What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-27 compared with 2022-02-28 · 422 added, 558 removed, 1642 unchanged (37% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 2 , 202 1 and 2 021

Consolidated Statements of Comprehensive (Loss) Earnings for the Years Ended December 31, 202 1 , 20 2 0 and 201 9

Consolidated Statements of Comprehensive Earnings (Loss) for the Years Ended December 31, 202 2 , 202 1 and 2 02 0

Consolidated Statements of Equity for the Years Ended December 31, 202 2 , 202 1 and 20 20

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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").

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive earnings (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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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.

The Company performed an interim and annual goodwill impairment test as of March 31, 2022 and April 1, 2022, respectively.

As of March 31, 2022 and April 1, 2022, the Company had $11.95 billion of consolidated goodwill, $4.95 billion and $0.78 billion of which was allocated to the Viatris Inc.

Europe and JANZ reporting units, respectively.

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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.

The fair values of the Europe and the JANZ reporting units exceeded their carrying values by approximately $0.8 billion, or 5.3%, and $0.23 billion, or 7.4%, respectively, as of March 31, 2022 and April 1, 2022 and, therefore, no impairments were recognized.

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.

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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 tested the effectiveness of controls over the review of the goodwill impairment tests, 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.

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• 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.

• 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.

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Prepaid expenses and other current assets 1,811.2 1,957.6

Assets held for sale 230.3 —

Total current assets 10,635.4 10,902.9

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Research and development 662.2 681.0 512.6

Acquired IPR&D 36.4 70.1 42.5

Selling, general and administrative 4,179.1 4,529.2 3,344.6

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Total operating expenses 4,882.1 5,609.5 4,007.5

(Loss) earnings from operations ( 34.0 ) ( 210.8 ) 715.5

Earnings (loss) from operations 1,614.9 ( 34.0 ) ( 210.8 )

Interest expense 592.4 636.2 497.8

Other (income) expense, net ( 1,790.7 ) ( 5.8 ) 12.6

(Loss) earnings before income taxes ( 664.4 ) ( 721.2 ) 154.4

Earnings (loss) before income taxes 2,813.2 ( 664.4 ) ( 721.2 )

Income tax provision (benefit) 734.6 604.7 ( 51.3 )

Net (loss) earnings ( 1,269.1 ) ( 669.9 ) 16.8

(Loss) earnings per share attributable to Viatris Inc.

Net earnings (loss) 2,078.6 ( 1,269.1 ) ( 669.9 )

Earnings (loss) per share attributable to Viatris Inc.

Basic $ 1.71 $ ( 1.05 ) $ ( 1.11 )

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AND SUBSIDIARIES

Consolidated Statements of Comprehensive (Loss) Earnings

Consolidated Statements of Comprehensive Earnings (Loss)

(In millions)

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2022 2021 2020

Net (loss) earnings $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8

Net earnings (loss) $ 2,078.6 $ ( 1,269.1 ) $ ( 669.9 )

Other comprehensive (loss) earnings, before tax:

Foreign currency translation adjustment ( 1,583.5 ) ( 1,340.9 ) 1,213.0

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

Change in unrecognized gain (loss) and prior service cost related to defined benefit plans 279.1 73.9 ( 14.0 )

Net unrecognized (loss) gain on derivatives in cash flow hedging relationships ( 36.9 ) 36.1 18.2

Net unrecognized gain (loss) on derivatives in net investment hedging relationships 460.1 456.8 ( 305.2 )

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Other comprehensive (loss) earnings, net of tax ( 1,016.9 ) ( 886.3 ) 939.2

Comprehensive (loss) earnings $ ( 2,155.4 ) $ 269.3 $ ( 335.5 )

Comprehensive earnings (loss) $ 1,061.7 $ ( 2,155.4 ) $ 269.3

See Notes to Consolidated Financial Statements

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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 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 )

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Share-based compensation expense — — 111.2 — — — — 111.2

Issuance of restricted stock and stock options exercised, net 2,611,819 — — — — — — —

Issuance of restricted stock, net 2,611,819 — — — — — — —

Taxes related to the net share settlement of equity awards — — ( 13.9 ) — — — — ( 13.9 )

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Balance at December 31, 2021 1,209,507,463 $ 12.1 $ 18,536.1 $ 3,688.8 — $ — $ ( 1,744.3 ) $ 20,492.7

Net earnings — $ — $ — $ 2,078.6 — $ — $ — $ 2,078.6

Other comprehensive loss, net of tax — — — — — — ( 1,016.9 ) ( 1,016.9 )

Share-based compensation expense — — 116.4 — — — — 116.4

Issuance of restricted stock, net 3,972,427 — 1.6 — — — — 1.6

Taxes related to the net share settlement of equity awards — — ( 11.6 ) — — — — ( 11.6 )

Issuance of common stock 313,341 — 3.3 — — — — 3.3

Cash dividends declared, $ 0.48 per common share

— — — ( 591.8 ) — — — ( 591.8 )

Balance at December 31, 2022 1,213,793,231 $ 12.1 $ 18,645.8 $ 5,175.6 — $ — $ ( 2,761.2 ) $ 21,072.3

__________________

(1) Ordinary Shares prior to November 16, 2020.

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Cash flows from operating activities:

Net (loss) earnings $ ( 1,269.1 ) $ ( 669.9 ) $ 16.8

Net earnings (loss) $ 2,078.6 $ ( 1,269.1 ) $ ( 669.9 )

Adjustments to reconcile net earnings to net cash provided by operating activities:

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Loss from equity method investments — 61.9 48.4

Gain on disposal of business ( 1,754.1 ) — —

Share-based compensation expense 116.4 111.2 79.2

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Proceeds from the sale of marketable securities 29.9 29.8 47.0

Net cash used in investing activities ( 117.8 ) ( 301.1 ) ( 525.4 )

Net cash provided by (used in) investing activities 1,520.5 ( 117.8 ) ( 301.1 )

Cash flows from financing activities:

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Non-contingent payments for product rights — ( 456.0 ) ( 143.3 )

Issuance of common stock 3.3 — —

Other items, net 18.6 ( 4.9 ) ( 3.3 )

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Effect on cash of changes in exchange rates ( 38.9 ) ( 30.9 ) 33.8

Net (decrease) increase in cash, cash equivalents and restricted cash ( 143.8 ) 358.8 101.8

Net increase (decrease) in cash, cash equivalents and restricted cash 556.3 ( 143.8 ) 358.8

Cash, cash equivalents and restricted cash — beginning of period 706.2 850.0 491.1

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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.

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, and complex generics, including biosimilars prior to the Biocon Biologics Transaction.

The Company operates approximately 40 manufacturing sites worldwide that produce oral solid doses, injectables, complex dosage forms and APIs.

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Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India.

Certain reclassifications were made to conform the prior period consolidated financial statements to the current period presentation.

Upfront and milestone-related charges in connection with collaboration and licensing arrangements made prior to regulatory approval of a development product that were previously presented in Research and Development are now presented in Acquired IPR&D in the consolidated statements of operations.

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.

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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.

Under ASC 830, Foreign Currency Matters (“ASC 830”), a highly inflationary economy is one that has cumulative inflation of approximately 100% or more over a three-year period.

Effective April 1, 2022, we classified Turkey as highly inflationary and began to utilize the U.S.

dollar as our functional currency in Turkey, which historically utilized the Turkish lira as the functional currency.

Application of the guidance in ASC 830 did not have a material impact on our consolidated financial statements for the year ended December 31, 2022.

The impacted net sales for the year ended December 31, 2022 and total assets at December 31, 2022 represented less than 1 % of our consolidated net sales and total assets, respectively.

Cash and Cash Equivalents.

