Viatris Inc. (VTRS) Earnings Call Transcript & Summary

Hi. Good morning, everyone. This is Navann Ty. I cover spec pharma at Citi, including Viatris. So Viatris is the combination of Mylan and Pfizer spin-off Upjohn business. And today, I have the pleasure of having with me Michael Goettler, who's the CEO of Viatris; Rajiv Malik, the President; and Bill Szablewski, the Head of Capital Markets. So before I start the Q&A, I'll just hand over to Bill for forward-looking statement.

Yes. Thank you, Navann, and good morning, everybody. During today's discussion, we may make forward-looking statements on a number of matters. These forward-looking statements are subject to risks and uncertainty that could cause future results or events to differ materially from today's projections and discussion. Please refer to our SEC filings for a fuller explanation of those risks and uncertainties and the limits applicable to the forward-looking statements. Also, during today's discussion, we will not be providing any updates to our 2021 guidance or discussing Q3 2021 or full year results for 2021. Thank you, and Navann, back to you.

Thank you, Bill. With that, I'm just going to maybe discuss around guidance, and that's fine if you can't comment, but maybe starting with H2, if you had qualitative comments or better visibility on the rest of the year and how has [indiscernible] evolved since the results. Yes. Let's start with that.

Yes. Navann, so first of all, thank you for having us. It's always a pleasure to be here. And you asked a question about the rhythm of the numbers, first half, second half. So before I comment on the second half, let me first talk about the first half because it's only been 30 days since we reported very, very strong quarter 2 results following very strong quarter 1 results, and we're very proud of that accomplishment, the first 2 quarters that we reported as a new company as Viatris. We also took the opportunity after the Q2 results to raise the guidance for the full year. And I believe that's really -- as for color, it's really a testament to the strong execution of the team, but it also validates the vision that we have and the strategy that we have in combining these companies and forming Viatris. And I think as the results show, the result of the combination is an even stronger future-ready and very resilient platform with enhanced global scale, geographic reach. We're in 165 countries now, a sustainable, diverse and differentiated product portfolio and pipeline. As you see that again, as we report the numbers, a powerful operating platform. We were able to see service levels in the first half that are at historical highs, and all of that during a pandemic. So very proud of what we can do executionally there. Strong commercial capabilities now in all the countries, the results reflect that, and the power to generate very strong and sustainable cash flow, right? In fact, if you look at the first half free cash flow generation, it's $1.27 billion in the first half, that's more than half of our initial guidance for the full year, right? Cash flow continues to be our North Star. It's really critical for our long-term financials. It's part of our management incentive, Rajiv, me, Sanjeev, others, both short-term as well as long-term incentives. And we believe we have the potential for significant growth in free cash flow in the coming years. So based on these strong quarter 1 and quarter 2 results, we have raised the guidance for the full year. We have raised it on all 3 of the key measures. That means revenue, EBITDA and free cash flow. And as we said, we're open to reassessing again at the end of quarter 3 results, whether we further raise or modify the guidance. Now on the rhythm of the numbers first half and second half, also when we had -- 30 days ago, when we had the call, we gave some color. We said we expect the second half revenue to be slightly lower than the first half, right? That's reflected in our guidance. And that's driven primarily by some anticipated competition on select brands and complex generics, again, anticipated and well known. It's related to some lower sales in the second half of COVID-related products. We had a benefit in the first half of some products like remdesivir, AmBisome, others that are used in conjunction with COVID . And as we had very strong peaks in COVID in India and Latin America, that demand get up. We don't expect that to repeat in the second half. Slightly lower sales in China in the second half, again, based on the very well-known and discussed impacts of VBP and URP. On the other hand, on expenses, slight uptick in R&D and SG&A to make investment in the sustainability of the business. And also in capital expenses, a slight uptake. So that's what we guided, and that's all that we take into account in guidance for the full year.

And looking to 2022, the $6.2 billion floor, could that be conservative? Or do you think consensus is too high? So where -- I'm interested to know where are the areas where analysts could be too optimistic or where are you too conservative and waiting for visibility.

