Viatris Inc. (VTRS) Earnings Call Transcript & Summary

Good morning, everyone. I'm Melissa Trombetta, Head of Global Investor Relations here at Viatris. And it is my pleasure to welcome everyone to Viatris' Inaugural 2021 Virtual Investor Day. Our goal for today is to provide a deep dive into the company's strategy to optimize total shareholder return, while delivering on its mission to empower people worldwide to live healthier at every stage of life. During today's presentation, we will be making forward-looking statements on a number of matters. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections. Please refer to the slides that we will be reviewing during today's presentation for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. These slides are also posted on our website at investor.viatris.com. Viatris routinely posts information that may be important to investors on this website and we use this website address as a means of disclosing material information to the public in a broad, nonexclusionary manner for purposes of the SEC's regulation fair disclosure, Reg FD. We'll be referring to certain financial metrics of Viatris on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of our financial performance. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP. The most directly comparable GAAP measures as well as reconciliations of the non-GAAP measures to those GAAP measures are available in the presentation slides as well as in the Investors section of our website. In addition, solely to supplement your understanding and assessment of our financial guidance for 2021, we have provided in the presentation slides, and may reference during today's call, certain preliminary estimated financial measures relating to 2020 which do not reflect financial actual results or pro forma results. Such measures also do not reflect the effect of any purchase accounting adjustments. Later today, Viatris intends to file its Form 10-K for the year-ended December 31, 2020, which will include the company's finalized actual results and segment-related information for the year. Let me also remind you that the information discussed during Investor Day, except for the participant questions, is the property of Viatris and cannot be recorded or rebroadcast without Viatris' expressed written permission. An archived copy of today's presentation will be available on our website and will remain available for a limited time. Before I turn it to our CEO, Michael Goettler, we're going to share a quick video to start us off this morning. [Presentation]

Welcome to Viatris, a new kind of health care company, and welcome to Viatris' First Investor Day. Because of the ongoing COVID pandemic, we'll be hosting today's Investor Day, virtually. And this Investor Day also follows our 2021 guidance call, which we had about 1 week ago. And as we said then, we're confident that our 2021 financial guidance reflects the changes in the operating environment and is the right starting point for Viatris. So what we want to do today is to share more with you, share more with you to help you better understand the assets, the capabilities and the talent that this newly formed company has, to better understand our unique operating model and to better understand the clear strategy and priorities that we have in order to deliver value to our shareholders. Now on this slide, you see the agenda. And as you can see, we have a number of interesting topics and what I hope will be an informative session for you today. Now I'm excited to have our leadership team here. As you can see, we have our regional presidents, giving you a walk around the world and give you insight into each of the regions. We have our Head of R&D. We're going to give you an insight into our manufacturing and supply chain. We're going to talk about our efforts around sustainability, around commitment to sustainability. And then Sanjeev is going to wrap it up with our financial commitments. These leaders really are the best ones to convey our confidence in the strength of what we have built and the vision that we have for the future. I want to start my presentation with our mission. What binds us is our sheer passion for our mission. We created this company and created Viatris because we see health care, not as it is, but as it should be. We act courageously, and we're uniquely positioned to be a source of stability in the world of evolving health care needs. This is the springboard for our future. And we aspire to empower people worldwide to live healthy at every stage of life, regardless of geography, regardless of circumstances. And our mission, we believe, is even more important today, given what's happening in health care. As you know, there are tremendous issues facing health care today. And we believe that through access, we believe that through leadership, we believe that through partnership, we cannot only make a difference, but also help to make this world a better place. Now Viatris was created just about 90 days ago through a combination of Mylan and Upjohn. And this highly, highly complementary combination makes Viatris an even stronger platform, an even stronger platform that gives us enhanced global and geographic reach, that gives us sustainable, diverse and differentiated portfolio in pipeline, that gives us a powerful operating platform and commercial capabilities and strong and sustainable cash flow. But now that we're about a little bit over 90 days in, I would now like to share with you some of my observations. I have had the opportunity to better understand our strength and some of the areas that we can build upon and further improve. And I want to share with you that the first thing that really struck me was the passion of our entire workforce. As I said, we're all truly motivated by our mission and what we can accomplish together and it's that passion that inspires an incredible work ethic. And nowhere was that work ethic more visible than through the integration process, the -- over a year that we spent. And despite the pandemic, the colleagues worked tirelessly to separate Upjohn from Pfizer and to integrate our 2 businesses. And thanks to the effort of literally thousands of colleagues around the world, our integration has been accomplished without any business disruption for our customers and our patients. And all that we've been able to accomplish since day 1 has also given me a deep appreciation for the talent that we have. Talent in the organization is entrepreneurial, certainly one of our strength. Talent that is also experienced, that has deep industry knowledge and that's transparent in discussing issues and authentic at all levels of the organization. These are strengths that we have to build on. We're also building on a robust foundation and platform with global scale and diversity. And I'll share more about that later as I talk about our unique operating model and our Global Healthcare Gateway. And finally, we have financial strength. Clearly, we have financial strength, the ability to generate strong and robust operating cash flows. And I believe these are strengths we can play to, as we have the opportunity to further enhance them. As we bring the 2 organizations together, my leadership team and I were laser-focused on creating the right internal conditions for success. That starts with a common definition of success, a common definition for everybody in the organization, the entire organization, that definition has to be generating net income in excess of our cost of capital for every product in every country. And for that, we need transparency and we need granularity of data to empower our managers to make the right economic decisions. And then we can incentivize that, that way. That aligns with shareholder value. Granularity is particularly important because we have 1,400 molecules, we're in 165 countries. I said before, this is not a business that we can manage with averages. And you will see later in Rajiv's presentation how we put this philosophy into practice, so what we call our IMT principles, that's invest, maintain and tail, and we do that at a very granular level. Secondly, now that we have our combined commercial footprint, we really have the opportunity to maximize our commercial impact, both for our current portfolio, but especially also for our new launches. There is a lot of value to be uncovered here, and we're focused on that. Third, we've got a very productive, I'm so impressed with very productive R&D engine. An R&D engine that has high volume, that has high productivity, there's high success rates and strong returns on investments. And we are nowhere near the point of diminishing returns on that investment. There are clear opportunities to enhance that investment through and while leveraging our Global Healthcare Gateway. And lastly, we clearly have already identified opportunities to enhance our efficiency. We announced our program to generate over $1 billion of synergies, and we've now accelerated that program from 4 years to 3 years to meet or exceed that target. So clearly, efficiencies are to be gained in the system here. So that's what I see. And I'm excited about the opportunity to lead us on this journey. And to act on that, we laid out a clear execution roadmap to optimize total shareholder return, and it comes in 2 horizons. The first Horizon, the next 3 years, will focus on delevering and rebalancing our business, laying the foundation for future durable growth and operating leverage. We said before, 2021 is our trough year. We've already accelerated our synergy capture of $1 billion from 4 years to 3 years, and we expect that period to generate strong and growing free cash flow. We're committed to repaying our debt, $6.5 billion in that time frame, and we expect to initiate a dividend, 25% of free cash flow starting in the second quarter, then expect to grow that dividend amount annually in the subsequent years. This Horizon 1, this period, these 3 years, it's all about execution. It's all about preparing for the future. And you're going to hear more about that in Rajiv's presentation. By creating Viatris, we now have all the pieces in place to fully leverage our operating model and the powerful and opportunistic platform that we have created. Now I want to give a bit of a personal note because I spent my entire career on the branded and innovative side of the business. And coming into Viatris, I was on the outside looking in. I spent a lot of time in the past months diving deeply into this operating model, which is very different from what I've known before. And today, I want to spend some time describing this unique platform to you, and you will get an even deeper insight into each of the components as we go through the presentations throughout the day. But why is this important? It's important because when you, as I have been, on the branded and innovative side of the business, the entire world view is through that branded lights. Your focus is on a few key brands, mostly protected by patents, and you start with those brands and you go around the world and select the countries to sell it based on the unmet needs or the market conditions, including the protection of intellectual property. At Viatris, our business model is the exact opposite of that. We start with a deep expertise in each market. And you'll see that later in the regional presentation, each market has unique characteristics, especially if you don't have IP protection, it forces us to be creative, it forces us to be more nimble. The needs of each country and the business opportunities are different, whether we talk about the developing market like China, with huge population, growing consumer demands, large unmet needs, or whether we talk about a mature health care system like Japan, whether we talk about promotionally sensitive markets or whether we talk about tender markets. And I personally appreciate those differences because I lived and work in many of these markets. So we as Viatris strive to tailor our offering to the needs and opportunities of each market. And that's in line with our mission, our mission to empower people worldwide to live healthier every stage of life, regardless of circumstances and regardless of geography. We have a strong global commercial infrastructure that enables us to do that. We're in 165 countries and territories. We're serving over 60,000 customers. We have an 11,000-person strong field force. We're truly global, but in each market, we're local. And with a deep understanding of how to best serve our customers and our patients. And few companies, if any, can do this truly at scale, to be able to tailor our offering to the particular needs and market opportunities of each country, one needs a particular set of purpose-fit, custom-built capabilities. And that's what we have. That's what Viatris has, starting with our broad portfolio of more than 1,400 products, 30,000 SKUs, it's only with such a broad product portfolio that we can truly serve the markets based on their needs, not based on what we have. Our research and development is also purpose-fit. It must be high volume. For example, we currently have 1,400 submissions, potential submissions, in our pipeline for the next few years. It must be high speed. It has high probability of technical and regulatory success because we don't have the binary risk that innovative and brand companies here. And instead, our R&D model is built on broad technical capabilities. You'll hear that later, as Walt is presenting. Now on this slide, you see a breakdown of our revenue and some of the examples of these 1,400 molecules, ranging from the iconic brands, such as Lipitor, Lyrica, Viagra, Norvasc and others, through generics, across all therapeutic areas, whether it's infectious diseases or noncommunicable diseases. Now consider that Viatris provides trusted and high-quality medicines to 9 out of the 10 WHO leading causes of death. And then we have a growing and emerging area for us, which is biosimilar and complex generics, and you'll hear more about that in the subsequent presentations. Our supply chain and manufacturing network also purpose-fit with approximately 50 sites around the world, and that allows us to cater to the local markets. Local proximity is important. It allows us to better serve the markets and be nimble and flexible to meet their needs. Our network is optimized for flexibility, for high quality and low cost. So that's the purpose for the capabilities, and that's the countries. The last piece of the puzzle that powers this operating more or less, what we call our high-performance drivers. And in many ways, these high-performance drivers are the oil that makes the gears go faster and move better. Now I told you, we have talent. Talent is something we were born with. But it's how we work together that's our real competitive advantage. That's our secret sauce. And obviously, other companies have also good powers, I hate to admit that. Other companies can get financing. Other companies can hire talent. But it's our culture. It's how we all work together that's a true competitive advantage that we have. And we are building upon and we're enhancing and building a culture that is performance-driven, that's highly engaging, that's inclusive. We have a great foundation to build on. And as we go along, we build our Viatris way our culture of the future. So that's the importance of culture. The next driver of our success is having the right disciplines in place. With a vast portfolio and geographic complexity, we need the right financial discipline. We need the right governance discipline. We need the right quality, compliance. We need the right capital deployment principles. They're all essential for us to maximize value creation. And as I said before, there's significant opportunity for us to do that discipline at a granular level. That's how we will distinguish ourselves, and that's how we will create value. There's a lot of value to be encouraging. And the last one, the last differentiator is sustainability. At Viatris we're all fueled by our shared commitment to act responsibly, doing what's right. It's in our mission. We know that our action affect all of our stakeholders, especially the patients that we pledge to serve. So social responsibility, corporate social responsibility is integral to our company. It's fundamental to achieve our mission. And later, you'll hear from Lara Ramsburg, our Head of Corporate Affairs, but you'll also be able to read about it in our first CSR report, which we intend to publish in May, and you'll also see it in our long-term sustainability goals, which we plan to establish and publish by the end of this year. So this is Viatris. This is us. This is our unique operating model. It's unique. It's been built over many years and through many transactions, and the last transaction of which is the Upjohn and Mylan combination. It's essentially complete now. And it's up to us to fully leverage its power. But we're also making this entire platform, the entire powerful operating platform now available to partners through Global Healthcare Gateway. And this Global Healthcare Gateway sits right at the heart of the Viatris. There's so many assets out there in the industry, I know, we know, that don't reach all the patients that could benefit because the companies that invented them don't have the scale, don't have the capabilities necessary or can't find the right partner to create the full value that these assets can bring. And we can bring our full operating platform, our full model to bear, either through organic R&D or through partnerships, and thereby connecting more patients with more products and services, creating value for patients, creating value for our partners and a true win-win way and, of course, value for our shareholders. Opportunities are plenty. The art is selecting the right ones, the right ones that need our stringent, disciplined investment criteria and withstand our strict due diligence and to assure that all capital investments we make create value for our shareholders. As the world health care needs evolve, our unique Global Gateway offers partners ready access to more markets and patients worldwide to the company's unmatched global infrastructure expertise, making Viatris a true partner of choice. And we have a small video that brings us to life for you. I'd like to play that video for you now. [Presentation]

So that's our Global Healthcare Gateway. And as opportunities come in, we will evaluate these opportunities. And I often get asked, what are you going to look for in deals? And we're going to look for strategic fit and financial criteria. Strategically, our preference, but not exclusively, our preference is on complex and innovative or otherwise differentiated products, products that leverage our commercial and technical strengths, especially China, where we have a lot of commercial capabilities, and that are complementary to our current therapeutic footprints. So we can create more value and/or enhance our technical capabilities. And on the financial side, financially, we're focused on value creation with strong returns, returns that I believed, in excess of our cost of capital. And of course, investments that are consistent with our commitment for debt repayment and our debt repayment priorities. So here you have it. That's our strategy. That's what we call our Horizon 1, the next 3 years. And our strategy is very clear, we're going to be focused on delevering and rebalancing our business to meet or exceed expectations. We have a unique and very purpose-fit, I hope I demonstrated that, purpose-fit operating model. And I'm confident that you appreciate the strength of each of the components as we hear from the rest of the team today in subsequent presentations. And our operating model is a very well-oiled machine and one that's now open for business, open for business for our partners through the Global Healthcare Gateway. And with the strength of our own R&D, with the strength of the Global Healthcare Gateway, we will return to long-term durable top line growth and operating leverage, and that creates more shareholder value creation. And our strong operating cash flow generation, our debt repayment, the achievement of the synergies, everything that we lay as a foundation in Horizon 1, in Horizon 2 enhances our financial flexibility and allows for many more options for capital deployment, returning value to shareholders and investing in our pipeline and business development. And the operating towards, really are execution, transparency and accountability, and that is exactly what you will see from us starting today at this Investor Day. So in summary, we're building on a really strong foundation. We're on a multiyear journey to transform this company within the health care industry. We believe we're uniquely positioned to achieve our goals, to leveraging the strength, the capabilities that we have, but we're also relentless in our commitment to continuous improvement. If we can get better, we will get better. And our obsession, our North Star is our obsession to create value in everything we do. That's what we're going to -- that's what we're focused. And with the talented and committed colleagues we have, I told you, I'm so impressed by the talent that we have, and you will hear from many of them today, an engaged culture and a clear strategy, there is no doubt that we will deliver enhanced shareholder value as we execute. So with that, I'd like to hand it over to my colleague, Rajiv Malik, and Rajiv will be focusing on business execution and how we're preparing for future growth. Thank you.

