Divestitures

9 Months Ended

Sep. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

On October 1, 2023, the Company announced it received an offer for the divestiture of its OTC Business, and entered into definitive agreements to divest its women’s healthcare business and, separately, in another transaction, its rights to two women’s healthcare products in certain countries, its API business in India and commercialization rights in the Upjohn Distributor Markets. The OTC, API and women’s healthcare businesses were deemed businesses for U.S. GAAP accounting purposes. As such, the assets and liabilities included an allocation of goodwill. The sale of the rights to two women’s healthcare products in certain countries was accounted for as an asset sale. In conjunction with these transactions, Viatris and the respective buyers entered into various agreements to provide a framework for our relationship with the respective buyers after the closing of the divestitures, including transition services agreements, manufacturing and supply agreements, and distribution agreements, as necessary.

During the three months ended September 30, 2024 and 2023, the Company recognized TSA income related to the divestitures of approximately $27.5 million and $47.2 million, respectively. During the nine months ended September 30, 2024 and 2023, the Company recognized TSA income related to the divestitures of approximately $47.0 million and $139.8 million, respectively. TSA income is recorded as a component of Other Income, Net.

Women’s Healthcare

In the third quarter of 2023, Viatris executed an agreement to divest its women’s healthcare business to Insud Pharma, S. L., a leading Spanish multinational pharmaceutical company. The divestiture of the women’s healthcare business was primarily related to our oral and injectable contraceptives and did not include all of our women’s healthcare related products; as an example, our Xulane® product in the U.S. was excluded. The transaction included two manufacturing facilities in India. Assets and liabilities associated with the women’s healthcare business divested were classified as held for sale in the consolidated balance sheet as of December 31, 2023. The transaction closed in March 2024 and during the three and nine months ended September 30, 2024, the Company recognized a pre-tax loss on sale of approximately $2.0 million and a pre-tax gain on sale of approximately $77.6 million, respectively, for the difference between the consideration received and the carrying value of the assets transferred (including an allocation of goodwill), which were recorded as a component of Other Income, Net in the condensed consolidated statements of operations.

In the third quarter of 2023, Viatris also entered into a separate agreement to divest its rights to women’s healthcare products Duphaston® and Femoston® in certain countries to Theramex HQ UK Limited, a leading global specialty pharmaceutical company dedicated to women’s health. The transaction (other than in the U.K.) closed in December 2023, and upon closing, the Company recognized a pre-tax gain on sale of approximately $156.2 million in that quarter for the difference between the consideration received and the carrying value of the assets transferred. In the third quarter of 2024, the Company closed the divestiture of the product rights in the U.K. to Insud Pharma, S. L., and recognized a pre-tax gain on sale of approximately $10.8 million. The respective pre-tax gains were recorded as a component of SG&A expense in the condensed consolidated statements of operations.

OTC

On October 1, 2023, Viatris received an offer from Cooper Consumer Health SAS, a leading European OTC drug manufacturer and distributor, for Viatris to divest its OTC Business, including two manufacturing sites located in Merignac, France, and Confienza, Italy, and an R&D site in Monza, Italy. In January 2024, we exercised our option to accept the offer in the OTC Transaction and entered into a definitive transaction agreement with respect to such OTC Transaction. The Company retained the rights for Viagra®, Dymista® (which, in certain limited markets, are sold as OTC products) and select OTC products in certain markets. The OTC Transaction closed on July 3, 2024.

The OTC Business divested met the criteria to be classified as held for sale on October 1, 2023. As such, the related assets and liabilities were classified as held for sale in the consolidated balance sheet as of December 31, 2023. Upon classification as held for sale in the fourth quarter of 2023, we recognized a total charge of approximately $734.7 million, which

was comprised of a goodwill impairment charge of approximately $580.1 million (recorded as a component of SG&A expense), and a charge of approximately $154.7 million to write down the disposal group to fair value, less cost to sell (recorded as a component of Other Income, Net) in the consolidated statement of operations. During the three and nine months ended September 30, 2024, the Company recorded additional pre-tax charges of approximately $92.6 million and $340.2 million, respectively, to further write down the disposal group to fair value, less cost to sell. The additional charges were recorded as a component of Other Income, Net in the condensed consolidated statements of operations, and were primarily due to an increase in estimated transaction related costs, including the assumption of additional contractual obligations, as well as the impact of working capital and other transaction related adjustments on the proceeds.