Navann, I think we have to go back to what I actually said in the second quarter conference call. And what we said is at that time, $6.2 billion of adjusted EBITDA as a floor -- as a true floor of our business going forward based on everything we saw at that time. This is not guidance for 2020, right? This is meant to be a support. It's meant to be a floor in the interim period while we're working on our long-term outlook, while we're working on our strategic plan. And until we give guidance for '22 and years beyond, this was meant to be a helpful floor and information. That's what the $6.2 billion is. That brings me to the strategic planning process. We're making good progress with that. It's a thorough bottom-up strategic planning efforts to really understand how our portfolio will evolve over the next several years. We're looking at all the strategic levers, and I'm looking forward to sharing that when the work is completed, and the work will complete towards the end of the year.

And just a follow-up on that, are you able to share some of the -- your internal long-term strategic planning assumptions to help us to have some visibility in the long term?

Yes. I think the intent is when we come out with that strategic plan that we give some further color and guidance on -- '22 guidance and long-term perspective and a good understanding of what the key drivers are and the actions that we're taking to improve shareholder value. Absolutely.

And then switching to free cash flow and credit profile and dividend. Can I ask you to discuss your credit profile versus your peers?

Sure. And I'm going to ask Bill to comment on that as our Head of Capital Markets as well. But let me say upfront that look, I think that's pretty clear, we're investment grade. We are committed to investment grade and strengthening our investment grade, and many of our peers are not, and that's by design. I mean we -- we're fully committed to maintaining strength in our investment grade. When we put the company together, we did it on purpose because we believe a strong balance sheet will give us sustainability and stability as market cycles, right, in this business I think it's very important. And also a strong balance sheet gives us financial flexibility going forward. So it's an important part of our story. It's an important part of our investment thesis, and it's part of our plan to deliver total shareholder return. Bill, you have anything else? You want to provide any color on the credit book?

Yes. I would say, Navann, and Michael kind of laid out the architecture. I would think that the investment-grade profile for us, what distinguishes the strengths in which, just taking it from a rating agency kind of point of view, it really stems from the size, the scale and the diversity of our business. When you look at this year's results through 6 months, we've got strong, I'll say, segment performance from our regions and then across our categories. So that breadth of kind of regional exposure, exposure to key strategic markets like China, and then the breadth of the portfolio, you've got brands, complex generics, generics biosimilars, right, those are all kind of key strengths that kind of result in our profile. The other piece, too, is when you look at our R&D engine from a rating agency wins, right, we've got an internal capability there in terms of the ability to bring products through the pipeline, get those across the regulatory kind of finish line and then commercialize those. So that internal pipeline is really the lifeblood of our future. That's a credit strength and a positive from a rating agency point of view. We've been very firm, and this is a commitment from the Board on down in terms of our financial policies, the policy that prioritizes debt reduction of $6.5 billion over the next 3 years. That's a firm commitment and then towards a long-term leverage target of 2.5x. That's very -- that's a credit strength of ours. And our balance sheet position will only strengthen over the coming years based on the way the maturity towers are set up. And then the last piece I would say is as we think about -- and Michael hit a bit about this, as we look at the organization, another piece that Rajiv and his team are focused on is the integration of the restructuring and the realization of $1 billion of synergies. So making sure that we're being as efficient as possible with our resources. I think all those elements lead to where we're at today as an investment-grade company. And I think we only see this as a strengthening credit profile each year on out as we continue to delever and deliver on those commitments.

That's helpful. And I think Viatris drew around $900 million to repay -- from a shareholder to repay the 2021 maturities partially. When do you expect the RCF drawdown to be repaid? And what is your policy regarding debt repayment?

Bill?

Yes, Navann. I'll take that one. So I would say that -- maybe I'll take the last question first and get back to the -- our vehicles of liquidity. When you look at policy of debt paydown and capital allocation priorities at a high level, debt paydown is the #1 priority in terms of how we're going to use cash flow and cash that sits on our balance sheet. That's been very clear. That policy also allows for what we expect as dividend growth over the horizon, which we can get into. But when you look at our vehicles of liquidity, we have a $4 billion 5-year revolver, which we just extended and revised the terms with that revolver also, it gives us kind of flexibility as we go through the next few years if we do need liquidity. We also have -- given that we're an investment-grade company, which is an advantage to us at times, is we have access to the CP market as a Tier 2 borrower, and we also have various kind of AR securities -- AR securitization facilities, excuse me. So we did draw down on our revolver, which was noted in our Q2 balance sheet. And as we generate cash flow and we've revised our guidance on cash flow this year, we'll be using that cash flow to pay down that revolver over time. But we're in a very well kind of liquiditized position based on today.

