Viatris Inc. (VTRS) Earnings Call Transcript & Summary

Good morning. I'm Chris Schott at JPMorgan. I'm very pleased to be introducing the newly formed Viatris for the company's first official presentation at the JPMorgan Healthcare Conference. We're going to have a presentation from the company's CEO, Michael Goettler, and then we're going to open up to a Q&A session with the broader management team from there. [Operator Instructions] And with that, let me turn it over to Michael.

All right. Good morning, Chris. Very nice to be back at JPMorgan, even though in a virtual format, and thanks for hosting us. And to the audience, I want to say thank you for joining us so early in the morning, East Coast time, 7 a.m., but for our first JPMorgan presentation as Viatris. A new kind of health care company that really came into being only 2 months ago. What I would like to share with you today are really 3 topics. Number one, who is Viatris and give you a bit of an overview of the company that we build by combining Upjohn and Mylan. Secondly, I want to talk as an incoming CEO of how I intend to manage the company with the goal of total shareholder return. And third, what our priorities are or very clear priorities are, and what you can expect from us in the near and mid to long term. Now I understand you have control of the slides. The audience has controlled of the slides. On Slide 2 and 3, we see some important disclosures on forward-looking statements, non-GAAP financial measures. In the interest of time, I'll leave it up to you to read them. And I would like to move to Page 4 in the presentation, which really introduces my leadership team. Joining me today for the Q&A portion of the presentation later on are Rajiv Malik. Rajiv Malik is the President of Viatris, 36 years or more of experience in the industry, a very strong scientific, operational, commercial background and expertise. And as president, Rajiv will be focusing on the business and operational execution of the business. Rajiv and I have been working together now for 1.5 years, leading up to day 1, and I couldn't wish for a better partner than him. Also joining me is Sanjeev Narula. Sanjeev has also 35 years or more of experience in finance, with Pfizer, American Express and other companies. Sanjeev was the CFO at Upjohn, together with me, is a very strong operational CFO. And as a CFO, he will be focusing on financial performance and discipline. And so you look at this layout and you look at how we divide roles and how we complement each other, you can very clearly see already what the focus for our company is: it's performance, it's execution and it's discipline. And this is a team that will make it happen, and I couldn't wish for a better team. Now behind that is a strong bench of other leaders we have in the company. For example, our regional presidents, operational leaders, our science leaders, our enabling function leaders. And very soon, on March 1, we'll be hosting our first inaugural Investor Day. And on that Investor Day, you'll be able to meet some of them, and I hope you join us for that. So you get a feeling for the bench strength of talent that we have in the company. So let me go to who is Viatris. If you move to Slide 5, I mentioned that Viatris is a new kind of health care company. And here's our mission, a mission that engages us, a mission that brings us together and a mission that excites each to every one of us to come to work every day. We see health care not as it is, but as it should be. Last year at JPMorgan, when we were still able to present in person, I said the world needs a company like Viatris. And I think today, that is true more than ever. We, every day, act courageously and we're uniquely positioned to be a source of stability in a world of evolving health care needs. And I couldn't have imagined a year ago how that word stability is even more relevant today. We empower people worldwide to live healthy at every stage of life. We do so based on 3 pillars: on access, leadership and partnership. Access by providing high-quality, trusted medicines regardless of geography and circumstances. Leadership by advancing sustainable operations and innovative solutions to improve patients' health. And partnership by leveraging our collective expertise, the platform that we have, to connect people to products and services. And you'll hear more about that. We believe we can be a partner of choice. We have a unique Global Healthcare Gateway, and partnering is going to be a key component of us moving forward. If you move to Slide 6, you can see why we're confident to act on that mission. We can be confident because of the assets and the capabilities that we have in Viatris, the unique platform. And starting with our in-line portfolio of products, you can see we have a very sustainable, diverse and increasingly differentiated portfolio of products, really spanning all categories: brands, generics, increasingly complex generics, biosimilars, over-the-counter medications, active pharmaceutical ingredients. It really is a very diverse and sustainable portfolio. In total, over 1,400 approved medicines. And that diversity, we believe, is a strength. Few companies have that kind of diversification in their portfolio, and that gives us not only protection from volatility, the ups and downs of the market, but also the ability to tailor our offering to the specific needs of individual markets. Now we're building on that in-line portfolio with strong signs. If you look at Slide #7, you see the pipeline that -- part of the pipeline that we're advancing with differentiated, complex and hard-to-make molecules. Now you can imagine, as I came on board as a CEO, one of my areas of interest was, of course, the pipeline. I'm now very confident in our ability to deliver on our R&D projects. One of the reasons I have confidence is on the slide. If you look at the top row of this chart, you see some of the examples of products that we already launched in the higher-value, more complex generics, biosimilars, new chemical entities, insulin analogs, drug device combinations such as dry powder inhalers, Wixela and others. So we've proven that we can deliver in these categories. For each of them behind that, we have additional pipeline. And I want to point out, for example, our once-monthly Copaxone as an innovation on top of a very complex molecule. Take Symbicort, for example, another