Good morning. My name is Gretchen, and I will be your conference operator today. I would like to welcome everyone to the Viatris 2023 First Quarter Earnings Call and Webcast. Thank you. I will now turn the call over to Bill Szablewski, Head of Global Capital Markets. Please go ahead.

Good morning, everyone. It is my pleasure to welcome you to our first quarter 2023 earnings call. With us today is our CEO, Scott Smith, President, Rajiv Malik; CFO, Sanjeev Narula; and Jeff Nau from our Eye Care Division. During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2023 and various strategic initiatives. 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 today's slide presentation and our SEC filings for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. We will be referring to certain actual and projected non-GAAP financial measures to supplement investors' understanding and assessment of our financial performance. Reconciliations of those non-GAAP measures to the most directly comparable GAAP measures are available on our website and in the appendix of today's slide presentation. An archived copy of today's presentation and other earnings materials will be available on our website at investor.viatris.com following the conclusion of today's call. With that, it is my pleasure to welcome our CEO, Scott Smith.

Good morning, everyone. I'm excited to speak to you today officially as the CEO of Viatris. It's been a busy and productive first month. Viatris is a special company; I knew that from the moment I joined the Board in December, and I appreciate it even more today. It begins with our ability to sustainably deliver access to high-quality medicines at scale to people regardless of geography or circumstance. Since becoming CEO, I have met with colleagues all over the globe and have had the opportunity to spend time with each business segment. I have seen firsthand the unique combination of passion, dedication, and skills of the people of Viatris. Their unwavering commitment to our mission is infectious. I'm honored to be part of this amazing organization, and I'm extremely impressed by everything that has been accomplished to date. In addition to our historically strong regulatory, clinical, and manufacturing capabilities, I've also been very impressed with the company's global commercial infrastructure and the talented people we have there. I look forward to finding additional ways to leverage these capabilities to deliver more access to more medicines to more patients around the world. I want to reiterate that I firmly believe in the strategic plan announced in November of last year. I believe that executing this plan will ensure that we are able to simplify our unique place in the global healthcare landscape. A critical part of my job is to enhance the already strong execution of the company and ideally accelerate our well-crafted strategy. What I've already seen and experienced, I believe we are positioned well to be set up for success in Phase II of our strategic plan. I believe that Viatris has the strong financial profile and financial flexibility to accelerate growth in the coming years, and I am fully aligned with the future capital allocation priorities that the company laid out in November, namely that, although we are not giving guidance beyond 2023, beginning in 2024, we expect the reshaped, rebased company to generate at least $2.3 billion of free cash flows per year, excluding transaction costs and taxes. And in Phase II, we intend to remark approximately 50% of our free cash flows annually to return to shareholders in the form of dividends and share repurchases. With the remaining 50%, we intend to identify and reinvest further in our businesses organically and inorganically with value-creating strategic transactions. While I will leave the discussion of details of our first quarter results to Rajiv and Sanjeev, I am very pleased to report that Viatris has had a great start to the year with yet another quarter of strong operational performance that gives us further confidence in our ability to return to growth as we enter Phase II of our strategic plan in 2024. In the first quarter, we delivered total revenues of $3.73 billion, adjusted EBITDA of $1.34 billion, and free cash flow of $923 million. Based on the strong performance, we are reaffirming our financial guidance for 2023. We are also laser-focused on executing our pipeline, especially our three franchises with the potential to reach $1 billion each in peak sales by 2028: complex injectables, novel and complex products, and eye care. On our planned divestitures, I think it is important to note that we are in a position of strength. Executing these planned divestitures is a matter of strategic choice, not a necessity, that we believe will accelerate our ability to move up the value chain and lay a solid foundation for our return to growth in phase II. We have been engaged in productive discussions with a number of interested parties to determine the right set for these well-performing assets. We continue to believe that these divestitures will unlock meaningful value for the company, and we remain on track with our stated goals, including announcing the transactions in 2023. I expect to be able to announce one or more of these transactions early in the second half of the year. And finally, on business development, the company laid out a strategic vision for business development in the area of ophthalmology, gastrointestinal, and dermatology. Our acquisitions of Oyster Point and Famy Life Sciences earlier in the year are excellent examples of the execution of that strategy, and I am focused on continuing to look for additional significant transactions in these areas and potentially others should the right opportunities arise. I think my combined experience with big biotech, big pharma, and smaller biotech companies will help us accelerate this vision. In summary, I could not be more energized by my time at the company so far, by the people I've met, and by all that I've experienced. I look forward to the exciting path ahead. I'll now turn the call over to Rajiv to provide you with an update on our operations and our pipeline, and then to Sanjeev, who will give you more detail on our financial results and capital deployment activities.