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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.

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 (income) 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 (income) 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.

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 with readily determinable fair values are recorded at fair value with changes in fair value recorded in Other (income) 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.

The share of net income or losses of equity method investments are included in Other (income) 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.

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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.

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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.

Indefinite-lived intangibles, principally IPR&D, are tested at least annually for impairment or upon the occurrence of a triggering event.

Indefinite-lived intangible assets, principally IPR&D acquired as part of business combinations, 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.

Acquired IPR&D.

IPR&D assets acquired as part of an asset acquisition are expensed immediately if they have no alternative future uses and are recorded in Acquired IPR&D in the consolidated statements of operations.

Contingent Consideration.

Viatris records contingent consideration resulting from business acquisitions at its estimated fair value on the acquisition date.

Viatris records contingent consideration resulting from business acquisitions or divestitures 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.

Significant judgment is employed in determining the assumptions utilized as of the acquisition or divestiture 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.

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Any future long-lived assets impairment charges could have a material impact on the Company’s consolidated financial condition and results of operations.

Divestitures.

For businesses that are divested, the Company records the net gain or loss on the sale within Other (income) expense, net .

For divestitures of businesses, including divestitures of products that qualify as a business, the Company allocates the relative fair value of goodwill associated with the businesses in the determining the gain or loss on sale.

The Company records amounts received as part of TSAs within Other (income) expense, net .

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.

The Company also has the CP Notes, Receivables Facility and the Note Securitization Facility.

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.

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Such consideration is included in other revenues in the consolidated statements of operations.

Receivables, including deferred consideration, with terms in excess of one year are initially recorded at their net present value using discount rates reflecting the relative credit risk.

Research and Development.

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(In millions, except per share amounts) 2022 2021 2020

Basic (loss) earnings attributable to Viatris Inc.

Basic earnings (loss) attributable to Viatris Inc.

common shareholders (numerator):

Net (loss) earnings attributable to Viatris Inc.

Net earnings (loss) attributable to Viatris Inc.

common shareholders $ 2,078.6 $ ( 1,269.1 ) $ ( 669.9 )

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Weighted average shares outstanding 1,212.1 1,208.8 601.2

Basic (loss) earnings per share attributable to Viatris Inc.

Basic earnings (loss) per share attributable to Viatris Inc.

shareholders $ 1.71 $ ( 1.05 ) $ ( 1.11 )

Diluted (loss) earnings attributable to Viatris Inc.

Diluted earnings (loss) attributable to Viatris Inc.

common shareholders (numerator):

Net (loss) earnings attributable to Viatris Inc.

Net earnings (loss) attributable to Viatris Inc.

common shareholders $ 2,078.6 $ ( 1,269.1 ) $ ( 669.9 )

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Total dilutive shares outstanding 1,217.4 1,208.8 601.2

Diluted (loss) earnings per share attributable to Viatris Inc.

Diluted earnings (loss) per share attributable to Viatris Inc.

shareholders $ 1.71 $ ( 1.05 ) $ ( 1.11 )

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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 Company paid quarterly dividends of $ 0.12 per share on the Company’s issued and outstanding common stock on March 16, 2022, June 16, 2022, September 16, 2022 and December 16, 2022.

On February 24, 2023, 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 17, 2023 to shareholders of record as of the close of business on March 9, 2023.

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 May 6, 2022, the Company announced that its Board of Directors had authorized a DRIP.

The DRIP allows shareholders to automatically reinvest all or a portion of the cash dividends paid on their shares of the Company’s common stock and to make certain additional optional cash investments in the Company’s common stock.

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.

Such repurchases may be made from time-to-time at the Company’s discretion and effected by any means, including but not limited to, open market repurchases, pursuant to plans in accordance with Rules 10b5-1 or 10b-18 under the Exchange Act, privately negotiated transactions (including accelerated stock repurchase programs) or any combination of such methods as the Company deems appropriate.

The program does not have an expiration date.

During 2022, the Company did not repurchase any shares of common stock under the share repurchase program.

In January and February 2023, the Company repurchased approximately 21.2 million shares of common stock at a cost of approximately $ 250 million.

The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

Share-Based Compensation.

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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 .

When such instruments do not qualify for hedge accounting the changes in fair value are recorded in the consolidated statements of operations within Other (income) expense, net .

Financial Instruments.

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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.

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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.

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.

We adopted the ASU prospectively on January 1, 2022.

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.

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 for a limited period of time adds ASC 848 to provide 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.

On December 21, 2022, the FASB issued ASU 2022-06 to defer the sunset date of ASC 848 until December 31, 2024.

ASU 2022-06 became effective upon issuance.

Entities can apply the provisions of ASU 2020-04 immediately, as applicable, and generally the provisions of the guidance are available through December 31, 2024 as entities transition away from reference rates that are expected to be discontinued.

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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 ASU 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):

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.

In September 2022, the FASB issued Accounting Standards Update 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50), which requires entities to provide qualitative and quantitative disclosures about their supplier finance programs, including a rollforward of related obligations.

The ASU will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward requirement, which becomes effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements and disclosures.

Revenue Recognition and Accounts Receivable

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Total Viatris $ 8,510.9 $ 259.9 $ 1,195.3 $ 1,853.8 $ 11,819.9

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

(a) Amounts for the year ended December 31, 2022 include the unfavorable impact of foreign currency translations compared to the prior year period.

(b) Amounts for the year ended December 31, 2022 reflect a decrease of approximately $ 63.5 million related to the year over year impact of the sale of the biosimilars business in November 2022.

The Company has not recognized the results of the biosimilars business in its consolidated financial statements subsequent to November 29, 2022.

The following table presents net sales on a consolidated basis for select key products for the years ended December 31, 2022 and 2021, respectively:

Year Ended December 31,

(In millions) 2022 2021

Select Key Global Products

$ 1,635.2 $ 1,663.2

Norvasc ® 775.1 824.7

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Influvac ® $ 225.5 $ 299.3

Yupelri ® 202.1 161.9

Dymista ® 179.8 168.0

Amitiza ® 167.9 201.5

Xanax ® 156.5 185.9

Dymista ® 168.0

Yupelri ® 161.9

(a) The Company does not disclose net sales for any products considered competitively sensitive.

(b) Products disclosed may change in future periods, including as a result of seasonality, competition or new product launches.

(c) Amounts for the year ended December 31, 2022 include the unfavorable impact of foreign currency translations compared to the prior year period.

(d) Amounts for the year ended December 31, 2020 are not presented due to the significance of products acquired as part of the Combination.

Variable Consideration and Accounts Receivable

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The following is a rollforward of the categories of variable consideration during 2022:

(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

(In millions) Balance at December 31, 2021 Current Provision Related to Sales Made in the Current Period Balances Divested Checks/ Credits Issued to Third Parties Effects of Foreign Exchange Balance at December 31, 2022

Chargebacks $ 591.7 $ 6,192.2 $ ( 53.4 ) $ ( 6,205.6 ) $ ( 1.5 ) $ 523.4

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Historically, we have not recorded in any current period any material amounts related to adjustments made to prior period reserves.

Accounts receivable, net was comprised of the following at December 31, 2021 and December 31, 2020, respectively:

Accounts receivable, net was comprised of the following at December 31, 2022 and 2021, respectively:

(In millions) December 31, 2022 December 31, 2021

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Acquisitions and Other Transactions

Oyster Point Acquisition

During the first quarter of 2023, the Company completed the acquisition of Oyster Point for approximately $ 425 million in cash, which includes $ 11 per share paid to Oyster Point stockholders through a tender offer and the repayment of the principal amount of certain debt of Oyster Point.

