly anticompetitive conduct concerning generic pharmaceuticals. The parties have resolved both matters filed by MYL Plaintiff and they have been dismissed with prejudice. On June 26, 2020, a putative class action complaint was filed by the Public Employees Retirement System of Mississippi, which was subsequently amended on November 13, 2020, against Mylan N.V., certain of Mylan N.V.’s former directors and officers, and an officer and director of the Company (collectively for the purposes of this paragraph, the “defendants”) in the U.S. District Court for the Western District of Pennsylvania on behalf of certain purchasers of securities of Mylan N.V. The amended complaint alleges that defendants made false or misleading statements and omissions of purportedly material fact, in violation of federal securities laws, in connection with disclosures relating to the Morgantown manufacturing plant and inspections at the plant by the FDA. Plaintiff seeks certification of a class of purchasers of Mylan N.V. securities between February 16, 2016 and May 7, 2019. The complaint seeks monetary damages, as well as the plaintiff’s fees and costs. On February 15, 2021, a complaint was filed by Skandia Mutual Life Ins. Co., Lansforsakringar AB, KBC Asset Management N.V., and GIC Private Limited, against the Company, certain of Mylan N.V.’s former directors and officers, a current director and officer of the Company, and current employees of the Company. The Complaint asserts claims which are based on allegations that are similar to those in the SDNY and the Western District of Pennsylvania complaints identified above. Plaintiffs seek compensatory damages, costs and expenses and attorneys’ fees. On October 28, 2021, the Company and certain of its officers and directors were named as defendants in a putative class action lawsuit filed in the Court of Common Pleas of Allegheny County, Pennsylvania on behalf of former Mylan shareholders who received Company common stock in connection with the Combination. A non-Viatris affiliated company and persons were also named as defendants. The complaint alleges violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 for purportedly failing to disclose or misrepresenting material information in the registration statement and related prospectus issued in connection with the Combination. Plaintiffs seek monetary damages, reasonable costs and expenses, and certain other equitable and injunctive relief. Opioids The Company, along with other manufacturers, distributors, pharmacies, pharmacy benefit managers, and individual healthcare providers is a defendant in more than 1,000 cases in the United States and Canada filed by various plaintiffs, including counties, cities and other local governmental entities, asserting civil claims related to sales, marketing and/or distribution practices with respect to prescription opioid products. In addition, lawsuits have been filed as putative class actions including on behalf of children with Neonatal Abstinence Syndrome due to alleged exposure to opioids. The lawsuits generally seek equitable relief and monetary damages (including punitive and/or exemplary damages) based on a variety of legal theories, including various statutory and/or common law claims, such as negligence, public nuisance and unjust enrichment. The vast majority of these lawsuits have been consolidated in an MDL in the U.S. District Court for the Northern District Court of Ohio. 143 Table of Contents In November 2019, the Company received a subpoena from the New York Department of Financial Services as part of an industry-wide inquiry into the effect of opioid prescriptions on New York health insurance premiums. The Company is fully cooperating with this subpoena request. European Commission Proceedings Perindopril On July 9, 2014, the Commission issued a decision finding that the Company as well as several other companies, had violated EU competition rules relating to the product Perindopril and fined the Company approximately € 17.2 million. The Company paid approximately $ 21.7 million related to this matter during the fourth quarter of 2014. The decision was affirmed on appeal by the General Court of the EU and is now on appeal to the CJEU. The Company has received a notice from an organization representing health insurers in the Netherlands stating an intention to commence follow-on litigation and asserting monetary damages. Citalopram On June 19, 2013, the Commission issued a decision finding that the Company as well as several other companies, had violated EU competition rules relating to the product Citalopram and fined the Company approximately € 7.8 million, jointly and severally with Merck KGaA. The decision was affirmed on appeal by the General Court of the EU and the CJEU. The Commission’s matter as to the Company is now closed. The Company has received notices from European NHS and health insurers stating an intention to commence follow-on litigation and asserting monetary damages. The NHS England and Wales has instituted litigation against all parties to the Commission’s