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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-28 · 259 added, 256 removed, 488 unchanged (51% of the section changed)

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These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements may include, without limitation, statements about the goals or outlooks with respect to the Company’s strategic initiatives, including but not limited to the Company’s two-phased strategic vision and potential and announced divestitures, acquisitions or other transactions;

the benefits and synergies of such divestitures, acquisitions, or other transactions, or restructuring programs;

Such forward-looking statements may include, without limitation, statements about the goals or outlooks with respect to the Company’s strategic initiatives and priorities, including but not limited to divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions;

the benefits and synergies of such divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs;

future opportunities for the Company and its products;

and any other statements regarding the Company’s future operations, financial or operating results, capital allocation, dividend policy and payments, stock repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, commitments, confidence in future results, efforts to create, enhance or otherwise unlock the value of our unique global platform, and other expectations and targets for future periods.

and any other statements regarding the Company’s future operations, financial or operating results, capital allocation, dividend policy and payments, share repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, commitments, confidence in future results, efforts to create, enhance or otherwise unlock value, and other expectations and targets for future periods.

Forward-looking statements may often be identified by the use of words such as “will”, “may”, “could”, “should”, “would”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “pipeline”, “intend”, “continue”, “target”, “seek” and variations of these words or comparable words.

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Factors that could cause or contribute to such differences include, but are not limited to:

• the possibility that the Company may not realize the intended benefits of, or achieve the intended goals or outlooks with respect to, its strategic initiatives (including divestitures, acquisitions, or other potential transactions) or move up the value chain by focusing on more complex and innovative products to build a more durable higher margin portfolio;

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

• with respect to previously announced divestitures that have not been consummated, including the divestiture of substantially all of our OTC Business, such divestitures not being completed on the expected timelines or at all and the risk that the conditions set forth in the definitive agreements with respect to such divestitures will not be satisfied or waived;

• with respect to previously announced divestitures, failure to realize the total transaction values for the divestitures and/or the expected proceeds for any or all such divestitures, including as a result of any purchase price adjustment or a failure to achieve any conditions to the payment of any contingent consideration;

• goodwill or impairment charges or other losses related to the divestiture or sale of businesses or assets (including but not limited to announced divestitures that have not yet been consummated);

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

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

• the ongoing risks and uncertainties associated with our recent divestitures;

• goodwill or impairment charges or other losses;

• the Company’s failure to achieve expected or targeted future financial and operating performance and results;

• the potential impact of public health outbreaks, epidemics and pandemics;

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

• actions and decisions of healthcare and pharmaceutical regulators;

• changes in relevant laws, regulations and policies and/or the application or implementation thereof, including but not limited to tax, healthcare and pharmaceutical laws, regulations and policies globally (including the impact of recent and potential tax reform in the U.S.

and pharmaceutical product pricing policies in China);

• the ability to attract, motivate and retain key personnel;

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• changes in third-party relationships;

• the effect of any changes in the Company’s or its partners’ customer and supplier relationships and customer purchasing patterns, including customer loss and business disruption being greater than expected following an acquisition or divestiture;

• the impacts of competition, including decreases in sales or revenues as a result of the loss of market exclusivity for certain products;

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• uncertainties regarding future demand, pricing and reimbursement for the Company’s products;

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

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

• inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with U.S.

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Company Overview

Viatris is a global healthcare company which we believe is uniquely positioned to bridge the traditional divide between generics and brands, combining the best of both to more holistically address healthcare needs globally.

With a mission to empower people worldwide to live healthier at every stage of life, Viatris provides access at scale, currently supplying high-quality medicines to approximately 1 billion patients around the world annually and touching all of life’s moments, from birth to the end of life, acute conditions to chronic diseases.

With our exceptionally extensive and diverse portfolio of medicines, a one-of-a-kind global supply chain designed to reach more people when and where they need them, and the scientific expertise to address some of the world's most enduring health challenges, access takes on deep meaning at Viatris.

Viatris is a global healthcare company whose breadth and scale we believe make it uniquely positioned to address healthcare needs globally.

With a mission to empower people worldwide to live healthier at every stage of life, Viatris supplies high-quality medicines to approximately 1 billion patients around the world each year.

The Company has a global footprint, an extensive portfolio of medicines that is well-diversified across therapeutic areas, a one-of-a-kind global supply chain designed to reach more people when and where they need them, and the scientific expertise to address some of the world's most enduring health challenges.

Viatris’ executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders.

With a global workforce of approximately 38,000, the Company has industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise complemented by a strong commitment to quality and an unparalleled geographic footprint to deliver high-quality medicines to patients in more than 165 countries and territories.

As of December 31, 2023, Viatris’ portfolio comprised more than 1,400 approved molecules across a wide range of key therapeutic areas, including globally recognized iconic and key brands and generics, including complex products, and the Company operated approximately 40 manufacturing sites worldwide that produce oral solid doses, injectables, complex dosage forms and APIs.

As discussed below, Viatris has entered into certain transactions, including the Pending Announced Divestitures.

The Company operates in more than 165 countries and territories with approximately 32,000 employees.

The Company has 26 manufacturing and packaging sites worldwide, more than 1,400 approved molecules, and industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise.

Viatris’ portfolio consists of generics (including complex products), globally recognized iconic brands, and an expanding portfolio of innovative medicines.

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

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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 and generic products, including complex 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 large and diversified portfolio of branded and generic products, including complex products, to people in markets everywhere.

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

Our Greater China segment includes our operations in China, Taiwan and Hong Kong.

Our JANZ segment reflects our operations in Japan, Australia and New Zealand.

Our Greater China segment includes our operations in mainland China, Taiwan and Hong Kong.

Our JANZ segment consists of our operations in Japan, Australia and New Zealand.

Our Emerging Markets segment encompasses our presence in more than 125 countries with developing markets and emerging economies including in Asia, Africa, Eastern Europe, Latin America and the Middle East as well as the Company’s ARV franchise.

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The following discussion highlights some of these key factors and market conditions.

The process of obtaining regulatory approval to manufacture and market new branded and generic pharmaceutical products is rigorous, time consuming, costly, and inherently unpredictable.

Complex products are more difficult, costly and time-consuming to receive regulatory approval for and bring to market.

Any delay in regulatory approval could impact the commercial or financial success of a product.

Regulatory approval, if and when obtained, may be limited in scope.

Even if regulatory approvals for new products are obtained, the success of those products is dependent upon market acceptance.

Generic products, particularly in the U.S., generally contribute most significantly to revenues and gross margins at the time of their launch, and even more so in periods of market exclusivity, or in periods of limited generic competition.

the timing of new product introductions can have a significant impact on the Company’s financial results.

As such, the timing of new product introductions can have a significant impact on the Company’s financial results.

The entrance into the market of additional competition generally has a negative impact on the volume and pricing of the affected products.

Additionally, pricing is often affected by factors outside of the Company’s control.

Conversely, generic products generally experience less volatility over a longer period of time in Europe as compared to the U.S., primarily due to the role of government oversight of healthcare systems in the region.

Conversely, generic products generally experience less volatility over a longer period of time in Europe as compared to the U.S., primarily due to the role of

government oversight of healthcare systems in the region.

In addition, U.S.

governmental agencies provide funding for certain products in our Emerging Markets region.

We expect that any reduction in that funding will have a negative impact on our financial condition, results of operations or cash flows.

For branded products, the majority of the product’s commercial value is usually realized during the period in which the product has market exclusivity.

and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales.

For example, depending on certain factors – including decisions by Japanese regulatory and/or patent authorities – generic entry may occur for Amitiza® 24 μg in Japan prior to one of the patents relevant to Amitiza® expiring in April 2025.

For example, generic entry may occur for Amitiza® 24 μg in Japan in December 2025 upon expiration of patent exclusivity.

Certain markets in which we do business outside of the U.S.

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Recent Developments

Idorsia Acquisition

On February 28, 2024, the Company announced that it will acquire the development programs and certain personnel related to selatogrel and cenerimod from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential development and regulatory milestone payments, and certain contingent payments of additional sales milestone payments and tiered sales royalties.

Viatris and Idorsia will both contribute to the development costs for both programs.

Viatris will have worldwide commercialization rights for both selatogrel and cenerimod (excluding, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region).

Lexicon Licensing Agreement

In October 2024, the Company entered into an exclusive licensing agreement with Lexicon for sotagliflozin in all markets outside of the U.S.

and Europe in exchange for an upfront payment of $25.0 million, and additional potential contingent payments, including regulatory milestones, sales milestones and tiered royalties ranging from low-double-digit to upper-teens on annual net sales.

Viatris will be responsible for all regulatory and commercialization activities for sotagliflozin in the licensed territories.

Lexicon will be responsible for providing clinical and commercial supply of sotagliflozin to Viatris.

The Company accounted for the transaction as an asset acquisition, with the upfront payment expensed as Acquired IPR&D in the fourth quarter of 2024.

Indore Manufacturing Facility

Following an inspection by the FDA at our oral finished dose manufacturing facility in Indore, India in 2024, the FDA has issued a warning letter, and an import alert related to this facility.

The import alert affects 11 actively distributed products that will no longer be accepted into the U.S.

until the warning letter is lifted.

It makes exceptions, subject to certain conditions, for four products based on shortage concerns.

Following recently concluded discussions with the FDA, the Company does not expect additional product exceptions to be granted by the FDA.