And on free cash flow, so it's -- the guidance is now $2.2 billion to $2.4 billion this year. Could we also consider the $2.3 billion, which is the mid guidance as a floor given the material cash cost this year? And also wondering if the $3-ish billion would be a good ballpark number for annual free cash flow going forward.

Navann, let me start, and Bill, if you want to provide some additional color, chime in. Obviously, we're not giving guidance for '22, right? I just want to make that very clear. But I think directionally, you are correct because as we said, free cash flow is our North Star. It's critical to our long-term financials. Our business has demonstrated the ability to generate significant free cash flow. We think that's going to grow, and it's going to grow. Bill touched on a few of the points. And very clearly for a couple of reasons. Number one is onetime costs. Onetime costs will go down over time. We guided for this year, earlier in the year. We said it's about $1.5 billion for this year. And you would expect over the next year or so, 2023, that to come down as we deliver on the synergies, as we deliver on the integration, to come down to legacy Mylan levels, which are around $500 million. So you've got about $1 billion there in additional free cash flow over that time, right? We will deliver on the benefits of the $1 billion in cost synergies over the next few years, and we're very proud of the progress we're making there. And we're working very actively on cash flow optimization projects that deliver capital improvements, and you saw some of that already in [ quarter 1 in products ]. So it makes me highly confident in our ability to not only deliver but to grow the cash flow. It made us confident in the potential to grow the dividend over time. It makes us confident in the ability to pay down the $6.5 billion in debt and improve our investment-grade standing, and makes me confident in having increased financial flexibility with the company going forward. So I think directionally, Navann, you're looking at it the right [ way ].

And just a follow-up, are you looking at the free cash flow yield versus peers to determine in Germany, your free cash flow targets?

Well, I think our objective is to maximize the free cash flow that we can, right, independent of what our peers are doing. But the free cash flow project, the improvement in capital -- in cash flow optimization, it's really a company whatever. It's not a target that Bill has in Treasury alone. It's -- every part of the company needs to contribute to that. I've mentioned before it's part of short-term, long-term incentive. And with the significant effort that projects that we have led by Sanjeev, our CFO, and led by Bill, of course, as part of that process, we're looking at benchmarks. We're looking at every part of the cash conversion cycle, trying to benchmark it not only against our peers, but against other industries as well and see whether we can improve it. So all that needs to come together. It's going to be continued execution across our segments and categories. It's going to be continued execution on the integration plan, realizing our synergies and continued optimization of working capital. And that really is what makes Viatris such a strong cash flow generator now and in the future.

And is your target of dividend above 25% of free cash flow, would you say it's aspirational or firm and long-term commitment? Is there any scope to increase?

So let me go back to what we said when we started Viatris, right? What we said was there was a very clear commitment from the management team all the way down from the Board that Viatris is going to be a company that focus on shareholder value creation, deliver total shareholder return. And the dividend is a key component of that, right? Since then, we have initiated our first dividend. We have paid our first dividend, and we actually announced the second dividend already. So we're on track. That dividend that we -- first and second one, $0.11 a share, right, that corresponds to 25% of the midpoint of free cash flow that we guided for the year, right? That was our starting shot. That's the initial starting line. Going forward, we intend to grow the dividend. How much and when is a decision the Board will be making, right, at that time, taking into account a variety of factors. We're no longer tied to a 25% benchmark, but we -- our intent is clearly to grow that. And if you look at the free cash flow again that we can generate, we're highly confident that we can grow that dividend [ over time ].

And then switching -- very interesting discussion on free cash flow and dividend. Switching to business development. What is -- maybe staying on the credit profile. What is the gross leverage -- is there a gross leverage level that Viatris should reach before considering business development?