dry power inhaler technology. Or take BOTOX as an example. So we've built on that foundation that we've laid, and we ensure that our future portfolio is increasingly differentiated and the differentiation leads to less erosion and longer tails. If you move to Slide 8. On Slide 8, you can see that in-line products that we have, the in-line and the pipeline that's brought to patients through a commercial network with unparalleled global reach and capabilities. We've organized ourselves commercially into 4 geographic regions: that's the developed markets, Greater China, the growth markets and what we call the JANZ region, Japan, Australia and New Zealand. We did that based on the similarities of the market and the needs of the market. Together, we're reaching 165 markets and territories in the world. We're reaching 60,000 customers. We have 12,000 reps and 1,200 marketers every day focusing on our customers. And we not only have a presence in these markets, we also have a presence in all major channels in these markets, in the hospital channels, government channels, retail channels, digital channels. So we have a broad presence and unparalleled global reach and depth on our commercial side. On Slide 9, you see the last piece of the platform. Beyond the products, beyond the pipeline, we have the commercial presence. Behind that commercial engine is a unique global supply network of around 50 sites, producing 80 billion doses in the world. But also strong technical resources, whether it's our medical team, whether it's our regulatory capabilities, our development capabilities. We have 2,500 scientists working on our pipeline every day. We have 1,000 regulatory experts. We have 600 medical and product specialists. A strong platform. And all of that together, if you now take our commercial capabilities, you take our supply network, you take our technical expertise, really forms a one of a kind, highly cost-efficient platform that we believe is groundbreaking. Slide 10 shows you what we believe is our groundbreaking Global Healthcare Gateway. It's taking all these platforms, all these capabilities together. And we're excited about the opportunity to make this platform available to more partners. And with that, to fuel future profitable growth and create value for our shareholders, for patients, for partners, et cetera. While we always say at the same time, we look at these capabilities, we also look at the discipline around capital investment opportunities. We're very disciplined with the robust governance, stringent investment criteria and aligning every investment we make with the interest of shareholders and creating value. And this Global Healthcare Gateway starts now, here at JPMorgan. Viatris is officially open for business, and we're excited what we can do together with our partners. We had many discussions. I'm encouraged by the discussions and I'm encouraged by the value that partners recognize in this platform. And as an example -- take China for an example. China is a very difficult market to enter. And we can really offer partners a lot. We have an absolute premier infrastructure in China. They can promote in multiple channels, hospital, retail and digital, has deep reach in the country, not just the top cities. Has deep knowledge and deep relationships. We have local manufacturing at international standards, quality standards, and also the highest compliance standards. That applies to many countries. But China, I think, is one of the examples we think that will shine for us. So that gives you an overview of who is Viatris and why we're excited about the platform that we've built. So now let me pivot a little bit and move to Slide 11, if you can follow me, and I want to share with you how I intend to run this company to maximize value creation for our shareholders. And as I mentioned, we have an Investor Day upcoming on March 1. We're going to share a lot more details with you then. We're looking forward to that. As you can imagine, we are right now laser-focused on the integration. We're 2 months into it. But we've also been very thoughtful as we bring these 2 companies together, that we have the unique opportunities to set the right tone now. We set the right tone and create the right internal conditions to maximize value. The internal conditions are critical. We need to get the right outcome. And it starts with a seemingly simple thing. A seemingly simple thing as to get the right and singular governing objective, the right and singular definition of winning, the right and singular definition of how we measure success. Everything flows from there. Now revenue, revenue growth is an important metric and we want to grow, but we want to make sure it's the right revenue that creates value for shareholders. Market share gains are important. That needs to be the right kind of market share gains to gain value for our shareholders. And I'm convinced that as we do this well, there is significant value we can unlock in the organization. And that's something that's particularly important for a company like Viatris, precisely because we have such a large and diverse portfolio. Now to do that, we need to put other conditions in place. We need to have the right structure with transparency and accountability, and we're building that now. We already announced the top 400 leaders. We are clear on our regional structure, our commercial structure. We're putting the right structure in place and the right transparency and accountability of our leaders. We need to have a rigorous target-setting process, resource allocation process, performance management process. And when I talked about culture before, I always said our culture needs to be performance driven. The right processes of target-setting performance management help to drive that kind of culture. We need to have the right systems and capabilities to identify opportunities and differentially invest and capitalize on market opportunities as they arise. And of course, the right incentives to align compensation of every person in the company within their sphere of influence with the interest of -- ultimately of the shareholders. There's a fifth point on this slide, and the fifth point is very important, especially given the diversification of the business that we have: 1,400 molecules, 30,000 SKUs, 165 markets, et cetera. This is a business we cannot manage by averages. We need to be granular. And