Following the substance of FDA’s original inspection observations, the Company immediately implemented a comprehensive remediation plan at the site.

The necessary corrective and preventive actions are well underway, including but not limited to related personnel actions.

Additionally, we have engaged independent third-party subject matter experts to support the remediation plan.

We have been in regular communication with FDA during this process and will continue to work to ensure that the FDA is satisfied with the steps we have taken to resolve all the points raised.

Our responses to the warning letter and import alert were submitted within the required time periods.

While product continues to be shipped from the Indore facility to markets outside the U.S., some impact in other markets, including the ARV business in Emerging Markets and select generic products in Europe, is anticipated.

The Company currently estimates the negative impact to 2025 total revenues to be approximately $500 million and to 2025 earnings from operations to be approximately $385 million.

We take very seriously our continued and comprehensive oversight of our entire manufacturing network.

Patient safety remains our primary and unwavering focus.

We will work closely with our customers to mitigate any possible supply disruptions and meet the needs of the patients we serve.

Acquisition of Idorsia Products

On March 15, 2024, the Company acquired exclusive global development and commercialization rights to two Phase 3 assets from Idorsia, as well as the potential to add additional innovative assets in the future.

Under the terms of the original agreements, the development programs and certain personnel for selatogrel and cenerimod were transferred to Viatris from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential contingent milestone payments (including $300 million payable upon the achievement of certain development and regulatory milestones, and $2.1 billion payable upon the achievement of certain tiered sales milestones), as well as potential contingent tiered sales royalties.

Viatris has worldwide commercialization rights for both selatogrel and cenerimod (excluding, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region).

A joint development committee was formed to oversee the development of the ongoing Phase 3 programs through regulatory approval.

The agreements also provide Viatris a right of first refusal and a right of first negotiation for certain other assets in Idorsia’s pipeline.

The closing of the transaction is subject to certain closing conditions.

On October 1, 2023, the Company announced it received an offer for the divestiture of its OTC Business, and entered into definitive agreements to divest its women’s healthcare business and, separately, in another transaction, its rights to two women’s healthcare products in certain countries, its API business in India and commercialization rights in the Upjohn Distributor Markets.

The divestiture of the women’s healthcare business is primarily related to our oral and injectable contraceptives and does not include all of our women’s healthcare related products;

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

The transaction to divest the Company’s rights to two women’s healthcare products in certain countries (other than in the U.K., which remains subject to regulatory approval) closed in December 2023.

The divestitures of the commercialization rights in certain of the Upjohn Distributor Markets closed during 2023.

Additionally, we expect to consummate the divestiture of our women’s healthcare business and our API business in India by the end of the first quarter of 2024, and in January 2024, we exercised our option to accept the offer in the OTC Transaction and entered into a definitive transaction agreement with respect to such OTC Transaction.

We currently expect the OTC Transaction to close by mid-year 2024.

The transactions that have not yet closed remain subject to regulatory approvals, receipt of required consents and other

closing conditions, including, in the case of the API business divestiture, a financing condition.

Refer to Note 5 Divestitures in Part II, Item 8 of this Form 10-K for more information.

Ophthalmology Acquisitions

During the first quarter of 2023, the Company completed the acquisition of Oyster Point for approximately $427.4 million in cash, which included $11 per share paid to Oyster Point stockholders through a tender offer, payment for vested share-based awards, and the repayment of the Oyster Point debt.

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

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

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

Refer to Note 4 Acquisitions and Other Transactions in Part II, Item 8 of this Form 10-K for more information.

Share Repurchase Program

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.

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 the year ended December 31, 2023, the Company repurchased approximately 21.2 million shares of common stock at a cost of approximately $250 million.

In February 2024, the Company repurchased approximately 19.2 million shares of common stock at a cost of approximately $250 million.

The Company did not repurchase any shares of common stock under the share repurchase program in 2022.

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

The Company announced that on February 26, 2024, its Board of Directors authorized a $1.0 billion increase to the Company’s previously announced $1.0 billion share repurchase program.

As a result, the Company’s share repurchase program now authorizes the repurchase of up to $2.0 billion of the Company’s shares of common stock.

The Company had repurchased a total of $500 million in shares through February 28, 2024 under the program.

2020 Restructuring Program

During 2020, Viatris announced a significant global restructuring program in order to achieve synergies and ensure that the organization was optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers, and other stakeholders.

As part of the restructuring, the Company optimized its commercial capabilities and enabling functions, and closed, downsized or divested certain manufacturing facilities globally that were 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.

The actions under the 2020 restructuring program were substantially completed during 2023.

Since the initiation of the 2020 restructuring program, the Company has incurred total pre-tax charges of approximately $1.4 billion through December 31, 2023.

Such charges included approximately $450 million of non-cash charges mainly related to accelerated depreciation and asset impairment charges, including inventory write-offs, and cash costs of approximately $950 million, primarily related to severance and employee benefits expense, as well as other costs, including those related to contract terminations and other plant disposal costs.

Viatris and Idorsia are both contractually obligated to contribute to the development costs for both programs, which are expected to be incurred through 2026.

There are risks and uncertainties associated with the timely and successful completion of these programs, including but not limited to the high cost and uncertainty of conducting clinical trials (particularly with respect to new and/or complex or innovative drugs), obtaining approval by relevant regulatory bodies and our partner’s financial condition.

Refer to Note 4 Acquisitions and Other Transactions included in Part II, Item 8 of this Form 10-K for more information.

On February 25, 2025, in order to preserve the ongoing continuity of the development programs for selatogrel and cenerimod considering certain capital structuring steps announced by Idorsia to secure its ongoing operations, Viatris and Idorsia entered into a letter agreement to amend certain terms of the original agreements described above.

Under the terms of the letter agreement, Viatris will receive additional territory rights in Japan, South Korea and certain other countries in the Asia-Pacific region for cenerimod, a $250 million reduction in contingent milestone payments, including $200 million of development milestones, and additional personnel to expedite transitioning the development programs to Viatris in exchange for Viatris assuming $100 million of Idorsia’s obligation to contribute to development costs.

In addition, the letter agreement provides for the replacement of the joint development committee with a transition committee to oversee the transition of both development programs to Viatris.

In October 2023, the Company announced it had received an offer for the divestiture of its OTC Business and had entered into definitive agreements to divest its women’s healthcare business, its API business in India, its rights to two women’s healthcare products in certain countries, and commercialization rights in the Upjohn Distributor Markets.

The divestiture of the women’s healthcare business was primarily related to our oral and injectable contraceptives and did not include all of our women’s healthcare related products.

The transaction to divest the Company’s rights to two women’s healthcare products in certain countries closed in December 2023 (other than in the U.K.), and the divestiture of the women’s healthcare business closed in March 2024.

In the third quarter of 2024, the Company closed the divestiture of the product rights in the U.K.

The divestitures of the commercialization rights in the majority of the Upjohn Distributor Markets closed during 2023 and 2024, the divestiture of our API business in India closed in June 2024, and the OTC Transaction closed in July 2024.

Refer to Note 5 Divestitures included in Part II, Item 8 of this Form 10-K for more information.

Financial Summary

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Earnings from operations 10.1 766.2 (756.1)

Net earnings 54.7 2,078.6 (2,023.9)

Diluted earnings per share $ 0.05 $ 1.71 $ (1.66)

Net (loss) earnings (634.2) 54.7 (688.9)

Diluted (loss) earnings per share $ (0.53) $ 0.05 $ (0.58)

A detailed discussion of the Company’s financial results can be found below in the section titled “Results of Operations.” As part of this discussion, we also report sales performance using the non-GAAP financial measures of “constant currency” net sales and total revenues.

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We routinely evaluate our net sales and total revenues performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and believe that this presentation also provides useful information to investors for the same reason.

More information about non-GAAP measures used by the Company as part of this discussion, including adjusted cost of sales, adjusted gross margins, adjusted net earnings, and adjusted EBITDA (all of which are defined below) are discussed further in this Part II, Item 7 under Results of Operations and Results of Operations — Use of Non-GAAP Financial Measures .

More information about non-GAAP measures used by the Company as part of this discussion, including adjusted cost of sales, adjusted gross margins, adjusted EBITDA, adjusted net earnings, and adjusted EPS (all of which are defined below) can be found in Part II, Item 7 under Results of Operations and Results of Operations — Use of Non-GAAP Financial Measures .

Results of Operations

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(In millions, except %s) 2024 2023 % Change 2024 Currency Impact (1)

2023 Constant Currency Revenues Constant Currency % Change (2)

2024 Constant Currency Revenues

Constant Currency % Change (2)

Developed Markets (3)

$ 8,929.4 $ 9,251.9 (3) % $ (5.3) $ 8,924.1 (4) %

Greater China 2,166.5 2,160.4 — % 47.2 2,213.7 2 %

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Emerging Markets (3)

2,250.7 2,551.6 (12) % 116.2 2,366.9 (7) %

Total net sales 14,692.8 15,388.4 (5) % 239.5 14,932.3 (3) %

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(2) The constant currency percentage change is derived by translating net sales or revenues for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2024 constant currency net sales or revenues to the corresponding amount in the prior year.

(3) For the year ended December 31, 2023, other revenues in Developed Markets, JANZ, and Emerging Markets were approximately $26.1 million, $1.1 million, and $11.3 million, respectively.

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

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

(5) Amounts exclude intersegment revenue which eliminates on a consolidated basis.