Navann, I think just because we made a clear commitment to capital allocation and we're sticking to it and very committed to it, doesn't mean we are also looking at BD, right? There is a tremendous amount of opportunity that we look at every day. What it does mean, though, is that we're not going to do BD that gets in the way of these commitments because these commitments are very, very firm, right? And we can do that in a variety of ways. Deals can be structured in a variety of ways. Upfront cash is only one way. And especially if as a company, you have a lot to offer as we have with what we call the Global Healthcare Gateway, the platform, the capabilities we can bring to a partner, there is flexibility to structure a deal in different ways because it's a win-win proposition for our partners. Secondly, beyond debt repayment and dividend, there is actually incremental free cash flow that can be used for some tuck-in opportunities, and we're looking at numerous opportunities every day. But we also have the discipline to look at the right opportunities, the one that creates shareholder value and act on it when it presents itself, right? And I think investors should not forget, in addition to BD, we -- or actually BD is the addition to the R&D engine that we have. We have a strong internal R&D engine. So we actually -- especially in biosimilars, complex generics. So we're actually in a position to be very disciplined. We're in a position to be very choosy and only add the right deals when we see them. But don't mistake our commitments for lack of activity and interest [ in this business area ].

That's clear. And what areas of indications would you consider for potential M&A? And I think the last time we discussed, tuck-in acquisition Phase II assets, still the priority.

I think I'll give more clarity on that when we lay out the strategic plan. Obviously, we're a company that's not focused on a particular therapeutic area at the moment. We have broad opportunities, both geographic as well as therapeutic area-wise. And as we lay out the strategy, we can also then give more clarity on areas of focus going forward.

And maybe one for Rajiv, a general question. What excites you the most in Viatris' pipeline?

Rajiv, that's a perfect question for you.

Thanks, Navann, for your question. There are many -- not just one, there are many exciting opportunities in our pipeline. For the last several years, we have been working diligently to move our pipeline towards more complex and the biosimilars. And we have several notable successes over these last few years. Today, as an outcome of this, we have a robust pipeline with 75% of our pipeline spent in that bucket where we are basically focusing on the complexity. Now some of the examples, if I just start with the biosimilars. In addition to what we have already delivered in terms of the biosimlar to Herceptin, Neulasta and [indiscernible] recently, as part -- the interchangeable, as part of Avastin, EYLEA, Hulio, BOTOX, Perjeta, Toujeo and I can go on several other programs, which are in an early stage and we have not yet disclosed. The second bucket is around the complex injectables, which is, I think, to me personally very -- because it's very hard to -- from the science point of view, it's very hard. And from manufacturing plant, from a regulatory point of view, it's very hard to execute. That's the complex injectables like generic to the -- injected for OCTREOTIDE. Again, INVEGA SUSTENNA, INVEGA TRINZA, it is depot injectables. The third, I think the drug devices like what we delivered on Wixela, our success in Symbicort is a complementary to that. And if I move on even in the oral solids, it's like products like [indiscernible] It's products like [indiscernible] And in addition to that, our focus on moving up to the value chain in 505(b)(2) programs or [ NC ] programs like [indiscernible] low-dose program, which I'm very excited about. We recently filed levothyroxine in [ all those ] patients. So if I look into our next 5 to 7 years, just to complement what Bill and Michael said, we have a very strong internal pipeline and execution around the science, clinical trials, the medical, regulatory as well as the IP legal. And we have delivered it repeatedly, whether it's a first-to-market opportunity on Wixela, Copaxone are now interchangeable, delivering the first interchangeable biosimilar, which is Semglee. So very exciting opportunities from a pipeline point of view.

And may I ask you some follow-up question on biosimilars. Maybe your strategy going forward and how important is the interchangeability for your strategy away from Semglee as well -- including and away from Semglee?

Rajiv, you want to start?