Thank you, Michael, for a great introduction. And thanks for recognizing and appreciating all the building blocks that got us here. I'm humbled to represent thousands of colleagues who are part of this journey from Mylan to Viatris. And I'm especially proud of the leadership team who is going to share with you today what makes Viatris so unique. Along with this dedicated and hard working team, and so many others, we have already accomplished a lot in the first 90 days, and I look forward to what lies ahead. Our 2 companies coming together is much stronger than our 2 organizations apart. And as Michael said, I would like to reaffirm that nothing has changed about the strategic rationale of our powerful combination. Today is a very exciting day for us, while we are showcasing for you our new organization, but also discuss with you in some depth detail how we will deliver. One week ago, we shared with you our financial guidance for '21. We talked to many of you one-on-one and really appreciated hearing the questions on your mind, such as, what is this business made up of? How big is the erosion? Is '21 a really trough year? How is this platform going to come back to the growth? Today, we pick up from where we left off last week and walk you through our business on a much deeper level to give you the confidence in what we have, how we are managing this business and how we are preparing the company, most importantly, for the future growth. This waterfall chart should look familiar, as we just shared this on our guidance call. You may recall, we described all of the onetime special events that impacted our '21 guidance. Today's presentation is going to be all about how we are executing on our business plan and can be broken into 4 key priorities. So number one, how we are maximizing our base business. I'll cover how we are managing our business region by region, product-by-product to stabilize and offset inherent erosion. I'll walk you around the globe to give you an understanding of our differentiated commercial segments, share how these businesses are supported from a manufacturing and a supply chain perspective. Second, help cover how we are delivering on our launches. More importantly, what is our pipeline, especially as it continues to evolve towards complex generics and biosimilars. Third, about the integration and integrating our legacy businesses, while accelerating our synergy activity. I'll give you a little bit more detail around the road map, what the road map looks like. And the fourth, how we are preparing the company for future growth to maximize the full potential of this platform and leverage Global Healthcare Gateway. The next several slides, I'll walk you around and little bit give you insights into about our diversified platform and how we are maximizing our base business. So let's start with our commercial platform, which is, both, diverse and resilient. We have a truly global footprint with presence in more than 165 markets. Our business segments, our Presidents, Tony, Sean, Drew, Menassie, will give you a walk on the globe and tell you what we have and how we expect to win in these geographies. Within each of our segments, we have broad reach across all the channels, finding leadership positions in many of these key markets. And lastly, but more importantly, our portfolio of over 1,400 molecules, which we know from here onwards we have agreed to share with you in the 3 broad segments: the brands; the generics; and our growing offering of complex generics and biosimilars. Now let me walk you through our commercial platform by the 3 above-mentioned categories and start with the brands and give you a little bit insight into the diversity within the brands. So we have roughly 20 iconic brands, which came from, along with the legacy Upjohn, which we -- which are focused on key therapeutic areas, including cardiovascular, neurology, pain, CNS, urology. And look what happens when we add in legacy Mylan brand portfolio. Not only we have complementary products that extend the depth -- our depth into the legacy Upjohn therapeutic areas. But even better, our combined portfolio increases our offering across all therapeutic areas, gives us an incredible broad reach. I mentioned about diversity within the brands. Our branded portfolio is made up of exclusive brands like Yupelri, where you have still the patent life -- these are the growing brands. Second, established brands like Creon and Influvac, which provide us durability as well as growth because they are hard to commoditize. Despite having no longer any IP protection, they're hard to commoditize because of the complexity in the science. And lastly, our iconic LOE brands like Lipitor and Viagra, where we have tremendous brand equity. And now when you couple all these brands with the number of the markets in which we play, it highlights for us to be successful. We cannot just manage every brand the same way in every market. Instead, it's critical that we granularly measure and manage at the individual market and product level. As Michael highlighted at JPMorgan, we are instilling the right internal conditions, disciplines to manage and maximize this business. And in that regard, first and foremost, we have a granular understanding of the profitability and the performance of any product or SKU at a market and channel level. This means our entire portfolio, not only just brands, even the generics. As you can see here, as an example, we continuously evaluate the contribution of each SKU, both extending the profitable life of each product and managing out SKUs that are not -- are neither cost of capital. This helps ensure we are making fact-based portfolio and resource allocation diseases. Another example of how we're going to leverage or leveraging our granular analytics is about implementation of investment, maintenance and scale resource allocation framework. We have classified every product within every market based on its responsiveness and growth potential. For example, in a highly responsive investment category, like, for example, Yupelri, we mentioned, we are investing for growth with a full suite of capabilities, which I will get into a minute. Conversely, we managed the stable, moderately responsive maintenance products differently, with selective investments, largely with the lower cost activities in order to protect their base and optimize our selling and marketing dollars. Lastly, for our tail products, which are not very responsive, it's all about doing more with less to stem the decline. Any investment we make, overhead, is through our central marketing Centers of Excellence and some low-cost activities. Now as you can see on the right side of the slide, this has resulted in the legacy Mylan continuing to optimize its selling and marketing spend by mid-single digits per year, while still preserving the top line of this branded portfolio. This disciplined rigor when applied to Viatris, now a combined platform, is a critical input for ensuring that we are maximizing the base business while driving efficiencies and synergies in our spend. Now let's talk about some commercial capabilities. Hopefully, the last few slides give you a clear picture of diversity and stability of our branded portfolio. And now you just look into the -- some of the capabilities which we use to sell and market our portfolio across all the channels. For products and markets that are responsive and provide attractive returns, on personal promotion, like the investment products I mentioned, the Yupelri example, I mentioned on the last slide, we have the full suite of traditional as well as the digital tools available to deploy. For less promotionally sensitive products and markets like Creon, we have efficient high-quality tools and resources that drive revenue at the right cost profile. And across the full portfolio, many of our core commercial activities are efficiently delivered into the markets through our global Centers of Excellence at a lower cost, but better quality than external agencies or some local resources, which is helping us to optimize every selling and marketing dollar we spend. Moreover, we don't just have these capabilities available, we know how to tailor them to each local market in an integrated model, with the right traditional and digital programs, which fit to the needs of these products, customers and patients. I want to go into a little bit more detail on the omnichannel and the digital tools that are such a key part of our commercial model. And if could follow few commercial capabilities which we enhanced by bringing these 2 platforms together, this is the one. We have been developing these tools for many years. And the onset of COVID-19 compelled us to further accelerate that ramp-up. We've taken the learnings from the early COVID period to increasingly strengthen and augment and, in some cases, totally replace our traditional capabilities with some really great success stories. For example, we have been able to add remote detailing to our sales reps to drive over 1.5x fees to our prescribers. Also augmented our marketing to activities like webinars, and we are delivering 8 to 10x more reach versus face-to-face meetings. Altogether, our full suites of omnichannel and promotional tools and programs drives an efficient and effective model across Viatris portfolio and pipeline. The last piece and the one another area which really got enhanced by these 2 platforms coming together is the medical affairs. And I want to talk about that, how medical affairs teams works to maximize the impact of our scientific investments in a patient-centric, 4-pillar approach. We have the core medical support roles that engage with the KOLs, generate evidence and effectively communicate evidence path. Second, the partnership and policy shaping is a critically important capability, especially for our brands and emerging markets. For example, we are actively engaged with leading organizations like American College of Cardiology, NCD Academy. These type of partnerships are a key part of moving from treating a specific condition to full disease management, especially in the cardiovascular and respiratory areas. Touching on the real-world evidence, we are very active in generating and analyzing the data that informs new publications and potential new indications as well as some new product ideas. And lastly, the most important one, also the lifecycle management. It's a critical capability for our portfolio, which I would like to spend a little bit more time on the next slide. LCM strategies, as you all know, essentially to extend the value of our drugs, the lifecycles of drugs to the patients and the lifespan of our assets in our portfolio. We have a range of LCM options available, including OTC switches, line extensions, new formulations, dosages, et cetera. Both Mylan and Upjohn have a great success in extending the life of our products. Take for example, Viagra and Amitiza, these are good examples how we have worked to make our drugs more accessible through OTC switches. We have utilized our formulation development and regulatory expertise to develop new formulations or dosage forms to satisfy some unmet needs. For example, Creon 35k or Influvac Tetra. Life cycle management has been successful for us. Historically, as well as we see this playing a huge role as we go forward. Now let's move into the second segment, which is perhaps -- which has got a lot of attention, the complex generics and biosimilars portfolio. Our goal over the last few years has been to move up the value chain from a science perspective. The complex generics and the biosimilars require, not only just high R&D spend, I think it requires a high level of the science, more complex science, executing through that complex science, regulatory strategy, IP legal skill sets. And I believe we have already shown that we have those core competencies to excel in this space through some first-to-market successes like generic Advair, generic to the Advair, generic to the Copaxone, biosimilar to Neulasta, biosimilar to Herceptin, and I can go on. While we are very proud of our track record, we also believe that we can do a lot more in this space and better serve the patient needs by breaking down these barriers. These investments have enabled us to see durable long-term revenue streams as compared to the core generics. And we see this as a core part of our forward-looking Viatris portfolio. Let me give you some color on our biosimilars business. The global biosimilar market is still in a very early stage and evolving. We know there's a lot more headroom for biosimilars. Today biosimilars only make about 6% of global biologics chains. And biologics stem cells are expected to more than double in the next 7 years, far outpacing small molecules. We are excited, we are very excited by our start with some big notable successes as we have entered this biosimilar market. The #2 in biosimilar market share for our oncology biosimilars in USA. We are market leader for trastuzumab in Australia and Canada, where we happen to be the first to enter the market. As we start '21, we are also excited to bring the first biosimilar to Humira in Japan and be a part of the first wave of the launch in Canada. Very soon, we'll be looking forward to launch our biosimilar to the Avastin as well as first biosimilar to the NovoLog in developed markets. We have always said that we see this business as a global, truly global franchise, started long back with the Herceptin launch in India, but slowly and steadily have build upon that. With the strength of regulatory approval and the launches around the globe, with a rapid growth in the past few years. More than just individual approvals, we are excited to have a biosimilar franchise, commercial -- now that the commercial scale that legacy Upjohn brings to further expand our reach and drive the biosimilar uptakes in this market. While we are optimistic for the future, we won't shy away from the fact that we had, had certain hiccups, which is not very surprising when you are trying to create a new market. Importantly, as we evolve, we are taking these learnings into our forward-looking plan. We have learned quickly the importance of entering each biosimilar market with the right product at the right time at the right cost and with enough supply. In our early launches, we had some hiccups. We were late to market in some cases. We missed the tender cycles in some markets. We also underestimated how the innovators would slow down or would compete aggressively and slow down the biosimilar uptake. We have also taken away some positives here. We have a great group of R&D partners. We have quickly developed a global presence. And we did really well in some tender markets and many other markets where we were the first. We take all of this forward and are committed to our next steps to leverage, not only in science, but our commercial capabilities to get the most out of this franchise. That commitment includes quickly ramping up the investments in our commercial capabilities wherever necessary, in certain markets, if there is opportunity to expand the access, drive uptake and help the market realize those cost savings. We also continue to remain committed to invest in the biosimilar development programs. And Walt will talk in a lot of detail about our biosimilar pipeline, where we are with the pipeline, with the development programs. But I would just like to highlight that we will be extremely focused on our efforts to be the first to the market and believe we are well positioned for several of our key programs in the future. Viatris is committed from scientific as well as from the commercial capabilities and know how to be a long-term leader in this space. Now let's move to the third -- a very important category of Generic segment, which makes up a little less than 1/3 of our total portfolio. Legacy Mylan, as you know, has been a strong leader in this space. Even within generics, we're not -- let me make it clear, we are not moving away from generics. We are being more diligent. We are being more prudent. More prudent in the selection of the products and have enriched our portfolio to encompass complex oral solids, hard-to-make products, injectables, transformal patches. We all know U.S. generics market is relatively more volatile as compared to Europe and some other emerging markets. But overall, we all agree that generics provide a steady source of cash flow. Within the USA, if we just come back to the volatility, our focus has been to address the volatility of our own portfolio. And to achieve that, we have been closely monitoring the margin profile of these products and rationalizing if we have to rationalize. If we believe the product has enough supply, enough competition and there is no risk of supply disruption for patients and customers -- from patients and customers' point of view. As we move forward, we'll be diligently and prudently investing in this space, leveraging our strong science, regulatory skill sets as the IP skill sets to continue to be the first to the market. The specific example of [ Bractera ] and Zytiga are the good ones. Let me now talk to you and introduce to you about other very important component of our platform that enables us to maximize this business, which is one of a kind diversified, resilient global manufacturing network. I know you are -- very soon, you're going to hear from our Chief Operating Officer, Sanjeev Sethi, who will talk to you about this expansive network and our strategy. From my perspective, our operation strategy is very well aligned and enables us to manage a robust and diversified portfolio. First and foremost, we have a deep and unwavering commitment to quality, compliance, safety of our employees as well as environment. And all these 4 elements are at the center of our manufacturing strategy. We have a flexible network, which can meet customer needs and they are always at the heart of how we operate. Ensuring supply continuity is very critical for our customers and the patients we serve. This platform is an outcome of a very well thought-out supply chain strategy, which continues to evolve as the markets around us evolve. We, of course, continue to be focused on the cost of the goods, which is one of the key imperatives for our Generics segment. Now let me talk to you about our exciting science platform which we are so proud of. I'm myself a scientist by profession. And I can tell you, we have one of the most efficient and productive teams I've seen in our industry. As I shared earlier, we have a strong track record. And we have been diligently moving up the value chain from the science perspective. Today, it's not about the past. Today is about future. How are we going to leverage all our combined experience and assets to maximize our future growth. 3/4 of our pipeline, you will get to know is made up of complex generics and biosimilars and some other novel products. And we are investing proportionately almost 3/4 of our R&D spend in this segment. Walt will walk you through this in great detail, while highlighting our renewed focus on geographies like China and Japan as well as the portfolio expansion through the emerging markets. We all know this expression that picture speaks louder than the words. Just look at this slide. It gets me so energized about the future. It's a powerful visual that not only illustrates our past successes, in bringing complex generics and biosimilar counterparts of these products to the market. But more importantly, gives a great snapshot of the depth of our global pipeline with several high-value products in the final stages of either pending approval or in development stage. Now let me shift gears and walk you through another very important chapter about integration and our synergy plans which is another important lever. As I shared on our guidance call last week, we have accelerated our planning and anticipate achieving our $1 billion target in cost synergies over the next 3 years instead of 4 years. The in-depth rigor, the discipline we are applying against these equities, gives us the confidence that we will not only meet, but have the potential to exceed our synergy targets as we move into year 4. The actions taken to date show that execution of our global restructuring program is very well under the way. In addition to the 5 sites we announced in December, we have identified and finalized 8 additional sites to either close, downsize or divest. The sites across various verticals, the site across various geographies. These sites were selected because of 5-year surplus capacity or a shift in the portfolio towards the more complex products or the age of the assets or some other reasons, similar reasons. We all know this will be a multiyear process. And as always, throughout this process, we are committed to ensuring supply continuity so that patient needs for critical medicines are met. I'll walk you through the phasing on the next slide. We spent the last few months finalizing the plans for our synergies for road map and have identified several key drivers. So this slide gives you an appreciation when we will start to see the savings come in from our synergy equities and what those dollars are in year 2, year 3. And you will see that in the first few years, we start seeing savings come from the COGS, procurement, overlapping infrastructure opportunity, whether as we have efficiently have rise our support functions or commercial infrastructure. Also, you will appreciate that we'll be relying upon multiple services from Pfizer for a period of time through TSAs and MSAs. And as we are able to absorb these services on the new Viatris platform, these savings will be part of our synergies. The full TSA and MSA synergies will largely be a rise after year 2 due to the time it takes to unwind the services. At this point of time, I can only tell you that our IT team is working diligently around the clock to build up and ramp up, and then set us up in a way that we can get off the TSA in a timely manner without any hiccup. Now just let's talk about how this platform can get back to the growth. As we look to the future, we see a number of growth opportunities across our pipeline, portfolio, geographies, partnerships and many more. To that, I would like to highlight our ability today. I will try to just walk you through our ability to cross-pollinate our legacy products across the world and the opportunity we see as a partner of choice through our Global Healthcare Gateway. Let's start with the cross-pollination of our businesses in key markets. We know there are opportunities to bring legacy Mylan products as well as pipeline into countries where Upjohn had a significant footprint and Mylan did not or vice versa. Korea is one such a good example that I would like to highlight, where Mylan had a presence, some products. But we were trying to work -- we were working through distributors, third-party distributors. Upjohn on the other hand had a significant footprint, a dedicated sales and marketing team and very mature digital capabilities, but didn't have a pipeline to expand in the market. You bring those 2 assets together, and you see a clear opportunity to bring the approved Mylan legacy products as well as the pipeline into the Korea and leverage the combined scale to launch these products as well as the exciting biosimilars and other pipeline products. And Korea is one example within our 165-plus countries. We are going to work now. Starting tomorrow, as you will hear, go back and figure out how we bring this, how can we basically leverage and bring this example to the life. And how can we do more with this platform as a part of our long-term strategy and share with you when we come next time and share with you our long-term outlook. It's important to tell you that in addition to the organic opportunities that our combination provides, we have a very strong track record as you can see on this slide, that we have all strong record as a partner of choice. And to me, this is very exciting, very exciting that we are much better placed than we were placed yesterday as a legacy Mylan company to further leverage this platform from a partnership point of view in a more institutional way. As Michael mentioned, this platform with this deep market expertise, tremendous science and manufacturing capabilities, disciplined management because all these attributes we've -- is why we believe we are a great partner of choice. Our scale and our expertise provide endless possibilities to connect patients to more products and services, ultimately creating better value for all stakeholders. And you will more -- you'll hear more about this in practice throughout the day. From here onwards, I would like to turn it over to our Commercial segment Presidents to give you a bit virtual walk around the globe, to see this platform and management in action. Sanjeev Sethi will take you through our global supply chain. And Dr. Walt Owens will provide you more details about a robust pipeline and scientific expertise to drive value from R&D. After all this, I'll come back and reiterate our key priorities and why this management team is absolutely confident in meeting and exceeding expectations. Thank you.