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Other revenues for the year ended December 31, 2024 were $46.5 million, compared to $38.5 million for the comparable prior year period.

The decrease in net sales was partially driven by the unfavorable impact of foreign currency translation of approximately $258.9 million, or 2%, primarily reflecting changes in the U.S.

Dollar as compared to the currencies of subsidiaries in Japan, China and India.

Additionally, net sales decreased by approximately $629.5 million, or 4%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2022 and 2023.

The most significant such impact related to the biosimilars business that was divested on November 29, 2022.

On a constant currency basis, net sales from the remaining business increased by approximately $17.0 million, or less than 1%, for the year ended December 31, 2023 compared to the prior year period as new product sales of approximately $451.3 million, primarily in the U.S.

and Europe, offset the impact of base business erosion of approximately $434.3 million.

Net sales decreased by approximately $732.2 million, or 5%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $239.5 million, or 2%, primarily reflecting changes in the U.S.

Dollar as compared to the currencies of subsidiaries in Japan, China, and countries in Emerging Markets.

On a constant currency basis, net sales from the remaining business increased by approximately $276.1 million, or 2%, for the year ended December 31, 2024 compared to the prior year period, driven by new product sales, primarily in Developed Markets, of approximately $582.4 million.

New product sales include new products launched in 2024 and the carryover impact of new products, including business development, launched within the last twelve months.

Net sales from Tyrvaya® totaled $41.7 million during the year ended December 31, 2023.

The increase was partially offset by base business erosion of approximately $306.3 million.

From time to time, a limited number of our products may represent a significant portion of our net sales, gross profit and net earnings.

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Developed Markets Segment

Net sales from Developed Markets decreased by $517.0 million or 5% during the year ended December 31, 2023 when compared to the prior year.

The favorable impact of foreign currency translation was approximately $85.2 million, or 1%.

Net sales from Developed Markets decreased by $322.5 million, or 3%, for the year ended December 31, 2024 when compared to the prior year.

Net sales decreased by approximately $421.1 million, or 5%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

The most significant such impact related to the biosimilars business that was divested on November 29, 2022.

Constant currency net sales from the remaining business decreased by approximately $104.3 million, or 1%, when compared to the prior year.

New product sales, including lenalidomide and Breyna™ in the U.S., combined with the stability of the existing product portfolio helped to partially offset the anticipated lower net sales of certain existing products, including Wixela Inhub®, Xulane® and cyclosporine ophthalmic emulsion in the U.S., as a result of lower volumes and lower pricing due to additional competition.

The favorable impact of foreign currency translation was approximately $5.3 million, or less than 1%.

Constant currency net sales from the remaining business increased by approximately $93.3 million, or 1%, driven primarily by new product sales throughout Developed Markets, including Breyna™ and lisdexamfetamine in the U.S.

This increase was partially offset by anticipated lower net sales of certain existing products within the U.S., including EpiPen® Auto-Injector and Perforomist®, as a result of lower pricing and volumes due to additional competition and increased utilization within government channels.

Net sales within North America totaled approximately $3.78 billion and net sales within Europe totaled approximately $5.15 billion.

Net sales from Tyrvaya® totaled $41.7 million during the year ended December 31, 2023.

Greater China Segment

Net sales from Greater China decreased by $40.8 million, or 2%, for the year ended December 31, 2023 when compared to the prior year.

This decrease was the result of the unfavorable impact of foreign currency translation of approximately $87.1 million, or 4%.

Net sales from Greater China were essentially flat for the year ended December 31, 2024 when compared to the prior year.

The unfavorable impact of foreign currency translation was approximately $47.2 million, or 2%.

Constant currency net sales increased by approximately $53.4 million, or 2%, when compared to the prior year, driven primarily by increased volumes of existing products.

Divestitures did not have a significant impact on the net sales during the year ended December 31, 2023.

Divestitures did not have a significant impact on the net sales during the years ended December 31, 2024 and 2023.

Net sales from JANZ decreased by $78.3 million, or 5%, for the year ended December 31, 2024 when compared to the prior year.

This decrease was partially the result of the unfavorable impact of foreign currency translation of approximately $96.2 million, or 6%.

This decrease was the result of the unfavorable impact of foreign currency translation of approximately $81.4 million, or 6%.

Net sales also decreased by approximately $16.4 million, or 1%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

Constant currency net sales from the remaining business decreased by approximately $92.9 million, or 6%, when compared to the prior year.

The decrease was due to lower net sales of existing products mainly driven by lower pricing and, to a lesser extent, volumes, in Japan as a result of government price reductions and additional competition, and lower volumes of existing products in Australia.

Constant currency net sales from the remaining business increased by approximately $19.5 million, or 1%, when compared to the prior year, driven primarily by new product sales in Australia.

This increase was partially offset by lower net sales of existing products mainly driven by lower pricing in Japan as a result of government price reductions and additional competition.

Emerging Markets Segment

Net sales from Emerging Markets decreased by $300.9 million or 12% for the year ended December 31, 2024 when compared to the prior year.

This decrease was driven by the unfavorable impact of foreign currency translation of approximately $160.8 million, or 6%.

In addition, net sales also decreased by approximately $70.4 million, or 3%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2022 and 2023.

Constant currency net sales from the remaining business increased by approximately $167.2 million, or 6%, when compared to the prior year, primarily driven by higher volumes of existing products in certain Asian countries.

Net sales decreased by approximately $294.6 million, or 12%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $116.2 million, or 5%.

Constant currency net sales from the remaining business increased by approximately $109.9 million, or 4%, when compared to the prior year, primarily driven by new products and higher net sales of existing products in certain Latin American, Middle Eastern and Asian countries.

Cost of Sales and Gross Profit

Cost of sales decreased from $9.77 billion for the year ended December 31, 2022 to $8.99 billion for the year ended December 31, 2023.

Cost of sales was primarily impacted by the decrease in net sales, including the impact of the disposition of the biosimilars business in November 2022, and lower purchase accounting amortization expense.

Cost of sales increased from $8.99 billion for the year ended December 31, 2023 to $9.12 billion for the year ended December 31, 2024.

The increase in cost of sales was largely driven by IPR&D intangible asset impairment charges of $177.1 million.

Refer to Note 8 Goodwill and Intangible Assets included in Part II, Item 8 of this Form 10-K for more information.

This increase was partially offset by the impact of the decrease in net sales, including as a result of the divestitures that have closed in 2023 and 2024.

Gross profit for the year ended December 31, 2024 was $5.62 billion and gross margins were 38%.

For the year ended December 31, 2023, gross profit was $6.44 billion and gross margins were 42%.

This change in gross profit is primarily related to the decrease in net sales and cost of sales.

The changes in gross profit and gross margins are primarily related to the impact of the divestitures and the IPR&D intangible asset impairment charges.

Adjusted gross margins were approximately 58% for the year ended December 31, 2024, essentially flat when compared to the year ended December 31, 2023.

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Research and Development Expense

R&D expense for the year ended December 31, 2023 was $805.2 million, compared to $662.2 million for the prior year, an increase of $143.0 million.

This increase was primarily due to continued investment in our pipeline, including approximately $42.1 million related to the ophthalmology acquisitions.

R&D expense for the year ended December 31, 2024 was $808.7 million, essentially flat compared to R&D expense of $805.2 million for the prior year.

An increase in spend on the selatogrel and cenerimod programs was partially offset by lower spending on base business programs.

We expect R&D expense to increase in excess of $100 million in 2025 as compared to 2024 primarily as a result of increased expenses for the selatogrel and cenerimod development programs.

Acquired IPR&D

Acquired IPR&D expense for the year ended December 31, 2023 was $105.5 million, compared to $36.4 million for the prior year, an increase of $69.1 million.

The increase was primarily due to upfront licensing payments to Mapi of $75.0 million related to additional products under development.

This was partially offset by an upfront licensing payment of $20.0 million to Calliditas Therapeutics AB related to Nefecon® recorded during the prior year.

Acquired IPR&D expense for the year ended December 31, 2024 was $28.3 million, compared to $105.5 million for the prior year, a decrease of $77.2 million.

The decrease was primarily due to upfront licensing payments to Mapi of $75.0 million related to additional products under development recorded during the prior year.

This was partially offset by an upfront licensing payment of $25.0 million to Lexicon related to sotagliflozin recorded during the fourth quarter of 2024.

Selling, General and Administrative Expense

SG&A expense for the year ended December 31, 2023 was $4.65 billion, compared to $4.18 billion for the prior year, an increase of $471.0 million.

The increase was primarily due to:

(1) a goodwill impairment charge of approximately $580.1 million related to the planned divestiture of the OTC Business, (2) expenses related to the ophthalmology acquisitions of approximately $152.8 million, (3) higher investment in selling and promotional activities, and (4) increased compensation, including severance-related costs.

Partially offsetting these increases were:

(1) lower acquisition and divestiture-related costs of approximately $88.2 million, primarily as a result of costs incurred in 2022 in conjunction with the Biocon Biologics Transaction and transitioning certain support services from Pfizer, (2) charges of $156.5 million incurred in 2022 related to the divestitures of the commercialization rights in the Upjohn Distributor Markets, and (3) a gain recorded in 2023 of approximately $156.2 million on the transaction to divest the Company’s rights to two women’s healthcare products in certain countries (other than in the U.K., which remains subject to regulatory approval).