In addition to the upfront cash consideration, each Oyster Point stockholder received one non-tradeable contingent value right representing up to an additional $ 2 per share, or approximately $ 60 million in the aggregate, contingent upon Oyster Point achieving certain metrics based upon full year 2022 performance, which are expected to be determined by the end of the first quarter of 2023.

Oyster Point is a commercial-stage biopharmaceutical company focused on the discovery, development, and commercialization of first-in-class pharmaceutical therapies to treat ophthalmic diseases.

The Company expects to account for this transaction as a business combination.

The accounting impact of this acquisition and the results of the operations for Oyster Point will be included in our consolidated financial statements beginning in the first quarter of 2023.

Due to the proximity of the closing date of this acquisition to the date of this filing, the initial accounting for this acquisition is incomplete, pending identification and measurement of the assets acquired and liabilities assumed.

Famy Life Sciences Acquisition

On November 7, 2022, the Company entered into a definitive agreement to acquire the remaining equity shares of Famy Life Sciences, a private-owned research company with a complementary portfolio of ophthalmology therapies under development, for a consideration of $ 281 million.

The Company had previously entered into a Master Development Agreement with Famy Life Sciences on December 20, 2019 to grant the Company rights with respect to acquiring certain pharmaceutical products and had additionally acquired shares representing approximately 13.5 % equity interest in Famy Life Sciences for $ 25.0 million during the year ended December 31, 2020.

The investment was accounted for in accordance with ASC 321, Investments - Equity Securities .

The transaction to acquire the remaining equity shares of Famy Life Sciences closed during the first quarter of 2023.

The Company expects to recognize a gain of $ 18.9 million during the first quarter of 2023 as a result of remeasuring its pre-existing 13.5 % equity interest in Famy Life Sciences to fair value, which will be recognized as a component of Other (income) expense, net in the consolidated statements of operations.

The Company expects to account for this transaction as a business combination.

The accounting impact of this acquisition and the results of the operations for Famy Life Sciences will be included in our consolidated financial statements beginning in the first quarter of 2023.

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 Upjohn Business was a global, primarily off-patent branded and generic established medicines business, which includes 20 primarily off-patent oral solid dose legacy brands, such as Lyrica®, Lipitor®, Celebrex® and Viagra®.

The Combination was completed on November 16, 2020.

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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.

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 was included in cost of sales in the consolidated statements of operations.

The inventory step-up was fully amortized during 2021.

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Earnings per share:

Basic $ 1.23 $ 1.55

Diluted $ 1.23

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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.

Biocon Biologics Transaction

On February 27, 2022, Viatris entered into a definitive agreement with Biocon Biologics to contribute its biosimilars portfolio to Biocon Biologics.

The transaction subsequently closed on November 29, 2022, creating what Viatris expects to be a unique fully vertically integrated global biosimilars leader.

Under the terms of the Biocon Agreement, Viatris received $ 3 billion in consideration in the form of a $ 2 billion cash payment, adjusted as set forth in the Biocon Agreement, and approximately $ 1 billion of CCPS representing a stake of approximately 12.9 % (on a fully diluted basis) in Biocon Biologics.

Viatris also is entitled to $ 335 million of additional cash payments in 2024.

In addition, Viatris and Biocon Biologics have agreed to a closing working capital target of $ 250 million.

An amount of cash equal to all or a portion of the closing working capital target may become payable to Biocon Biologics in connection with certain events in the future, depending on the valuations attributable to such events.

Refer to Note 6 Balance Sheet Components for additional information on assets and liabilities related to Biocon Biologics.

Viatris and Biocon Biologics also entered an agreement pursuant to which Viatris is providing commercialization and certain other transition services on behalf of Biocon Biologics, including billings, collections and the remittance of rebates, to ensure business continuity for patients, customers and colleagues.

The term of the transition services agreement is generally up to two years .

Under the transition services agreement, Viatris is entitled to be reimbursed for its costs (subject to certain caps) plus a markup.

Upon closing, the Company recognized a gain on sale of approximately $ 1.75 billion for the difference between the consideration received, including the fair value of the CCPS, and the carrying value of the biosimilars portfolio (including an allocation of goodwill).

The gain was recognized as a component of Other (income) expense, net in the consolidated statement of operations during the year ended December 31, 2022.

The Company has not recognized the results of the business in its consolidated financial statements subsequent to November 29, 2022.

For the period from January 1, 2022 to November 29, 2022, total revenues relating to the biosimilars portfolio which was subsequently contributed to Biocon Biologics were approximately $ 611.5 million.

The Company’s CCPS in Biocon Biologics are classified as equity securities and are included in Other assets in the consolidated balance sheet as of December 31, 2022.

Refer to Note 10 Financial Instruments and Risk Management for further discussion.

The Company had previously entered into an exclusive collaboration with Biocon on the development, manufacturing, supply and commercialization of multiple, high value biosimilar compounds and three insulin analog products for the global marketplace.

The collaboration was terminated upon closing of the Biocon Biologics Transaction.

Other Potential Divestitures

In November 2022, the Company provided an update on the strategic priorities announced in February 2022, including identifying the following businesses no longer considered core to its future strategy that the Company intends to divest:

• API (while retaining some selective development API capabilities);

• Women’s health care, primarily related to our oral and injectable contraceptives.

This does not include all of our women’s health care related products;

as an example, our Xulane® product in the U.S.

• Upjohn Distributor Markets.

In the fourth quarter of 2022, we determined that our Upjohn Distributor Markets should be classified as held for sale in the December 31, 2022 consolidated balance sheet.

Upon classification as held for sale, we recognized a total charge of $ 374.2 million.

This was comprised of a goodwill impairment charge of $ 117.0 million, other charges, principally inventory write-offs, of $ 84.3 million and a charge of approximately $ 172.9 million to write down the disposal group to fair value, less cost to sell.

Assets held for sale associated with the Upjohn Distributor Markets consisted of intangible assets of $ 230.3 million as of December 31, 2022.

If these transactions are not completed during 2023, the distribution arrangements will expire and the Company will wind down operations in these markets, which may result in additional asset write-offs and other costs being incurred.

These additional charges could be in excess of $ 300 million.

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.

Balance Sheet Components

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(In millions) December 31, 2022 December 31, 2021

Equity method investments, clean energy investments $ — $ 47.9

CCPS in Biocon Biologics $ 997.4 $ —

Operating lease right-of-use assets 259.3 290.8

Non-marketable equity investments 94.0 81.4

Deferred consideration due from Biocon Biologics 299.5 —

Other long-term assets 753.3 798.5

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Accrued restructuring 95.3 233.5

Equity method investments, clean energy investments 10.9 47.5

Accrued interest 80.2 86.6

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Operating lease liability 80.6 86.7

Due to Biocon Biologics 22.5 —

Other 978.1 1,265.5

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Other long-term obligations $ 1,756.5 $ 1,933.6

(1) Includes a total of $ 221.2 million due to Biocon Biologics.

Refer to Note 10 Financial Instruments and Risk Management for additional information.

The Company has operating leases of real estate, consisting primarily of administrative offices, manufacturing and distribution facilities, and R&D facilities.

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Total lease liability $ 262.0

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.

As of December 31, 2022, the Company did not have any significant leases that have not yet commenced.

For the years ended December 31, 2022, 2021 and 2020, the Company had operating lease expense of approximately $ 90.9 million, $ 97.6 million and $ 80.7 million, respectively.

Operating lease costs are classified primarily as selling, general and administrative expenses and cost of sales in the consolidated statements of operations.

Operating lease costs are classified primarily as SG&A and cost of sales in the consolidated statements of operations.

Equity Method Investments

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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.