Good morning. I'm Tony Mauro, and I'm the President of Developed Markets at Viatris. I'm very proud to be leading this segment after approximately 25 years with legacy Mylan. I'm also excited to be part of the first Viatris Investor Day, and I'm looking forward to talking to you this morning about our Developed Markets segment. As you've heard, this segment includes our businesses in North America and in Europe and contribute significantly to Viatris' revenue. I plan to walk you through the businesses in these 2 regions and talk to you a little bit about the road map for success. Road map is centers around 3 main building blocks. First, sustainable stability. We expect to see our historical low to mid-single-digit erosion continue. This will be driven primarily by LOEs, but also will be offset by new launches and volume growth in this segment. The second building block on this road map is focused growth. I will talk to you about our focus on highly profitable, highly complex products. You will see our global business and biosimilars continue to be a long-term investment strategy. And we project growth in this franchise in both developed market regions on a year-over-year basis. In addition, we are focusing efforts on products like Yupelri in North America, as well as on products from our newly acquired business from Aspen in Europe. And finally, the third building block on the road map to success is an effective and efficient infrastructure. We strive to create one of the most efficient selling and marketing organizations in the industry with focused granular analysis to drive portfolio and resource decisions at the market level and the intention where we have experienced field force and existing relationships built within our current customer base. We will continue to employ new digital capabilities to enhance these interactions and provide quality service to the customers and patients we serve in all our markets. So let's take a look at Developed Markets at a glance. The Developed Markets' total prescription marketplace is nearly $780 billion in value, combined in both Europe and North America. And both of these regions are growing on a year-to-year basis. 7 of the top 10 prescription markets globally are within the Developed Markets segment, including the largest pharmaceutical market in the world being the U.S. at $526 billion in IQVIA value. The generic and biosimilar conversion percentages shown on the screen are that of the entire prescription marketplace. So based on these statistics, we see significant opportunity for our portfolio to continue to grow and be successful throughout the entire segment. I would like to turn now to the Viatris business performance within this segment. As I mentioned, our Developed Markets segment, which is made up of more than 35 countries in North America and Europe, is a significant contributor to the total revenue of Viatris. For 2021, we project the business to be approximately $10.5 billion in total revenue, making up approximately 60% of Viatris' total revenue for 2021. You can see from the table shown on the slide, our North American business continues to be a strong business. With approximately 700 products and a field force of roughly 400 people supporting our entire portfolio. We have many launches planned in 2021 and also expect to see a significant contribution coming from our biosimilar franchise within the region. That said, we are seeing that our business in Europe is growing and will now contribute more revenue to Viatris than our North American region. We have a portfolio of greater than 1,400 products and a sales force of more than 3,000 colleagues working to support our European market. We have significant number of launches planned in 2021, as well as strong performance around our biosimilars for growth in this marketplace as well. So now as we look at the products and footprints in Developed Markets, we're going to dive a little more into how -- the depth of our portfolio and the sustainability and stability of our business, you will see that we have a diverse portfolio mix of brands, generics and complex generics and biosimilars that are spread across multiple technologies in dosage forms across the 35 countries that make up Developed Markets. And we continue to be a market leader in complex generic products, where we rank #1 in value, volume and total prescriptions for products like Wixela, glatiramer acetate and XULANE. When you look at the stability of our portfolio, you will see, as I have already mentioned, that historical erosion is expected to continue in the low to mid-single digits. In addition to this, we continue to be a leader in the retail pharma market in value in Italy, Portugal, France and the U.K. And in the U.S., we ranked #2 in generic value with more than half of our generic products ranking either #1 or #2 in overall value. So turning to growth opportunities within the segment. We see our focus has been very strategic. When we launch brand products like Yupelri and support them with the appropriate investments, we are the clear leader with 93% market share and continued growth of more than 30% projected on a year-over-year basis. We have also ensured that other key brands have the right commitment and level of support and are projecting growth on many of these products, especially within our European region. Along with our biosimilars portfolio, they continues to grow on a year-over-year basis in both North America and the U.S. and Canada. Finally, when we look at the commercial operations around Developed Markets segment, we see a very strong commercial presence and sales teams that are strategically focused within the relevant channels. These teams have built long-standing relationships that have allowed us to be the partner of choice with our customers. It's very clear from this slide that we are much more than 1 market, 1 product and 1 channel. So moving to the commercial toolkit and how we deploy the resources that I just walked you through. We're going to continue this discussion around the commercial operations focus and how we continue to evolve the organization over the years. And specifically, with the COVID-19 pandemic we've had over the last 12 months. I'd like to walk you through 2 specific case studies that I think will be very helpful in showing you how we're going to redeploy these resources in market. First, let's take a deeper dive into Yupelri. While we started this journey with a dedicated sales force, strategic call targets and a marketing platform until the deployment of our investment, maintenance and tail brand strategy, we never truly realized the full potential, efficiency and effectiveness that could be created through a true omnichannel marketing strategy. We have now taken our traditional sales force with the approach that we've done from launch and complemented it with digital capabilities. In 2020 alone, our 135 field reps with approximately 40,000 call targets, completed more than 400,000 HCP interactions and hundreds of thousand digital interactions with both health care professionals and consumers. These efforts have driven cost savings while enhancing our share of voice in the marketplace. Turning your attention to the chart on the right side of the slide. You will see in Europe the investment, maintenance and tail strategy and analysis has allowed us to reevaluate the specific tactics around the portfolio. With successful optimization of the maintenance, tail products, we have been able to reduce our overall SG&A by more than 10%, while at the same time, growing our revenue by 5%. So moving to focused future growth in the Global Healthcare Gateway. When we introduced you to Viatris, we also introduced you to our Global Healthcare Gateway. This is our commitment to leveraging our global platform and experience to fuel future growth and broaden access to medicines for patients through unique partnerships around the world. In Developed Markets, one example of the Global Healthcare Gateway was the announcement of our agreement to acquire the commercialization rights of Aspen's thrombosis business in Europe. This portfolio of products was a significant addition to our business that makes us one of the largest suppliers of thrombosis products to patients in the European market. It also, most importantly as well, bolsters our commercial infrastructure to further expand on complex injectables throughout the European countries. By adding to our experienced sales and marketing team, we will further strengthen our current reach into hospitals and enhance the future growth of our biosimilars franchise in Europe. So in addition to this example, you can see we have a strong track record of partnerships from Natco and Theravance in the U.S., to Biocon in the U.S. and in Europe and to FKB in Europe, we have been able to leverage the capabilities and strengths each organization has to offer to achieve great success in the markets we participate in. So what are some of the key factors impacting performance? As we take a look at where Developed Markets is coming from, and most importantly, where we're headed, we can see there are several factors that are impacting our projected performance for 2021. The North American region is projected to see year-over-year decline due to onetime events and certain pro forma adjustments. These include things such as the loss of exclusivity on Perforomist expected in June of this year and an administrative fee and return reserve adjustment for Lyrica in the U.S. in 2020. COVID-19 and normal competition also continue to impact our business. When we account for these onetime events and normalize our business, you can see base business erosion is in the low single digits, as we have stated and as we have expected. Offsetting some of these negatives are tailwinds and opportunities such as the projected growth in Yupelri, new product launches within this segment, the addition of this very important Aspen portfolio in Europe and the projected growth of our key brands in biosimilar products in Europe and across the segment. The segment projection overall for Developed Markets is to remain flat. So let's talk again about the building blocks to drive growth. When I began this presentation, I started out by highlighting the road map to success and detailed the important building blocks along the way. The building blocks to drive growth for Developed Markets are very simple. First, we must have a stable business, which will be done through prudent management of our portfolio and continued investment in a robust pipeline across North America and in Europe. Next, a strategic focus on growth. Products that include -- that are included in these are highly profitable and highly complex. Their continued commitment to our biosimilar franchise across the regions and growing our share as well as investment in focused products based on the investment, maintenance and tail strategy will be extraordinarily critical to our success. And finally, maximizing the effectiveness and the efficiencies in our commercial infrastructure to include the continuation of omnichannel marketing approach will provide cost savings and enhance our share of voice in North America and in Europe. I truly appreciate the opportunity to talk with you today about the exciting and dynamic business we have in Developed Markets. We look so forward to 2021 and the future. And thank you for your time.

Good morning. I'm Drew Cuneo. I'm Viatris' President of our JANZ segment, which is made up of Japan, Australia and New Zealand. I myself has spent more than 20 years in the health care industry in various roles, including running large and complex commercial businesses. However, I'm humbled, honored and truly excited to have the privilege of leading this segment comprised of what I consider highly talented and hardworking people. As you will see, we have a lot of work to do in the near term, but this team is up for the challenge. Now let's dive in. We are true leaders in these markets with substantial commercial operations across product and business types that enable us to maintain leadership and deliver health care solutions to our customers. Our businesses in JANZ are diverse and durable, with efficient commercial infrastructures and operational excellence that support long-term competitive advantages. However, in order to respond to industry and macroeconomic trends and to deal with company-specific headwinds, we are proactively restructuring to ensure stability and set ourselves up for long-term growth. Additionally, we are focused on optimizing and taking a disciplined approach to our investments. We're targeting investments into our focused growth products ranging from our key brands to our biosimilars. Using our existing commercial platforms and our local market expertise, we have success in managing products through their entire life cycles from launching growth through and including the post-LOE period and during generitization. We also have a proven track record of leveraging our platform to partner with pharmaceutical and biotech companies, creating future opportunities to manage risk and capitalizing growth opportunities. Now just for a snapshot. JANZ is a substantial business segment. We're forecasting about $1.9 billion in revenue this year, which represents a little more than 10% of total Viatris interest revenue. And again, as I mentioned before, we are market leaders in all 3 JANZ markets. We're top 10 in both sales and volume in Japan. And in fact, we're #1 in volume for both Australia and New Zealand and top 10 in sales for both. Our portfolio is broad and features about 800 products and 3,000 SKUs and our sales colleagues in JANZ number over 1,100 people, providing a robust promotional capability that enables us to continually have a share of voice necessary to meet customer needs across channels. In terms of the JANZ markets in which we operate, these are wealthy developed nations with advanced health care systems and promotionally sensitive pharmaceutical markets. Japan, in fact, has the oldest population in the world with nearly 30% of their population aged 65 and higher. Our portfolio plays very well in these demographics with chronic medications geared toward aging populations in areas such as cardiovascular, gastrointestinal, pain and respiratory. Generic penetration is also high in these markets. But we are well positioned to operate in these markets and post-LOE brands often retain a substantial portion of their value. Now let's turn to what makes our JANZ business different. We have significant competitive advantages that support our leadership positions. First, we have a broad portfolio across channels. Product types and therapeutic areas, allowing us to deliver a full portfolio of solutions to our customers and the governments we serve. Second, we have responsive operations capabilities that are underpinned by local manufacturing and distribution and a team that's dedicated to excellence. This last-mile distribution capability has created our reputation locally as a reliable supplier. And importantly, we have the operating agility to respond to the emerging needs of customers and government stakeholders, thereby providing significant value on a day-to-day basis. Third, our commercial infrastructure with representation across the customer-facing spectrum from physician office to pharmacies to OTC front-of-store expertise positions us to be able to promote products efficiently and to manage the product life cycles effectively. And finally, our investment into our digital platform has been key during the COVID-19 pandemic by enabling us to more efficiently and more broadly reach our customer base in these conditions. Going forward, a hybrid approach to promotion will be critical as it will allow us to continue to promote to customers with a leaner and more efficient organization. Now let's dig into some of the details that make our business a durable platform for the long term. As far as portfolio diversity goes, branded revenue makes up greater than 2/3 of the sales in JANZ. Most of that revenue is made up of sticky established brands that will continue to provide value year after year. Further, as you can see in the bottom left, no product makes up a disproportionate share of our revenue going forward. We have a portfolio of growth brands, such as Amitiza and EFFEXOR, our 2 largest brands in the region, as well as our OTC brand Ferro-grad and specialty products, such as Dymista and Creon. Our focused growth brands have sales of greater than $500 million and year-over-year growth of nearly double digits. Complementing our brand portfolio and demonstrating our capabilities to manage the product life cycle, we've recently begun launching authorized generics, biosimilars and complex generics. While their contribution today is relatively small, it will grow over time. The JANZ markets, like all developed markets, present complexities and nuances. Annual price decreases and high generitization are the norm. But Viatris has a granular management discipline and approach to effectively manage these complexities. Key to our approach, as I mentioned before, strength across different channels, featuring the ability to promote to GPs, specialist hospitals and to pharmacies. Two, we have a disciplined investment philosophy. We're investing in products of the most differentiation and the greatest returns and addressing the rest of the portfolio via efficient means, such as our digital platform and key account management. Optimizing value -- long-term value and maximizing what we have. We are placing emphasis on value optimization down to the product level. By doing this, we're able to effectively manage product life cycles by launching line extenders, such as for Amitiza and Creon, by pursuing OTC switches, such as for Dymista and RELPAX and by launching authorized generics in these markets. Finally, we are an organization that seeks sustainability. In order to do that, we are applying a careful approach to managing costs and economics throughout the business. By focusing on cost and investment discipline, product level optimization, and some cases, rationalization and always improving operational level efficiencies. Now focusing on growth in the future. The Global Healthcare Gateway will be key to our long-term growth. In JANZ, we have very specialized markets where we hold distinct competitive advantages and local market expertise. This truly differentiates Viatris as a partner of choice. Additionally, we have a proven track record of partnering in these markets, including for Amitiza, our largest product in the region, with large pharma to leverage our unique local infrastructure and for various biosimilars. The most recent example of partnership is with FKB for Hulio, where our close collaboration has allowed us to recently launch the first and only biosimilar adalimumab in the Japan market. These are some examples of how our scientific operations and commercial excellence have created the opportunity for us to partner in JANZ and create value for both us and our partner. Now let's talk about some of the factors impacting our performance in 2021. Last year, the JANZ region did about $2.4 billion in sales, that's approximately $500 million more than our 2021 plan. With Celecox going off exclusivity in 2020 and Lyrica at the end of 2020, we are experiencing significant erosion in these products in 2021 and expect high generic penetration before year-end. We also continue to anticipate COVID-19 impacts throughout the year as ongoing states of emergency continue in Japan and there are delays continuing in rolling out the vaccine. Annual price declines and products are also something that we routinely face in these markets. We see that manifest a normalized base business erosion of 3% to 4%. And while we cannot entirely offset the headwinds we're seeing in 2021, especially ones as large as losing exclusivity in our 2 largest products, Celecox and Lyrica in the same year, we are taking action. We are proactively and aggressively restructuring the business and our cost structure to meet these challenges to enhance profitability and to better position JANZ for future growth. Our restructuring plan will significantly reduce our footprint and rightsize the cost structure by approximately 35% versus our pre-COVID operating cost. With this leaner organization, we continue to leverage digital and remote tools. And we continue to use our hybrid and virtual reps, allowing us to efficiently enhance our reach. To maximize profitable growth, we will discontinue unprofitable products and end uneconomic relationships, while we seek continual improvement to contract terms. Most of these headwinds are onetime events, and we are taking action with the goal of stabilizing the business for the future. Now putting this all together, let's look to the future and we think about it in 2 horizons. In the near term, as I mentioned, we are restructuring and stabilizing the JANZ business. We're refining our market approach and how we target customers using our lean and new infrastructure. We are creating a cohesive culture built on competitive advantages where we aim to serve our customers in a comprehensive way, and we are laying the groundwork for future success. As we move forward, after stabilization, we will focus on maximizing the potential of both our assets that we have and we'll collaborate with our R&D colleagues to build out targeted pipelines to support future growth. Our new combined JANZ platform brings together the best of both legacy companies. We have top-notch talent, a stronger, more efficient commercial platform, additional business drivers and opportunities to generate long-term growth. All of this will establish the base, at which point, we will turn our focus to leveraging the Global Healthcare Gateway and our uniquely strong commercial platform. In conclusion, I want to reiterate the Viatris JANZ region has a number of strengths. One, an established leadership position. Effective and efficient infrastructure, disciplined investments into our focused products, proven experience in managing product life cycles, local market expertise that truly differentiates us and the successful track record of successfully partnering with other pharmaceutical and biotech companies to ensure long-term success. Thank you, and be well.