decision, including the Company. The Company sought indemnification from Merck KGaA with respect to the € 7.8 million portion of the fine for which Merck KGaA and the Company were held jointly and severally liable. Merck KGaA counterclaimed against the Company seeking the same indemnification. In June 2018, the Frankfurt Regional Court issued a judgment ordering the Company to indemnify Merck KGaA with respect to the amount for which the parties were held jointly and severally liable. The parties have resolved this matter. The Company has accrued approximately € 11.4 million as of December 31, 2021 related to this matter. It is reasonably possible that we will incur additional losses above the amount accrued but we cannot estimate a range of such reasonably possible losses at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued. U.K. Competition and Markets Authority Paroxetine On August 12, 2011, the Company received notice that the Office of Fair Trading (now the “CMA”) opened an investigation regarding possible infringement of the Competition Act 1998 and Articles 101 and 102 of the Treaty on the Functioning of the EU, with respect to alleged agreements related to Paroxetine. The CMA issued a decision on February 12, 2016, finding that the Company, Merck KGaA, and other companies were liable for infringing EU and U.K. competition rules. The CMA issued a penalty to Merck KGaA of approximately £ 5.8 million, for which the Company is jointly and severally liable for approximately £ 2.7 million. On appeal, the Competition Appeals Tribunal affirmed the CMA’s decision but reduced the penalty to Merck KGaA to approximately £ 3.9 million, and reduced the amount for which the Company is jointly and severally liable to approximately £ 2.05 million. The CMA’s matter as to the Company is now closed. The Company has also received a notice from the NHS England and Wales stating an intention to commence follow-on litigation and asserting monetary damages. The Company has accrued approximately £ 8.8 million as of December 31, 2021 related to this matter. It is reasonably possible that the Company will incur additional losses above the amount accrued but we cannot estimate a range of such reasonably possible losses at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued. 144 Table of Contents Product Liability Like other pharmaceutical companies, the Company is involved in a number of product liability lawsuits related to alleged personal injuries arising out of certain products manufactured/or distributed by the Company, including but not limited to those discussed below. Plaintiffs in these cases generally seek damages and other relief on various grounds for alleged personal injury and economic loss. The Company has accrued approximately $ 74.8 million as of December 31, 2021 for its product liability matters. It is reasonably possible that we will incur additional losses and fees above the amount accrued but we cannot estimate a range of such reasonably possible losses or legal fees related to these claims at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued. Nitrosamines The Company, along with numerous other manufacturers, retailers, and others, are parties to litigation relating to alleged trace amounts of nitrosamine impurities in certain products, including valsartan and ranitidine. The vast majority of these lawsuits in the United States are pending in two MDLs, namely an MDL pending in the United States District Court for the District of New Jersey concerning valsartan and an MDL pending in the United States District Court for the Southern District of Florida concerning ranitidine. The lawsuits against the Company in the MDLs include putative class actions seeking the refund of the purchase price and other economic and punitive damages allegedly sustained by consumers and end payors as well as individuals seeking compensatory and punitive damages for personal injuries allegedly caused by ingestion of the medications. Similar lawsuits pertaining to valsartan have been filed in other countries. The Company has also received claims and inquiries related to these products, as well as requests to indemnify purchasers of the Company’s API and/ or finished dose forms of these products. The original master complaints concerning ranitidine were dismissed on December 31, 2020. The Company was not named as a defendant in the amended master complaints, though it was still named in certain short form personal injury complaints. The end-payor plaintiffs and certain of the plaintiffs named in the short form personal injury complaints in the ranitidine matter have filed appeals to the U.S. Court of Appeals for the Eleventh Circuit. Lipitor A number of individual and multi-plaintiff lawsuits have been filed against Pfizer in various federal and state courts alleging that the plaintiffs developed type 2 diabetes purportedly as a result of the ingestion of Lipitor. Plaintiffs seek compensatory and punitive damages. In February 2014, the federal actions were transferred for consolidated pre-trial proceedings to