The law that provided for IRC Section 45 tax credits expired during the year ended December 31, 2021for all three clean energy investments and all of the clean energy investments have wound down operations.

During the years ended December 31, 2021 and 2020, 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.

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

The Company recognized a net gain of approximately $ 5.7 million and $ 21.4 million, respectively, which was recognized as a component of Other (income) expense, net in the consolidated statements of operations.

The carrying values and respective balance sheet location of the Company’s clean energy investments were as follows at December 31, 2021:

(In millions) December 31, 2021

Other current liabilities 10.9

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

Summarized financial information, in the aggregate, for the Company’s three equity method, clean energy investments on a 100% basis as of December 31, 2021 and for the years ended December 31, 2021 and 2020 are as follows:

(In millions) December 31, 2021

Current assets $ 4.2

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Current liabilities 2.8

Noncurrent liabilities — 1.8

Total liabilities 2.8

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Net loss $ ( 21.4 ) $ ( 23.6 )

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.

Goodwill and Other Intangible Assets

The Company’s net losses from its equity method investments included 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 and 2020, the Company recognized net losses from equity method investments of $ 61.9 million, and $ 48.4 million, respectively, which were recognized as a component of Other (income) expense, net in the consolidated statements of operations.

The Company recognized the income tax credits and benefits from the clean energy investments as part of its provision for income taxes.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 are as follows:

(In millions) Developed Markets Greater China JANZ Emerging Markets Total

(In millions) Developed Markets (1)

Greater China JANZ Emerging Markets (2)

Balance at December 31, 2020:

Goodwill $ 8,258.0 $ 67.8 $ 584.8 $ 1,065.0 $ 9,975.6

Accumulated impairment losses ( 385.0 ) — — — ( 385.0 )

$ 9,184.5 $ 738.3 $ 864.0 $ 1,560.2 $ 12,347.0

Acquisitions 704.3 652.8 217.4 533.0 2,107.5

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 )

9,184.5 738.3 864.0 1,560.2 12,347.0

Balance at December 31, 2021:

Goodwill 9,569.5 738.3 864.0 1,560.2 12,732.0

Accumulated impairment losses ( 385.0 ) — — — ( 385.0 )

$ 8,723.4 $ 969.5 $ 776.3 $ 1,644.5 $ 12,113.7

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 )

Disposition (3)

( 743.9 ) ( 2.7 ) ( 32.6 ) ( 140.5 ) ( 919.7 )

Impairment — — — ( 117.0 ) ( 117.0 )

Foreign currency translation ( 518.0 ) ( 26.2 ) ( 54.7 ) ( 52.3 ) ( 651.2 )

Balance at December 31, 2022 $ 7,461.5 $ 940.6 $ 689.0 $ 1,334.7 $ 10,425.8

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

(1) Balances as of December 31, 2022, 2021 and 2020 include accumulated impairment losses of $ 385.0 million.

(2) Balance as of December 31, 2022 includes accumulated impairment loss of $ 117.0 million.

(3) Reflects goodwill relating to the biosimilars portfolio.

Refer to Note 5 Divestitures for additional information.

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

As a result of the Biocon Biologics Transaction (refer to Note 5 Divestitures for additional information) and the decline in the Company’s share price during the first quarter of 2022, the Company performed an interim goodwill impairment test as of March 31, 2022.

The Company performed the annual goodwill impairment test as of April 1, 2022.

There were no significant changes from the interim goodwill test performed at March 31, 2022 and the results were consistent with the interim goodwill impairment test.

The Company performed both its interim and annual goodwill impairment tests on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China.

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 March 31, 2022 and April 1, 2022, the allocation of the Company’s total goodwill (prior to the reclassification of goodwill to assets held for sale) was as follows:

North America $ 3.61 billion, Europe $ 4.95 billion, Emerging Markets $ 1.64 billion, JANZ $ 0.78 billion and Greater China $ 0.97 billion.

As of March 31, 2022 and April 1, 2022, the Company determined that the fair value of the North America 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 $ 797 million or 5.3 % for both the interim and annual goodwill impairment tests.

As it relates to the income approach for the Europe reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately 0.5 %.

A terminal year value was calculated with a negative 1.0 % revenue growth rate applied.

The discount rate utilized was 9.5 % and the estimated tax rate was 15.3 %.

Under the market-based approach, we utilized an estimated range of market multiples of 7.5 to 8.0 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 3.0 % 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 $ 231 million or 7.4 % for both the interim and annual goodwill impairment tests.

As it relates to the income approach for the JANZ reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately negative 4.8 %.

A terminal year value was calculated assuming no revenue growth rate.

The discount rate utilized was 6.0 % and the estimated tax rate was 30.4 %.

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 3.5 % or an increase in discount rate by 2.0 % would result in an impairment charge for the JANZ reporting unit.

For the Emerging Markets reporting unit, the estimated fair value exceeded its carrying value by approximately $ 816 million or 10.3 % for both the interim and annual goodwill impairment tests.

As it relates to the income approach for the Emerging Markets reporting unit at March 31, 2022 and April 1, 2022, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately 1.6 %.

A terminal year value was calculated with a 0.8 % revenue growth rate applied.

The discount rate utilized was 10.5 % and the estimated tax rate was 18.4 %.

Under the market-based approach, we utilized an estimated market multiple of 7.5 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 approximately 8.5 % or an increase in discount rate by 3.0 % would result in an impairment charge for the Emerging Markets reporting unit.

Subsequent to the completion of the interim goodwill impairment test and in conjunction with the Biocon Biologics Transaction, the Company allocated goodwill to its biosimilars portfolio using a relative fair value approach and reclassified the amount to assets held for sale.

Upon closing of the Biocon Biologics Transaction on November 29, 2022, we derecognized goodwill of $ 919.7 million allocated to the biosimilars portfolio.

In the fourth quarter of 2022, we determined that our Upjohn Distributor Markets should be classified as held for sale in the December 31, 2022 consolidated balance sheet.

The Company allocated goodwill to its Upjohn Distributor Markets using a relative fair value approach and recorded a goodwill impairment charge of $ 117.0 million within the Emerging Markets reporting unit, which was recorded within SG&A in the consolidated statement of operations.

The goodwill impairment charge was the result of the estimated proceeds less selling costs from the disposal of the Upjohn Distributor Markets being below the carrying value of the net assets of the disposal group.

Refer to Note 5 Divestitures for additional information.

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 Assets, Net

Intangible assets consist of the following components at December 31, 2022 and 2021:

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Total Product Rights and Licenses $ 14,313.6 $ 6,115.0 $ 1,495.8 $ 4,160.1 $ 26,084.5

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:

Amortization expense and intangible asset disposal & impairment charges, which are included as a component of amortization expense, are classified primarily within cost of sales in the consolidated statements of operations, and were as follows for the years ended December 31, 2022, 2021 and 2020:

Year ended December 31,

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IPR&D intangible asset impairment charges 0.6 19.4 37.4

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

Finite-lived intangible asset disposal & impairment charges 172.9 83.4 45.0

Total intangible asset amortization expense (including disposal & impairment charges) $ 2,678.1 $ 2,805.0 $ 1,688.2

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.

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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.

A discount rate of 9.0 % was utilized in the valuations performed during the years ended December 31, 2021 and 2020.

Any future long-lived assets impairment charges could have a material impact in the Company’s consolidated financial condition and results of operations.

In the fourth quarter of 2022, the Company recognized an intangible asset charge of approximately $ 172.9 million, which was recorded within Cost of Sales in the consolidated statement of operations, to write down the disposal group to fair value, less cost to sell, related to our Upjohn Distributor Markets, which was classified as held for sale.