Thanks, Scott, and good morning, everyone. As Scott mentioned, we had another strong start to the year and a strong quarter of operational performance across various segments as well as product categories. Let me now begin by sharing our commercial segment highlights from the quarter. As I do, I will be making certain comparisons on an operational basis, which excludes the negative impact of foreign currency rates versus the plan that supports our financial guidance as well as to Q1 2022 results which also excludes the results from the divested biosimilars business from Q1 2022. Our well-balanced business of developed markets, where gross margin is close to 60% of our net sales, delivered another strong quarter. Europe performed ahead of our expectations, with France and Italy driving the strong performance. The region grew low single digits in Q1 compared to the prior year on an operational basis, making it our fifth consecutive quarter of year-over-year growth. Our key brands like Dymista, Creon, and Yupelri, as well as our generics portfolio, continued to perform strongly in Q1. Our North America business also performed ahead of expectations driven by better-than-expected performance in our generics portfolio, including generic Symbicort, and our injectables portfolio. Our brand business was led by stronger performance of Yupelri. We look forward to launching several new products in North America this year, including Breyna, our generic version of Symbicort. We and our partner developed Drug Delivery, have settled the patent litigation with AstraZeneca and expect to launch the product after the expiration of regulatory exclusivity. We anticipate launching Breyna with 180 days first-to-file generic exclusivity, subject to FDA's future determination of the issue if and when another NDA filer becomes eligible for final approval. For the remainder of the year, in developed markets, we expect to meet or exceed our expectations of both North America and Europe. Moving to emerging markets, Korea, Malaysia, Thailand, as well as the Middle East, delivered strong performance. Lipitor, Norvasc, and Viagra performed better than expected. Generics also performed ahead of expectations driven by solid ARV performance. We remain confident for this segment to deliver mid-single-digit growth for the full year, primarily driven by our brand category of this region. In JANZ, the brand category fell slightly behind expectations primarily due to customer buying patterns in Japan. We remain confident in our broad outlook for the year due to the projected strong performance of our generics, including authorized generics as well as our brands like Creon, Amitiza, and Effexor. Greater China performed better than expected with 5% year-over-year growth on an operational basis. We expect another strong year of operational performance, in line with our expectations, as we continue to focus on the retail segment and growing the self-pay patient base while navigating the evolving policy environment. I'm also pleased to confirm that we have 10 regulatory submissions under review with the SFDA in China. Moving to Eye Care. Tyrvaya's launch continues to progress as planned in its first quarter as a part of Viatris. March delivered Tyrvaya the highest launch-to-date monthly prescriber count and total prescriptions. Furthermore, we remain excited about Tyrvaya's opportunities ahead, including driving prescriptions from the recent Medicare Part D coverage wins, leveraging Viatris' commercial infrastructure, and launching its first direct-to-consumer marketing campaign in Q4, which together provides confidence in our current full-year outlook for Tyrvaya as well as beyond that. We have made significant progress in stabilizing our base business, which we believe is one of the key elements to the successful execution of our phase II strategy in 2024 and beyond. One of the primary drivers to our expected stabilization is the effective management of our brand portfolio, which forms approximately two-thirds of our overall base. I'm pleased to report that for the last several quarters, our branded business has consistently performed at or above our expectations across the various geographies. This continued strong performance of our branded category, along with our anticipated $500 million plus of new product launches in 2023, gives us tremendous confidence that our base business, excluding the positive impact of our Eye Care Division, will return to growth in the second half of the year versus the prior year. We believe we are headed into the final stages of completing all aspects of our phase I commitment and will deliver another strong year that we expect will put the company in a very solid position to execute phase II. Let me now switch to provide noteworthy updates on our pipeline with a focus on the three key buckets we highlighted at the beginning of the year. I will begin with our portfolio of complex injectable products. We secured the sole first-to-file position for Wegovy, a weight loss treatment. In addition, we can also confirm that we have achieved the sole first-to-file status for Ozempic 8-milligram strength. As we have previously disclosed, we have a shared first-to-file position on the other strengths of Ozempic. In addition, we have strengthened this portfolio and submitted our NDA for Abraxane used in the treatment of breast cancer as well as advanced our MR-151 product, an anticoagulant, into its clinical phase of development. Finally, we have also submitted another first-to-market ANDA to the FDA for MR-204, which is indicated for chronic dry eye disease. Within our select novel and complex products pipeline, I'm really excited to announce that we filed our NDA for Glatiramer Acetate once monthly to the FDA. As we have previously noted, our GA one monthly product has met its primary endpoint of reduction in annual relapse rate in a placebo-controlled Phase III study. GA monthly demonstrated a 30% reduction in ARR compared to placebo. In addition to this, GA once monthly, when compared to placebo, demonstrated clinically relevant improvement on the expanded disability status scale score that was statistically significant. For Meloxicam, we have completed our end of Phase II meeting with the FDA on May 1 with positive outcomes, and we look forward to initiating our Phase III clinical trial in the second half of this year. Finally, we are progressing our IND and enabling study for our Botox program and remain on track to make our IND filing this year. Our Eye Care pipeline is also advancing as planned. We are pleased that we have received positive top-line results for Tyrvaya in China. We, along with our partner, are now checking our submission in China to August of this year. Our clinical program for MR-142 for night vision disturbances is progressing well. We also submitted our IND and are Phase III-ready for our MR-148 for dry eye disease. In addition, we aligned with the FDA on the Phase III study design for our Blepharitis program, which will get initiated later this year. Finally, we are executing an IND-enabling study for our nerve growth factor product, MR-146, which we hope to progress to treat all stages of neurotrophic keratopathy. Before I hand it over to Sandeep, I want to recognize that our execution has been and continues to be a team effort, and I would like to thank our colleagues around the globe for delivering another strong quarter. With that, I will now hand the call over to Sanjeev.