every time I think about this, I saw a comic once and it was a person that had a head in the oven, the feet in the refrigerator and the subtitle was the average temperature is okay. Now we can't look at this at just the business unit level. This is not enough. We can't look at it at just a country level. It's not enough. We can't look at it at just the product group level. It's not enough. Value is always concentrated. And we need to be able to differentially invest or divest in a market, at a product at a customer level, at a channel level and even at the SKU level. And the reason why I said it, as I explained this, it sounds a little bit like a management one-on-one textbook, but the art is really doing it well. Now we're at the beginning of this journey. We know that companies that do this well generate sustained and superior returns for their shareholders, and we will set ourselves apart from our peers by doing this well. And all of that aligns with the disciplined capital allocation and our focus on total shareholder return. So let's talk a little bit about TSR. The way -- from my perspective, the way I look at TSR is actually very simple. It has 2 components. First one is returning capital to shareholders, and we do that through the initiation of a dividend, for example. The second one is share price appreciation. These are the 2 ways. Dividend will be initiated after the first 2 quarters. So very, very soon. Share price appreciation will come over time and will need to be earned, will need to be earned through consistent execution, through transparency and through accountability to deliver, to say what we will deliver. And for that, we have a very clear road map. If you look -- take a look at Slide 12, it lays out that road map for you. And the road map comes in 2 stages. There's a near term, let's say, the next 3 to 4 years; and there's a mid- to long term, I call it horizon 1 and horizon 2. In horizon 1, what you can expect from us performance-wise is stable revenue, stable revenue while we continue to invest in our pipeline. We see 2021 as our trough year and flat revenue in the near term. In that period, we're also going to realize at least $1 billion in cost synergies by 2024 or sooner. And you may have seen from us that we're wasting no time. About a month into our merger in mid-December, we already announced a significant global restructuring program. We announced that we're going to sell, downsize or close up to 15 sites around the world. We announced 5 of the sites already, including our Morgantown facility. We're going to take synergies and also the G&A, and sales and marketing areas and enabling functions, you take all of that together, we announced that we can see a reduction of employees up to 20% of our headcount. And I'm confident that we're able to deliver on our synergy targets, because I can see the progress we're already making about the integration and I'm very pleased with that promise. I'm also very pleased with the engagement we have in terms of talent retention, in terms of hitting our key milestones that we set for ourselves and the engagement of the employees. It gives us strong confidence. And lastly, we work on improving our cash conversion and generate a strong free cash flow that will then enable us to optimally deploy our capital. So that's what you can expect from us on performance. On capital deployment, our priorities could not be clearer. Focusing on debt reduction with a target of 2.5x, initiating a dividend of at least 25% of free cash flow. And then we want to realize the synergies. Realize the synergies requires cash, and we estimate that to be $1 billion to $1.3 billion, with the majority of it coming in the first 2 years. So that's where our capital goes in the near term in the horizon 1. Now if we move to the right-hand side of this chart, we can now build on what we accomplished in horizon 1. We'll have a much stronger balance sheet. We'll have enhanced free cash flow. We'll [ have ] modestly but durable revenue growth, giving us the ability to have more options for capital deployment. It means further growing the dividends, potential share repurchases, but also opportunities for pipeline investment, opportunities for -- more pipeline investment opportunities for opportunistic business development to generate future growth. So that is the road map for delivering shareholder value. And as I said, execution, transparency, accountability will really be the key operative words as we begin this journey. I look forward to sharing more with you on Investor Day. So let me sum up on Slide 13 what we talked about so far. I hope you see that Viatris is a unique company with a unique global platform, a differentiated profile. Through our Global Healthcare Gateway, we can make this platform available to partners and generate more value. Second, I shared with you how I want to run this company. The foundation for that is a highly engaging and inclusive, and as I said, performance-driven culture. And I'm very pleased about the progress we're making on that front. Third, we have a very clear execution road map. Clear priorities we are putting in place, the right internal conditions to create shareholder value. And fourth, you see our commitment to very disciplined capital allocation, enhancing our free cash flow, initiating a dividend, paying down our debt and driving future growth in a very disciplined way via internal R&D and a Global Healthcare Gateway. So let me just, in closing, before we move to the Q&A, Chris, let me just express how -- and hope you can feel it and you will feel it certainly when Rajiv and Sanjeev join me as well, how energizing it is to see the work that we've done over 1.5 years to prepare for this to come to life, to launch not only a new kind of health care company, but also a new business model and a renewed commitment to shareholder value creation. You can see the clear road map that we have, and you can see the clarity with which we lay out our priority both in terms of performance and in terms of capital deployment. And you can see it in the way we will manage this company, creating the right internal conditions to maximize shareholder value. And we still have a long road ahead, but I hope you can feel the excitement. I can only touch the surface today, but I hope to share a lot more with you on March 1 at our Investor Day. With that, Chris, let's move to Q&A.