The Company has approximately $ 230.3 million of intangible assets related to the Upjohn Distributor Markets that have been classified as held for sale in the December 31,2022 consolidated balance sheet.

Refer to Note 5 Divestitures for additional information.

On April 30, 2021, the Company completed an agreement to divest a group of OTC products in the U.S.

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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.

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.

A discount rate of 10.5 % was utilized in the valuations performed during the year ended December 31, 2022.

Discount rates ranging between 7.0 % and 9.0 %, and 9.0 % and 11.0 % were utilized in the valuations performed during the years ended December 31, 2021 and 2020, respectively.

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 10, 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.

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, 2023 through 2027 is estimated to be as follows:

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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.

23 unchanged sentences

1,250.0 1,250.0 1,250.0

Foreign currency forward contracts 105.6 — 105.6

Euro Total € 5,850.0 € 5,100.0 € 5,850.0

1 unchanged sentence

Yen Total ¥ 40,000.0 ¥ 40,000.0 ¥ 40,000.0

(1) The Senior Notes were repaid at maturity during the second quarter of 2022.

At December 31, 2022, the principal amount of the Company’s outstanding Yen borrowings and the notional amount of the Yen borrowings designated as net investment hedge was $ 305.1 million.

16 unchanged sentences

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.

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.

20 unchanged sentences

Derivative Financial Instruments in Cash Flow Hedging Relationships :

Foreign currency forward contracts Other expense, net (5)

Foreign currency forward contracts Other (income) expense, net (4)

— — — — — 7.1

Derivative Financial Instruments Not Designated as Hedging Instruments:

Foreign currency option and forward contracts Other expense, net (3)

Foreign currency option and forward contracts Other (income) expense, net (3)

( 82.1 ) 39.3 ( 10.1 ) — — —

8 unchanged sentences

( 3.5 ) ( 3.4 ) — ( 4.5 ) ( 4.3 ) ( 4.5 )

Derivative Financial Instruments in Net Investment Hedging Relationships:

Foreign currency borrowings and forward contracts 436.6 ( 346.4 ) 56.7 — — —

Non-derivative Financial Instruments in Net Investment Hedging Relationships:

Foreign currency borrowings 360.1 436.6 ( 346.4 ) — — —

Total $ 390.8 $ 479.0 $ ( 325.8 ) $ 84.7 $ 26.6 $ 0.3

1 unchanged sentence

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.

(2) At December 31, 2022, the Company expects that approximately $ 8.0 million of pre-tax net losses 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.

(4) Represents the location of the gain excluded from the assessment of hedge effectiveness.

(5) Represents the location of the gain/(loss) reclassified from AOCE into earnings.

Fair Value Measurement

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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

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

December 31, 2020

(In millions) Level 1 Level 2 Level 3 Total

December 31, 2022 December 31, 2021

(In millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Recurring fair value measurements

7 unchanged sentences

Total equity securities 42.6 — — 51.0 — —

CCPS in Biocon Biologics — — 997.4 — — —

Available-for-sale fixed income investments:

16 unchanged sentences

• 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.

Unrealized gains and losses attributable to changes in fair value are included in Other (income) 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.

Unrealized gains and losses attributable to changes in fair value are included in Other (income) expense, net , in the consolidated statements of operations.

• CCPS in Biocon Biologics — valued using a Monte Carlo simulation model using Level 3 inputs.

The fair value of the CCPS is sensitive to changes in the forecasts of operating metrics and changes in volatility and discount rates.

The Company elected the fair value option for the CCPS under ASC 825.

The fair value is reassessed quarterly and any change in the fair value estimate is recorded in Other (income) expense, net , in the consolidated statements of operations for that period.

• 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.

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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.

As of December 31, 2022, the Company has a contingent consideration liability of $ 132.0 million related to the Respiratory Delivery Platform and $ 221.2 million related to the Biocon Biologics Transaction.

The contingent consideration liability related to the Biocon Biologics Transaction represents the amount of the closing working capital target to which the parties have agreed that may become payable to Biocon Biologics in connection with certain events in the future, depending on the valuations attributable to such events.

The measurement of these contingent consideration liabilities is calculated using unobservable Level 3 inputs based on the Company’s own assumptions primarily related to the probability and timing of future events and payments which are discounted using a market rate of return.

At December 31, 2022 and 2021, discount rates ranging from 6.4 % to 9.0 % were utilized in the valuations.

Significant changes in unobservable inputs could result in material changes to the contingent consideration liability.

Significant changes in unobservable inputs could result in material changes to the contingent consideration liabilities.

A rollforward of the activity in the Company’s fair value of contingent consideration from December 31, 2020 to December 31, 2022 is as follows:

7 unchanged sentences

Fair value loss (3)

33.8 39.3 73.1

Balance at December 31, 2021 $ 66.7 $ 133.0 $ 199.7

Payments ( 64.1 ) — ( 64.1 )

Biocon Biologics Transaction — 220.0 220.0

Reclassifications 61.8 ( 61.8 ) —

5 unchanged sentences

(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.

Although the Company has not elected the fair value option for financial assets and liabilities other than the CCPS, any future transacted financial asset or liability will be evaluated for the fair value election.

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

The amortized cost and estimated fair value of available-for-sale securities were as follows:

(In millions) Balance Sheet Location Cost Gross

December 31, 2022

Debt securities $ 38.1 $ 0.1 $ — $ 38.2

Available-for-sale fixed income investments Prepaid expenses and other current assets $ 38.0 $ — $ ( 2.7 ) $ 35.3

$ 38.0 $ — $ ( 2.7 ) $ 35.3

December 31, 2021

Debt securities $ 37.5 $ 1.6 $ — $ 39.1

Available-for-sale fixed income investments Prepaid expenses and other current assets $ 38.1 $ 0.1 $ — $ 38.2

$ 38.1 $ 0.1 $ — $ 38.2

Maturities of available-for-sale debt securities at fair value as of December 31, 2021, were as follows:

Maturities of available-for-sale fixed income investments at fair value as of December 31, 2022, were as follows:

(In millions)

3 unchanged sentences

Short-Term Borrowings

The Company had $ 1.49 billion and $ 1.10 billion of borrowings as of December 31, 2021 and 2020, respectively.

The Company did not have any short-term borrowings as of December 31, 2022 and had $ 1.49 billion of short-term borrowings as of December 31, 2021.

(In millions) December 31, 2022 December 31, 2021

1 unchanged sentence

Receivables Facility — 318.5

Note Securitization Facility — 200.0

Other 1.1 1.2

Short-term borrowings $ — $ 1,493.0

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.

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.

The Company has a $ 400 million Receivables Facility which expires in April 2025 and a $ 200 million Note Securitization Facility which expires in August 2023.

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.

Borrowings outstanding under the Receivables Facility bear interest at the applicable base rate plus 0.775 % and under the Note Securitization Facility at the relevant base rate 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, 2022.

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.

As of December 31, 2022 and 2021, the Company had $ 474.9 million and $ 388.9 million, respectively, of accounts receivable balances sold to its subsidiary Mylan Securitization under the Receivables Facility.