an MDL in the U.S. District Court for the District of South Carolina. Since 2016, certain cases in the MDL were remanded to certain state courts. In 2017, the District Court granted Pfizer’s motion for summary judgment, dismissing all of the cases pending in the MDL. In June 2018, this dismissal was affirmed by the U.S. Court of Appeals for the Fourth Circuit. The state court proceedings remain pending in various jurisdictions, including in California, Missouri, and New York. On January 27, 2021, the California Court granted Pfizer’s motion to exclude the opinions of plaintiffs’ only general causation expert in connection with his opinions involving the three lowest doses of Lipitor (10, 20 and 40 mg). The Company’s motion for summary judgment in connection with the 10, 20, and 40 mg plaintiffs was granted, resulting in their dismissal. On November 3, 2021, the Court granted the Company’s motion seeking the dismissal of the remaining cases involving the highest dose of Lipitor (80 mg). Viagra Since April 2016, an MDL has been pending in the U.S. District Court for the Northern District of California , in which plaintiffs allege that they developed melanoma and/or the exacerbation of melanoma purportedly as a result of the ingestion of Viagra. Additional cases filed against Eli Lilly and Company (“Lilly”) with respect to Cialis have also been consolidated in the MDL. Plaintiffs seek compensatory and punitive damages. In January 2020, the District Court granted Pfizer’s and Lilly’s motion to exclude all of plaintiffs’ general causation opinions. As a result, in April 2020, the District Court entered summary judgment in favor of defendants and dismissed all of plaintiffs’ claims. In April 2020, plaintiffs filed a notice of appeal in the U.S. Court of Appeals for the Ninth Circuit. The parties have reached a settlement in principle. Dilantin Since 2018, a number of individual and multi-plaintiff lawsuits have been filed against Pfizer and related entities in various federal and state courts, alleging that the plaintiffs developed cerebellar atrophy as a result of the ingestion of Dilantin. Plaintiffs seek compensatory and punitive damages. The parties have resolved this matter. 145 Table of Contents Intellectual Property The Company is involved in a number of patent litigation lawsuits involving the validity and/or infringement of patents held by branded pharmaceutical manufacturers including but not limited to the matters described below. The Company uses its business judgment to decide to market and sell certain products, in each case based on its belief that the applicable patents are invalid and/or that its products do not infringe, notwithstanding the fact that allegations of patent infringement(s) or other potential third party rights have not been finally resolved by the courts. The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, a reasonable royalty on sales or damages measured by the profits lost by the patent owner. If there is a finding of willful infringement, damages may be increased up to three times. Moreover, because of the discount pricing typically involved with bioequivalent products, patented branded products generally realize a substantially higher profit margin than generic and biosimilar products. The Company also faces challenges to its patents, including suits in various jurisdictions pursuant to which generic drug manufacturers, payers, governments, or other parties are seeking damages for allegedly causing delay of generic entry. An adverse decision in any of these matters could have an adverse effect that is material to our business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price. The Company has accrued approximately $ 226.9 million as of December 31, 2021 for its intellectual property matters. It is reasonably possible that we will incur additional losses and fees above the amount accrued but we cannot estimate a range of such reasonably possible losses or legal fees related to these claims at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued. Insulin Glargine On October 24, 2017, Sanofi and affiliated entities (collectively for the purposes of this section, “Sanofi”), sued Mylan GmbH and other Mylan entities in the U.S. District Court for the District of New Jersey asserting that Mylan GmbH’s new drug application for insulin glargine injection 100 Units/mL vials and prefilled injection pens (SEMGLEE ® vial and pens) infringed 18 U.S. patents. 