SG&A expense for the year ended December 31, 2024 was $4.43 billion, compared to $4.65 billion for the prior year, a decrease of $224.5 million.

The decrease was primarily due to lower goodwill impairment charges of approximately $259.1 million (refer to Note 8 Goodwill and Intangible Assets included in Part II, Item 8 of this Form 10-K for more information on the goodwill impairment charges recorded in 2023 and 2024), and the impact of the divestitures.

Partially offsetting these decreases was a gain recorded in 2023 of approximately $156.2 million on the transaction to divest the Company’s rights to two women’s healthcare products in certain countries.

Litigation Settlements and Other Contingencies, Net

The following table includes the losses/(gains) recognized in litigation settlements and other contingencies, net during the years ended December 31, 2023 and 2022, respectively:

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

Year Ended December 31,

(In millions) 2024 2023

Contingent consideration adjustment (primarily related to the Respiratory Delivery Platform)

Contingent consideration adjustment

$ 54.8 $ 80.4

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Total litigation settlements and other contingencies, net $ 350.9 $ 111.6

The contingent consideration adjustment for the year ended December 31, 2024 was primarily due to fair value adjustments related to the Respiratory Delivery Platform and the Idorsia contingent consideration liabilities.

Refer to Note 9 Financial Instruments and Risk Management included in Part II, Item 8 of this Form 10-K for more information.

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

Interest Expense

Interest expense for the year ended December 31, 2023 totaled $573.1 million, compared to $592.4 million for the year ended December 31, 2022, a decrease of $19.3 million primarily due to the impact of debt repayments.

Other Income, Net

Other income, net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income.

Other income, net for the year ended December 31, 2023 totaled $9.8 million, compared to $1.79 billion for the year ended December 31, 2022.

Interest expense for the year ended December 31, 2024 totaled $550.0 million, compared to $573.1 million for the year ended December 31, 2023, a decrease of $23.1 million.

The decrease was primarily due to the impact of debt repayments, partially offset by the non-cash accretion of the contingent consideration liability related to the Idorsia Transaction.

Other Expense (Income), Net

Other expense (income), net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, extinguishment of debt, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income.

Other expense (income), net for the year ended December 31, 2024 totaled $83.3 million of expense, compared to $(9.8) million of income for the year ended December 31, 2023, a decrease of $93.1 million.

The decrease in other income, net was driven by:

(1) the gain from the Biocon Biologics Transaction of $1.75 billion recorded in the prior year, and (2) charges incurred during the year ended December 31, 2023 of approximately $154.7 million related to the planned divestiture of the OTC Business to write down the disposal group to fair value, less cost to sell, and approximately $85.2 million related to the divestitures of the commercialization rights in the Upjohn Distributor Markets.

This was partially offset by:

(1) net gains recorded during the year ended December 31, 2023 of approximately $43.4 million as a result of remeasuring our equity interests in Mapi and Famy Life Sciences and the CCPS in Biocon Biologics to fair value, (2) higher interest income of approximately $46.8 million, and (3) an increase in TSA income from Biocon Biologics of approximately $150.3 million.

(1) higher net loss on divestitures of approximately $156.4 million, (2) charges of $184.6 million related to the impairment of our equity investment in Mapi and advances for GA Depot inventory (refer to Note 18 Licensing and Other Partner Agreements included in Part II, Item 8 of this Form 10-K for more information), (3) net gains recorded in the prior year of approximately $43.4 million as a result of remeasuring our equity interests in Mapi and Famy Life Sciences and the CCPS in Biocon Biologics to fair value, and (4) lower TSA income of approximately $98.1 million as the prior year included TSA income related to the reimbursement for transition services provided to Biocon Biologics.

Biocon Biologics had substantially exited all transition services with Viatris as of December 31, 2023.

The costs related to the transition services are included in SG&A and R&D.

This was partially offset by:

(1) current year gains of $373.5 million as a result of remeasuring the CCPS in Biocon Biologics to fair value, (2) higher interest income of approximately $32.1 million, and (3) gain on debt extinguishments of $16.5 million.

Income Tax Provision

For the year ended December 31, 2024, the Company recognized an income tax provision of $11.0 million, compared to an income tax provision of $148.2 million for the prior year, a change in the provision of $137.2 million.

The income tax provision for the year ended December 31, 2023 was negatively impacted by the goodwill impairment related to the planned divestiture of the OTC Business, partially offset by the deferred tax impact of the Company’s internal tax restructuring.

The income tax provision for the year ended December 31, 2022 was negatively impacted by the gain from the Biocon Biologics Transaction.

The current year and prior year provisions were impacted by the levels of income and the changing mix at which it is earned in jurisdictions with differing tax rates.

The income tax provision for the year ended December 31, 2024 includes a tax benefit related to certain gains on the sale of subsidiaries in connection with the divestiture of the OTC Business which were partially exempt from tax.

This benefit was partially offset by the goodwill impairment charge recorded in the second quarter of 2024, for which no tax benefit was realized.

The income tax provision for the year ended December 31, 2023 was negatively impacted by the goodwill impairment related to the divestiture of the OTC Business, partially offset by the deferred tax impact of the Company’s internal tax restructuring.

The current year and prior year provisions were also impacted by the levels of income and the changing mix at which it is earned in jurisdictions with differing tax rates.

2023 Compared to 2022

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We use the non-GAAP financial measure “adjusted cost of sales” and the corresponding non-GAAP financial measure “adjusted gross margin.” The principal items excluded from adjusted cost of sales include restructuring, acquisition and divestiture-related costs, and other special items, purchase accounting amortization and other related items, and share-based compensation expense, which are described in greater detail below.

Adjusted Net Earnings

Adjusted net earnings is a non-GAAP financial measure and provides an alternative view of performance used by management.

Adjusted Net Earnings and Adjusted EPS

Adjusted net earnings and adjusted net earnings per diluted share (“adjusted EPS”) are non-GAAP financial measures and provide an alternative view of performance used by management.

Management believes that, primarily due to acquisitions, divestitures and other significant events, an evaluation of the Company’s ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with U.S.

Management believes that adjusted net earnings is an important internal financial metric related to the ongoing operating performance of the Company, and is therefore useful to investors and that their understanding of our performance is enhanced by this measure.

Actual internal and forecasted operating results and annual budgets used by management include adjusted net earnings.

Management believes that adjusted net earnings and adjusted EPS are important internal financial metrics related to the ongoing operating performance of the Company, and are therefore useful to investors and that their understanding of our performance is enhanced by these measures.

Actual internal and forecasted operating results and annual budgets used by management include adjusted net earnings and adjusted EPS.

EBITDA and Adjusted EBITDA

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We calculate EBITDA as U.S.

GAAP net earnings (loss) adjusted for net contribution attributable to equity method investments, income tax provision (benefit), interest expense and depreciation and amortization.

EBITDA is further adjusted for share-based compensation expense, litigation settlements and other contingencies, net, and restructuring, impairment of long-lived assets, acquisition and divestiture related and other special items to determine adjusted EBITDA.

GAAP net earnings (loss) adjusted for income tax provision (benefit), interest expense and depreciation and amortization.

EBITDA is further adjusted for share-based compensation expense, litigation settlements and other contingencies, net, gain (loss) on divestitures of businesses, impairment of long-lived assets and goodwill, restructuring, acquisition and divestiture-related and other special items to determine adjusted EBITDA.

These adjustments are generally permitted under our credit agreement in calculating adjusted EBITDA for determining compliance with our debt covenants.

The significant items excluded from adjusted cost of sales, adjusted net earnings, and adjusted EBITDA include:

The significant items excluded from adjusted cost of sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS include:

Purchase Accounting Amortization and Other Related Items

The ongoing impact of certain amounts recorded in connection with acquisitions of both businesses and assets is excluded from adjusted cost of sales, adjusted net earnings, and adjusted EBITDA.

The ongoing impact of certain amounts recorded in connection with acquisitions of both businesses and assets is excluded from adjusted cost of sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS.

These amounts include the amortization of intangible assets, inventory step-up, property, plant and equipment step-up, intangible asset impairment charges, including for IPR&D, and impairment of goodwill.

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Fair Value Adjustments, Including Contingent Consideration

The impact of changes to the fair value of assets and liabilities, including contingent and deferred consideration and non-marketable equity investments, and the related accretion income or expense are excluded from adjusted net earnings and adjusted EBITDA because they are not indicative of the Company’s ongoing operations due to the variability of the amounts and the lack of predictability as to the occurrence and/or timing and management believes their exclusion is helpful to understanding the underlying, ongoing operational performance of the business.

The impact of changes to the fair value of assets and liabilities, including contingent and deferred consideration and non-marketable equity investments, and the related accretion income or expense are excluded from adjusted EBITDA, adjusted net earnings, and adjusted EPS because they are not indicative of the Company’s ongoing operations due to the variability of the amounts and the lack of predictability as to the occurrence and/or timing and management believes their exclusion is helpful to understanding the underlying, ongoing operational performance of the business.

Share-based Compensation Expense

Share-based compensation expense is excluded from adjusted cost of sales, adjusted net earnings and adjusted EBITDA.

Share-based compensation expense is excluded from adjusted cost of sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS.

Our share-based compensation programs have become increasingly weighted toward performance-based compensation, which leads to variability and to a lack of predictability as to the occurrence and/or timing of amounts incurred.