Yes. Biosimilar is and will continue to be an important area for the company and will be a key growth driver, a key driver for our future growth. And let me also say, it's a little bit too early in the biosimilar space as this market is evolving, as it's in its infancy that we should say that we should not go on the predicting game of the winners and losers. The first part of our strategy is to build the portfolio because we believe having a deep and broad offering around commercial portfolio will ensure a robust strategy, will be the first leg of delivering the strategy. And I just gave you several examples of our pipeline where we are either executed already or well on our way to execute on that. And then second, I think -- so our -- first one is delivering, and that's where the speed to market, being first to the market, having effective cost of goods, all those things, all those come together. And then the second part is as we have gone around the world, launched these products, starting with the U.S.A., Europe and many other emerging markets, we're having -- we had many learnings. And it's not just contractual game as game -- as product life cycle evolves, you need more than the contractual capabilities, and we are mapping those. We are building those capabilities as we go along. And I remain very, very optimistic that it's -- we have done pretty well from a science point of view. We have done -- we have a mixed bag from the commercial execution point of view. We have several successes Toujeo in Japan. First Herceptin in Australia, Canada. First Fulphila, which is a biosimilar. Neulasta in U.S.A. So we have some several key successes, and I think we're going to build upon that. Onto your question on interchangeability before I give to Michael to add on this, I think it's going to a case-by-case decision. It's ideally suited for chronically administered biosimilars. Disease state needs to be relatively stable with a limited chance of rapid decline. So you have to take into consideration [ weigh your factor ], and you need to look into, okay, what sort of clinical studies or what sort of PK or PD studies between the [ 3 test ] reference, [indiscernible] test reference, again test against the reference, all those studies, all those factors you need to take in consideration before you say, okay, we need to go for interchangeability or not. Michael?

Yes. I think, Rajiv, you hit on the key points. And maybe what I can add is from a strategy perspective, it's very clear that biosimilars is not a mature market yet, and it's a growing market. There's no doubt about it. And therefore, with the capabilities we have, it is and will be and can be a growth driver for Viatris. We've made significant investments in building the pipeline. We've shown that we can deliver on the science and bring these innovative products to the market. We have only a few molecules now, but already these few molecules are 150 marketing authorizations in 85 countries. So it shows our ability to take this and really take a global approach to it. And we have, and Rajiv mentioned a few examples, we have one of the most diverse and strongest pipeline in biosimilars to follow that. So what that means is in the future, that portfolio, that pipeline will translate into a commercial portfolio and gives us one of the strongest commercial portfolios in the industry. I believe that having that broad portfolio is actually important. Rajiv mentioned first-to-market contract, and these are important factors, but the ability to that portfolio, I think, is important. This is not a market where sustainably, if you have a onesie and a twosie, you can be successful. And you see some of these companies that have these onesies and twosies coming in and going out of the market. So I agree with Rajiv. It's too early to declare winners and losers in the market. It's a developing market. And you should fully expect us, again, as part of the strategic plan process that we'll look into the biosimilar opportunity very deeply, and then we consider it, and we'll make it a significant source of growth for Viatris going forward.

And then more for Sanjeev (sic) [ Rajiv ], maybe just to focus on Rajiv. What range of discount would you look versus Sanofi potential higher rebates on Lantus? And also maybe more generally, what is your pricing discounting policy? And how does it compare versus your competitors?

Look, we are not discussing our pricing strategy or the approach to the customer strategy, but one thing I'm going to tell you, Navann, is that we are very excited with this first interchangeable approval of the biosimilar. It's a great opportunity for the whole landscape, and it's getting rightfully a lot of attention from all the stakeholders, including the FDA or policymakers or many other stakeholders in the health care system and our customers. It's a great opportunity for us to relaunch this product and build up on this portfolio around the diabetes with the Semglee first, which was noninterchangeable, now interchangeable, followed by aspart. And then we're having a pipeline around Toujeo [ and all of that ]. So it's a great opportunity for us around that. We are having some very encouraging and constructive discussions. We are in early phase of those discussions with our customers. And I can tell you, they are excited, and we are excited. We are -- essentially, as we said, we are essentially relaunching with a core team of expanding access to this interchangeable product. We are committed to make it a success. We always said it's going to be a slow ramp. We expect 2022 will give us a meaningful time to -- ramp it up to a meaningful market share with peak in '23. That's what I can tell you at this point of time.

And maybe a few others on biosimilars. How do you think about the biosimilar EYLEA space going forward because there's no currently approved biosimilars?

Again, another exciting opportunity, Navann, for us. We are first to complete our clinical trials. We are ahead in this phase. If not first, we'll be definitely in the first wave of the molecules. We are above -- final stage of combining our application to the -- for the submission, which is likely to happen over the next couple of months. And we are very confident that we will be -- as I said, we'll be in the first wave and most likely in '24. This is a '24 product, and we're looking forward to this launch.