Thank you, Rajiv, and good morning, everyone. We're off to a great start to the year and as a team could not be more confident in our strategy to deliver our plan and return the company to growth. As Scott mentioned, the first quarter was in line or slightly ahead of our expectations. Our business fundamentals are strong, and we are encouraged by continued performance, including the stability of our base business. In the quarter versus the prior year, excluding biosimilars, net sales from our Europe, emerging market, and China businesses grew operationally. New products contributed well. We are looking forward to several exciting launches in the second half of the year. Early in the quarter, we closed the Eye Care acquisition, and our SG&A and R&D expenses for Q1 include costs associated with the commercial infrastructure and late-stage pipeline of these businesses. We continue to see benefits from our unique platform and its ability to generate significant cash flow from operations. We feel good about the opportunities ahead that will strengthen our free cash flow generation. Looking at quarter 1, 2023 highlights, you will see our summarized results versus the prior year on a reported basis. It is important to note that for comparison purposes, our reported results for quarter 1, 2022, included the biosimilar business. Our net sales and adjusted EBITDA walks show sales for the quarter were in line with our expectations and, on an operational basis, down slightly versus the prior year. Foreign exchange had a negative impact of approximately 5% on net sales versus the first quarter of 2022. The stability of our business was primarily driven by growth in Europe across a diverse portfolio, key products in Greater China, and brands in emerging markets. As mentioned, base business performance was in line with our expectations, and the full year remains on track with the estimate we provided at the end of February due to ramp of new products and volumes. New product revenues got off to a solid start and benefited from sales of additional strengths of lenalidomide. Adjusted gross margin of approximately 60% in the quarter exceeded our expectations and was driven by positive portfolio and segment mix, new product launches, lower impact of inflation on COGS, and the impact of certain positive variances. We reported strong adjusted EBITDA, which included SG&A investment in the eye care franchise and R&D to progress key programs across injectable and complex products. We had another excellent quarter of free cash flow of $923 million. In the quarter, free cash flow conversion continued to improve. The year-on-year decline was driven by lower adjusted EBITDA with biosimilar divestiture and the impact of foreign exchange. In the quarter, we incurred approximately $22 million in transaction costs, primarily relating to eye care acquisitions. We continue to deliver on our capital allocation plan and financial commitment. As a result, we remain in a strong balance sheet position with a low coupon fixed-rate capital structure. We are committed to our investment-grade rating, and we continue to pay down debt to reach our leverage target of 3 times. In the quarter, we paid down approximately $550 million of debt for a total of approximately $6 billion since the beginning of 2021. Additionally, we returned approximately $400 million of capital to our shareholders in the quarter. Before I discuss the 2023 outlook, although we are not providing guidance beyond 2023, especially given the strong start to this year, I have even more confidence in our phase II outlook beginning in 2024. This includes the expectation of generating at least $2.3 billion in free cash flow from the rebased business before any associated transaction costs and taxes. Coming back to 2023, we are reaffirming our 2023 guidance ranges. We currently expect full-year revenue, adjusted EBITDA, and free cash flow to be at the midpoint of the ranges. While foreign exchange continues to be dynamic, based on current rates, we have assumed a slight headwind in Q2 and minimal to neutral impact for the full year. Now a few updates on our expected phasing for the rest of the year. We continue to expect total revenue to be higher in the second half due to ramp and launch of new products, including Breyna, our generic version of Symbicort, as well as normal product seasonality, particularly in Europe. We now expect adjusted EBITDA to be evenly weighted between the first half and the second half, driven by two factors. Number one, gross margins stepping down in Q2 and moderating in the second half due to portfolio and segment mix, expected higher COGS because of inflation, and expectation that positive variance in the first quarter will not repeat. And number two, SG&A and R&D spending to step up in Q2 and increase subsequently in the second half. This includes the expected DTC investment in Tyrvaya as well as increased investment in the eye care pipeline and organic R&D. We expect cash flow to be lower in subsequent quarters given the expected increase in capital expenditure, one-time costs, and working capital. Specifically, Q2 and Q4 will be lower due to the timing of semiannual interest payments. As a reminder, our adjusted EBITDA and free cash flow guidance excludes any future acquired IP R&D for unsigned deals. Our free cash flow does not include any transaction costs and taxes associated with the planned divestiture or the Eye Care acquisition. In closing, based on the sound fundamentals of our business, we are well positioned for a strong 2023, and nothing has changed with respect to our phase II outlook beginning in 2024. With that, I'll hand it back to the operator to begin the Q&A.