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Restructuring, Acquisition and Divestiture-Related Costs and Other Special Items

Costs related to restructuring, acquisition and divestiture-related activities and other actions are excluded from adjusted cost of sales, adjusted net earnings and adjusted EBITDA, as applicable.

Costs related to restructuring, acquisition and divestiture-related activities and other actions are excluded from adjusted cost of sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS, as applicable.

These amounts include items such as:

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• Certain acquisition and divestiture costs, including costs relating to integration and planning, advisory and legal fees, certain financing related costs, certain reimbursements related to the Company’s obligation to reimburse Pfizer for certain financing and transaction related costs under the Business Combination Agreement and Separation and Distribution Agreement, certain other TSA related set-up and exit costs, and other business transformation and/or optimization initiatives, which are not part of a formal restructuring program, including employee separation and post-employment costs;

• The pre-tax loss of the Company’s clean energy investments, whose activities qualify for income tax credits under the Code;

only included in adjusted net earnings is the net tax effect of the entity’s activities;

• Other costs, incurred from time to time, related to certain special events or activities that lead to gains or losses, including, but not limited to, incremental manufacturing variances, asset write-downs, including other-than-temporary impairments of investments in equity or debt instruments, or liability adjustments;

1 unchanged sentence

• Gains or losses from divestitures, including impairments of held for sale assets;

• The impact of changes related to uncertain tax positions are excluded from adjusted cost of sales and adjusted net earnings.

In addition, tax adjustments to adjusted earnings are recorded to present items on an after-tax basis consistent with the presentation of adjusted net earnings.

• The impact of changes related to uncertain tax positions are excluded from adjusted net earnings and adjusted EPS.

In addition, tax adjustments to adjusted earnings are recorded to present items on an after-tax basis consistent with the presentation of adjusted net earnings and adjusted EPS.

The Company has undertaken restructurings and other optimization initiatives of differing types, scope and amount during the covered periods and, therefore, these charges should not be considered non-recurring;

however, management excludes these amounts from adjusted cost of sales, adjusted net earnings and adjusted EBITDA because it believes it is helpful to understanding the underlying, ongoing operational performance of the business.

however, management excludes these amounts from adjusted cost of sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS because it believes it is helpful to understanding the underlying, ongoing operational performance of the business.

Litigation Settlements, Net

Charges and gains related to legal matters, such as those discussed in Note 19 Litigation included in Part II, Item 8 of this Form 10-K are generally excluded from adjusted net earnings and adjusted EBITDA.

Charges and gains related to legal matters, such as those discussed in Note 19 Litigation included in Part II, Item 8 of this Form 10-K are generally excluded from adjusted EBITDA, adjusted net earnings, and adjusted EPS.

Normal, ongoing defense costs of the Company made in the normal course of our business are not excluded.

Reconciliation of U.S.

GAAP Net Earnings (Loss) to Adjusted Net Earnings

A reconciliation between net earnings (loss) as reported under U.S.

GAAP, and adjusted net earnings for the periods shown follows:

GAAP Net (Loss) Earnings to Adjusted Net Earnings and U.S.

GAAP (Loss) Earnings Per Share to Adjusted EPS

A reconciliation between net (loss) earnings and diluted earnings (loss) per share as reported under U.S.

GAAP, and adjusted net earnings and adjusted EPS for the periods shown follows:

Year Ended December 31,

(In millions) 2023 2022 2021

GAAP net earnings (loss) $ 54.7 $ 2,078.6 $ (1,269.1)

Purchase accounting related amortization (primarily included in cost of sales) (a)

(In millions, except per share amounts)

2024 2023 2022

Impairment of goodwill related to assets held for sale (included in SG&A) (b)

GAAP net (loss) earnings and U.S.

GAAP diluted (loss) earnings per share $ (634.2) $ (0.53) $ 54.7 $ 0.05 $ 2,078.6 $ 1.71

Purchase accounting amortization (primarily included in cost of sales) (a)

2,581.1 2,421.5 2,721.3

Impairment of goodwill (included in SG&A) (b)

321.0 580.1 117.0

Litigation settlements and other contingencies, net 350.9 111.6 4.4

Interest expense (primarily amortization of premiums and discounts on long term debt) (23.0) (42.4) (48.7)

Clean energy investments pre-tax loss — — 61.9

Acquisition and divestiture-related costs (primarily included in SG&A) (c)

361.0 377.9 475.7

Loss (gain) on divestitures of businesses (included in other income, net) (d)

Loss (gain) on divestitures of businesses (included in other expense (income), net) (d)

399.4 239.9 (1,754.1)

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Research and development expense 2.8 2.8 1.0

Selling, general and administrative expense (g)

Selling, general and administrative expense 90.5 (83.5) 68.8

Other expense (income), net (g)

(160.2) (24.4) (3.8)

Other income, net (h)

Tax effect of the above items and other income tax related items (h)

(597.1) (525.6) (41.7)

Tax effect of the above items and other income tax related items (i)

Adjusted net earnings and adjusted EPS $ 3,192.4 $ 2.65 $ 3,537.7 $ 2.93 $ 4,077.1 $ 3.35

Weighted average diluted shares outstanding

1,202.7 1,206.9 1,217.4

Adjusted net earnings $ 3,537.7 $ 4,077.1 $ 4,410.0

Significant items for the year ended December 31, 2024 include the following:

(a) Includes an intangible asset charge related to the divestitures of the commercialization rights in the Upjohn Distributor Markets of approximately $32.0 million to write down the disposal group to fair value, less cost to sell.

Also includes amortization of the step-up in the fair value of inventory related to the Oyster Point acquisition of approximately $29.3 million.

(b) A goodwill impairment charge of approximately $580.1 million related to the planned divestiture of the OTC Business.

(a) Includes IPR&D intangible asset impairment charges of $177.1 million as the Company concluded that certain of its IPR&D assets were fully impaired due to unfavorable clinical results and/or changes in market conditions which led to the termination of the development programs.

(b) Includes a goodwill impairment charge of $321.0 million related to the JANZ reporting unit.

(c) Acquisition and divestiture-related costs consist primarily of transaction costs including legal and consulting fees and integration activities.

(d) Includes a charge related to the planned divestiture of the OTC Business of approximately $154.7 million to write down the disposal group to fair value, less cost to sell, and a charge of approximately $85.2 million related to the divestitures of the commercialization rights in the Upjohn Distributor Markets.

(d) Consists primarily of pre-tax charges / (gains) related to the divestitures of the OTC, biosimilars, API, and women’s healthcare businesses of approximately $369.0 million, $60.0 million, $47.8 million, and $(77.8) million, respectively.

(e) Includes approximately $115.7 million in cost of sales, approximately $3.0 million in R&D, and approximately $92.3 million in SG&A.

Refer to Note 17 Restructuring included in Part II, Item 8 of this Form 10-K for additional information.

(f) Includes incremental manufacturing variances at plants in the 2020 restructuring program of approximately $45.9 million and charges related to the divestitures of the commercialization rights in the Upjohn Distributor Markets of approximately $19.2 million.

(g) Includes a gain of approximately $156.2 million on the transaction to divest the Company’s rights to two women’s healthcare products in certain countries (other than in the U.K., which remains subject to regulatory approval), which closed in December 2023.

(h) Includes net gains of approximately $43.4 million as a result of remeasuring our non-marketable equity investments to fair value, including our equity interests in Mapi and Famy Life Sciences and the CCPS in Biocon Biologics.

(i) Adjusted for changes for uncertain tax positions.

(f) Includes incremental manufacturing variances at plants slated for sale or closure of approximately $109.4 million.

(g) Includes:

(1) a gain of approximately $373.5 million as a result of remeasuring the CCPS in Biocon Biologics to fair value;

(2) a gain on the extinguishment of debt of $16.5 million;

and (3) charges of $184.6 million related to the impairment of our equity investment in Mapi and advances for GA Depot inventory (refer to Note 18 Licensing and Other Partner Agreements included in Part II, Item 8 of this Form 10-K for more information).

(h) Adjusted for changes for uncertain tax positions.

Reconciliation of U.S.

GAAP Net Earnings (Loss) to EBITDA and Adjusted EBITDA

GAAP Net (Loss) Earnings to EBITDA and Adjusted EBITDA

Below is a reconciliation of U.S.

GAAP net earnings (loss) to EBITDA and adjusted EBITDA for the year ended December 31, 2023 compared to the prior year periods:

GAAP net (loss) earnings to EBITDA and adjusted EBITDA for the year ended December 31, 2024 compared to the prior year periods:

Year Ended December 31,

(In millions) 2024 2023 2022

GAAP net earnings (loss) $ 54.7 $ 2,078.6 $ (1,269.1)

GAAP net (loss) earnings $ (634.2) $ 54.7 $ 2,078.6

Add adjustments:

Net contribution attributable to equity method investments — — 61.9

Income tax provision 11.0 148.2 734.6

148.2 734.6 604.7

Interest expense (a)

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Loss (gain) on divestitures of businesses 399.4 239.9 (1,754.1)

Impairment of goodwill related to assets held for sale 580.1 117.0 —

Impairment of goodwill 321.0 580.1 117.0

Restructuring, acquisition and divestiture-related and other special items (c)

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GAAP Net Earnings (Loss) to Adjusted Net Earnings.

GAAP Net (Loss) Earnings to Adjusted Net Earnings.