API

On October 1, 2023, Viatris executed an agreement to divest its API business in India to Matrix Pharma Private Limited, a privately held pharmaceutical company based in India. The transaction included three manufacturing sites and a R&D lab in Hyderabad, three manufacturing sites in Vizag and third-party API sales. Viatris retained some selective R&D capabilities in API. The transaction closed in June 2024. The API business in India met the criteria to be classified as held for sale on October 1, 2023 and the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet as of December 31, 2023. During the three and nine months ended September 30, 2024, the Company recognized a pre-tax charge of approximately $15.1 million and $32.5 million, respectively, to write down the disposal group to fair value, less cost to sell, which was recorded as a component of Other Income, Net in the condensed consolidated statements of operations, primarily driven by the impact of working capital and other transaction-related adjustments.

Upjohn Distributor Markets

In the fourth quarter of 2022, the commercialization rights in the Upjohn Distributor Markets met the criteria to be classified as held for sale. Upon classification as held for sale, the Company recognized a total charge of $374.2 million in 2022, which was comprised of a goodwill impairment charge of $117.0 million, other charges, principally inventory write-offs, of $84.3 million and a charge of approximately $172.9 million to write down the disposal group to fair value, less cost to sell. During the nine months ended September 30, 2023, the Company recorded an intangible asset charge of $32.0 million to write down the disposal group to fair value, less cost to sell, and additional charges of $19.2 million. Total charges during the year ended December 31, 2023 amounted to $136.4 million, primarily consisting of losses on the disposals of $85.2 million, which were recorded as a component of Other Income, Net. The divestitures of the commercialization rights in certain of the Upjohn Distributor Markets closed during 2023 and 2024, and the remaining transactions are expected to be completed in the near future. If the remaining transactions are not completed, the distribution arrangements will expire in accordance with our agreement with Pfizer and the Company will wind down operations in these markets, which may result in additional asset write-offs and other costs being incurred.

Biocon Biologics Transaction

On November 29, 2022, Viatris completed a transaction to contribute its biosimilars portfolio to Biocon Biologics. Under the terms of the Biocon Agreement, Viatris received $3 billion in consideration in the form of a $2 billion cash payment, adjusted as set forth in the Biocon Agreement, and approximately $1 billion of CCPS representing a stake of approximately 12.9% (on a fully diluted basis) in Biocon Biologics. During the three months ended September 30, 2024 and 2023, the Company recorded a gain of $39.4 million and $19.1 million, respectively, and during the nine months ended September 30, 2024 and 2023, the Company recognized a gain of $368.7 million and $50.6 million, respectively, as a result of remeasuring the CCPS in Biocon Biologics to fair value. The increase is primarily related to changes in certain market factors, including Biocon’s share price. The Company’s CCPS in Biocon Biologics are classified as equity securities and are included in Other Assets in the condensed consolidated balance sheets, and gains and losses recorded as a result of remeasuring the CCPS in Biocon Biologics to fair value are recorded as a component of Other Income, Net. The fair value is reassessed quarterly. Refer to Note 11 Financial Instruments and Risk Management for further discussion. Pursuant to the terms of the Biocon Agreement, the Company is entitled to receive a total of $335 million of additional cash payments in 2024 as deferred consideration, of which $145 million was received during the second quarter of 2024 with an additional $160 million payment due in the fourth quarter of 2024. In addition, the Biocon Agreement provides for a closing working capital target of $250 million, of which $220 million was paid by Viatris to Biocon Biologics during 2023. Viatris and Biocon Biologics have tentatively agreed to offset certain amounts due between the parties, including the remaining working capital target amount against the first deferred consideration payment described above. Refer to Note 8 Balance Sheet Components for additional information on assets and liabilities related to Biocon Biologics.

At the time of closing of the Biocon Biologics Transaction, Viatris and Biocon Biologics also entered an agreement pursuant to which Viatris was providing commercialization and certain other transition services on behalf of Biocon Biologics, including billings, collections, and the remittance of rebates, to ensure business continuity for patients, customers and colleagues. Biocon Biologics had substantially exited all transition services with Viatris as of December 31, 2023.

Assets and Liabilities Held for Sale

The Company did not have assets and liabilities classified as held for sale at September 30, 2024. Assets and liabilities held for sale consisted of the following at December 31, 2023:


(In millions)	December 31, 2023
Assets held for sale
Accounts receivable, net	$	112.1
Inventories	422.4
Prepaid expenses and other current assets	7.5
Property, plant and equipment, net	262.2
Intangible assets, net	1,946.0
Goodwill	188.0

Other assets	5.1
Valuation allowance on assets held for sale	(157.3)
Total assets held for sale	$	2,786.0

Liabilities held for sale
Accounts payable	$	137.4
Other current liabilities	35.3
Deferred income tax liability	77.2
Other long-term obligations	25.2
Total liabilities held for sale	$	275.1