And how are the Avastin and insulin aspart programs progressing? Have you heard any update from the FDA?

Yes. We have very definitive updates from FDA in terms of the aspart, the sciences behind us. They have more or less looked at that. We are having FDA scheduled inspection on audit of our Malaysia plant in the coming weeks. As far as the Avastin is concerned, although there is no pending scientific questions, we have not yet heard from FDA about scheduling that inspection of our backlog facility of Biocon.

And one on BOTOX. Do you plan to move into the clinic in the near term?

Yes. I'm excited to tell you, we have very, very recently meeting with the FDA on BOTOX. And this is where -- I think it was a very encouraging and constructive meeting. We have a clear understanding with the FDA around the CMC as well as the clinical pathway for a biosimilar to BOTOX. And we now remain on track for our pivotal clinical studies to start before the end of '22.

And how does the J&J -- the new 6 months INVEGA HAFYERA is changing potentially your approach to the marketing of INVEGA SUSTENNA and INVEGA TRINZA?

Look, if you read it, the indication for INVEGA HAFYERA, the patients must be treated with either INVEGA SUSTENNA or TRINZA before the start. That was exactly the way they said -- when they approved INVEGA TRINZA, they said patients must be stabilized on INVEGA SUSTENNA for 4 months. So what happened after that? Not only TRINZA grew, SUSTENNA has continued to grow. And we believe that is similar phenomena over here. Life cycle management is a very -- there's another leaf out of the life cycle management for the brand companies. And we have been out there to manage this and manage our portfolio according to -- around this life cycle management. So I'm very excited with this complex injectable opportunity, which is coming our way in the near future.

And just a final one. What do you think of the -- I know it's early stage with the HHS proposal that was released very recently.

Michael, you want to go first?

Yes. So I -- look, I think we're digesting it. It was released yesterday. But the -- in general, what I can say, any policy that increases biosimilar utilization is a good one, right? And yesterday in the White House proposal, there were -- there was mentioning of shared savings model. There was mentioning of Part B incentives of biosimilars. And I think these are all things that we'd be supportive of and that are good for patients and good for access to patient to affordable, high-quality medicine that they can count on. That's what we're all about as a company.

Thanks for your early thoughts. And then I just wanted to go through a few different subjects. Maybe first on China. If you could give us an update regarding the pricing reforms, maybe some outlook comments for the rest of the year. And is that still better than peers? I know the earnings call was recent, but just wanted to hear your updated thoughts.

Rajiv, you want to take that?

Yes. So look, we have given enough color around VBP evolution and how URP has evolved. And I'll sum up to say that we have continued to see the strong performance in China and very proud of our team, how they have executed navigating this VBP and URP. But more than that, I'm very optimistic that we are so well set up commercially with our retail-oriented commercial infrastructure that we will execute, we will be able to leverage the Viatris strength of the pipeline, the science, the portfolio assets to basically opportunistically and strategically execute on maximizing the opportunity, which is China as a market offers, especially around the retail space. So we continue to invest in our pipeline. We have already made some submissions as we have already said that 6 of the products will be filed this year, we are building on that because we believe this health care consumerism, evolution of the private hospital and insurance is going to drive the market and grow -- lead to the growth of the market. And our execution so far, but more importantly, how we are situated over there gives me a lot of confidence that it will be a great opportunity for Viatris.

And Navann, maybe I can add to that. It's like -- I 100% agree. As Rajiv said, we're very proud of the teams, what they executed and how we're responding to it. But if we step back a little bit, I mean, I look at VBP and in URP almost as a bump in the road because this -- China is an exciting market. China is a growing market. And yes, it impacts us in the short term, but it still is so much unmet need in the market. There's such a rise in consumer buying power. So where the growth is coming from, changes, right? The channel mix especially is changing. But overall, this is a growing and sustainably growing market for years to come. And for a company like Viatris that is diverse, that has R&D and pipeline, that has [ 1,400 product ], that is opportunity, and we can leverage that opportunity. We already decided on 2 dozen projects that we want to bring to China and add to the pipeline there. I think probably 6 or 7 or so will be submitted this year. We have strong commercial capabilities. I think you see that in the execution that we have in quarter 1 and quarter 2. You see that in our results. And we can now bring that to bear to the legacy Mylan portfolio that we have there that's existing as well as the future portfolio. So we're excited about China as an opportunity, mid and long term. And I think, yes, that's what I want to add.