Liquidity and Capital Resources

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Nevertheless, our ability to satisfy our working capital requirements and debt service obligations, and fund planned capital expenditures, share repurchases, or dividend payments, will substantially depend upon our future operating performance (which will be affected by prevailing economic conditions), and financial, business and other factors, some of which are beyond our control.

Beginning in 2024, upfront and milestone payments related to externally developed IPR&D projects acquired directly in a transaction other than a business combination, which were previously included in cash flows from operating activities in the consolidated statements of cash flows, are now classified as cash flows from investing activities.

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

The adjustments resulted in an increase to net cash provided by operating activities and an increase to net cash used in investing activities of $100.4 million for the year ended December 31, 2023.

Operating Activities

Net cash provided by operating activities decreased by $597.1 million to $2.30 billion for the year ended December 31, 2024, as compared to net cash provided by operating activities of $2.90 billion for the year ended December 31, 2023.

Net cash provided by operating activities is derived from net earnings (loss) adjusted for non-cash operating items, gains and losses attributed to investing and financing activities and changes in operating assets and liabilities resulting from timing differences between the receipts and payments of cash, including changes in cash primarily reflecting the timing of cash collections from customers, payments to vendors and employees and tax payments in the ordinary course of business.

The decrease in net cash provided by operating activities was principally due to lower operating earnings, including as a result of the disposition of the biosimilars business in November 2022 and other divestitures during 2023, and the timing of cash payments and collections.

This was partially offset by higher deal-related costs in 2022, primarily taxes and transaction costs, associated with the closing of the Biocon Biologics Transaction.

Net cash provided by operating activities is derived from net (loss) earnings adjusted for non-cash operating items, gains and losses attributed to investing and financing activities and changes in operating assets and liabilities resulting from timing differences between the receipts and payments of cash, including changes in cash primarily reflecting the timing of cash collections from customers, payments to vendors and employees and tax payments in the ordinary course of business.

The decrease in net cash provided by operating activities was principally due to lower operating earnings, including as a result of divestitures in 2023 and 2024, higher transaction costs associated with divestitures, and the timing of cash payments and collections.

Investing Activities

Net cash used in investing activities was $764.1 million for the year ended December 31, 2023, as compared to net cash from investing activities of $1.52 billion for the year ended December 31, 2022, a decrease of $2.28 billion.

Net cash from investing activities was $1.80 billion for the year ended December 31, 2024, as compared to net cash used in investing activities of $864.5 million for the year ended December 31, 2023, an increase of $2.67 billion.

In 2024, significant items in investing activities included the following:

• cash paid for acquisitions, net of cash acquired, of $667.7 million;

• payments for product rights and other, net totaling approximately $97.5 million, related to various product-related payments;

• proceeds from the sale of assets and businesses of $2.51 billion, primarily related to the divestitures of the OTC Business, the API business in India and the women’s healthcare business;

• cash paid for acquisitions, net of cash acquired, of $350.0 million related to the Idorsia Transaction;

• capital expenditures, primarily for equipment and facilities, totaling approximately $326.0 million.

While there can be no assurance that current expectations will be realized, capital expenditures for the 2025 calendar year are expected to be approximately $300 million to $400 million.

• proceeds from the sale of assets and businesses of $364.1 million, primarily related to divestitures of the Company’s rights to two women’s healthcare products in certain countries (other than in the U.K., which remains subject to regulatory approval) and commercialization rights in certain Upjohn Distributor Markets.

In 2023, significant items in investing activities included the following:

• proceeds from the sale of assets of $1.95 billion related to the Biocon Biologics Transaction;

• cash paid for acquisitions, net of cash acquired, of $667.7 million;

• payments for product rights and other, net totaling approximately $97.5 million, related to various products;

• capital expenditures, primarily for equipment and facilities, totaling approximately $377.0 million;

• proceeds from the sale of assets and businesses of $364.1 million, primarily related to divestitures of the Company’s rights to two women’s healthcare products in certain countries and commercialization rights in certain Upjohn Distributor Markets.

Financing Activities

Net cash used in financing activities was $2.30 billion for the year ended December 31, 2023, as compared to net cash used in financing activities of $3.88 billion for the year ended December 31, 2022, a decrease of $1.58 billion.

Net cash used in financing activities was $4.33 billion for the year ended December 31, 2024, as compared to net cash used in financing activities of $2.30 billion for the year ended December 31, 2023, an increase of $2.03 billion.

In 2024, significant items in financing activities included the following:

• repayments of Senior Notes at maturity of approximately $1.25 billion, consisting of the 3.125% Senior Notes and the 4.200% Senior Notes;

• repayment of Senior Notes through tender offers for and satisfaction and discharge of approximately $1.86 billion of Senior Notes;

• repayment of Senior Notes at maturity of approximately $1.86 billion, consisting of the 1.023% Euro Senior Notes and the 2.250% Euro Senior Notes;

• share repurchases of $250.0 million;

• cash dividends paid of $574.8 million;

• payment of $220.0 million to Biocon Biologics related to the closing working capital target, partially offset by net cash of $47.6 million, primarily collected on behalf of other partners, which are included in Other items, net.

• receipt of $245.0 million in deferred consideration from the Biocon Biologics Transaction, and net cash of $52.7 million collected on behalf of various partners, including Biocon Biologics, which are included in Other items, net.

In 2023, significant items in financing activities included the following:

• repayments of Senior Notes at maturity of approximately $1.79 billion, consisting of the 0.816% Euro Senior Notes and the 1.125% Senior Notes;

• borrowings and repayments under the Revolving Facility of $1.88 billion;

• net repayments of short-term borrowings of $1.49 billion;

• repayments of Senior Notes at maturity of approximately $1.25 billion, consisting of the 3.125% Senior Notes and the 4.200% Senior Notes;

• share repurchases of $250.0 million;

• cash dividends paid of $575.6 million;

• proceeds of $19.3 million related to cash collected on behalf of Biocon Biologics.

• payment of $220.0 million to Biocon Biologics related to the closing working capital target, partially offset by net cash of $47.6 million collected on behalf of various partners, including Biocon Biologics, which are included in Other items, net.

Refer to the consolidated statements of cash flows in Part II, Item 8 of this Form 10-K for additional details on other significant sources and uses of cash during the years ended December 31, 2024 and 2023.

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The majority of our cash is invested in U.S.

government money market funds.

government money market funds and in bank deposits.

In order to support our global operations, we maintain significant cash and cash equivalents within the banking system with the majority of this at Global Systemically Important Banks.

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Our primary emphasis is on the safety of the principal.

Where possible, we diversify our cash and cash equivalents among counterparties to minimize exposure to any

one counterparty.

The Company anticipates having sufficient liquidity, including existing borrowing capacity under the Revolving Facility, Commercial Paper Program, Receivables Facility, and Note Securitization Facility combined with cash to be generated from operations, to fund foreseeable cash needs without requiring the repatriation of non-U.S.

The Company has access to $4.0 billion under the Revolving Facility which matures in July 2026.

Effective April 28, 2023, we executed an amendment to the Revolving Facility to convert the benchmark interest rate from LIBOR to an adjusted SOFR, with no change in the applicable interest rate margins.

Where possible, we diversify our cash and cash equivalents among counterparties to minimize exposure to any one counterparty.

The Company anticipates having sufficient liquidity, including existing borrowing capacity under the 2024 Revolving Facility, Commercial Paper Program, and Receivables Facility combined with cash to be generated from operations, to fund foreseeable cash needs without requiring the repatriation of non-U.S.

Should we determine the need to repatriate or convert cash held in countries that have significant restrictions or controls in place, including in China, we may be unable to repatriate or convert such cash, or be unable to do so without incurring substantial costs.

The Company has access to $3.5 billion under the 2024 Revolving Facility which matures in September 2029.

Up to $1.65 billion of the 2024 Revolving Facility may be used to support borrowings under our Commercial Paper Program.

As of December 31, 2023, the Company did not have any borrowings outstanding under the Commercial Paper Program and the Revolving Facility.

The Company has a $400 million Receivables Facility which expires in April 2025 and a $200 million Note Securitization Facility which expires in August 2024.

As of December 31, 2023, the Company did not have any borrowings outstanding under the Receivables Facility or 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.

As of December 31, 2024, the Company did not have any borrowings outstanding under the Commercial Paper Program or the 2024 Revolving Facility.

The Company has a $400 million Receivables Facility which expires in April 2025.

As of December 31, 2024, the Company did not have any borrowings outstanding under the Receivables Facility.

Under the terms of the Receivables Facility, certain of our accounts receivable secure the amounts borrowed and cannot be used to pay our other debts or liabilities.

The amount that we may borrow at a given point in time is determined based on the amount of qualifying accounts receivable that are present at such point in time.

Borrowings outstanding under the Receivables Facility bear interest at the applicable base rate plus 0.775%, and under the Note Securitization Facility at the relevant base rate plus 1.00% 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.

Borrowings outstanding under the Receivables Facility bear interest at the applicable base rate plus 0.775% 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 agreement governing the Receivables Facility contains various customary affirmative and negative covenants, and customary default and termination provisions.

We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S.

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Our factoring agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold.

We derecognized $30.8 million and $34.7 million of accounts receivable as of December 31, 2023 and 2022 under these factoring arrangements, respectively.

We derecognized $68.5 million and $30.8 million of accounts receivable as of December 31, 2024 and 2023, respectively, under these factoring arrangements.

Additionally, in 2023, we entered into a similar arrangement for certain European countries.