2 of the 18 patents covered the insulin glargine formulation. Both of these patents have been held invalid and all appeals have concluded. These two patents were the only patents asserted against the SEMGLEE ® vial product. The 16 other asserted patents relate to a pen injection device (“device patents”) and were asserted only against the SEMGLEE ® pen injection device. Prior to trial, Sanofi dismissed 12 of those device patents from the case and granted the Company a covenant not to sue with respect to them. On June 17, 2019, following the District Court’s claim construction order, the District Court entered judgment of non-infringement with respect to the asserted claims of three of the four remaining device patents (U.S. Patent Numbers 8,603,044, 8,679,069, 8,992,486). Only one device patent remained for trial (U.S. Patent Number 9,526,844). On March 9, 2020, the District Court issued an opinion after trial finding all asserted claims of the ‘844 patent not infringed and invalid for lack of written description. On September 10, 2018, Mylan Pharmaceuticals Inc. (“MPI”) filed IPR petitions challenging five device patents (the ‘844, ‘044, ‘069, ‘486, and ‘008 patents). On April 2, 2020 and May 29, 2020, the PTAB issued final written decisions in the IPR proceedings finding all challenged claims unpatentable except for two claims of the ‘008 patent for which Sanofi granted the Company a covenant not to sue as described above. On appeal, the Federal Circuit affirmed the PTAB’s decisions finding the challenged patents unpatentable, including the ‘844 patent, and dismissed Sanofi’s appeal of the District Court decision as moot. On March 26, 2021, the PTAB issued a final written decision in an IPR proceeding in which MPI challenged an additional Sanofi device patent (U.S. Patent Number RE47,614) and found all challenged claims unpatentable. Sanofi’s appeal is pending. On June 11, 2020, the FDA approved the SEMGLEE ® vial and pen products, which MPI began selling on August 31, 2020. 146 Table of Contents Dimethyl Fumarate On June 30, 2017, Biogen MA Inc. and Biogen International GmbH (collectively, “Biogen”) sued MPI in the U.S. District Court for the Northern District of West Virginia asserting that MPI’s abbreviated new drug application for dimethyl fumarate delayed-release capsules containing 120 mg and 240 mg of dimethyl fumarate (generic for Tecfidera ® ) infringed six U.S. patents that Biogen had listed in the Orange Book: 6,509,376, 7,320,999, 7,619,001, 7,803,840, 8,759,393, and 8,399,514. All patents except for the ‘514 expired during the litigation and were dismissed from the case. After a trial involving only the ’514 patent on June 18, 2020, the District Court issued a judgment finding all claims of the ’514 patent invalid for lack of adequate written description. On appeal, the Federal Circuit affirmed the District Court’s judgment. Biogen has filed a petition for rehearing. On July 13, 2018, MPI filed an IPR petition challenging the ’514 patent based only on obviousness. On February 5, 2020, the PTAB issued a final written decision finding the claims not obvious. MPI’s appeal was denied as moot in light of the above-described Federal Circuit decision affirming the District Court’s invalidity judgment. On August 17, 2020, the FDA approved MPI’s dimethyl fumarate delayed-release capsules, which MPI began selling on August 18, 2020. Lyrica - United Kingdom Beginning in 2014, Pfizer was involved in patent litigation in the English courts concerning the validity of its Lyrica pain use patent. In 2015, the High Court of Justice in London ordered that the NHS England issue guidance for prescribers and pharmacists directing the prescription and dispensing of Lyrica by brand when pregabalin was prescribed for the treatment of neuropathic pain and entered a preliminary injunction against certain Sandoz group companies preventing the sale of Sandoz’s full label pregabalin product. Pfizer undertook to compensate certain generic companies and NHS entities for losses caused by these orders, which remained in effect until patent expiration in July 2017. In November 2018, the U.K. Supreme Court ruled that all the relevant claims directed to neuropathic pain were invalid. Dr. Reddy’s Laboratories filed a claim for monetary damages, interest, and costs in May 2020, followed by the Scottish Ministers and fourteen Scottish Health Boards (together, NHS Scotland) in July 2020. In September 2020, Teva, Sandoz, Ranbaxy, Actavis, and the Secretary of State for Health and Social Care, together with 32 other NHS entities (together, NHS England, Wales, Scotland and Northern Ireland) filed their claims. T he claims filed by Sandoz, Teva, Actavis, and Ranbaxy have been resolved. Lyrica - Canada In June 2014, Pharmascience Inc. (“PMS”) commenced an action against Pfizer Canada Inc., Warner-Lambert Company and Warner-Lambert Company LLC (the Pfizer Canada Defendants) seeking damages in connection with an earlier unsuccessful patent litigation brought by the Pfizer Canada Defendants involving pregabalin. PMS claimed lost profit damages from November 30, 2010, the date it received tentative regulatory approval for its pregabalin product, to February 13, 2013, the date Pfizer’s patent case against PMS was dismissed. The parties have resolved the matter. Other Litigation The Company is involved in various other legal proceedings including commercial, contractual, employment, or other similar matters that are considered normal to its business. The Company has approximately $ 8.4 million accrued related to these various other legal proceedings at December 31, 2021. 147 Table of Contents ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None.