Long-Term Debt

3 unchanged sentences

Current portion of long-term debt:

2021 Senior Notes (a) **

2022 Euro Senior Notes (a) ****

0.816 % — 856.6

2022 Euro Senior Notes ****

2022 Senior Notes (b) ***

1.125 % — 1,002.9

2022 Senior Notes ***

2023 Senior Notes (c) *

3.125 % 750.6 —

2023 Senior Notes * 4.200 % 499.8 —

Other 0.7 0.9

2 unchanged sentences

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) *

2023 Senior Notes (c) *

3.125 % — 766.1

2023 Senior Notes * 4.200 % — 499.6

4.200 % 499.6 499.3

2024 Euro Senior Notes ** 2.250 % 1,069.8 1,135.8

2.250 % 1,135.8 1,219.9

2024 Euro Senior Notes **** 1.023 % 813.5 871.6

1.023 % 871.6 944.6

2025 Euro Senior Notes * 2.125 % 534.8 567.8

2.125 % 567.8 609.9

2025 Senior Notes *** 1.650 % 759.6 763.4

1.650 % 763.4 767.1

2026 Senior Notes ** 3.950 % 2,243.2 2,241.4

3.950 % 2,241.4 2,239.7

2027 Euro Senior Notes **** 1.362 % 945.9 1,013.0

1.362 % 1,013.0 1,097.4

2027 Senior Notes *** 2.300 % 775.3 780.8

2.300 % 780.8 786.1

2028 Euro Senior Notes ** 3.125 % 798.5 847.4

3.125 % 847.4 909.7

2028 Senior Notes * 4.550 % 748.9 748.7

4.550 % 748.7 748.6

2030 Senior Notes *** 2.700 % 1,512.8 1,520.5

2.700 % 1,520.5 1,528.0

2032 Euro Senior Notes **** 1.908 % 1,444.4 1,546.6

1.908 % 1,546.6 1,672.6

2040 Senior Notes *** 3.850 % 1,650.6 1,657.1

3.850 % 1,657.1 1,663.3

2043 Senior Notes * 5.400 % 497.4 497.3

5.400 % 497.3 497.3

2046 Senior Notes ** 5.250 % 999.9 999.9

5.250 % 999.9 999.9

2048 Senior Notes * 5.200 % 747.8 747.8

5.200 % 747.8 747.7

2050 Senior Notes *** 4.000 % 2,200.8 2,205.1

4.000 % 2,205.1 2,209.3

USD Term Loan Facility — 600.0

YEN Term Loan Facility 347.6 —

YEN Term Loan Facility Variable 305.1 347.6

Other 2.0 1.9

1 unchanged sentence

Long-term debt $ 18,015.2 $ 19,717.1

(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.

(a) The 2022 Euro Senior Notes were repaid at maturity in the second quarter of 2022.

(b) The 2022 Senior Notes were repaid at maturity in the second quarter of 2022.

(c) 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.

7 unchanged sentences

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.

Dollar Notes and € 3.60 billion aggregate principal amount of the Upjohn Euro Notes, respectively.

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.

Dollar Notes were issued pursuant to an indenture dated June 22, 2020 in a private offering exempt from the registration requirements of the Securities.

In October 2021, substantially all of the then-outstanding $ 7.45 billion aggregate principal amount of Unregistered Upjohn U.S.

Dollar Notes were exchanged for Registered Upjohn Notes registered under the Securities Act in the same aggregate principal amount and with terms substantially identical in all material respects with the corresponding series of Unregistered Upjohn U.S.

Dollar Notes.

The Upjohn Euro Notes were issued pursuant to an indenture dated June 23, 2020 in a private offering exempt from the registration requirements of the Securities Act.

Viatris and Upjohn Finance B.V.

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.

14 unchanged sentences

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.

YEN Term Loan Facility and 2021 Revolving Facility

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.

The YEN Term Loan Facility and the 2021 Revolving Facility will mature in July 2026 and contain customary affirmative covenants for facilities of this type, including 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 a financial covenant, which set the Maximum Leverage Ratio as of the end of any quarter 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, and other 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.

Up to $ 1.65 billion of the 2021 Revolving Facility will be available to repay outstanding borrowings under our Commercial Paper Program if necessary.

At December 31, 2022 and 2021, the aggregate fair value of the Company’s outstanding notes was approximately $ 15.36 billion and $ 22.01 billion, respectively.

8 unchanged sentences

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 )

Net unrealized (loss) on marketable securities, net of tax $ ( 2.3 ) $ —

Net unrecognized gain and prior service cost related to defined benefit plans, net of tax 268.5 32.2

Net unrecognized (loss)/gain on derivatives in cash flow hedging relationships, net of tax ( 18.5 ) 9.2

Net unrecognized gain on derivatives in net investment hedging relationships, net of tax 377.0 16.7

Foreign currency translation adjustment ( 3,385.9 ) ( 1,802.4 )

18 unchanged sentences

Balance at December 31, 2020, net of tax $ ( 18.0 ) $ ( 353.6 ) $ 1.2 $ ( 26.1 ) $ ( 461.5 ) $ ( 858.0 )

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:

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 )

2 unchanged sentences

Amortization of actuarial loss included in SG&A 7.4 7.4

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 )

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 )

3 unchanged sentences

Balance at December 31, 2019, net of tax $ ( 31.6 ) $ ( 74.3 ) $ 0.6 $ ( 17.4 ) $ ( 1,674.5 ) $ ( 1,797.2 )

Other comprehensive earnings (loss) before reclassifications, before tax 29.3 59.6 0.5 ( 21.0 ) ( 415.5 ) ( 347.1 )

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:

Loss on foreign exchange forward contracts classified as cash flow hedges, included in net sales 0.7 0.7 0.7

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

1 unchanged sentence

Amortization of actuarial loss included in SG&A ( 1.9 ) ( 1.9 )

Net other comprehensive earnings (loss), before tax 37.1 59.6 0.5 ( 24.8 ) ( 415.5 ) ( 343.1 )

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 )

Cumulative effect of the adoption of new accounting standards ( 3.4 ) — — ( 0.2 ) — ( 3.6 )

Balance at December 31, 2020, net of tax $ ( 18.0 ) $ ( 353.6 ) $ 1.2 $ ( 26.1 ) $ ( 461.5 ) $ ( 858.0 )

15 unchanged sentences

Foreign - Other 2,018.4 1,318.1 224.3

Total (loss) earnings before income taxes $ ( 664.4 ) $ ( 721.2 ) $ 154.4

Total earnings (loss) before income taxes $ 2,813.2 $ ( 664.4 ) $ ( 721.2 )

For all periods presented, the allocation of earnings before income taxes between U.S.

27 unchanged sentences

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.

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.

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:

Our effective tax rate from continuing operations differs from the applicable United States statutory federal income tax rate of 21.0 %, due to the following:

Year Ended December 31,

1 unchanged sentence

Statutory tax rate 21.0 % 21.0 % 21.0 %

United States Operations

Clean energy and research credits — % 9.8 % 12.8 %

rate differentials — % — % ( 3.1 ) %

Impact of changes in legislation — % ( 9.2 ) % — %

Foreign rate differential ( 3.6 ) % 31.4 % 8.6 %

Expiration of attributes 9.8 % — % — %

Goodwill impairment 6.5 % — % — %

State income taxes and credits 1.3 % ( 0.6 ) % ( 1.6 ) %

Valuation allowance ( 0.1 ) % 8.6 % ( 118.5 ) %

Tax settlements and resolution of certain tax positions 1.0 % 0.9 % ( 3.8 ) %

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 ( 6.7 ) % ( 109.7 ) % ( 35.5 ) %

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 %

Incremental U.S.

tax on foreign earnings 2.0 % ( 36.9 ) % ( 3.6 ) %

Valuation allowance ( 13.6 ) % ( 8.4 ) % 24.6 %

Impact of the Combination and divestitures ( 106.9 ) % ( 42.2 ) % — %

Deferred tax impact of tax law changes 5.4 % 7.0 % — %

Withholding taxes 1.5 % ( 1.3 ) % ( 1.6 ) %

Tax settlements and resolution of certain tax positions 0.8 % ( 3.9 ) % ( 27.6 ) %

Other foreign items 1.9 % ( 1.8 ) % 2.1 %

Waived deductions under IRC § 59A — % — % ( 3.3 ) %

Other items 1.5 % ( 4.2 ) % ( 10.5 ) %

Effective tax rate 26.1 % ( 91.0 ) % 7.1 %

1 unchanged sentence

Subsequent to the Combination, the Company realizes benefits from lower tax rates in Singapore and Puerto Rico due to manufacturing and other incentives.