As of December 31, 2023, we have assigned and derecognized approximately $415.7 million of Trade Receivables, Net , which are now included in Other Receivables .

As of December 31, 2024 and 2023, we assigned and derecognized approximately $29.9 million and $415.7 million, respectively, of Trade Receivables, Net , which were included in Other Receivables .

The Company has certain voluntary supply chain finance programs with financial intermediaries which provide participating suppliers the option to be paid by the intermediary earlier than the original invoice due date.

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Any divestitures could impact future liquidity.

In addition, we plan to continue to explore various other ways to create, enhance or otherwise unlock the value of the Company’s unique global platform in order to create shareholder value.

As previously discussed, on October 1, 2023, the Company announced certain divestiture related transactions.

Refer to Note 5 Divestitures in Part II, Item 8 of this Form 10-K for more information.

For information regarding our dividends paid and declared and share repurchase program, refer to Note 2 Summary of Significant Accounting Policies in Part II, Item 8 of this Form 10-K.

In addition, we plan to continue to explore various other ways to unlock the value of the Company’s unique global platform in order to create shareholder value.

For information regarding our dividends paid and declared and share repurchase program, refer to Note 2 Summary of Significant Accounting Policies included in Part II, Item 8 of this Form 10-K.

Long-term Debt Maturity

For information regarding our debt agreements and mandatory minimum repayments remaining on the outstanding notional amount of long-term debt at December 31, 2023, refer to Note 10 Debt in Part II, Item 8 of this Form 10-K.

The YEN Term Loan Facility and the Revolving Facility contain customary affirmative covenants for facilities of this type, including among others, 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 3.75 to 1.00 for the quarter ended March 31, 2023 and each quarter ending 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.

For information regarding our debt agreements and mandatory minimum repayments remaining on the outstanding notional amount of long-term debt at December 31, 2024, refer to Note 10 Debt included in Part II, Item 8 of this Form 10-K.

The YEN Term Loan Facility and the 2024 Revolving Facility contain customary affirmative covenants for facilities of this type, including among others, 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 3.75 to 1.00, 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.

The Company is in compliance with its covenants at December 31, 2024 and expects to remain in compliance for the next twelve months.

We and our subsidiaries and affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly-issued debt securities) in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of our outstanding indebtedness.

Refer to Note 10 Debt included in Part II, Item 8 of this Form 10-K for more information.

Supplemental Guarantor Financial Information

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(3) with respect to the Utah U.S.

Dollar Notes, the earlier to occur of (i) with respect to the guarantee provided by Mylan Inc., (x) the release of Utah Acquisition Sub Inc.’s guarantee under all applicable Mylan Inc.

Dollar Notes, the earlier to occur of (i) with respect to the guarantee provided by Mylan Inc., (x) the release of Utah

Acquisition Sub Inc.’s guarantee under all applicable Mylan Inc.

Debt (as defined in the applicable indenture) and (y) Mylan Inc.

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under the Senior U.S.

Dollar Notes are subject to certain limitations and terms similar to those applicable to other guarantees of similar instruments, including that (i) the guarantees are subject to fraudulent transfer and conveyance laws and (ii) each guarantee is limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable guarantor without rendering the guarantee, as it relates to such guarantor, voidable under applicable fraudulent transfer and conveyance laws or similar laws affecting the rights of creditors generally.

Dollar Notes are subject to certain limitations and terms similar to those applicable to other guarantees of similar instruments, including that (i) the guarantees are subject to fraudulent transfer and conveyance laws and (ii) each guarantee is limited to an amount not to exceed the maximum amount that can be guaranteed by the applicable guarantor without rendering the guarantee, as it relates to such guarantor, voidable under applicable fraudulent transfer and conveyance laws or similar laws affecting the rights of creditors generally.

The following table presents unaudited summarized financial information of Viatris Inc., Mylan Inc., Utah Acquisition Sub Inc., and Mylan II B.V.

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(1,206.6) (1,243.8)

Net (loss) earnings

Other Commitments

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We have approximately $384 million accrued for legal contingencies at December 31, 2024.

While the Company believes that it has meritorious defenses with respect to the claims asserted against it and the assumed legal matters referenced above, and intends to vigorously defend its position, the process of resolving these matters is inherently uncertain and may develop over a long period of time, and so it is not possible to predict the ultimate resolution of any such matter.

It is possible that an unfavorable resolution of any of the ongoing matters could have a material effect on the Company’s business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price.

In conjunction with the Combination, Viatris entered into a TSA with Pfizer pursuant to which each party provided certain limited transition services to the other party.

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, 2023, 2022 and 2021, the Company incurred $5.5 million, $54.5 million, and $30.4 million, respectively, related to this provision of the TSA, and approximately $143.5 million during the period beginning on the closing date of the Combination and ended December 31, 2023.

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

At the time of closing of the Biocon Biologics Transaction, Viatris and Biocon Biologics also entered an agreement pursuant to which Viatris was 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.

Biocon Biologics had substantially exited all transition services with Viatris as of December 31, 2023.

In connection with the Announced Divestitures, Viatris has agreed, at the closing of the respective transactions, to enter into transition services and manufacturing and supply agreements pursuant to which the Company will provide services to the respective purchasers, substantially the same as we currently provide to the related businesses, generally for a period of up to 12 months, subject to potential extensions in certain circumstances.

In addition, in connection with the OTC Transaction and the divestiture of our women’s healthcare business, we have agreed, at the closing of the respective transactions, to enter into distribution agreements for certain markets for a limited period of time.

In connection with our API business divestiture, we have agreed to enter into a manufacturing and supply agreement pursuant to which we will purchase a significant amount of API from the purchaser in that transaction.

inherently uncertain and may develop over a long period of time, and so it is not possible to predict the ultimate resolution of any such matter.

In connection with the divestitures, Viatris and the respective buyers entered into transition services and/or manufacturing and supply agreements pursuant to which the Company is providing services to the respective purchasers, substantially the same as we previously provided to the related businesses, generally for a period of up to 12 months for transition services and for periods between one to 10 years for manufacturing and supply agreements, depending on the geographic market and the products subject to such agreement, subject to potential extensions in certain circumstances.

In addition, in connection with the OTC Transaction and the divestiture of our women’s healthcare business, we entered into distribution agreements for certain markets for a limited period of time.

In connection with the API business divestiture, we entered into a manufacturing and supply agreement pursuant to which we are purchasing a significant amount of API from the purchaser in that transaction.

At December 31, 2024, our material cash requirements from known contractual and other obligations primarily relate to repayment of outstanding borrowings and interest, open purchase orders, post-employment benefit plans, unrecognized tax benefits, capital expenditures, dividends and leases.

For additional information, refer to Notes 2, 7, 10, 12, 14, and 16 in Part II, Item 8 of this Form 10-K.

For additional information, refer to Notes 2, 7, 10, 12, 14, and 16 included in Part II, Item 8 of this Form 10-K.

We anticipate our cash requirements related to ordinary course purchases of goods and services will be consistent with our past levels.

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

While the maximum amount to which Viatris may be exposed under such agreements cannot be reasonably estimated, the Company maintains insurance coverage, which management believes will effectively mitigate the Company’s obligations under these indemnification provisions.

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

The maximum amount to which Viatris may be exposed under such agreements cannot be reasonably estimated due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement.

Historically, we have not paid material amounts under these indemnification provisions.

Further, for certain agreements, the Company maintains insurance coverage, which management believes will effectively mitigate the Company’s obligations under these indemnification provisions.

No amounts have been recorded in the consolidated financial statements with respect to the Company’s obligations under such agreements.

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We estimate that the amounts that may be paid during the next twelve months to be approximately $33 million.

Additionally, these agreements may also include potential sales-based milestones and call for us to pay a percentage of amounts earned from the sale of the product as a royalty or a profit share.

These agreements may also include potential sales-based milestones and call for us to pay a percentage of amounts earned from the sale of the product as a royalty or a profit share.

Refer to Note 18 Licensing and Other Partner Agreements included in Part II, Item 8 of this Form 10-K for additional information.

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We have identified the following to be our critical accounting policies:

the determination of net revenue provisions, acquisitions, intangible assets, goodwill and contingent consideration, income taxes and the impact of existing legal matters.

the determination of net revenue provisions;

accounting for acquisitions, including intangible assets, goodwill and contingent consideration;

income taxes;

and the impact of existing legal matters.

Revenue Recognition

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Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances.

Accruals for these provisions are presented in the consolidated financial statements as reductions in determining net sales and as a contra asset in accounts

receivable, net (if settled via credit) and other current liabilities (if paid in cash).

Accruals for these provisions are presented in the consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash).

Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions.

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The following is a rollforward of the categories of variable consideration during 2024:

(In millions) Balance at December 31, 2022 Current Provision Related to Sales Made in the Current Period Acquisitions, Divestitures, and Other

Checks/ Credits Issued to Third Parties Effects of Foreign Exchange Balance at December 31, 2023

(In millions) Balance at December 31, 2023 Current Provision Related to Sales Made in the Current Period Checks/ Credits Issued to Third Parties Effects of Foreign Exchange Balance at December 31, 2024

Chargebacks $ 530.3 $ 5,008.7 $ (5,043.6) $ (1.5) $ 493.9

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

Acquisitions, Intangible Assets, Goodwill and Contingent Consideration

Acquisitions, including Intangible Assets, Goodwill and Contingent Consideration

The Company accounts for acquired businesses using the acquisition method of accounting in accordance with the provisions of ASC 805 , Business Combinations , which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective estimated fair values.