Good morning. My name is Menassie Taddese, I'm the President of Viatris Emerging Markets, and I'm extremely happy to be here with you. By way of brief introduction, I've got over 23 years of industry experience, both in domestic and international markets, having managed innovative and established businesses. Having had the good fortune to live and work in the U.K. and South Africa and where I'm based now in Dubai, UAE. My markets are very complex and varied and still dogged by some of the same stereotypes that we associate with developing economies. What I'm here to tell you is these markets have made tremendous, tremendous progress just in the last couple of decades in this century. And what's important to me and important to us at Viatris, is the fact that 2 out of every 3 individuals on this earth live in these emerging markets. So what does this mean from an emerging markets business perspective for Viatris? Emerging markets Viatris is $3.3 billion, a nice composition of business across Asia, across Africa, Middle East and emerging Europe, Latin America and the business vertical that represents 37% of our business is the ARV business vertical that we manage as such. We serve over 125 markets. Got a nice channel mix. This is a topic that's ever more important as markets and health care evolves around these countries. 55% of our business comes from retail, 45% comes from business to government, business-to-business and other funds. And what I'm particularly excited about is the 3,500 talented capable individuals that are highly engaged in emerging markets, the majority of which are customer-facing. And when you look at our rank, we're a top 15 player. Adjusted for the third-party funder business, which IQVIA does not capture, we're actually a top 10 player. In 5 out of our 8 markets, we're a top 10 player. And in 3 markets, 3 of our leading markets, we're actually a top 5 player. So we've got scale, breadth and depth of this Viatris business in emerging markets. If I pan out towards the market, it's a very attractive $150 billion market, $100 billion of which is concentrated in the top 10 markets. These markets have been growing at double the global pharma market growth rate and are expected to only accelerate that from 2020 to 2024. Some key trends that I'll highlight. Twin demographic divide. When you think about aging population, when you think about economies, when you think about health care, a growing middle class that we've all heard about, this is not only underpinning wealth creation and urbanization, it's also driving demand for quality health care. As the WHO describes it, the dual burden of communicable and non-communicable diseases, to me, this is the health equity conversation of the day, how are we going to provide quality medications at affordable prices with broad access across this 5 billion plus person population. The good news for us is not only are we well positioned to be able to do that at Viatris. National healthcare agendas are also moving towards quality and affordability as key markets. And finally, it's important to note that these markets are still markets that value brands. So differentiation, share of voice, brand consciousness is extremely important for our markets. So I have given you a little bit of a sense of who we are in emerging markets as Viatris, but also the marketplace. This obviously lead to one conclusion, and that is that there's opportunity. I'd say that there's huge opportunity, a significant unmet medical need. What I'm going to do over the next few slides is really tell you about how we're approaching this business, how we think we can unlock value across these markets. To me, success in emerging markets is threefold. We've got the scale. We've got the portfolio and the solutions. We've also got the capabilities and the efficiency. The scale, I've already talked about. The scale with knowledge as well to leverage the market similarities but also tailor solutions for local dynamics. That's just the way health care works in these markets, and that's the experience that we have. The breadth and depth of the portfolio we've already talked about. For me, beyond the leading positions that we have in CV, in pain, in CNS and other areas, the ARV, the pipeline that comes behind it is extremely important. I come from a legacy Upjohn background, a legacy Pfizer background, so when I think about the Upjohn business, just 20 products, we were trying to maximize my products and doing a fairly good job. I see this pipeline and an ability to really go further in the therapy areas where we're competing and very strong and leading, but also to be able to expand beyond that. This also comes with strong brand equity that will help us be able to identify growth paths across our markets. We've got an efficient infrastructure. What I'm here to also tell you is that it's extremely effective with end-to-end capabilities to be able to execute with excellence in commercial and other settings. So these are headlines. Let me give you a sense for what our sustainable competitive advantages are. A very busy slide, I'll spend a little bit of time on this, so bear with me. I don't want you to think that these are individual silos. I don't think you can be good in 1 or 2 and succeed in emerging markets. You've got to be good across the board. This is what Viatris brings to the table. So if I start off at the left, the breadth and depth of the portfolio is really unmatched. There's nobody that has the profile of offering that we have. Across chronic conditions, 11 TAs, the NCD5 has been described and defined by the WHO, but also industry leadership in ARVs and other such areas. When you look at the composition of the business, brands are more than half of our business. Generics, including this ARV component is a large chunk of our business and complex and biosimilars are a growing portion of our business. What's important to note in emerging markets is given the profile of these businesses, given the nature of these businesses and given the margins of these businesses, we've got unique go-to-market models that are fit for purpose to make sure that we're doing well by patients, but also doing well on behalf of the business. But I think of scale and operational excellence is really end-to-end capabilities. It will take too much time to be able to exhaust it. But if I focus on just a couple of them, the anchor market footprint that we have is not just about sales and market. It's really going beyond that. The marketplace has evolved. Key account management capabilities, channel capabilities, whether it's tender, retail, funding capabilities to be able to work with funders across the globe, some local, some globe. And then what cannot ever be overstated in emerging markets is that manufacturing footprint and the supply reliability. The ability to be able to do what you say you will do and produce the product, but also supply it in the last-mile concept across emerging markets is extremely critical. Not only do we have the breadth of the portfolio, not only do we have the execution excellence. But if I go over to the right, what gives me confidence as we go forward also is we've got the know-how. The know-how, which it comes through from the expertise and the leadership that we have, scientific in nature, the beyond-the-pill solutions. This is to say, it's not just about the product. It's the holistic patient journey that we need to solve for in emerging markets. And for that matter, across any market in health care. And a key differentiator for us is our ability to be able to expand access in broad ways. I'll show you some examples as we go forward that will bring this to light. The strong brand equity and reputation that we have is not just about all right. It is actually the legacy companies that we come from, the iconic brands that we have, the leading portfolios that we have in certain areas. And again, this footprint and supply reliability, that all sums up to exceptional stakeholder management which is critical not only to identify opportunities, but also mitigate risk, which is part and parcel of the way we manage the business. All this to say, creating value through know-how, execution excellence and differentiation. So I talked about country examples. Let me give you some. Again, another busy slide. I will leave this with you, but touch a few points to punctuate. From a Thailand perspective, starting left to right. Thailand is an evolving market, like all of my markets. The 70% of the business flows through the hospital. But retail is becoming an ever more important channel. We've got broad geographic footprint. But what's important to note in Thailand is that we've got a comprehensive portfolio and a channel mix management approach that allows us to be able to continue to win in hospital, but also expand in retail through differentiation. This has very much led to us being a top 5 player. And we think actually a top 3 player with leadership in CV, in pain and ARVs and beyond. Switching to Korea. It's about our digital capabilities. As a platform beyond the table stakes of everything else that we do, a single-payer system where HCPs have increasing demand for digital information. We've got a digital infrastructure and multichannel capabilities that is world-class, and we're evolving it, and we've used it, especially in COVID days, and we continue to use it. What's important to note in Korea is the #1 ranked product in all of Korea is still Lipitor. If I switch gears to South Africa and talk about access. With a very different market, a large population, per capita health care spend at a lower level. Our end-to-end capabilities to be able to really broaden access that I talked about earlier, through differentiation, through funding and through partnerships as well as to be a leader in South Africa, again, another top 5 and a leader in ARV in both retail and hospital channels. And finally, over to the right is stakeholder management in the Gulf markets. High per capita spend, relatively smaller markets, predominantly tender driven, but evolving. Regulations are changing on a regular basis. So our ability to be able to operate in this environment requires that we mitigate risk, but we also drive opportunities. And again, we're a top 5 player here with leadership in CV and pain and in other areas. Hopefully, this gives you some examples of sustainable competitive advantages coming to light. If I switch gears, I want to talk about Global Healthcare Gateway. And an example, almost a case study, of the type of things that we think we can do as we go forward in this new Viatris journey that we're on. To understand the ARV business, you'll know that 9 million patients are on Viatris HIV treatments across 125 countries. It's the largest portfolio across first line, second line and pediatrics. We're consistently among the first to launch novel first-line regimens across multiple markets. Again, it's not just about the advancement in the technology and innovation, it's also the access that we're offering. We've got strong relationships with key stakeholders in the HIV community, innovative solutions for HIV patients, strategic partnerships with partners like Gilead and other innovative companies. This focus is not only in HIV, but expanding to hepatitis, to TB, with partnerships with Gilead, Otsuka, TB Alliance, again, all this to say a case study for what is to come in emerging markets given the footprint that we have now when we continue to execute Global Healthcare Gateway going forward. What I hope I've done is give you some market dynamics, allowed you to touch and feel some of the capabilities that we have that gives me confidence that this combination is really why this transaction happened to be able to leverage the sort of scale that we'll have in markets like the emerging markets. And before I go into a longer-term time line, what I want to do is actually focus on the near-term of 2021. 2021 is impacted by some special onetime items. There's no doubt about it, remdesivir was a positive for us in how quickly we were able to capitalize on treatments for COVID patients in 2020, that's no longer the case going forward. So it will be a negative in 2021. There are other items. In emerging markets, too many to list. Pluses, minuses, go-to-market model changes that we have in Vietnam and a few others, those would be too long to discuss. What I'd like to focus on are the headwinds and tailwinds that apply in 2021, but are also themes that we need to concentrate on and own as we go forward. Pricing and cost containment has been, is here, will be here as we go forward and competition as well. I hope I've given you a bit of a sense that we're equipped to be able to manage that, to be able to mitigate risk where possible, but to also identify opportunities as we go forward. What excites me is the tailwinds. We've talked a lot about health care agenda, a growing middle class, an unmet medical need. I think that's clear. Again, coming from an Upjohn background, with 20 products that we were trying to maximize, when I look at the potential to be able to launch additional treatments, additional products in areas we're strong in and complementary areas as we evaluate strategically where we want to go. There's a tremendous, tremendous opportunity, and this will be a tailwind that is in play already in 2021. And I think only grows as we go forward as a combined company. I've been giving you this 2021 and this near-term overview. I'd really like to focus now on the building blocks for growth as we go forward. Organically, for now, in the near term, we're going to continue to modify our go-to-market model, continue to find efficiencies and effectiveness as we look to build our capabilities, especially in the digital front. That will continue. But when you get to the medium to longer term, and you look at Phase II and Phase III, there's a tremendous opportunity as I've spoken to already to be able to launch global products in markets that they're not in already. To continue to expand beyond the urban centers, and again, in fit-for-purpose unique sort of ways that either leverage our current platform or actually use new go-to-market models where we've got tremendous third-party capabilities, intermediary capabilities that we can bring to bear. And continue to enhance our product differentiation through life cycle management, which has been part and parcel of the way we manage the business and the way we've insulated this business for many years. Now finally, as we begin to execute more with Global Healthcare Gateway, I think there's a tremendous opportunity to expand much deeper in the therapeutic areas that we're in and potentially expand into other adjacencies, as I spoke to already. Again, thinking about highly differentiated, incremental innovation to be able to bring something more to the market, to be able to build our business. Now with this as background, I really want to close out this conversation with 3 key takeaways. We are extremely well positioned. I said a little earlier, this combination of Mylan and Upjohn coming to be able to create Viatris, for me, makes most sense in emerging markets. I maybe a little partial, but that's the case. We've got a solid foundation, really a differentiated position in evolving markets. We've got scale, leadership and know-how to really be able to drive the near-term opportunities, but also ensure that the business continuity and business growth occurs. And then when you think about it going beyond that, we've got an opportunity to be able to have focused growth through meeting the significant unmet medical needs that exist. Look, I know it's a lot to digest in a very short period of time. When you're trying to cover 125 countries, 200-plus products and multiple therapeutic areas, not very easy to be able to pull it all together. But what I hope I've given you is a sense of the marketplace from an emerging markets perspective, our presence as Viatris and the growth plans that we have as we go forward. Thank you for your attention. I'd be happy to answer questions in the Q&A session. Thank you very much.

I'm Sean Ni, President of Greater China region, and I'm speaking to you from our headquarters in Shanghai. I'm very proud to present to you on behalf of over 5,000 Viatris colleagues in this region about the exciting business opportunity we have here in one of the most dynamic and promising markets to create value for Viatris and all of its stakeholders. In the presentation, I'll show you that we have a strong and sustainable business foundation here, we have already fully integrated our legacy businesses and are operating as one company. We have also adapted our business model to the new market environment and shifted our focus to less policy sensitive market segments. Despite the policy headwinds, China as the second largest pharmaceutical market in the world, is still very attractive. In addition to strong economic fundamentals, the rise of health care consumerism offers great opportunities for our products in channels beyond the traditional hospital channel. Both our retail-oriented portfolio on the market and our pipeline are well positioned to capture these opportunities. Finally, the new Viatris organization has transformed itself into an agile, patient-centric omnichannel operating model. We have a powerful organization here with deep roots in this market and exceptional well-rounded capabilities. We are set to regain growth from focused portfolio expansion and to become the partner of choice in this complex market with very high entry barriers. First, let me give you a quick overview of the Greater China market segment. We have 3 markets in this segment: Mainland China; Taiwan; and Hong Kong, estimated to contribute $1.75 billion in 2021, which is about 10% of Viatris' overall revenue. We have leadership positions in each of the 3 markets, ranked #8 among all multinational pharma companies in Mainland China, #9 in Hong Kong and then #14 in Taiwan. Mainland China is our main market, representing about 90% of the overall revenue in the segment. So we'll focus the rest of the presentation on Mainland China. It is the second largest economy in the world with 20% of global GDP and is expected to grow 7.5% to 8.5% in 2021. Private consumption is growing rapidly and is expected to match the current scale of the United States by 2030 at $12.7 trillion. Health care spending is about 6% of GDP. And expected to grow in line with GDP growth. It is worth pointing out that this is far below the U.S. health care spending of 18% of GDP. The recent health care reform initiatives, such as volume-based procurement, is shifting funds towards innovative medicine and broadening coverage of basic medical needs. In the meantime, private funding is growing rapidly driven by rising disposable income and the need of high-quality health care. Cardiovascular diseases represent the greatest disease burden in the next 10 years for China. At 20%, it is much higher than global average of 14%. We're well organized to benefit from the strong demand with our infrastructure in China. We have a field force of 4,200 employees, covering over 7,000 hospitals and over 400,000 pharmacies in China. We can't talk about China without talking about VBP. So let me walk you through the history of VBP. VBP stands for volume-based procurement. This slide shows you the history of VBP implementation. In the Viatris portfolio, Lipitor and Norvasc was included in round 1. Celebrex, Zoloft and Viagra was included in round 3. And most recently, Lyrica was included in round 4. All Viatris products with meaningful sales are now subject to VBP tenders. Going forward, our portfolio had very limited exposure to the current VBP policy. We have proactively rebalanced our business to adapt to VBP impact. Through focused investment in retail channel, our business contribution from retail has increased from 23% to 35% in 2020 and is expected to further increase to 46% in 2021. The implementation of universal reimbursement price will further pressure our hospital business. We're keeping a close eye on the policy implementation details of URP that is expected later this year. And we have fully accounted for the potential impact in our operating plan. The creation of Viatris last year provided us with a great opportunity to adapt ourselves to the changing landscape and we're well positioned to compete effectively in the post-VBP China market. We rapidly integrated the legacy businesses with teams working together from day 1 after closing, and rebalanced our business to be ready to go to market with the right strategy to drive our business forward. We restructured our organization to focus on each of the 3 patient access channels: hospital, retail and online platforms. Our organization is equipped with deep experience in this industry. Robust business processing systems and localized manufacturing and R&D capabilities are all our great assets. Our long history of partnerships with the health care community and government in China's health care priorities gives us a strong foundation to serve our patients, business partners and stakeholders effectively as Viatris. Our portfolio is well positioned to leverage our strong commercial capabilities in China. Iconic brands like Lipitor and Norvasc have very high brand loyalty in a large patient base. We have already started executing our plan to expand the cardiovascular portfolio. Viagra is a very successful retail-oriented Rx product and is the foundation of our strong position in the retail channels. Celebrex, Lyrica, Viartril, Legalon, which are already launched in China, all have very strong retail potential and are growing rapidly. Our planned introduction of our retail-oriented portfolio including OTC and consumer health care products will further solidify our leadership position in the retail channel and capture the opportunity in health care consumerism. Our deep and differentiated commercial experience and capabilities makes us an extremely desirable standout when optimizing ours or any of our future partner's portfolios. Although our patients may purchase their needed medicine from retail pharmacy or online channels, the recommendation of doctors and hospitals is still an important key influence factor. We have a unique operating system that allows our teams to work seamlessly together across all 3 patient access channels, hospital, retail and online digital channels. This is another key differentiator for Viatris. Our business is also operating with a robust compliance program, and we're committed to continuing investing in this area to maintain high standard of compliance for our company. We believe our unique strategy and positioning, our first-in-class global and local capabilities, our deep roots in the China market, which has an extremely high barrier to entry, positions us as the best partner of choice for any other global pharma or biotech companies around the globe looking forward to tap into this market. We offer our potential partners a one-stop shopping opportunity through our Global Healthcare Gateway with the resources and capabilities of a top-tier big pharma and the mindset of an entrepreneur, including our commitment to provide our partners with high standard of compliance. We are also committed to bring the science from China to the global markets. Looking into 2021, the key factors impacting our performance will be VBP expansion which impacts Celebrex and Zoloft for the full year and Lyrica for 3 quarters. URP, which is universal reimbursement price, is expected to happen later this year. And we're closely monitoring the developments on this new policy. As I said before, the impact has already been fully accounted for in our operation plan. Besides the impact of these factors, we expect our hospital business to be flat. Our retail business will continue to show strong growth, benefiting from growing health care consumerism and underlying market growth driven by unmet medical needs. We also expect to realize both revenue and cost synergies as planned, benefiting from a quick completion of integration of the 2 businesses. To conclude this presentation, we're set to regain growth with a focused strategy in Greater China. In the near term, our rapid integration of the businesses and transformation of our business model will allow us to stabilize the business and realize planned synergies, as the organization further transforms itself into our new omnichannel business model and unleash the full power of our commercial capabilities will drive organic growth from our current portfolio to its full potential. In the medium to long term, portfolio expansion from both internal R&D pipeline and our Global Healthcare Gateway will drive exciting new growth opportunities for our business in Greater China. As we expand from the current portfolio of products to now optimizing Viatris' global portfolio of innovative, branded, generic and consumer health care products. I hope to share my excitement with the opportunity to lead the Greater China business to do our part in creating value for Viatris. Thank you. [Break]