Great. Thank you, Michael, for those comments. Obviously, a lot of exciting dynamics in the company. Maybe just to start off with on some financial questions. I think you've alluded in the past to a 2021 base that was somewhere around $18 billion in top line, somewhere around $7 billion in EBITDA. Can you just talk through some of the pushes and pulls as we think about that type of number? And in general, I know you're not going to give out guidance until March 1, but is that the right ballpark or baseline that we should be still thinking about as we look at the business today?

Chris, thank you for the question, and obviously we'll give guidance on or before Investor Day. But let me start by reiterating a little bit the commitments that we made regarding what we will include in that guidance, and I'll give you a little color for some of the pushes and pulls.

Great.

So we consistently said the guidance will include all the risks that we see, all the opportunities that we see, all the onetime events that we can see and any country-specific headwinds. Now let me give you a few example of those. There's been a lot of discussion about China. China, the health care reforms, the changes, the volume-based procurement. I think we understand that very well now. We know what we're in for there. We're in the third wave of that volume based procurement. There's another step coming. It's called URP, universal reimbursement price, right? And we're taking that into consideration as we'll give guidance for 2021 and beyond. The other big topic of discussion was the [ neuro category ], right, in Japan. That actually has happened now. As of mid-December, 20 generics in the -- or more than 20 generics have launched. We launched our own authorized generic. We'll continue, obviously, with the IP litigation. But those generics are on the market, and we take that into account as we give guidance. We want to take into account the effect of the continuing COVID-19 pandemic, which I think everybody now expects to continue into the second half or mid of the year at least. We're going to incorporate all the standup costs. We're going to incorporate restructuring costs. The cost to achieve the 1 billion to 1.3 billion that I disclosed today for the first time. The cost of the TSAs, the transitional service agreements; the MSAs, the manufacturing service agreements that we have with Pfizer, Celebrex Japan and other companies. So we take all of that and any other risk and opportunity we see, we take that all into account as we give guidance. We're making excellent progress. We're putting -- we have 60 days now that we put our 2 budgets together, and we're in the process of finalizing that. And on Investor Day, I look forward to giving that guidance. But Chris, let me also say from -- personally from me, it's really about getting the right number, not any particular number. It's getting the right number, particularly to assure that '21 is a trough year, right? And let me also say that while the headwinds that I mentioned, a lot of them are 2021 headwinds, I feel really good. I feel really good about the durability of this platform going forward. So it's the right number, not just any number. And thanks for your patience to hold on to Investor Day.