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Refer to Note 4 Acquisitions and Other Transactions and Note 8 Goodwill and Intangible Assets included in Part II, Item 8 of this Form 10-K for additional information.

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.

Purchases of developed products and licenses that are accounted for as asset acquisitions, including milestone payments related to development compounds due upon receipt of regulatory approvals, 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.

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These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, the discount rate, terminal growth rates, operating income before depreciation and amortization, capital expenditures forecasts and control premiums.

When compared to the prior year’s annual goodwill impairment test completed on April 1, 2022, the Company has experienced significant fluctuations in foreign exchange rates in certain international markets, combined with a significant increase in market interest rates.

These market factors have caused the discount rate utilized in all our reporting units to increase between 1.0% to 4.5%, resulting in a significant reduction in the calculated fair values at April 1, 2023 for all our reporting units.

Also, in conjunction with the Company’s annual strategic planning process which included determining long-term growth rate targets for our business, operational results during the forecast period were reduced and long-term growth rates were increased.

As a result of these changes, the calculated fair values of the North America, Greater China and Europe reporting units declined in excess of 10% and the JANZ and Emerging Markets reporting units declined in excess of 15% when compared to the prior year fair values.

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

The Company performed the annual goodwill impairment test as of April 1, 2024.

When compared to the prior year’s annual goodwill impairment test completed on April 1, 2023, due to certain macroeconomic conditions, the Company has experienced fluctuations in foreign exchange rates in certain international markets, combined with an increase in market interest rates.

These conditions impacted all reporting units, with the most significant impact in JANZ and Emerging Markets.

The impact in the other reporting units was offset by changes in other discount rate assumptions.

As of April 1, 2024, the allocation of the Company’s total goodwill was as follows:

North America $3.12 billion, Europe $3.86 billion, Emerging Markets $1.17 billion, JANZ $0.62 billion and Greater China $0.93 billion.

As of April 1, 2023, 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 $535 million or 3.9% for the annual goodwill impairment test.

As it relates to the discounted cash flow approach for the Europe reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately 2.4%.

A terminal year value was calculated with a 2.0% revenue growth rate applied.

The discount rate utilized was 11.0% and the estimated tax rate was 14.9%.

If all other assumptions are held constant, a reduction in the terminal value growth rate by 1.0% or an increase in discount rate by 0.5% 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 $145 million or 5.5% for the annual goodwill impairment test.

As it relates to the discounted cash flow approach for the JANZ reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years.

In conjunction with its annual goodwill impairment test, the Company recorded a goodwill impairment charge of $321.0 million during the second quarter of 2024 related to its JANZ reporting unit, which was recorded within SG&A in the consolidated statement of operations.

The impairment charge was primarily the result of a 1.0% increase in the discount rate and a 0.5% reduction in the terminal growth rate assumption for the reporting unit.

For the JANZ reporting unit at April 1, 2024, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately negative 0.3%.

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The discount rate utilized was 8.0% and the estimated tax rate was 30.3%.

If all other assumptions are held constant, a reduction in the terminal value growth rate by 0.5% or an increase in discount rate by 0.5% 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 $513 million or 7.7% for the annual goodwill impairment test.

As it relates to the discounted cash flow approach for the Emerging Markets reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years.

Following the goodwill impairment charge recorded in the JANZ reporting unit, the carrying value of the reporting unit was equal to its estimated fair value as of April 1, 2024.

If market conditions or the projected results were to change materially, it may be necessary to record further impairment charges to the JANZ reporting unit in future periods.

As of April 1, 2024, the Company determined that the fair values of the North America, Greater China, and Emerging Markets reporting units were 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 $882 million or 7.9% for the annual goodwill impairment test.

As it relates to the discounted cash flow approach for the Europe reporting unit at April 1, 2024, the Company forecasted cash flows for the next 10 years.

During the forecast period, the revenue compound annual growth rate was approximately 2.5%.

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The discount rate utilized was 10.0% and the estimated tax rate was 15.7%.

If all other assumptions are held constant, a reduction in the terminal value growth rate by 2.5% or an increase in discount rate by 1.0% would result in an impairment charge for the Emerging Markets reporting unit.

In the fourth quarter of 2022, the commercialization rights in the Upjohn Distributor Markets met the criteria to be classified as held for sale.

The Company allocated goodwill to its commercialization rights in the Upjohn Distributor Markets using a relative fair value approach and recorded a goodwill impairment charge of $117.0 million in that quarter 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 commercialization rights in the Upjohn Distributor Markets being below the carrying value of the net assets of the disposal group.

In the fourth quarter of 2023, the OTC Business met the criteria to be classified as held for sale.

The Company allocated goodwill to its OTC Business using a relative fair value approach and recorded a goodwill impairment charge of $580.1 million in that quarter within the Europe (majority of the charge), JANZ and Emerging Markets reporting units, 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 planned divestiture of the OTC Business being below the carrying value of the net assets of the disposal group.

Refer to Note 5 Divestitures included in Part II, Item 8 of this Form 10-K for additional information on these divestitures.

If all other assumptions are held constant, a reduction in the terminal value growth rate by 1.5% or an increase in discount rate by 1.0% would result in an impairment charge for the Europe reporting unit.

Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.

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The fair value of finite-lived intangible assets was calculated as the present value of the estimated future net cash flows using a market rate of return.

For the year ended December 31, 2021, the Company recorded $83.4 million (related to the divestiture of a group of OTC products in the U.S.) of impairment charges for finite-lived intangible assets, which were recorded as a component of amortization expense.

At December 31, 2024 and 2023, the Company’s finite-lived intangible assets totaled $16.26 billion and $18.86 billion, respectively.

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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.

If the divestitures of the commercialization rights in the remaining Upjohn Distributor Markets are not completed, 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.

The Company’s 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.

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For the years ended December 31, 2024 and 2022, the Company recorded $177.1 million and $0.6 million, respectively, of impairment charges, which were recorded as a component of amortization expense.

There were no IPR&D impairment charges in 2023.

At December 31, 2024 and 2023, the Company’s IPR&D assets totaled $814.2 million and $319.4 million, respectively.

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Favorable resolution would be recognized as a reduction to our provision for income taxes in the period of resolution or expiration of the underlying statutes of limitation.

Based on this evaluation, as of December 31, 2023, our reserve for unrecognized tax benefits totaled $272.8 million, of which $204.3 million was recorded in connection with the Combination and is subject to Pfizer’s indemnification obligations to Viatris under the Tax Matters Agreement.

Based on this

evaluation, as of December 31, 2024, our reserve for unrecognized tax benefits totaled $255.7 million, of which $182.2 million was recorded in connection with the Combination and is subject to Pfizer’s indemnification obligations to Viatris under the Tax Matters Agreement.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

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Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth.

Based on this evaluation and other factors, as of December 31, 2023, a valuation allowance of $421.4 million has been recorded in order to measure only the portion of the deferred tax asset that more likely than not will be realized.

Based on this evaluation and other factors, as of December 31, 2024, a valuation allowance of $1.23 billion has been recorded in order to measure only the portion of the deferred tax asset that more likely than not will be realized.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth.

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An estimate is made to accrue for a loss contingency relating to any of these legal proceedings if it is probable that a liability was incurred as of the date of the financial statements and the amount of loss can be reasonably estimated.

Because of the subjective nature inherent in assessing the outcome of litigation and because of the potential that an adverse outcome in a legal proceeding could

have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or ordinary share price, such estimates are considered to be critical accounting estimates.

Because of the subjective nature inherent in assessing the outcome of litigation and because of the potential that an adverse outcome in a legal proceeding could have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay dividends or repurchase shares, and/or stock price, such estimates are considered to be critical accounting estimates.

A variance of 5% between estimated and recorded litigation reserves and actual resolution of certain legal matters would have an effect on our litigation reserve balance of approximately $19.2 million.

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Dollar and the local currencies in the markets in which we operate, mainly the Euro, Indian Rupee, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and South Korean Won affect our results as previously noted.

During 2022 and 2023, the global economy has been impacted by high levels of inflation and rising energy costs, which has resulted in significant economic volatility.

As a result, central banks have and may continue to tighten their monetary policies and increase interest rates.

In recent years, the global economy has been impacted by high levels of inflation and rising energy costs, which has resulted in significant economic volatility.

As a result, central banks have tightened their monetary policies and increased interest rates.

While inflationary and other macroeconomic pressures may ease and interest rates may decline, we do not expect to see a corresponding reduction in these higher costs.

These macroeconomic pressures combined with the volatility in foreign exchange rates, including the strengthening of the U.S.

dollar versus certain of the other currencies in which we operate, negatively impact our results of operations.

dollar versus certain of the other currencies in which we operate, have impacted and may continue to negatively impact our results of operations.

We proactively look to manage such macroeconomic pressures by implementing strategies to mitigate and partially offset the impact of these factors.

While inflationary and other macroeconomic pressures have somewhat eased more recently, we do not expect to see a corresponding reduction in these higher costs.

Recent Accounting Pronouncements

Refer to Note 2 Summary of Significant Accounting Policies in Part II, Item 8 of this Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

Refer to Note 2 Summary of Significant Accounting Policies included in Part II, Item 8 of this Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

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 7. Management’s Discussion and Analysis