Good morning, everyone. Really honored to be here today, even though we are meeting virtually. My name is Sanjeev Sethi. I'm the Chief Operating Officer for Viatris. I'm proud of the team I represent. You heard from Rajiv about our overall supply network strategy and how it is designed to serve patient needs in the different markets that we operate in. He talked about some of the key enablers and the basic principles, which govern our operations. We are proud to have built a robust global operating platform. This has been the result of years of strategic planning and investments. Our operating platform enables us to deliver on our mission of providing access. I will now walk you through all the key elements in more detail. We currently have 50 manufacturing sites spread across 5 continents. But it's not just about the number of sites. It's about how well we've managed them. Flexibility of network and proximity of these sites to our key markets is very critical. We have global sites with regulatory approvals to serve multiple countries. However, complexity of regions like Europe and emerging markets cannot be fully served by global sites, so we have sites dedicated to serve regional needs. We also have local sites to cater to in-country beats. In some cases, such as South Africa and Turkey, local presence is required even to participate in the market. With the coming together of Mylan and Upjohn, we have further expanded our local footprint. We now have local sites in Africa, China, Middle East, Southeast Asia as well. We have about 190 distribution centers spread across 60 countries. These distribution centers provide us last-mile distribution capabilities. Another important aspect of our net worth is our flexibility, flexibility in terms of volume and basket size for country-specific needs. This becomes important because we serve large markets like United States and also small, fragmented markets in Europe and emerging markets. Let's now talk about our manufacturing capabilities. We are proud of the diversity and scale that we have created. As you see here on the slide, we have technical capabilities to manufacture across dosage forms and across the complexity spectrum from oral solids to transdermal patches to respiratory products and biosimilars. For example, OST for us is not just about simple immediate-release tablets. It includes multiple, difficult-to-manufacture technologies as well. Similarly, in injectables, we have now built capabilities for complex injectable technologies like depot injections, liposomes, microspheres. For topicals, we have full range of ointments, creams, foams and transdermal patches. For respiratory, we have capabilities for nasal sprays, meter dose inhalers and dry powder inhalers. We have full scientific and manufacturing bandwidth for biosimilars. We have the capability and capacity to handle almost every type of synthetic API. Overall, we currently have capacity to produce approximately 80 billion units across different dosage forms and technologies. Coming to the backbone of our operating platform, our supply chain network. This slide here shows, as an example, how all our major markets are well supported to ensure reliable supply to customers. We understand the diverse needs of different markets and have built infrastructure and capabilities to cater to these market-specific requirements. Let's look into France as an example. We have 2 manufacturing sites located in-country. In addition, we have a dedicated packaging facility for the French market. Outside of France, there are multiple internal manufacturing and packaging sites that are approved to make products for the French market. And we also have relationships with several third parties as well. In addition to the manufacturing and packaging support, we have also deployed dedicated in-country resources of key functions like supply chain, regulatory, pharmacovigilance and quality. These examples highlight how the network we have built is well positioned to serve the needs of markets across the globe and drive access. So what has this resulted in overall? Let's briefly look into some key stats that help us define a resilient and reliable supply chain. Our efforts of being responsive to market needs have helped us maintain customer service levels at approximately 95% despite the COVID disruptions in 2020. We have also made conscious efforts to derisk all our critical products and markets and ensure supply continuity. Our top 100 products are supplied from 80 different locations in 20 countries, meaning if an event such as global pandemic hits again, no single geography or location will cause a major disruption to our business. Approximately 50% of our top 100 products are dual sourced either for API or for finished product or for both, providing us with an even greater level of supply chain security. In addition, we don't depend only on China or India for our API needs. 20 countries supply API for our top 100 products. So we talked about our manufacturing capabilities and our supply chain network. But we also need right cost of goods to be sustainable. We always keep challenging ourselves to stay cost competitive. We are in the process of reshaping our operating platform. In line with our network strategy, we will be rationalizing approximately 15 sites across the network. This will help us optimize overall capacity and focus on changing portfolio needs towards more complex products. We will continue to have ample capacity to meet customer needs once our network is further optimized. We will leverage low-cost geographies for commodity products. Needless to say, ensuring supply continuity will be a top priority during this exercise. With the combination of Upjohn and Mylan, we are using a procurement scale to drive spend efficiencies. Vertical integration. This gives us end-to-end control on supplies, cost competitiveness and speed to market. We are driving efficiencies by utilizing centers of excellence. By centralizing resources and activities, we are able to reduce redundancies across locations and deliver a more standard output at a better cost. We are further improving efficiencies by enhancing automation in manufacturing and quality labs and also by balancing the scale of operations. This slide shows you, as an example, how vertical integration helps us stay in the game for a longer duration even in a hyper cost-sensitive market. When we manufacture APIs internally, we have full control over the chemistry and the process, and we can use it to our advantage to improve and get to more efficient processes. We can source key starting materials more efficient and increase the scale of manufacturing. In this particular example, we could bring down the cost of API from $614 per kg to $270 per kg. All these efforts have helped us hold our leadership position in the hyper cost-sensitive ARV business for more than a decade now. In the previous slide, you saw that we have relationships with over 600 third parties. Within that group, there are several key strategic partnerships that we have built over the years. These partnerships complement our internal capabilities and capacities and, at times, provide us with a greater speed to market. We partner with these suppliers much more closely than traditional third-party relationship. We share in risk, cost as well as commercial success. We work in close collaboration and engage directly to ensure effective decision-making at every stage. There are many success stories, where, along with our partners, we could achieve speed to market, expand depth and breadth of our portfolio and enhance market reach. For example, biosimilars with Biocon; revefenacin with Theravance; Creon and Influvac with Abbott. We also have contract manufacturing relationships with companies like TRC and Gland Pharma. We will take all these learnings from our past successes in our partnerships and amplify them with a unique commercial and operating platform that Viatris offers and be a partner of choice. Now coming to the most important aspect of our platform, quality and compliance. We Don't view quality as a function. It's a mindset for us. It's in our DNA. It's built into everything we do and is the fundamental point of decision-making for every product. We constantly work towards enhancing our quality culture. We encourage our workforce to speak up. But we don't stop with that. We have a strong focus on continuous improvement. We continue to invest in automation and leverage the latest technologies to enhance our quality systems and processes. We also have our shares of issues as well. However, what differentiates us from others is how we deal with the issues. We are constantly engaged with the regulators and stay close to the issues to minimize any disruption in our business. As you see on this slide, we have experience to deal with multiple regulatory authorities. Last year alone, we had approximately 100 inspections by different regulatory authorities. We are regularly inspected, not only by United States FDA or European agencies, but by many other health authorities across the globe. This allows us to continually strengthen our quality systems and share best practices and learnings across our sites. Environment, health and safety is very important for our business, and we really pay serious attention to it. As a responsible organization, we are not only committed to provide a safe and healthy workplace for our employees, contractors and visitors, but also to protect the environment. We encourage our employees to play an active role in making workplace safety a priority. Many of our sites have been certified by ISO and recognized by British Safety Council with 5-star rating and Sword of Honor. We have made significant efforts and invested resources to protect our environment and reduce impact on climate change through conservation of water, promoting clean air and responsibly managing waste. A truly differentiating aspect of our operations is the highly engaged and performance-driven leadership team that manages. Our operations leadership team has more than 250 years of combined pharmaceutical industry experience, averaging 25 years per leader. We are hands-on, and we are focused on execution, continuous improvement, customer service and financial discipline. While we are operationally set up across the globe, the organization design we have ensures close connectivity amongst the leadership and the operating teams. There is seamless, cross-functional collaboration, driving accountability and end-to-end ownership. I've mentioned continuous improvement several times, and this comes in many forms. Another example is shown in the way we deploy our capital. We diligently and purposefully select projects and investments to enhance our platform for the future. Capital is deployed for the maintenance and for improving the efficiency of our existing infrastructure. We have selectively invested in implementation of best-in-class systems for our manufacturing sites, taking areas that help improve quality and compliance or increase the efficiency of our operations. And in line with our business and R&D strategy, we are deploying capital to upgrade our facilities to the most current technologies and further enhance our capability and capacities in areas like complex injectable, continuous manufacturing and biosimilars. Before I close, I want to share a short video that will give you a glimpse of inside some of our manufacturing facilities, which I hope will bring some of my slides and words to life. [Presentation]

That was a quick view of our manufacturing operations. So this brings me to the end of my section. To summarize, we have a customer-oriented, diversified and flexible operations platform. Our supply chain network is resilient and de-risked. Our experienced leadership team is focused on execution, sustainability of operations and continuous improvement. And overall, we are well positioned to deliver access and growth with best-in-class manufacturing capabilities and strong, strategic partnerships. Thank you very much.

Good day, all. My name is Walt Owens, and I am Head of Global R&D for Viatris. By way of introduction, my background includes 25 years of experience in the pharmaceutical industry in areas of R&D, operations and quality. Prior to entering the pharmaceutical industry, I was involved in academic research, in organic and physical chemistry at Rice University. I'm very excited to share with you today our long-term R&D strategy to support Viatris and the global health care gateway business model. I'm also going to share with you additional details regarding our capability, our pipeline and why we are so confident in our ability to excel. Our R&D strategy is composed of 6 fundamental pillars that will support the Viatris business model. These strategy components are, number one, development of complex and novel products. These represent unique, limited competition products. Our second pillar is biosimilars with an emphasis on first-to-market opportunities. Number three, we're not shying away from traditional generics, but instead, we are diligently pursuing the challenging opportunities. We will also support our markets, including Japan and China, with new submissions. We will enhance our current brands through appropriate life cycle management. And finally, we will maintain our broad portfolio of marketed products for enhanced cost of goods, risk mitigation and regulatory compliance. Taken together, all these R&D strategies are critical to meeting our goals in each of our markets. Our R&D strategy is underwritten by our scientific, clinical and regulatory depth and breadth of capability. We have 3,000 scientists worldwide with local and global regulatory presence in 55 countries that are focused on delivering a portfolio of products that exceeds $224 billion in brand sales. Our scientists have expertise in multiple dosage forms, device design and engineering. In addition, we have demonstrated experience in 80-plus multinational clinical studies and have conducted over 800 bioequivalent studies in the generic space. Legacy Mylan and now Viatris has a long-standing proven track record of delivering complex products. We've never shied away from challenging science or allowed the lack of an obvious regulatory pathway to inhibit our development of these types of products. We like breaking down barriers. Our basic science, engineering and clinical research, combined with our regulatory expertise and manufacturing capability, have allowed us to deliver products such as glatiramer acetate, Wixela and an array of transdermals, peptide and protein-based products as well as complex respiratory products. Not only have these development programs resulted in noncommoditized products, the learnings and the science developed fuels the science of the future to develop and deliver complex products for Viatris. An excellent example of our complex product focus can be seen with our success in development of complex depot injections. We have all the necessary science and capabilities in-house to deliver these products across a wide array of technologies such as nanoparticular designs, depots and complex APIs, which does include peptides and proteins. The acquired scientific capability and knowledge that we have sets us up for long-term success in complex products for the company. We have already demonstrated success with programs such as Copaxone as well as with the submissions of Victoza and the Invega family of products. In addition to the submissions that I just mentioned, we are making excellent progress on 8 programs that are at various stages of development. Furthermore, 5 of these programs are well advanced and have reached the regulatory exhibit batch stage or are in-clinical execution. We're confident that several of these products will result in first-to-market opportunities. Along with our complex product programs, we're also focused on delivering novel products that meet the needs of the patient or they fill gaps in health care. Development of these products depends upon strong clinical research, regulatory strategy and experience as well as formulation design and end-to-end product and process capability. The ability to translate medical and patient needs through science into an effective product label is a key expertise that we have. We have all the necessary elements to be successful. In addition, we have a demonstrated track record of delivering novel brand products, and we are not new to this area of development as proven by the success of products such as our Yupelri, Perforomist, Symfi and IMPEKLO. We're well positioned to leverage our regulatory and science platform to deliver a broad portfolio of novel drugs. As an update for you for our novel products programs, we wanted to share the current progress of key developments such as the novel delivery of meloxicam and glatiramer acetate once monthly. As you can see on this milestone status graphic, both of these programs are reaching or are actively progressing into the important clinical phases of development. In addition to these, we're excited to have MR100 and MR108 progressing as well into Phase III. It's noteworthy that Pretomanid and Delamanid were developed in partnership with TB Alliance, where Viatris conducted the necessary research to bring these infectious disease products to the markets that need them, and they are now approved. Expanding our biosimilars platform with an emphasis on being first is our second key strategic pillar. As you can see, and as we have demonstrated, we have internally developed a strong scientific, clinical and regulatory discipline for biosimilars. We have leveraged our internal capability with key partners to develop these challenging products across multiple therapeutic categories, technologies and geographies. We have promoted these programs across many of our regions into the emerging markets while relying upon opportunistic business development activities to support unique markets like Japan. As we have mentioned, Viatris has a proven scientific and regulatory track record in biosimilars. As a demonstration, this has yielded 313 country-level approvals across 7 products and has facilitated our ability to market these critical medicines in 76 countries. We're also making excellent progress in the pipeline products for biosimilars such as EYLEA, which has now completed its Phase III clinical study enrollment despite the COVID pandemic. We have several programs that are nearing the end of their regulatory review cycles, and our BOTOX program is moving at an excellent pace with our partner, Revance. And we have initiated the analytical and preclinical characterization studies. Considering the progress shown here, we have a number of first-to-market opportunities in this existing biosimilars portfolio. That said, our focus on biosimilars does not stop with our current pipeline programs. Moving forward, we have identified 13 new target development programs, spanning additional therapeutic areas and equating to $57 billion in global brand sales. Combining our existing portfolio with these new biosimilar targets will give Viatris one of the industry's leading biosimilar pipelines with 30 products yielding a global brand value of nearly $161 billion. This forward-looking focus on biosimilars, in combination with our deep science and track record, positions us very well for execution in this critical strategy element. For a third component of our R&D strategy, we're not shying away from generic drug development. Instead, we will continue to pursue those products that have high barriers to entry and represent first-to-market or niche opportunities. Historically, our R&D teams have been very successful in delivering products that fall into this category. Valuable products such as mesalamine suppositories, remdesivir injection, dimethyl fumarate, heparin, daptomycin, just really to name a few, were made a reality from this generic product strategy. Our R&D and regulatory teams will continue to focus their generic development efforts on products that meet the criteria of noncommodity, first-to-market or are challenging from a regulatory scientific perspective across all of the Viatris markets. How will we support our key markets in North America, Europe, Japan and China? We will continue to feed these markets with new products and submissions year-over-year. As you can see in the charts on this slide, we are projecting significant increases in our submissions to Europe, Japan, Australia, New Zealand and China when compared to the previous 5 years. Specifically, we see increases of greater than 250% for submissions into the Japan, Australia, New Zealand and China markets when compared to the 2016 through 2020 time frame. For Japan and China, we're also excited to increase our footprint on our submissions, particularly in China, as it's a new market for us. We also recognize that there may be unique regulatory requirements such as clinical trials and local patient populations or different product strengths that are needed to compare to the same product in the U.S. or Europe. Therefore, dedicated expert resources with a specific focus on these markets is required and is now established inside the Viatris R&D organization. We will continue to deploy our science from our large markets in the U.S. and Europe through incremental regulatory execution. This strategy will deliver a large portfolio of products and submissions into the emerging markets such as Southeast Asia, Africa, the Middle East and Latin America. By developing products for a primary market like the U.S. or Europe and then geographically expanding through incremental regulatory execution provides in a mechanism for efficient and cost-effective delivery of new products to our emerging markets business. Here's an excellent example of how a complex biosimilar product has been geographically expanded through excellence in regulatory execution after receiving the primary market approval. Viatris' trastuzumab was the first U.S. approval in 2017. The scientific data from the U.S. and Europe has been leveraged to rapidly expand access to this product in 97 countries with 38 more countries pending approval or planned for submission. These activities have facilitated marketing of this important product in 63 countries today. Enhancing our existing brands through life cycle management is another key pillar of our R&D strategy. We are undertaking development actions such as OTC switches for Dymista and Viagra, development of new indications and the development of new product streams such as what we have done with Creon and Newark, where we have introduced the 20,000 and 35,000 live-based unit capsule product. We are also actively pursuing improvements in device designs and expanding dosage forms of marketed products to enhance their value. These enhancements are our key focus of our R&D strategy with the aim of filling patient and medical needs while, at the same time, inhibiting the natural erosion of these products in the market. As one can imagine with a large portfolio of products such as ours, we must maintain our disciplined regulatory compliance and engage in activities to improve cost as well as address risk mitigation. We have organized our centers of excellence for regulatory operations, tech services, product safety and risk management as well as medical affairs to enable them to focus on these important product maintenance activities, and they can do this in an unencumbered fashion. The efforts of these group supports 30-plus thousand marketing authorizations worldwide. As part of our R&D operating model, we also identify and manage closely key partners that can complement and enhance our organic capability and capacity. We operate in very close collaboration with our partners to ensure quick and decisive decision-making and define product development strategy. The model has been very successful as is evidenced by products such as Yupelri, Ogivri, and [ Semglee ], demonstrating our ability as a development partner. Based upon our scientific depth and breadth of capability, combined with our proven track record to develop challenging products, Viatris is absolutely a development partner of choice. We only need to look at our example, Ogivri, with our partner, Biocon, to appreciate how 2 high science organizations can be brought together to deliver an important oncology product. The deep scientific capabilities of both groups complement each other. Where overlap do exist, the ideas of both organizations are considered and the best possible strategy emerges. Governance is critical, and governance of these programs is managed through joint steering teams that ensure agreed-upon strategy, decisive decision-making and that execution stays on track. Combining all of our strategic pillars that we have discussed here today yields a very compelling and robust product pipeline for Viatris. This pipeline spans oral solids, injectables, topicals and semi-solid products as well as transdermals, respiratory and biosimilars. Our R&D and regulatory teams are focused on delivering products that account for $224 billion in global brand sales. For our novel products, we can estimate between $100 million to $500 million in peak sales for each of these products. In addition, 75% of the brand product value of our pipeline is associated with the development of complex products and biosimilars. In closing, as you can see, Viatris R&D has a robust set of strategies to support the long-term business model and our global health care game. These strategies are not at all necessarily new but are based upon a proven track record of scientific and regulatory success, which gives us great confidence in our ability to execute and deliver new products to the Viatris markets for the future. Thank you.