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.

Prior to the Combination, Mylan was a U.K.

tax resident, with its Corporate seat in the Netherlands.

As of the date of the Combination, Viatris is domiciled in the U.S., and the applicable income tax rate to Viatris is the U.S.

statutory federal income tax rate of 21.0 %.

The effective tax rate reconciliations of the years ended December 31, 2021 and December 31, 2020 have been recast to reflect this change.

During the year ended December 31, 2022, a Puerto Rico net operating loss, which was recorded in conjunction with the Combination, expired unutilized resulting in a $ 274.4 million write-off of deferred tax asset and corresponding valuation allowance.

The expiration and valuation allowance impacts are reflected in the above table.

Valuation Allowance

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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.

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

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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.

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In Australia, the tax authorities have issued notices of assessments to the Company for the years ended December 2009 to December 2020, 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.

The tax authorities denied our objections to the assessments for the years ended December 2009 to December 2020 and we have commenced litigation in the Australian Federal Court challenging those decisions.

The Company made a partial payment of $ 56.0 million in 2021 and $ 5.2 million in 2022 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 2015 concerning our tax position with respect to whether income earned by a Company entity not domiciled in France should be subject to French tax.

We have commenced litigation before the French tax courts where the tax authorities will seek unpaid taxes, penalties, and interest.

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.

The Company has recorded a net reserve for uncertain tax positions of $ 298.1 million and $ 315.6 million, including interest and penalties, in connection with its international audits at December 31, 2022 and 2021, respectively.

In connection with our international tax audits, it is possible that we will incur material losses above the amounts reserved.

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Related accrued interest and penalties included in the consolidated balance sheets were $ 106.4 million and $ 96.8 million as of December 31, 2022 and 2021, 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.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 21.1 million of tax expense, $ 18.5 million of tax expense, and $ 6.0 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.

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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.

Prior to the Distribution, Viatris adopted and Pfizer, in the capacity as Viatris’ sole stockholder at such time, approved the 2020 Incentive Plan (the Viatris Inc.

2020 Stock Incentive Plan ) which became effective as of the Distribution.

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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:

The 2020 Incentive Plan and 2003 LTIP include (i) 72,500,000 shares of Common Stock authorized for grant pursuant to the 2020 Incentive 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 2020 Incentive 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:

The following table summarizes stock awards (stock options and SARs) activity under the 2020 Incentive Plan and 2003 LTIP:

Number of Shares

Under Stock Awards Weighted

Under Stock Awards Weighted Average

Exercise Price

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Outstanding at December 31, 2020 6,711,731 $ 35.36

Granted 814,351 17.37

Exercised ( 27,615 ) 21.13

Forfeited ( 1,135,241 ) 26.39

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Also, at December 31, 2022, 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:

A rollforward of the changes in the Company’s nonvested Restricted Stock Awards (restricted stock and restricted stock unit awards, including PSUs) from December 31, 2021 to December 31, 2022 is presented below:

Number of Restricted

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Of the 16,880,145 Restricted Stock Awards granted during the year ended December 31, 2022, 11,471,308 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.

Of the remaining Restricted Stock Awards

granted, 290,173 are not subject to market conditions and will cliff vest within a three -year period, and 5,118,664 are subject to market or performance conditions and will cliff vest in three years or less.

As of December 31, 2022, the Company had $ 171.2 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 1.5 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.

The total intrinsic value of Restricted Stock Awards released during the years ended December 31, 2022 and 2021 was $ 51.8 million and $ 78.1 million, respectively.

With respect to options granted under the 2020 Incentive 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.

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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:

There were no options granted during the years ended December 31, 2022 or 2021.

The assumptions used for options granted under the 2020 Incentive Plan and 2003 LTIP during the year ended December 31, 2020 are as follows:

Year Ended December 31,

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Weighted average grant date fair value per option $ 8.07

Dividend yield — %

Employee Benefit Plans

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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

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Total $ ( 289.6 ) $ ( 53.3 ) $ ( 25.7 ) $ 18.0

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 unrecognized net actuarial (gains) 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.

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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:

The change in accumulated other comprehensive loss in 2022 relating to pension benefits and other postretirement benefits consists of:

(In millions) Pension Benefits Other Postretirement Benefits

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Obligations for contributions to defined contribution plans are recognized as expense in the consolidated statements of operations when they are earned.

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 a 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.

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Total employer contributions to defined contribution plans were approximately $ 111.5 million, $ 107.4 million and $ 115.5 million for the years ended December 31, 2022, 2021 and 2020, 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.

Seg ment Information

Segment 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.

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, including biosimilars prior to the Biocon Biologics Transaction, and generic products to people in markets everywhere.

Our Developed Markets segment comprises our operations primarily in North America and Europe.

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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;

◦ Intangible asset amortization expense and impairments of goodwill and long-lived assets;

◦ R&D expense;

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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.

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 costs related to our planned divestitures and the Biocon Biologics Transaction, and, as applicable, any associated transition activities.

◦ 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.

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Intangible asset amortization expense ( 2,504.6 ) ( 2,702.2 ) ( 1,605.8 )

Intangible asset impairment charges ( 102.8 ) ( 82.4 ) ( 180.6 )

Intangible asset disposal & impairment charges ( 173.5 ) ( 102.8 ) ( 82.4 )

Impairment of goodwill ( 117.0 ) — —

Globally managed research and development costs ( 662.2 ) ( 681.0 ) ( 512.6 )

Acquired IPR&D ( 36.4 ) ( 70.1 ) ( 42.5 )

Litigation settlements & other contingencies ( 4.4 ) ( 329.2 ) ( 107.8 )

1 unchanged sentence

Corporate and other unallocated ( 2,123.3 ) ( 2,021.5 ) ( 1,391.6 )

(Loss) earnings from operations $ ( 34.0 ) $ ( 210.8 ) $ 715.5

Earnings (loss) from operations $ 1,614.9 $ ( 34.0 ) $ ( 210.8 )

The following table represents the percentage of consolidated net sales to Viatris’ major customers during the years ended December 31, 2022, 2021, and 2020:

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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 conjunction with the Combination, Viatris entered into a TSA with Pfizer pursuant to which each party provides certain limited transition services to the other party generally for an initial period of 24 months from the closing date of the Combination.

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.

During the years ended December 31, 2022 and 2021, the Company incurred $ 54.5 million and $ 30.4 million, respectively, related to this provision of the TSA, and approximately $ 138.0 million during the period beginning on the closing date of the Combination and ended December 31, 2022.

We expect to incur future costs related to the completion of the services.

As of December 31, 2022, the Company has exited substantially all transition services with Pfizer.

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.

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The Company is recording the expense for these agreements over the applicable service periods.

In conjunction with the Biocon Biologics Transaction, Viatris and Biocon Biologics also entered an agreement pursuant to which Viatris is providing commercialization and certain other transition services on behalf of Biocon Biologics, including billings, collections and the remittance of rebates, to ensure business continuity for patients, customers and colleagues.

In the normal course of business, Viatris periodically enters into employment, legal settlement and other agreements which incorporate indemnification provisions.

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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.

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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.

38.2 48.3 86.5

Cash payment ( 170.1 ) ( 15.3 ) ( 185.4 )

Utilization — ( 34.9 ) ( 34.9 )

Foreign currency translation ( 5.1 ) ( 0.3 ) ( 5.4 )

Balance at December 31, 2022 $ 155.6 $ 1.9 $ 157.5

2016 Restructuring Program

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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.