We'll take our first question from Glen Santangelo from Jefferies.

Hi, thanks. Scott, I wanted to start with you. It seems it's been a couple of months since you've joined, and you've had a chance to review everything. Encouragingly, you appear to agree with the strategic plan and feel comfortable with it all. Could you revisit what you expect the proceeds to be from the three asset sales coming later this year? If I remember correctly, you mentioned $5 billion to $6 billion pretax. What would that be after tax? Also, what is your plan for those proceeds? Will 50% of that be returned to shareholders, which would suggest a share repurchase larger than the current authorization? Any additional details regarding capital deployment in the latter half of the year would be helpful. Thanks.

Good morning, Glen, thank you for the question. I'm not just comfortable with the strategic plan; I'm very supportive of it. When I joined the Board at the end of the year, I was impressed by the plan and the direction it sets for us. I believe it is a strong plan, and I fully support it. Regarding divestitures, I want to emphasize that we expect to meet the previously announced ranges for both value and timing. It's important to clarify that these divestitures are a strategic choice rather than a necessity, as our financial performance is strong. We have quality assets, and there are several interested parties. We aim to announce these divestitures by the end of 2023 and hopefully one or more in the second half of the year. We are pleased with our progress, but it is crucial to understand that we do not need to proceed with these divestitures to execute our plan, which remains robust due to our strong operational and financial performance.

No, I think, Scott, you covered everything. I think just two points to kind of just double-click on that. Glen, to your point about the ranges. So, we talked about a net proceeds of about $4.9 billion to $6.1 billion. And that was after the taxes onetime cost and the Oyster Point acquisition at that point. So, we stay within the range. And the idea there is that will be the proceeds that will be available for additional debt pay down, buying back shares, and investing in the business for the capital allocation plan that was already laid out.

Our next question comes from Chris Schott from JPMorgan.