Before I conclude, again, I would like to mention that how proud I am of our leadership team. What excites me about all that we have shared with you today is that we are just at the starting point, just at the beginning of optimizing the value of what we are creating. As a combined company, our assets are incredibly powerful. We have diversity in every aspect of our platform, supported by all of the strong commercial capabilities I showcased. But it's how we manage this unmatched platform that will truly determine the success. And as Michael as well as I stated earlier, we believe we have the right internal capabilities and management discipline. Our disciplined approach to understanding our profit growth potential on a granular level and strategically managing our resource allocation, coupled with a rigorous performance management process focused on execution and results, gives us the tremendous confidence in our ability to meet our stated objectives. Everything that I just shared with you today comes down to our people. I'm so proud of the talented, high-performing and diverse workforce we have brought together and cannot thank them enough. I'll close my remarks from where I began. Whether it was Tony walking you through developed markets or Sean Ni discussing Greater China or Menassie talking about his excitement about emerging markets or Drew giving you an insight into our chance, I hope by hearing from this team gave you enough insight to appreciate why we are confident that we can manage our base business, manage its erosion in a more diligent way. We're extending the profitable life of our existing products and proactively responding to the country-specific changes in our market structure and environment. I also hope that Walt's presentation about our attractive pipeline helped give you a glimpse into the future and why we passionately believe that we are uniquely positioned to meet the world's evolving health care needs as well as offset -- very well offset inherent erosion of our business. And Sanjeev's presentation showcased how our deep portfolio and pipeline is supported through an expansive, curable and resilient manufacturing and supply network. We also shared with you the synergy road map and detailed action plans to execute not just $1 billion cost synergy target but our potential to exceed that. Lastly, the attractiveness of our commercial footprint, our scientific and manufacturing capabilities, our legal capabilities makes us a partner of choice and leverage our global health care gateway. When taking all of these pieces into consideration, you should have an appreciation about our confidence in '21 being a trough year. While there is more work to be done starting tomorrow, we are identifying the opportunities for future growth that will propel us into the next stage. And we look forward to discussing with you in the months ahead. Thank you very much.

Hi, everyone. I'm Lara Ramsburg, Head of Corporate Affairs at Viatris, and it's really great to be with all of you here today. During my almost 30-year career now, including 12 years at Mylan, I value every leadership experience I've ever had, whether in communications and corporate brand, global policy or government affairs, the office of the CEO or managing previous integrations. But one of the most rewarding times of my career was driving the creation of Mylan's global sustainability program. Significant strides were made in a few short years. And now combined with the legacy and the commitment of the Upjohn organization, it really sets the stage for the strong Viatris sustainability platform that I'm just so excited to talk with you about today. As you've seen throughout the earlier presentations, the tenants of sustainability truly are fundamental to our mission, and our overall sustainability priorities are not only aligned with our business objectives, but I can really attest, they're also embedded throughout our organization and our teams, and you'll be learning more about that throughout this presentation. We may be a health care company, and we're certainly very proud of that, and patient health is obviously critically important to us. But our vision of health is not just about physical health. We're also focused on employee health, environmental health, community health and global public health. While Viatris may be early in its life cycle, the strong foundation to deliver on this vision and fulfill our mission is not. That includes a real dedication to fostering an engaged workforce, where everyone feels a sense of belonging and has access to the tools they need to reach their full potential. And even in these early days of Viatris, we have also been expanding upon the strong impact of our legacy companies, which I'll give some specifics on shortly. But with all that said, advancing our sustainability performance and efforts is a continuous journey, as you all know, and it really requires us to have a holistic approach. So I'll be outlining the clear path that we have set for ourselves to take what we believe are our most important next steps. As you've seen, access, leadership, partnership are the pillars of our work to fulfill our mission. And to me, it really does all start with our focus on access and our ability to consistently provide high-quality medicines to patients in more than 165 countries and across all income levels. In addition to the stats you've already seen today, and I know you've seen many of them, the power of our access platform really comes to life when you realize that Viatris has a portfolio capable of treating 9 out of the 10 leading causes of death; has more than 200 medicines listed on the WHO Essential Medicines list; markets biosimilars in more than 70 countries; and with our combined resources, we now have strong leadership in the noncommunicable disease space while also continuing to be the largest producer by volume of antiretroviral medicine for infectious disease, reaching 5x as many HIV patients as the originator companies combined. I really -- I can think of no better way to describe our impact on access than that combination right there. And as you've already heard from Sanjeev, we're also committed to leadership when it comes to advancing sustainable operations. Ensuring the quality and the safety of our products is at the heart of how we operate across our network. All of our facilities operate with strict quality management systems, and we audit those facilities and those of our suppliers to ensure compliance. We're committed to environmental responsibility and have been working to reduce our environmental impact. We've decreased our scope 1 and scope 2 greenhouse gas emissions by approximately 16% in the past 5 years. You'll also see we've significantly increased our renewable energy use, and we've decreased our water supply ratio, all while continuing to focus, first and foremost, on the health and the safety of our employees. And where I think you can see the strength and the resilience of our operations really come through is as we've been able to continue to work throughout COVID. We've been able to do this without significant disruption, and I just personally cannot thank the teams directly involved enough for their efforts. Turning to our partnership pillar. This is where both legacy organizations of Viatris really shine with deep relationships that we are quickly continuing to build upon. In addition to the partnerships referenced earlier today that expand access, we also partner with nonprofit organizations such as the Gates Foundation, the Clinton Health Access Initiative and the TB Alliance to provide critically needed infectious disease medicines and innovations. While, at the same time, we have a leading role in groups like the NCD Alliance to aid in disease awareness and screening as NCDs represent leading causes of death, including in low- and middle-income countries. We work with industry groups and trade associations on access policy advocacy and with philanthropic organizations to help support patients and communities in need around the world. And we're leveraging a strong foundation to help oversee these efforts. Between the Viatris Board and our management team, we have the environmental, social and governance, also known as ESG, oversight mechanisms in place to help drive our agenda forward, including the Board's Risk Oversight Committee, which oversees management's efforts regarding corporate social responsibility; and our internal cross-functional social responsibility council. As part of building out our ESG oversight, we've also been actively working to enhance our disclosures so that key stakeholders, like you, have the information they need to follow our journey. This includes striving to ensure that we meet all necessary investment criteria. And we really do look forward to continuing to build upon and expand these efforts as we go along. Michael also acknowledged at the very beginning of today's discussion that cultivating a dedicated and engaged workforce is a critical priority as we bring our 2 companies together and drive our mission. To that end, we are establishing what we call The Viatris Way. This will be the foundation of how we are building a performance-driven, highly inclusive and engaging organization through all aspects of the employee experience. This holistic plan for workforce integration and culture building includes all the foundational elements you would expect such as competitive compensation and benefit plans, internal opportunities for advancement and more. We're also advancing our work and diversity and inclusion, standing up employee resource groups and instituting policies and trainings that enable flexible remote work even after today's COVID protocols are no longer necessary. We not only -- we want to be a partner of choice, but we also want to be an employer of choice, and we want to enable every employee of Viatris to really be able to reach their full potential. And even though our time as a combined company has been relatively short, we are already expanding our impact. We are a principal sponsor of the NCD Academy and recently supported its launch of oncology coursework for health care providers, particularly in rural regions. Our leadership in treating infectious diseases such as HIV/AIDS continues through our recent announcement of FDA's tentative approval of our pediatric formulation of the frontline treatment, dolutegravir. And at the same time, we also announced a groundbreaking partnership with CHAI and Unitaid to significantly reduce the price of this product and expand access in low- and middle-income markets. I'm also really proud of our global partnership with Sesame Workshop to help children and caretakers deal with the socio emotional impact of COVID-19 as children are especially exposed to negative -- the negative effects from the pandemic. This is an initiative that many of our employees have really gotten behind and shared with their family and friends as we all continue to try to find new ways to cope during what are certainly challenging times. And we have a clear path in place to continue enhancing our commitments. This includes an assessment of our ESG priorities as a combined company in collaboration with external experts and in conjunction with the company's enterprise risk management process. This work will help us to solidify our goal-setting priority areas and initiatives. We're also continuing to expand our sustainability-focused memberships and Board and company policies. We are driving towards the publication -- as I speak, of our inaugural Viatris Sustainability Report in the first half of this year, where we will be working to provide additional transparency, including further enhancements to our TCFD and SASB-related disclosures. And by the end of the year, following the completion of an assessment of our restructuring activities, we'll be in a position to really solidify the relevant baseline data that we need in order to establish and announce our long-term goals. We then plan to begin tracking against those goals in January of 2022 and expect that our initial focus will likely include areas like climate, water and waste, diversity and inclusion and, obviously, access. So I know this was a lot of information to absorb in a short amount of time, but I hope you can really feel, as I walk through these highlights, that our focus on sustainability isn't just words on a sheet of paper. Not only do we have a strong foundation to grow from, the tone really is set at the top, where we have the highest level of Board and management commitment. And we have a plan to drive additional progress, which we look forward to executing. So to close, obviously, empowering people worldwide to live healthier at every stage of life is certainly an ambitious goal. But it's one we take great pride in because we really do see our efforts and our impact in action every day, and we look forward to sharing more of that story with you as we continue along our journey. Thank you.

Hope the day was insightful and constructive, and you had a better understanding of our business. Being on the job for 90 days as a CFO of this company, I'm very happy to be here to take a few minutes to talk about what I'm focused on and then address some of the feedback we've received after the guidance call from last week. Let me begin with highlighting on our commitment to deliver on financial guidance and creating shareholder value. I believe 4 pillars will define our success: first, on focused execution by enhancing and strengthening our capabilities to plan and forecast for future; strong discipline by applying rigor and allocation of resources; we are committed to providing appropriate level of transparency; granular reporting of results, identifying the risk and opportunities; finally, balanced approach to capital allocation with top priorities of deleveraging and dividend growth. Strengthening our balance sheet will be key. We need the flexibility, given the nature of our business, and to insulate from the market volatility. First, let me start with our 2021 guidance we shared last Monday. I want to punctuate a few points. I believe we accomplished the goal to give you enhanced visibility and understanding across P&L and cash flow. I want to reiterate that 2021 will be a trough year for revenue, adjusted EBITDA and free cash flow. 2021 is a unique year, given the significant impact of special and onetime items. Because of the nature of special items, comparison of 2020 to 2021 is somewhat less important. This is especially true with respect to quarter 4 of 2020. Given the stub period and the transaction-related items, we do not believe the fourth quarter of 2020 is representative of business going forward for Viatris. Quarter 1 2021 will be the first full quarter for Viatris. Now let me share with you a more detailed view of revenue guidance. In this revenue walk, we've kept the special items on the left-hand side and the normalized basis on the right-hand side. If you look at on the left-hand side, the first item is Japan Lyrica. We've seen the generic entry, and we see a rapid erosion. All that has been modeled and reflected in the forecast. We are anticipating the Perforomist will go LOE in U.S. The U.S. rebate adjustment for Lyrica for legacy Upjohn that impacted favorably in 2020 is not expected to repeat in 2021. For China, 2021 reflects the impact of first round of VBP bidding. With that, the VBP should be behind us as the most of the hospital portfolio is under VBP program. We've also factored in an initial implementation of China's URP beginning in quarter 3. We're expecting gradual COVID recovery beginning in second half. The impact in 2021 is expected to be relatively less than 2022. However, the overall impact for 2021 would still be a negative of about 3% of the revenue. Moving to right side of this chart. You can see the normalized base. You can see the base business erosion. That is almost entirely offset by new product revenue, including the Aspen transaction. Product ruling. We continue to look at our portfolio. There is discontinuation of product in our portfolio that generate very low or negative profit margin. This slide show you the reportable segments in approximation of revenue. The special items on this chart are in the middle of the chart to focus on. These items have a disproportionately higher gross margin, impacting approximately 120 basis points of decline on a year-on-year basis. Once those items are behind us, I expect the gross margin to normalize. Looking forward, we're focused on balancing between base erosion and new products. We will continue to seek opportunities to slow the erosion, maximize the value of launches, given our expanded global and diversified platform. Now on to the EBITDA walk. There are a few additional items that were not driven by revenue I want to highlight here. Depreciation and amortization adjustment reflects lower allocation. We are covering the TSA cost from Pfizer in the operating cost. The product pruning, as I mentioned before, have a very little impact on the EBITDA. We do see certain increase in the expenses, especially with R&D investment and normal inflationary changes. We're building synergies of approximately $500 million in the guidance. That's part of the $1 billion that we expect to achieve over the next 3 years. While we give no quarterly guidance, I expect both revenue and adjusted EBITDA to be more second half weighted due to the seasonality of products, timing of government tenders and synergy realization. I want to provide some additional clarity relating to $1.5 billion of cash cost in 2021. You can see on this chart, we're providing a summarized breakout components. Cash cost to achieve synergies of approximately $400 million in 2021. That is within the estimated range that we shared with you before of $1 billion to $1.3 billion total in next 3 years. Remaining cash charges relating to restructuring and integration, we expect them to decline significantly over the next 2 years. The total cash cost to achieve over 3 years, period between '21 to '23, will normalize in 2023 to an amount that approximate historical Mylan levels. Going forward, not all estimated savings for restructuring activities expected to impact adjusted EBITDA because certain historical costs were already being excluded from adjusted EBITDA. Again, just as a reminder, 2021 is a trough year for free cash flow. I expect the cash flow to grow significantly over the next 2 years. Reinforcing on our financial commitments, debt reduction, growing dividends are 2 main priorities. We expect to pay down $6.5 billion of debt over the next 3 years. That consists of $1.1 billion of short-term debt and $5.4 billion of long-term debt. We expect that short-term borrowings will fluctuate throughout the year, given significant onetime cash outlays and seasonality of our business. Our intention is to continue to strengthen our balance sheet that's absolutely necessary for future flexibility. Our long-term leverage target goal continues to be 2.5x, which we expect to achieve post 2023. We will be creative when it comes down to bolt-on business development opportunities. They will not impact our ability to pay down debt. The dividend is clearly impacted in 2021 by $1.5 billion of cash cost. We expect to grow dividend demand in future years, and we will expect the Board to consider dividend growth on an annual basis. We are committed to transparent disclosure that will help you to understand the drivers of our business with the 10-K that will be filed later today, historical Mylan revenue, its segment profitability, recost will happen for new segments. We will also provide definition of segment profitability. We'll also provide revised product categories for brands, complex generic biosimilars and generics. This is consistent with how we intend to manage our business. Starting with first quarter, you should expect to see revenue of -- by top products under each of the 4 regional segments. We also received multiple questions on multiyear outlook. We expect to begin our strategic planning exercise over the next coming months. More visibility into 3 years outlook will be provided later in the year. Before wrapping up, I want to provide additional perspective on some of the initiatives underway in my organization to support delivering on our financial commitments. You can see on the chart couple of items I want to highlight. We want to be strategic partners to business to provide insightful analysis, enhancing our core capabilities while building infrastructure associated services and center of excellence. For all the reasons we discussed today, improving cash flow conversion will be key. We're looking at end-to-end cash convergence cycle to identify improvement opportunities. To conclude, very excited about the quality of 2 organizations coming together and the opportunity to create value. As CFO of this company, my priorities are on focused execution, strong in financial management, transparency and granularity, balanced capital allocation, and we remain diligent to meet our financial commitment and create shareholder value. Now with that, after listening to so many hours, I'll turn it over to Bill Szablewski, Head of Capital Market, to begin our Q&A session. Thank you.

Good morning, everyone, and thank you for joining us for our inaugural Investor Day. Hopefully, you felt this morning was informative and helpful, as we walk you around our business. Joining us today for our Q&A is our CEO, Michael Goettler; our President, Rajiv Malik; our CFO, Sanjeev Narula. And they're also accompanied by the regional leadership that you heard from today on our presentation. With that, I'll get started with the Q&A session. Greg Gilbert, would you please ask your first question. Thank you.

Michael, given the number of geographies you operate in, the number of types of products you have, it seems like the number and types of deals are endless. So maybe you could focus us on the types and perhaps size of deals you can anticipate doing in the next couple of years. And maybe as part of that percentage, there used a mantra at Pfizer that for deals share buyback is the case to beat. That's probably engrained in your head. Curious if you have a similar mindset or something different here?