Great. And can you just build on the growth off of those 2021 numbers? I guess -- there's obviously pieces of the portfolio that have some headwinds over time. On the flip side, we've got some bright spots for those biosimilars, et cetera. How do we think about the business returning to organic growth over time? What's a realistic time line to envision that occurring? And I guess when we think about the growth going forward, how much of that is internally generated and how much of that is going to be dependent on things like in-licensing or even business development to actually get the position -- the business in a position that it can generate the top line growth over time?

I think it has to be a combination of both. It has to be a combination of internal and BD. And -- now I really think we look at this in 2 horizons. There's the near-term horizon, as I said, what you should expect as stable revenue while we continue to invest in our pipeline. The focus during that time will be on integration synergies, improving cash conversion, using that cash flow for the priorities that we laid out. And as you said, Chris, our business has a natural erosion, and it needs to be compensated by both our pipeline, our very strong pipeline as well as potential business development, and we have a lot to offer. Now business development will focus, in that horizon 1, on the type of business development opportunities that don't require a lot of upfront cash because our capital deployment priorities are clear. But our health care gateway is open for business. We have a lot of discussions here at JPMorgan. And we have a lot to offer, I think, to partners beyond just upfront cash, right? And if you -- now you'd be surprised when you talk to partners what they actually need and how win-win deals can be struck in many different ways. As we go to Horizon 2, I think we have a lot more options. There are a lot more options. There's then much stronger cash flow. Different choices for capital deployment. But it starts right now.

Okay. A couple of questions, just coming back to kind of trough numbers. When you refer to trough in 2021, is that trough on revenue? Is that trough on EBITDA? I'm just trying to get -- is it on both? I'm just trying to get a sense of kind of how you think about that baseline and the growth off of it.

I think we'll give you precise guidance on that, again, on Investor Day. But maybe, Sanjeev, do you want to elaborate a little bit on that question?

Yes, yes. So I think -- Chris, thank you for that question. So I think, obviously, EBITDA is -- a lot of it is driven that by revenue. So as we finalize revenue with all the pushes and pulls, clearly, we'll have an impact on the EBITDA. So the other thing, Chris, that we are very mindful as we look at EBITDA is synergy flow-through, which we have commitment of $1 billion. We said that is going to be $1 billion over the next 4 years. But majority of that will happen in the next couple of years. So again, we are looking at that specifically in terms of the flow-through of that, what happens with all the restructuring that are in place. But clearly, a lot of it is driven by where the revenue lands, with all the pushes and pull that we're talking about.

Okay. Another one -- not asking for specific numbers, but when you think about that guidance you'll provide, how are you handling things like the transition services and some of the restructuring charges with the new company? How do you think about what's included in, I guess, your non-GAAP guidance to us versus what's excluded? Because I think that's a question we get is just how to think about that number versus what Mylan historically has done or what other companies would do. So any color there?

Sanjeev?

Sure. Mike, do you want me to maybe take that?

I think that's a question for you, Sanjeev. Yes.

So Chris, clearly, I'm going to parse it out in 2 ways. One is obviously the cash flow implications. As Michael pointed out, if you look at the cost you achieve, which we estimate at this point in time will be approximately $1 billion to $1.3 billion. And it's in line with the benchmark. You have $1 billion of synergies, that's in line with the benchmark. So that's -- we expect majority of that will be incurred in the next 2 years. So that's one part which will have an implication on the cash flow. But I think after 2 years or so, you can see the cash flow will start improving as this cost is behind us. So I think that's number one. So number two is just on the adjusted EBITDA and the GAAP net income. So obviously, we follow GAAP guidelines. We follow the guidelines that are normal for the company. So a lot of the onetime items. If you restructure a plant like Morgantown, a lot of the unabsorbed costs will be onetime, right? So we disclosed that as we have done that in the past. But again, the idea being is very clear about disclosing what are the onetime items, both from a cash flow perspective, and what are the onetime items which are required because of the -- even the actions we are taking to streamline the operations and provide transparency.