On December 11, 2020, the Company announced that the Morgantown plant will be closed or divested as part of the 2020 Restructuring Program.

The Morgantown plant was closed during the third quarter of 2021.

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Cash payment ( 18.1 ) ( 7.6 ) ( 25.7 )

Reclassifications — ( 8.1 ) $ ( 8.1 )

Utilization — ( 32.9 ) ( 32.9 )

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$ 20.0 $ 2.8 $ 22.8

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

(1) For the year ended December 31, 2022, total restructuring charges for the 2020 restructuring program, in Developed Markets, Greater China, JANZ, Emerging Markets, and Corporate/Other were approximately $ 74.6 million, $ 2.5 million, $ 0.9 million, $ 8.2 million, and $ 0.3 million, respectively.

(2) 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.

(3) 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, 2022 and 2021, 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.

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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.

Our significant licensing and other partner agreements are primarily focused on the development, manufacturing, supply and commercialization of multiple 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.

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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.

During the year ended December 31, 2020, the Company recorded $ 30 million of Acquired IPR&D expense for a milestone payment that was due upon the decision to continue the development program.

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.

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In October 2020, Momenta was acquired by Johnson & Johnson.

The parties continue to collaborate on the development of M710.

M710 was divested as part of the Biocon Biologics Transaction.

Theravance Biopharma

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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, 2022, the Company has paid a total of $ 50.0 million in milestone payments to Theravance Biopharma.

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.

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.

Under the amended agreements, the Company received the exclusive global commercialization rights for Hulio®.

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.

Hulio® was divested as part of the Biocon Biologics Transaction.

The collaboration was terminated upon closing of the Biocon Biologics Transaction.

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).

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.

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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.

officer (collectively the “Mylan Defendants”) were 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.

Plaintiffs’ sought monetary damages, attorneys’ fees and costs.

These lawsuits were filed in various federal and state courts and were either dismissed or transferred into a MDL in the U.S.

District Court for the District of Kansas and were consolidated or centralized.

An antitrust class consisting of certain states was ultimately certified.

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.

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.

In February 2022, the parties reached an agreement to fully resolve this matter for $ 264 million, which was accrued for during the year ended December 31, 2021.

During the first quarter of 2022, $ 5.0 million of the settlement was paid and the remaining amount of the settlement was paid in July 2022.

The settlement was approved by the Court on July 11, 2022 and contains an express provision disclaiming and denying any wrongdoing or liability by the Mylan Defendants.

This matter is resolved.

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.

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 concerning a patent settlement between Pfizer and Teva and other alleged actions regarding the launch of Teva’s generic epinephrine auto-injector.

Plaintiffs’ seek monetary damages, declaratory relief, attorneys’ fees and costs.

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The Court granted the Company’s motion for summary judgment and dismissed Sanofi’s claims.

Sanofi’s appeal is pending.

Sanofi’s appeal was denied.

Sanofi has filed a petition seeking review by the U.S.

Supreme Court.

The Company has a total accrual of approximately $ 5.5 million related to these matters at December 31, 2022, which is included in other current liabilities in the consolidated balance sheets.

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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.

Beginning in 2016, the Company, along with other manufacturers, has been named as a defendant in lawsuits filed in the United States and Canada 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 lawsuits allege harm under federal laws and the United States lawsuits also allege harm under state laws, including antitrust laws, state consumer protection laws and unjust enrichment claims.

Some of the United States 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 EDPA 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.

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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.

On December 14, 2016, attorneys general of certain states 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 operative complaint includes attorneys general of forty-six 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.

The amended complaint also includes claims asserted by attorneys general of thirty-six 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, restitution, and other equitable monetary relief.

The States’ claim for disgorgement and restitution under federal law in this case has been dismissed.

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.

The operative complaint is brought by attorneys general of forty-seven states, certain territories and the District of Columbia.

The amended complaint also includes claims asserted by attorneys general of forty-two states and certain territories against several individuals, including a Company sales employee.

This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA.

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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.

The operative complaint is brought by attorneys general of forty-six states, certain territories and the District of Columbia.

This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA and has been ordered to proceed as a bellwether.

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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.

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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.

On October 28, 2021, the Company and certain of its then 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.

On January 3, 2023, an amended complaint was filed naming the same defendants and alleging the same violations as the original complaint.

Plaintiffs seek monetary damages, reasonable costs and expenses, and certain other equitable and injunctive relief.

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District Court for the Northern District Court of Ohio.

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.

On January 13, 2023, the Company received a civil subpoena from the Attorney General of the State of New York seeking information relating to opioids manufactured, marketed, or sold by the Company and related subject matter.

The Company is fully cooperating with this subpoena request.

European Commission Proceedings

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.

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.

Competition and Markets Authority

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.

Meda Sweden Commercial Dispute

On August 30, 2021, Ocular AS and other related entities (“Claimants”) initiated an arbitration in Sweden against Meda OTC AB and Meda AB (collectively, “Meda” or the “Company”) alleging breach of a 2013 sale and purchase agreement between Claimants and Meda concerning commercialization of a dental hygiene product.

Claimants are seeking approximately $ 155 million in purported damages, plus interest and costs.

The Company believes that it acted lawfully and vigorously contested all aspects of Claimants’ case – including their asserted damages – at an arbitration hearing that took place in February 2023.

Product Liability

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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.

The vast majority of these lawsuits naming the Company 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 and certified classes 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.

Third party payor, consumer and medical monitoring classes were certified in the valsartan MDL and a Rule 23(f) petition to appeal the certification decision is pending.

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.

The end-payor plaintiff immediately appealed to the U.S.

Court of Appeals for the Eleventh Circuit, which affirmed the dismissal.

The personal injury and consumer putative class plaintiffs filed amended master complaints.

The Company was not named as a defendant in the amended master complaints, though it was still named in certain short form complaints filed by personal injury plaintiffs.

The trial court has dismissed all remaining claims against the generic defendants.

Certain of the personal injury plaintiffs appealed this dismissal, which remains pending.

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.

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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.

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.

The parties have settled this matter.

Intellectual Property

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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.

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.

Dimethyl Fumarate

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On appeal, the Federal Circuit affirmed the District Court’s judgment.

Biogen has filed a petition for rehearing.

Biogen’s petition for rehearing was denied.

Biogen’s petition seeking review by the U.S.

Supreme Court was also denied.

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.

MPI’s appeal of the PTAB decision is moot in light of the U.S.

Supreme Court denying review of the Federal Circuit’s affirmance of the District Court’s invalidity judgment.

These matters are resolved.

On August 17, 2020, the FDA approved MPI’s dimethyl fumarate delayed-release capsules, which MPI began selling on August 18, 2020.

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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.

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, and Northern Ireland) filed their claims.

All of the claims except for those filed by Dr.

Reddy’s Laboratories and NHS Scotland have been resolved.

A trial on the remaining claims has been set for November 2023.

Beginning in January 2023, certain generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Yupelri® with associated Paragraph IV certifications.

The companies assert the invalidity and/or non-infringement of polymorph patents expiring in 2030 and 2031, and a method of use patent expiring in 2039.

The companies have not filed Paragraph IV certifications to our compound patents, which currently expire in December 2025, with one compound patent subject to a patent term extension to October 2028.

In February 2023, we brought patent infringement actions against the generic filers in federal district courts, including the U.S.

District Court for the District of New Jersey, the U.S.

District Court for the District of Delaware, and the U.S.

District Court for the Middle District of North Carolina, asserting infringement of the patents by the generic companies.

Other Litigation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data