Right, thank you for joining us today, and thanks for the question. And look, I hope it became clear from everything you heard today. That we are, by our nature, a hybrid business model. We've got an R&D pipeline that Will presented that we're very proud of, that is very rich, that's increasingly complex, and that gives us everything we need to deliver on the commitments that we made. But we're also very open for business development. And we always look at both. And you saw the number of deals that each of the regional presidents presented, the partnerships they have, et cetera. So opportunities are plenty. As you said, with the breadth of our portfolio, it's a wide gamut of type of deals of kind of products we could do. The art is really -- and you made a reference to Sanjeev and share buy base, the art is in the right discipline for how we do capital investments. We're very disciplined about it, making sure that investments we make ultimately return value to shareholders. So -- and we're going to apply that same discipline not only for external deals, but we apply that same discipline internally for R&D pipeline as we do portfolio selection. So as I tried to say in my presentation, we're going to look for every deal, every opportunity we look at. We're going to look at strategic fits, and we're going to look at financial criteria. Strategically, we have a preference for more complex, more differentiated, more innovative type products that have longer tails. That's a preference that we have clearly. We're looking for fit with our commercial footprints and infrastructure because, again, look at China, for example, we have a very strong presence in cardiovascular. We have a very strong presence in retail, et cetera. Having deals in those similar areas allows us to create more value and again, return value to shareholders because 1 plus 1 is more than 2. And all we're going to look for deals that enhance our technical capabilities that then we can leverage across the portfolio as well. So that's strategically. And then financially, we're going to look at majority 2 things. One is very, very strong returns, returns in excess of the cost of capital, returns that are the case to beat to create value for shareholders. And the second thing we're going to look at is very clearly does it get in the way of our commitment to debt repayment, and we're not going to make any deals in the next few years that get in our way on debt repayment. So that's what I would say. We've got -- as far as the gateway is concerned, we've got all the physical assets in place. The monetary assets as we read through day 1. The monetary assets, we make sure it doesn't conflict with our debt repayments, and you're going to see more coming forward. Thank you.

Thanks, Greg, for your question. Next question, can we go to Umer, please? Umer? Are you in the queue, Mr. Umer? Okay. So we'll circle back to you. Next question, Balaji, would you please go ahead.

Can you hear me?

Yes.

We can hear you.

So -- yes, a couple of questions from me. Firstly, on the biosimilars front. Can you tell us if you have enough pipeline currently now with the second and third wave portfolio of biosimilars, and you need to augment this with newer partnerships? Also, if you can help us call out the ROCI you generate on biosimilars today and directionally, where could this move to? I'm asking this in particular context with one of your competitors signaling exit from the biosimilar strategy indicating that this is not as attractive as it was thought 2 years ago or 1 year ago. So what could also we do in terms of change in game plan? And I have a couple of other questions.

Thanks, Balaji, and let me just summarize. We have no intention to get out of biosimilars, quite the opposite. But let me have Rajiv get more into details on that.

Thanks, Balaji, and thanks, Michael. Balaji, we today try to show you a little bit about what not we have only achieved, but more importantly, what's in the pipeline. And we're excited, as we already disclosed with the projects like looking into the biosimilar to Avastin, looking to the biosimilar of NovoLog, EYLEA, biosimilar to Humira, biosimilar to Perjeta, Toujeo, BOTOX, I can go on. And as we're talking about this, you would expect us that Walt talked about certain targets, and that's where exactly where we are wider near the program, finalizing the diligence around that. And we will continue to go both ways. We will keep on looking for the partnerships, and we'll keep on building our own competencies. So it's an area for us where we have said this is a global franchise. This is an area where we have decided to hang in, not get out. And for us, it's a long-term play, and we continue to make the R&D investments, as well as investments in our commercial infrastructure. Because we are very excited what we see ahead in this growing space. So that's my two cents view on the biosimilars.

Can you also comment to the ROCI part of the question?

Yes, and I -- look, it's -- you have to take it as a beginning -- at a beginning of a life cycle, everything is not because you are investing simultaneously to build up the capabilities and all that. We see it's a market to markets. There are somewhere in the tender markets, there might be challenges on the ROCI. But that's why when you look into a global franchise, we don't in making those investment decisions based on market to market. For us, we see this as an attractive financially, from the returns perspective, as we go on, we see a longer annuity, we see these sticky. And these are the products once you get the share, they are not going to be commoditized very easily. So there's a different type of the value to -- DCF type value to these programs and this business.

Thank you, Balaji, for your question. Moving on, next question, Randall, could you go ahead, please?

So on Slide 153, you pointed to post 2023 long-term leverage target of at or below 2.5x. If we take the $6.5 billion in debt paydown, that would imply EBITDA of around $6.6 billion or 3% annual growth. Is that the right way to think about it? And if it's not, and that target is later, then it implies a lower level of growth. So I'm trying to get some visibility around what you're thinking about for the next couple of years in terms of growth? And then I have a follow-up for Rajiv. You talked a lot about digital tools, right? But what about digital therapeutics? You've got some peers who are focused here in areas like respiratory, but also other areas. Is that part of your thinking as you think about the broad global Viatris platform, either on the generic or the brand side?

Okay, thanks, Randall. Sanjeev, can you take the question on the leverage and the implied EBITDA? And then, Rajiv, if I could have you answer on the digital therapeutics?

Yes, so Randall, so let me first address the leverage question. So you're absolutely right. On Slide 153, we're talking about long-term debt leverage target of 2.5. That's not been achieved in 2023. To be clear, that's the long-term target post 2023. We've also said that by 2023, we're paying down $6.5 billion of debt, $5.4 billion on long-term and $1.1 billion on short term. So that's the commitment that we've given that. Now based on that, we're not providing a long-term EBITDA guidance, but one thing I can clearly tell you that our 2021 is the trough year for EBITDA, cash flow and revenue, and that is what's there and particularly for free cash flow, we're expecting that to rapidly grow as some of the onetime payments go down.

Thanks, Sanjeev. So Randall, to your question, I think one of the area we saw a huge enhancement when we brought these 2 assets together is around the commercial infrastructure and especially the omni-channel and digital tools which I just talked about. And you also heard Menassie speak about beyond the pill and not just limiting to the conventional way. And that's where digital therapeutics come in. And you pointed out exactly the respiratory is a great area where you can have a smart inhaler, smart nebulizer, trying to reach out the patient in a different way. And that's definitely that's another area when we're looking to -- when we are looking into the pipeline, we continue to look into those opportunities, and you will see us bringing some of those capabilities along.

Thanks, Randall, for your question. Next question, could we go to Nate, please?

I wanted to ask on China. As we think about the URP program being implemented earlier this -- later this year, excuse me, could you talk about what impact you see on your sales in the hospital channel? And how will implementation of the URP program impact pricing and maybe acceptance of generics in the retail channel in China? Do you feel like there could be any spillover effects given what's going on with the hospital setting?

Rajiv, you want to take that question?

URP, we have always factored in after VBP, we knew the URP is the next thing. We have factored in the volume change, volume drop we will see in some of the hospital segment. But -- and we have already factored it in. We have factored it. In fact, our trough in China is based on the full implementation of the URP. And we are very confident that once we hit that, that's where our work starts actually when we're looking into, because we still see a lot of value in the hospital. And even today, if you see the -- after the VBP, certain round of VBP in Lipitor, if you go back and check the databases, there is still a lot of value of the brand and brand loyalty. So hospital channel will always be important. Hospital channel will be important for us to bring in more products. And then -- more and more, I think the focus is going to be about the evolving health care, which we talked -- which I think Sean hit it very nicely about the consumerism in the health care and the move towards the retail. And our focus -- our renewed focus on -- this is how we have rebalanced our business. Our portfolio selection is taking all this into consideration, that while we see hospital as an ongoing opportunity, an important channel, we definitely see more opportunity in aligning our portfolio towards their channel. Michael, you want to add something or...

Yes, I think the only thing I can add to that is that clearly, we've taken the headwinds into account as Rajiv and Sean made out in this presentation. But I do want to emphasize the long-term bullishness that we have on China that we are fundamentally rebalancing this business. We acted very quickly. We're already ahead of expectations where we thought we would be this year. We have shifted our investments and now stand on 3 legs and strongly laid out, not only the hospital channel, but also the retail channel and the digital channel, right? That gives us a much stronger base to build upon. And we recently approved about 2 dozen products in our pipeline that we're going to bring to China, which is the strength of this platform that now we have -- this -- the 1,400 molecules that we can choose from and see where we have opportunities in China, leveraging the commercial presence and the footprint that we have, they're much better.

Yes, Nate, thank you for your question on China. Next question, can we go to Akash, please?

I just want to make sure the messaging I'm understanding. So on Slide 12, you're saying you're not going to see top line revenue growth until 2024, but you're also alluding that 2021 will be a trough year on revenues. Given some of the China headwinds, some of the rationalizations you're alluding to in JANZ and some of the developed markets, are you saying that top line revenues might be choppy, up and down from 2021 to 2023 and then start growing in 2024 onwards? And if so, what in 2024 onwards will allow you to start going into kind of sustainable growth? And then I remember Rob had kind of alluded to Viatris might be run at a 17% to 18% long-term SG&A as a percent of sales. That might be something you guys are thinking about. Can you comment on where you see your SG&A expenses going over time? And is that maybe a doable goal if we're thinking from a 5-year horizon?

Yes, Akash, thanks for the question. And look, as we said, we gave 2021 guidance. We're not going to give a quantitative guidance for '22 and '23. That's going to come at a later point, where we have the ability to really build this bottom-up with quality. Everything we're going to give to you is with quality. But what we can say and that you see that in the slides, the ones that we quoted and others, is that we have all the levers in place now to be very confident to say that '21 is a trough year. And as Sanjeev just said, a trough year on revenue, a trough year on EBITDA and definitely a trough year on cash flow. Why we're confident in that? Because look at all the levers we have. A lot of the onetime items like the Lyrica LOE, like the Perforomist LOE, other things have basically washed out of the system. URP, we anticipated that's going to wash out as well. So what you're left with there are no major LOEs after this -- after -- Lyrica has the last major LOE in excess of $100 million that we're going to look at in this planning horizon. So you're going to get much more normalized base business after that. We still have synergies we can deliver. We have commercial excellence, and you saw, I think, plenty of examples in today's video presentation of how we can get more out of what we have, how we can cross-pollinate the portfolio, how we can leverage the capabilities we have to get more out of what we have. Revenue synergies, we're going to have COVID updraft. We put some of that in our '21 guidance, but clearly, that's going to drop over into '22 as well. And then the launches. I think we can do better with our launches. You take all of that together. Clearly, we are confident '21 is a trough year, and we're going to give quantitative guidance at later.

Maybe next, want to pass the second piece, Michael, to Rajiv on kind of synergies and SG&A?

I think that's a great idea. Thank you.

Now -- and Akash, you're right. Robert has clearly mentioned that. And if you look into the -- if you ask me, 1 of the reasons, 1 of the purpose of today's presentation was to give you an idea about our mix. Now all products are not equal, all markets are not equal. Even within the brands, there's a diversity. And it's about understanding of that granularity at SKU level, at a market level and then more importantly, how you manage it. This is going to help us to take it directly to that 17.5% or 18%, which you mentioned. And I absolutely see us moving in that direction over the next 3 to 5 years.

Thank you, Rajiv. Thanks, Akash, for your question. Next question, now can we go to Umer, please.

Can you hear me now?

Yes, we can Umer.

We can hear you.

So there's 2 broad areas I want to touch on. One was on the finance side. Michael, Sanjeev, I was curious if there really is $6.5 billion of debt paydown by year-end '23? And presumably, there's another, I don't know, give or take, a couple of billion in dividend paid by the end of '23. That implies free cash flow of something like $8.5 billion. So considering the guidance for the current year is around low 2s, that implies you're doing north of $3 billion in free cash flow. You're effectively committing to that in a way. Am I mistaken there? Number one. And then on the R&D side, Rajiv, I felt like outside of oral semaglutide, I didn't really hear a big meaningful new pipeline disclosure today. Unlike in our -- in prior investor days where there have been new things we learned about, BOTOX, et cetera. So I guess can you highlight for us your top 3 or top 5 programs, the highest R&D priorities for you over the next 3 to 5 years? And also, Rajiv, I'd be curious, how early do you think you can launch a potential biosimilar PD1?

Sanjeev, do you want to take the financial question and then Rajiv, the pipeline, please.

So Umer, thank you for the question. So let me take the cash flow question. And let's just step back and kind of just reiterate some of the facts. So clearly, strengthening the balance sheet is a key priority, as you heard that from Michael, and what I mentioned about that in my comments. So we are paying down $6.5 billion debt over -- by 2023, so $5.4 billion long-term and $1.1 billion of short-term debt. We also said that and I shared that in the chart today, the big part of the impact on the cash flow in 2021 is the $1.5 billion of onetime cost. That is going to be -- because of the nature of that cost, will decline significantly over next 2 years. The restructuring cost that you have, cost to achieve synergies, will decline over next year, 2 years. And you should expect, for modeling purposes, by the end of around 2023, that should be at the historical Mylan level. So that kind of the parameters I can provide you. Now without giving you the absolute guidance and all on the cash flow, you will see the cash flow should rapidly improve as this cost declines over a period of time. And that obviously will allow us enhanced capacity to grow the dividend in dollar terms and do all the other things. But that's kind of what I'd say. But you're absolutely right, the cash flow will improve over the next couple of years in a significant way.

So Umer, your question is fair. Last time when we talked in '18, we -- if you recall that my last slide in R&D section was flashing out all those brand names, which are in our pipeline. Today, I try to put it into a segment of what's already approved, what's pending approval, what's still in the development stage and what tease you a little bit about the target areas around that. And we couldn't share with you unless we have a very definitive development time line laid out that over this period of time, it's going to be hit in the market. But you can expect that as we keep on finalizing the -- especially the biosimilars, the cell membranes and the [indiscernible] and all that and getting a fair idea about how deep we already are in that science and how much it's going to take us, look, as and when we keep on getting that clarity, we will keep on bringing this visibility for you. But going back to, again, at that point as I said, I said -- I've been saying again and again about our focus on the complexity, the complex injectables. I'm very excited by the progress we are making in this pocket. I'm excited on the biosimilars. I'm excited into some other drug devices you will see, which we bring on after the [indiscernible] Advair, we are very close to bringing in the next to the first Symbicort -- the first generic to the Symbicort, and we keep on adding that -- these products into our pipeline. As far as your PD-1, yes, this is post '25. And as we get more definitiveness, we will give you the clarity on the next 5 biosimilar programs very soon.

Thank you, Umer, for your question. Next question, could we go to Chris Schott?

I just have 2. I guess first, maybe more broadly on the business, how does Viatris protect itself from some of the policy changes like we've seen in China over the past few years occurring elsewhere in the portfolio? So I guess, does inherently the portfolio needs to evolve further as you highlight with biosimilars and complex generics? Or do you think we reached a point where most of the potential changes have really occurred at this point, and we don't have to maybe think about that as a risk factor in the business as much going forward? My second question was just on margins by segment. I think we're going to maybe get some of our details later today. But can you sort of high-level talk about the profitability of the 4 segments? And as we think about the business units, are there particular regions we should be thinking about, I guess, more margin expansion potential than others? And are there regions where you can think about more investment going on. I'm sure, your sense is, I guess, thinking about the mix of the different products. Is there -- are there standouts in either end of those divisions?

Chris, excellent question. I'll try to address the first one and then ask Rajiv and Sanjeev to address the second one on the margins. But as policy changes are concerned, the trend -- I mean, look, we're blessed to be in an industry health care, which is clearly has incredible demand, and it's going to be growing. And because of that, governments all around the world have continuous effort to try and contain health care cost. And that's the business we're in. Where you get in trouble is if you stand on 1 leg, right? And in China, we were over -- the legacy Upjohn business was overexposed to a few products in 1 segment, right? We have fundamentally rebalanced this business now. We're standing on several legs. We have a much larger portfolio. And if you look at the Viatris portfolio, it is so diversified. The number of products, the number of countries we stand on. We have no major LOEs ahead of us. In terms of countries, the U.S. generic, our new definition of generic segment, the U.S. generic business is 10% of the overall pie. China is about 10%. So if something happens now in 1 country, clearly, we have enough levers to offset that, and there's a much more solid base stand on. The second thing I would say is that because of the broad base, and that's essential to the logic of this combination. Because of the broad based where we play in generics, in biosimilars and complex and in brands, we can often be part of the solution as well. So as things evolve, we can see opportunities, and then we can act on it. And that's part of this opportunistic business model that I tried to describe in my opening comments. You start with the countries, you see what the countries need, where the country opportunities are. And then we have this entire platform, the portfolio, the manufacturing, the R&D, the capabilities we have, the performance drivers, our culture, then we can bring that to bear for a country and react to it fairly quickly. So I'm very confident about the future there. And now on the margin by segment, Rajiv, do you want to start and maybe Sanjeev can complement.