Thanks so much. Just following up on the divestiture process. It sounds like things are on track, but you mentioned this position of strength. I guess to the extent the current rate environment does not result in valuations that are aligned with your targets, can you still kind of push forward with this capital allocation story and kind of the targeted acquisitions just given the step-up in free cash flow? Or would that part of the plan have to change? I know that's not Plan A, but just to the extent that we weren't able to get all these to go in line, should we think about there being a different outlook? Or is it pretty much the same regardless? Thank you.

Thank you very much for the question, Chris. I think it's very important to note that due to the strong operational and financial performance of the company, we can execute our financial commitment and on the plan without the divestitures. So, these are really good, well-performing assets. Yes, there's been some deterioration, I believe, in interest rates in the macroeconomic environment. And we don't go into any sale that we don't think mirrors the value that we see in these important assets. Again, having said that, there's a lot of interest in these assets, and we believe they're going to move forward. And I believe they're going to be, by the time we get to the end of this process, in the previously announced range, both for value and timing. But no, they're not necessary for us to be able to execute on the plan.

Our next question comes from Jason Gerberry from Bank of America.

Thanks for taking my question. This is Robin for Jason. So, first is on your monthly GA for multiple sclerosis. How do you see the market opportunity there given the decreased use of GA overall? And do you believe you can increase the use of GA with a monthly depot? And then on Tyrvaya, just early impressions. What do you think is needed to drive the launch curve to look like more successful dry-eye launch analogs? Thank you.

Thank you, Jason, for your question. I'm pleased to announce the submission of this NDA, which is crucial for a product that may not have a partner. This is not merely about compliance; we've thoroughly analyzed the data over the past few months and delved into existing studies. The significant treatment effect of the depot product in reducing the ARR is supported by the MRI endpoint and validates the use of GA Depot for RMS patients. To give you context, while current treatments require 14 injections a year with a dosage of almost 560 milligrams, GA Depot only needs one injection a month at 40 milligrams. Additionally, this treatment not only reduces relapses but also significantly decreases contrast-enhanced lesions by 28% and new or enlarging T2 hyperintense lesions by about 17%, while also showing significant improvement on the expanded disability status scale (EDSS). With all this information, we are optimistic about GA's market potential. This product will enhance our aspirations for the molecule.

On the Tyrvaya side, if we look at Tyrvaya's performance in 2022, it was predominantly driven by commercial coverage. As we enter 2023, we have increased Medicare Part D coverage from single digits to about 54% coverage of lives. Considering the marketplace, approximately half of all dry eye disease prescriptions come from Medicare Part D, so we expect this to be a significant advantage. As we exited the quarter in March, we recorded the strongest launch to date for prescribers and prescriptions. We anticipate this trend to continue as digital advertising increases and we start the DTC campaign at the end of the year. Additionally, utilizing Viatris' commercial infrastructure should provide further support for Tyrvaya in the overall portfolio.

I just want to make a quick comment on Tyrvaya and the Eye Care business as well. We need to remember that this deal closed in January. So, this Q2 is our first full quarter with Oyster Point under Viatris's management. Both revenue and demand for Tyrvaya were in line with our expectations for Q1 and March had the highest demand, as previously noted. We see opportunities to leverage strong parts of the existing organization, including commercial access and our large development team to help accelerate revenues in the future, including initiating DTC later this year. I just want to say that we're very, very excited about not only Tyrvaya but the Eye Care business in general.

Our next question comes from Balaji Prasad from Barclays.

Good morning, everyone. Thanks for the question. Scott, just a couple of questions on the EBITDA side. You called out $2.3 billion of EBITDA for 2024 at least. Can you help us understand what this factors? I would imagine this factors in your asset divestments, and maybe some helpful color would be on what's it like-for-like. Continuing on EBITDA, the cadence implies that Q2 EBITDA is below where the Street is currently. So, was there any pull-forward of EBITDA from Q2 to Q1? Thanks.

I did confirm $2.3 billion going forward. But let me take it to Sanjeev to give you some more context around your EBITDA question.