Great, great. The other question that on the financial side we get is the dividend and kind of how to think about that. And you've talked about at least 25% of GAAP free cash flow in terms of the -- when you set the dividend. I guess when you think about that target, I guess, just thinking about kind of the first couple of years of cash flow where you're talking about integration costs, et cetera. So is there any color you can provide about how we should think about is it going to be exactly that 25% level? Or is there some flexibility in that? It seems like cash flow will be a bit depressed kind of upfront. And Sanjeev, I know you touched a little bit on that, but maybe as part of that answer, can you just -- how should we kind of roughly think about cash flow conversion, maybe both in the near term and then once we get past the onetime charges? So a lot of different topics there, but it's a big topic for investors. So any color would be appreciated.

Chris, great question. And as you can imagine, we're getting a lot, this question, since the last couple of months that we've closed the transaction. So let me just step back and kind of reiterate what Michael pointed out. Just to kind of -- our capital deployment priorities are absolutely clear. Essentially, 2 pillars as you think about that, the deleveraging and returning capital to the shareholders through the initiation of dividends. So on the deleveraging, we got clarity. I intend to pay down $4 billion of maturities in the next 2 years, which is '21 and '22. So that's clear. We strongly believe having a healthy and stronger financial profile is something that we want to achieve for the company for all the future plans that we have. Our commitment to dividend hasn't changed because as you pointed out, it will be 25% of free cash flow and will be initiated in quarter 2. Now in terms of the free cash flow, again, we've also clarified that it's going to be the cash flow from GAAP, from the operations minus the CapEx. And both that we disclose, so you can actually have full transparency of that. So in terms of the process, as you know, Board formally approves and our intent plan is to present the operating plan for 2021 to the Board, and that will enable us to set the exact amount for dividend for 2021. And in terms of the mechanics, the plan that I intend to share at the Investor Day, is the timing and the cadence of the dividend for this particular year because this being with the first year. So we'll provide that at the Investor Day. The final point, Chris, is an important point which kind of highlight that. As you can imagine, with such a massive restructuring, there is obviously going to be cost to achieve. And we've estimated that of $1 billion to $1.3 billion, which most of that will be incurred in the first 2 years. And as a result of that, clearly, the cash flow generation or cash flow conversion will be at the lowest spot in 2021. But then as you have the onetime costs behind you, you seek to improve the cash flow generation. The 2 other positive factors that will happen after the first couple of years is, obviously, as we pay down the debt, our interest cost goes down, right? That will help on the cash flow generation. And then the flow-through of synergies. We set a $1 billion of synergy, at least $1 billion in 4 years, and a lot of that is going to happen in 2 years. And so that will start to happen on that. So clearly, it's going to have an impact on the onetime costs in the first 2 years, but we begin to see an improvement in cash flow conversion, which obviously will impact the dividend as we go forward.

Okay. Great. Just on business development, as you think about kind of the other uses of cash flow over time. Can you just elaborate a little bit more on the approach towards bizdev? I think you recently did the Aspen deal. I guess should we be thinking about transactions like that going forward? Or are there other obvious areas, I guess, that you think that it would make sense for your business to expand? So I -- we're just trying to get our hands around is that a template for deals? Do you think more about in-licensing and how you balance, I guess, those 2 types of opportunities against each other of maybe more synergy-driven deals or versus things that actually can really drive top line growth over time?

Yes, thank you, Chris. Let me start with that question, and then maybe I'll ask Rajiv to add some more color, especially on the Aspen deal, because I think we're very happy with the way that's going. But from a deep perspective, look, I laid it out. I mean we are interested in deals that drive future revenue and help us to return to growth, right? That's clear as long as they create value for shareholders. We are balanced by the capital deployment priorities that we have, which means that initially we focus on deals, whether it's licensing, partnering, [ no matter what ], that fully leverage the platform that we have with the Global Healthcare Gateway, right? And as I said, partners are interested in many things. It could be that they have a particularly -- they have a need to expand globally where they can't enter markets, we can help them to do that. They can have manufacturing issues they need to be overcome, we have the ability to do that. They can have regulatory issues that we can help solve. So there's a lot that comes together here, a lot of win-win scenarios that they can look at. So that will be the focus of the BD opportunities in the near term to build the foundation for horizon 2. And then once we get to horizon 2, we have more broader options available in terms of how we can structure the deal. Aspen, I think, is a great example of a solid strategic fit that helps us lay a foundation for horizon 2, and maybe Rajiv can comment a little bit more on Aspen.