And I wanted to touch base on mitigation. I think Viatris has significantly lower mitigation risk than some of the peers in the sector. I estimate around $400 million in price fixing liabilities and around $200 million in opioids that Viatris will be liable for. So those are my estimates. But can you touch base on mitigation risk and your latest dialogue of your legal team with plaintiffs? And do you expect [indiscernible] settlement in 2022?

Yes. So I think, [ Navann, in each of your questions ], you're asking about opioids and you're asking about price fixing. So let me comment on those. On opioids, as you mentioned, there are these settlements discussions with other companies are having. I don't know whether these will happen or will not happen. What I can tell you is these settlements have nothing to do with Viatris, right? We're not part of it. And the companies that are involved in the settlement discussions are very different. They are in advanced stages of litigation, we are not. They're involved with the state [ AGs ], we are not. So it doesn't really apply to Viatris. So we don't see this as materially changing our position, and we continue to believe that the claims against us in civil lawsuits are really without merit, and we're going to defend them vigorously. So I can't comment on any dollar numbers. We think they're meritless. On price fixing, no update. Same thing. We know of no evidence that the company or any of our employees participated in any price fixing and, again, believe that the claims are without merit, and we're going to defend them vigorously. So that's really the update. There's no update, that's the update.

And then another subject at your peers as well, different peers, but we have seen some Actavis investors. Can you comment on the potential for Actavis investors at Viatris? What is your general view?

Yes. I don't know whether I want to comment on active investors, passive investors. We kind of work for all investors, right? And that's our goal is to increase shareholder value, total shareholder return for all of our investors. And you'll be hard-pressed to find a management team that's more active than this team. We're firing on all cylinders. We're proud of the execution of our plan. We're completing the integration and the restructuring, right? We're well on track there. We're well on track of capturing $1 billion in synergies in 3 years, half of that we're going to do in the first year, $500 million. We're well on track in terms of paying down our debt and strengthening our balance sheet, $6.5 billion in debt repayment by 2023. We've initiated the dividend, returned value to shareholders. And as you asked us and we discussed, we see future growth in that dividend. And then cash flow, cash flow, cash flow is our North Star and has significant potential to grow. So that's what an active management team does, and we believe that will provide value for shareholders.

And maybe a final one, just a general in health care reforms and what would be the impact on Viatris. You touched base on biosimilars, but maybe a more general comment.

Yes. Navann, maybe, Rajiv, you have things to add to the comment. But I think -- I still think it's kind of very early. A lot going on, including yesterday's announcement. I think as a general comment, I told you we're supportive, of course, of anything that supports biosimilar utilization. But as a general comment, don't forget Viatris is part of a solution here. Access is part of our DNA. That is what we do. And we believe that most -- ultimately, all these efforts are focused on providing more access to affordable, high-quality medicine, to trusted medicines. And if that happens, we can be a significant part of the solution, that will be good for Viatris and [indiscernible]

Now Michael, you said it. The breadth of our portfolio in the U.S.A., including biosimilars, complex generics and many other products, which you have means that the focus of congressional efforts on the highest-priced products or Medicare -- in fact, positions us as a part of the solution. And I'll tell you, we are cautiously optimistic that truck pricing reform will ultimately be aimed at increasing the patient access, as Michael said, for the trusted and high-quality affordable medicines. So we remain excited, and we're watching very closely and working with the administration very closely.

I think we're coming towards the end of our session. I don't know if you have any final comments.

No, no. Thanks for having us. Look, we're proud of the execution that we had in the quarter 1, quarter 2. You've seen this is a very active management team that fires on all cylinders. We deliver on our commitments. And we're going to be excited to share the long-term outlook and the strategic plan when it is completed towards the end of the year. So more good things to come.

Thank you, Navann, for having us. Thanks.

Thank you for that. Thank you for the insightful discussion and for answering my questions and looking forward to the strategic plan. And good luck with your meetings.

Thank you, Navann.

Thanks.