I would also like to add something to your very powerful answer you gave, and just complement you. And Chris, you know this, you have seen this market evolve for a number of years. Remember how long back Germany or U.K. from generics point of view became just distribution market, highly genericized, once you get into a market, yes. And then you saw also Portugal. And then today, if you see our business in Germany or U.K., yes, generics -- we are still there in generics. But then there's a -- we have brought in this diversity around the brands and all that. And the biosimilars now leading to the growth in the German market or leading in the U.K. So I think it all comes together. So this is where the diversity comes in that while you're trying to manage all these pressures from the various -- this environmental pressure, the pricing pressure and all that, there are components of our business which sustain us, which help us weather it in a much better way. And then the third piece is the growth on the biosimilars and the complexities continue to go to offset that erosion. And Europe today, per se, as I mentioned to you, is just 1%, 2% erosion. And we have a soft pipeline, definitely much more to offset that. So that -- I think that's another proof point I just wanted to give you before I move on to the segment. From the margin profile point of view, holistically, not just by segment by segment. One of the key part is us managing the costs. And we have always done it so well. And because this is what our business taught us. We have grown up in this business, keeping an eye on that gross margin and how we can manage proactively our cost of goods to offset any mix pressures and all that to an extent possible. It's not a onetime event. While we have a couple of hundred million dollars built in our synergies plan, but you can expect us to continue to use our -- all the skill sets within the network, vertical integration, using the scale to procure it more effectively, to continue to drive the cost of goods so that we can proactively manage the segment profitability.

And Chris, just to add to what Rajiv's great answer is, in terms of the transparency and visibility, you will see in the 10-K that we filed today will provide you a definition of the segment profitability. And going forward, you will be able to see the profitability at a level which is gross margin and the direct cost. So you can be able to track how each of those segments are performing in terms of the margin and be able to track that business. So that's the enhanced transparency and granularity we will provide going forward.

Thank you for your question. Next question, can we go to Gary, please?

I guess, first, just following on Chris' question. Given the breadth of the portfolio and geographic presence in so many fluid markets, how often are you going through the portfolio in-depth and determining how to allocate capital to maximize profitability? So are you constantly looking to rationalize the portfolio? How much pruning should we expect every year in order to minimize pressure in the base business? It didn't look like such a huge number this year for pruning. So can you just walk through the diligence with that exercise that you highlighted today? And then with the global health care gateway, when you partner products in different regions, how much has profitability changed across the portfolio? How much growth do you expect from partnerships versus Mylan's internal pipeline when you think of having the global health care gateway as sort of a funnel into those regions going forward?

Okay, thank you, Greg. The short answer, the pruning is constant. It's something you constantly have to be vigilant about. It's something we said we want to be granular about. But I'll let Rajiv give a more in-depth answer, and then I'll come back from the global health care gateway.

Gary, it's a way of life from here onwards, which we have decided. It's not one-time. It's a constant looking into, not just from the profitability point of view, but for many other points of view, and we have set up a separate team, we call it office of business performance which is going to continuously look into and give the feedback to the business that where we are ready -- heading into that red zone of where we may not be making enough margin. It's already enough -- it has enough competition. So supply is not an issue. Disruption -- the patient being served is not an issue because there are enough splash. But I don't see this as we go along a huge number, although it's going to be continuous, it's not going to be a huge number because I think the one bigger market where we saw this was the U.S. and we took our time while restructuring this business to one-time have a deeper look into and rationalize. And that's why you saw last couple of years the top line in the U.S. being impacted by the pruning or rationalization. Outside of the -- I think when you get out of the U.S.A., the product mix is very different. It's a lot of the brands, the OTC products. But it applies to across. But I don't see the magnitude of that pruning, as you said, and already notices to be so significant. Michael, back to you.

Thank you, Rajiv. Gary, on the growth of internal versus external, I think what I can tell you is for '21, we assume no incremental BD. So the numbers that we're giving you is essentially what we can produce with what we have. Going forward, we will look -- be very neutral on this. It doesn't matter really whether something is internal or external as long as it meets our strict financial criteria. And that means returning value to shareholders, that means not getting in the way of our debt repayment priorities, and it means meeting the strategic criteria that we set out, fit with our portfolio, increasingly complex portfolios so we get longer tails, et cetera. That's how we're going to look at the business. We're not going to set an artificial percentage about how much we allocate to each.

Thank you, Michael. Before we go to the next one, just to maybe go back to a question a few minutes ago, particularly on cash flow. Sanjeev, can you embellish a little bit on particularly Randall and Umer's question on how we see cash flow trajectory over the next few years?

Sure, sure. So Bill, as we said, the cash flow -- the 2021 is going to be the trough year for free cash flow. And as I mentioned, that's clearly impacted by $1.5 billion of onetime cost. And as I provided the granularity on the onetime cost, $1.5 billion, there are 4 components of that. And because of the nature of those costs, those costs will decline over next 2 years, significantly, the cost of restructuring our plant network, the cost to achieve synergies. Those are going to decline as those programs are ramped up. That will then increase the cash flow rapidly in next 2 years as -- the thing -- way to think about this is the onetime cost that we have of $1.5 billion that will probably reach to a level of historical Mylan by the end of 2020. So that's the cash flow growth. So what you should expect is a rapid growth of cash flow over the next 3 years. And that then, obviously, will allow us to pay down the debt that we said, $6.5 billion. And then we'll create capacity for us to increase the dividend dollars, which obviously will be a Board decision.

Thanks, Sanjeev. And just to clarify here for the transcript. So just to be specific, even though we're not giving guidance, your math that you've kind of cited guys is directionally correct. So we'll go on to the next question. David Amsellem, could you go forward with the next question, please? Thank you.

So I know there has been some questions and some back and forth about business development, but I wanted to dig a little bit deeper. So in your developed markets and in the United States, a challenge, obviously, is base business erosion. You already have a diversified business in these markets. But what I wanted to ask is what is the extent to which you're looking to add more of a specialty brand presence, not just -- it's not just by sense, but actual brands, either via bolt-on or something even more significant? And then secondly, can you talk about R&D investment in specialty brands. And I guess where I'm going with this is a number of your peers in the broader generics space certainly are focused on building more and more of a brand presence. So how do you think about that as you think about strategic planning over the next few years?

Thanks, David. Let me talk a little bit about what you call the base business erosion, and then I'll hand it to Rajiv for the specialty brands and investment in R&D in this area and a few things ongoing. On the base business erosion, the only thing I would say is, again, we're not giving guidance. But don't take the current erosion as a constant. I mean, clearly, as we come together now, as we have an enhanced commercial infrastructure, as we have enhanced capabilities and bring things together, we can do more with what we have. We can -- we have the revenue synergies that we can potentially generate. We have capabilities we can exchange. We have a stronger commercial presence in the country who previously didn't have it. I mean one of the things you saw in the presentations today was the example of Korea. So there is actually a lot of upside, I believe, in value to be generated just in the assets that we have. That's part of the equation as you look at growth. The other equation then is pipeline and potential business development, cost synergies and all the other things we talked about, right? So I just want to highlight that as a comment. And Rajiv, you could specifically comment on the specialty brands.

No, your very fair question, our Europe as well as our rest of the world businesses have benefited from our past acquisitions, I can say, of Abbott and Meda, not U.S. to that extent. But we have been conscious that we need to build this and build this brand business, specialty brand business. So we knew we had a fairly good presence as for the respiratory products was concerned, especially into the nebulizer business, performance was followed up with the utility, which is now growing. We knew we had Dymista which was the only product which came from the Meda acquisition over there. We had brand Epipen with that. So -- and even if you know, today in our pipeline, Copaxone once a month is an investment in that direction to further build those capabilities for U.S. because U.S. is a leading candidate for that program. Today, we all talked about this non-opioid pain product. That's also focus in U.S., U.S. being the leading business case over there. But you're right, we're going to look -- based on this approach, we're going to look -- it's not just we said we're going up the value chain from the biosimilars point of view or the complex products, we set innovation also, and that's going to be one of the spot. And I think Michael laid out very clearly and he said, not only the complexity, but the innovation. And that's what we meant from there, finding the other Yupelri like partnerships, absolutely, yes. Finding other -- some more -- if we can get some of these opportunities, U.S. will be an attractive market for us to build this portfolio and the capabilities.

Next up, could we go to Kevin, please?

I think we're all trying to edge around the same question around sort of organic growth, and the 1 number that just keeps popping up to me is that in 2021, your expectation for new product growth is $690 million, which is -- exceeds the traditional or typical year for the company. Yet, it still wasn't enough to offset the base business erosion and the EBITDA line. I guess what my question is, and we're all kind of asking it, saying in different ways is, do you think that new products can offset base business erosion beyond 2021 on the EBITDA line? Meaning, is this something that can sustain the company beyond 2021 as we go -- before we get to 2024 and the expected sort of top line growth?

Okay. Kevin, thank you. Look, I think on EBITDA, I already said several times now on that question that we have a lot of levers to work on EBITDA, right, the synergies, the more performance, et cetera. So I'm not going to repeat myself on that. I think the numbers that you're referencing from our chart from the guidance call, these are gross margin numbers, right? And on gross margin, clearly, between 2020 and 2021, we have a significant step down, partially due to a couple of onetime items. And I think what you can expect going forward is a much more normalized business evolution on our overall gross margin. And Rajiv, maybe you can comment a little bit more on the pipeline and what we see coming there.

No, and look, one of the reasons we wanted to make sure, first of all, you guys get comfortable about the '21 being the trough year. That was one of the objective today. The second objective was we give you insight into this platform and show you the potential of not only these new launches or the revenue synergies offsetting the base erosion, but also our proactively trying to manage the erosion because we -- once we get over here, 1% -- if you can erase the decline of 1% tail products, that takes off the pressure of your new product launches, which you have and all those. So there are many levers. And as we always said, we have been -- we had 90 days behind us. We very well appreciate what we have now got to work with. The teams are excited. You saw that excitement. We are going down right from tomorrow onwards to work and give you basically -- once we come out, whenever we talk to you next, give you a more tangible direct answer than beating around this that there's a potential to do that. That's an old idea. I am very excited. I mean, I'm looking into -- I gave you Korea example. Menassie gave you several other example and so many other walk around. We believe there's enough opportunity for us, one, to do more from these launches, absolutely. This 601 run rate you saw, yes, this is an average. But there have been years of $1 billion launches, which was 2019, whereas 2018, 2019 was $800 million, $900 million, then there are some light year. But that all numbers were based on what Mylan had built on based on their sort of commercial presence, but do you -- can we do more from the launches? Yes. Can we get more out of this platform? Absolutely, yes. But we're going to do our work before we say how much. And that's the task that lies ahead of us.

Thank you for the question. Next one, can we go to Ronny.

Couple of questions about the cost structure. You got out running at roughly 5%, a bit shy of that as a percent -- as an R&D percentage of revenue. And I'm kind of wondering what has to be a significant investment in regulatory effort around the globe, how much money is actually being dedicated to R&D proper in your R&D centers? Just because it seems like a very low ratio for a company that plans to do internal development a significant way. You kind of mentioned just about similar efforts on the generics seem to require a bit more than that. And second, I was wondering if you guys are building your own R&D for biosimilars? Are you developing your own manufacturing for biosimilars? You relied on external parties so far, but with Biocon busy elsewhere for second wave products, I was wondering about that. And lastly, if I can throw a couple of individual products, I noticed darbepoetin BS on your portfolio. Are you developing the darbepoetin for developed market? And Rajiv, do you expect to get Symbicort this year in the United States? I noticed you got a conference on this tomorrow.

Yes, okay. Go on, Michael.

Rajiv, why don't you start and take the second question first, and I'll come back to the R&D percentage.

I can start with the Symbicort. Very confident, Ronny, 9th March is our targeted date. Any day we can hear something. But I'm very confident that we will be -- like Advair, we will be the one to open this market as soon as we can. So that's Symbicort. Your second question was around the pipeline on -- yes.

Darbepoetin.

Yes.

I mentioned -- yes.

Can I -- Walt -- can you comment specifically on that, Walt?

Can you hear me?

Yes.

Yes.

Yes, for darbepoetin, Ronny, I mean that's something that was developed as a deal for Japan. We're obviously looking at a number of similar products as you see out in time with a fairly long horizon where we hope to be first to market. So certainly, all things are in consideration there for sure.

And your third question was about building our own R&D capabilities. Absolutely, yes, we are building that science capabilities. But I will not say the same today for all the manufacturing because I think there is lot of options available through the strategic partnerships and all that. So that's where we are not building our own at this point of time. Yes, as we go along, as the landscape changes, this direction can change. And before I give it back to Michael, because he will wrap it up on the R&D, I can tell you we have one of the very efficient and most productive R&D. And we have used our centers of excellence, especially around areas like regulatory, which you called out, to optimally do best from the dollars we spend around that. Michael, back to you.

Thanks, Rajiv. And Ronny, you said -- on R&D, you said 5%. Actually, the guidance is 3.8% to 3.9%, so it's even lower than what you had. And I have to say, I'm extremely impressed with the R&D we have. I'm extremely impressed with the productivity that we have. What we get out of the 3.8% and 3.9% is amazing. And as I mentioned in my opening remarks, we're nowhere near the point of diminishing returns. So clearly, as we now start with our strategic plan, laying out a more multi year plan, we're going to take a very, very hard look at the required R&D spending going forward.

Thanks for the questions. Ronny. Really appreciate it. Next, could we go to Ami, please?

Thank you for the question. A lot of my questions have been answered, so I'll ask about China. You highlighted on China being a significant growth driver. But there seem to be a lot of long-term headwinds in the market with the government really deciding that they're not going to pay or they're going to look to lower cost of drugs. So can you talk about how you can drive sustainable growth in the market with those types of headwinds? Is it that you -- yes, maybe talk about the pipeline or how you see the market dynamics changing that gives you confidence to grow.

Thanks, Ami. I think this is actually a question -- I think we still have Sean on the line. We actually may ask Sean to elaborate a little bit more. But just at a high level, Ami, I think that the simple story is we're -- China's health care expenditure will grow. They will grow at least in line with the GDP. There is growth in the market. The question is, are you positioned correctly to capture the growth. And that's exactly the transition we're going through, and we're already kind of halfway there in terms of positioning ourselves to participate in that potential growth. And Sean, do you -- if you're still there, if you're still awake, do you want to elaborate on that?

Yes, I'm here, Michael, can you hear me?

Yes.

Yes. So as Michael alluded to, I mean, China has 2 parts of the health care spending that's growing rapidly. The government funding is growing, even though it's slowing down. But what's more important is the consumer side of the spending is increasing rapidly. So even though the government is trying to limit its funding to cover more patients and to pay less for -- on an average basis, the consumer side of the spending is increasing rapidly, and that's exactly what we're doing. We're positioning our portfolio, we're positioning our commercial capabilities to capture that side of the business. Back to you, Michael.

Thanks, Sean.

And Michael, if I can just add, I think the global health care gateway is going to be a huge driver for China because I think we -- if you ask us the excitement, our excitement about global health care gateway setting us a stage for the future growth. And once we start -- we talked about our internal pipeline will bring us back to the modest growth, but global health care gateway will go a long way to help us because we are so proud of our platform in China, and that's a perfect offering for many other partners who are looking to be in China.

Thanks, Ami, for the question. And we have a question in from Jason Gerberry. He's having some technical difficulties with Zoom. I'll ask the question to you guys. As a follow-up on biosimilars, we are seeing competitors take a hybrid approach in the U.S. with both [indiscernible] BLAs and products going through conventional biosimilar framework. This appears to prioritize expedience to market over some of the commercial benefits of being a biosimilar. Are you working through a similar hybrid approach? As an example, is the EGM business subject to natural erosion where you have underlying growth in that market?

Rajiv, do you want to take that?

Walt? I'll pass it on to Walt this one. And then I'll come back and wrap it up. Walt?

So the overall biosimilars pathway that we're following, I think, as you have seen, it's a very broad viewpoint and certainly looking at this in terms of BLA opportunities, if you will, 351(k) opportunities as first to market opportunities over, as I said, fairly long horizon. And we see quite a bit of opportunity in that particular area as we're moving forward.

Yes, I mean I would say that when you're looking into the gaps around the existing biologies products, there are -- always there are opportunities which used to be called biobetters or something, and we are constantly looking into some gaps or unmet needs. It might be an evolution of a drug device, which can help you move the needle or address some of the questions from the provider's point of view. And we see this as an area. At the moment, we don't have a program in our pipeline. But as we go along, we definitely keep on looking at this space.

Thanks, Rajiv.

Thanks, Rajiv. And that's going to conclude our Q&A session. Now, Michael, I'll turn it back to you to wrap up our day.

Thank you, Bill, and thanks for all the question. I want to thank the team that's joined by video for being available for all the Q&As. Not everybody got a question, but thanks for being here, folks. I want to thank everybody who participated for your attention. I know it was long, and it was virtual and you had to listen to a lot of videos. But I'm really convinced that we were able to give you an inside look into our business deep inside and increase your confidence and what we can able to deliver, so that you see the same thing we see. In summary, I think we accomplished a lot in the first 90 days. We're building on a strong foundation. We are on a multiyear journey to transform this company. You've seen some of our talented and committed colleagues, and there 45,000 more around the world that we have to work together with, a pleasure to work together with. And we have an incredible global platform and a unique operating model. And I think you can also see today a little bit the culture shines through and the clarity of the strategy. So we think we're very well positioned to not only achieve our mission, to empower people worldwide, to live healthier life at every stage of life, but also for our financial commitments that we made. And we're looking forward to continuing this conversation with the transparency that we displayed today. So thank you very much. Thanks for joining us, and we'll talk to you soon.

Thank you, guys.