Thanks, Michael, and thanks, Chris. Obviously, we talked about Aspen quite a bit, and I'm very happy where we are -- how we have landed the deal and where we are with this. It's very complementary. As Michael mentioned, very significant strategic addition to our European business and very -- financially also, very attractive deal. It complements and expands our complex injectable business and sets up rightly in Europe from the biosimilar play. And more importantly, we have done all this behind us. We have closed this in November, and we are very optimistic based on the solid start of the -- taking over this business. We have a strong market share for these [ countries ], Germany and several other [ eastern ] markets. And supported by a very well -- a well-integrated supply chain. We are well on our way to execute on this.

So I think, Michael, you touched on China a bit in the presentation. But just -- it's -- another question we get is how do you think about growth in the Chinese markets over time? I guess if you think about the near term, we've got the VBP kind of impact. Do we think about 2021 China revenues as a good base? Or should we maybe be thinking about there maybe another reset or decline, and maybe more like 2022 being a base from there? And then where do we go from there? How do you think about growing that business over time as we kind of wash through some of these initiatives that we're seeing?

Yes. So I think in that near term, we're going to continue to see some decline, right? And as I said, the VBP impact that we fully understand now, fully anticipate, but it's still washing itself through the system. And then there is the -- what I mentioned, the URP impact, universal reimbursement price impact, that we expect to come in '21. It could be coming a little bit later, and so the exact timing of the trough we'll have to see. But let me point out 2 things that I think are important. One is we're really excited about China. It is a growth -- a key growth opportunity for us. But it also represents only 10% of our overall business. So the discussion overall has to be put in context. If we talk about Viatris overall, it's 10% of our business, we can absorb it. But there is lots of opportunity here. And there's no doubt, I think in anybody's mind, that China in the long term is a growth market and we'll return to [ growth there ]. Number two, we have adapted very quickly and very well to the volume-based procurement impact. We invested -- is invested in the hospital a little bit, to rightsize the hospital business, but invested in the retail space. The retail, which as you know more self-pay, more protected, now represents 1/3 or more than 1/3 of our total business, and it's growing at 20%. So we're very happy with those investments that we made. We're actually now one of the top 3 companies in the Chinese retail prescription market. So that's just to give you context. So while we anticipate the headwinds with VBP, and we're going to give you more details on that Investor Day, long term, we're really, really excited about what we can do. And I tell you, one of the things that we always said we would do is see whether they can bring the Mylan portfolio to China, right? Can we leverage the Mylan breadth of the portfolio and bring that to the infrastructure? We now identified a pipeline of more than 2 dozen products that we bring to the Chinese market. We made those decisions already. And then, of course, we have the opportunities through the Global Healthcare Gateway. So I continue to be excited about China. It will be a significant part of our growth story going forward.

Great. And maybe just one last question on this partnership opportunity to leverage the gateway. Initial receptivity you're having from potential partners there. And I guess from a time line perspective, how long do you think it will be before we actually get more visibility on the type of transactions that you're envisioning through those in-licensing? Is that something to realistically think about this year? Or should we really -- it's more like kind of -- these deals are going to take some time to get in place and be announced because I think we're all kind of just interested to see what direction you can go with that?

Yes. But don't expect us to announce any deals on this, any deals on Investor Day. Now this takes…

Okay. You have 45 days.

We do it -- exactly. We do it right and these things come when they come and we'll announce them when they come.

Okay. Perfect. But again, are these generally going to be longer term? Or is -- should we look about later in the year? Is this something we could hear about this year? Or is that -- is this probably more 2022 and beyond? Or too early to tell at this point?

I think it's a continuous effort. And when we find the right deal, we'll announce the right deal. If you don't find the right thing, we don't do it. As I said, it goes back to the disciplined capital allocation that we talked about.

Great. Well, look forward to the March 1 analyst meeting, but thanks again for the comments today. And best of luck with the registration and getting the company up and running.

Thank you, Chris, and please join us on March 1. We're looking forward to that. Thank you.

Yes. Thanks so much.

Thank you.

Thank you.