Yes. Thank you, Balaji. I will cover both points that you have talked about in terms of 2024. A simple way to think about this is twofold. What Scott mentioned, a minimum of $2.3 billion free cash flow for 2024 is after taking out all the divested assets that we have announced. So, if you talk about today's 2023 guidance that we have, the $2.5 billion includes all the divested assets that we have with us. This is to kind of show you the starting point for phase II, which is assuming all the divested assets are out of the numbers, and that's how we get to that $2.3 billion. It's important to note that before any cost for divestment or any taxes, which will obviously be funded through the divestment proceeds on that. And we are well on track, and we feel very good about where we are on that particular point. As far as the EBITDA is concerned, again, we had a strong quarter, came in at our expectation, slightly ahead of our expectation. The way to think about EBITDA in terms of the phasing is going to be now evenly phased between the first half and second half. And that's going on because there are two factors that are driving it. First is obviously the gross margin, which first quarter came in ahead of our expectations. Our gross margin is going to step down in Q2 and is going to moderate in the second half of the year. So, there's a function of product and portfolio mix, the continued impact of inflation, and the non-repeat of certain positive variances that we had in the first quarter. And then you obviously have the SG&A and R&D stepping up starting from Q2 and increasing later in the year because of the investment that we are making in the IT division, the R&D pipeline on organic products, and the DTC that Scott talked about for Tyrvaya, which is going to kick in at the later part of the year. That's why we feel great about overall where we are. But that's the cadence that we expect now but still will be at the midpoint of our EBITDA guidance.

Our next question comes from David Amsellem from Piper Stanley.

Thanks. So, I just wanted to ask a couple of product specifics. So, you still have a lot of exposure to Lipitor and Norvasc. Can you talk about how sticky you think those products can be globally? And then secondly, just in general, how are you thinking about the trajectory of the established brands portfolio over time? And then another question I have is just a societal, philosophical question. As you think about your exposure to regular way, generics, oral solid generics in developed markets in particular, how do you think about the role of that business in the overall organization? And I guess, more specifically, is oral solid generics a business that you want to deemphasize over time? Thank you.

I can start with the second part. We want to maintain the importance of the oral solid business. We carefully examined our portfolio and considered various options for commoditized products with numerous suppliers available. Access is not a concern. We refined that portfolio to focus more on complex and hard-to-manufacture products, as there will always be a need for innovative leaders in this area. While generics continue to be significant for us, our main focus is on enhancing access to these challenging products globally. We are not stepping away from this segment. Regarding established brands, not limited to Lipitor, many of these have been part of our portfolio even before Upjohn, and they have not been declining rapidly. Although there may not have been enough attention paid to them over the past two years, I know our priorities and we are committed to these products. Over the last several quarters, we have successfully stabilized this segment, reducing the decline from 4% to 5% down to about 1%, with flat results this quarter. We expect to see growth in this segment next quarter. The goal has been to stabilize this part of our portfolio, contributing to the overall strength of our platform. We are very optimistic about the progress we've made in managing this portfolio.

Our next question comes from Ash Verma from UBS.

So, I have two on pipeline. On Botox, have you received clarity from the FDA? And can you share with us what's going to be the trial design, biosimilarity endpoint, et cetera, for this program? And are you pursuing just the therapeutic indications here, not aesthetic? And then separately, for Juluca, can you elaborate a little bit on what is the value proposition? Does this in any way expand the market opportunity? Or is it going to cannibalize the high-dose product that you have? Thanks.

Regarding the student low dose, the market is already quite competitive, with one, two, or three players. I wouldn't say it's cannibalized, but it is commoditized, and our low dose is addressing a medical need. There is a significant need for a low-dose hormone product, and we are making progress. Our Phase I studies are now completed, and Phase III studies are currently in progress, targeting approximately 12 million women. We anticipate bringing this product to market by around 2026. Regarding Botox, we established a clear understanding with the FDA about their expectations regarding CMC and clinical trials about 1.5 years ago. For instance, one of the clinical studies focuses on survival dystonia as well as extensive digital and embroidery. All these studies are progressing well, and we are planning to submit our IND later this year to initiate Phase III studies.

Our next question comes from Umer Raffat from Evercore.

Hi, guys. Thanks for taking my question. I have two here if I may. First, it seems like China has been a very good tailwind through the duration of COVID lockdowns. And considering it did so well last year, and considering it's doing so well, up 5% in 1Q as well, how are you baking in potential for a restart and implementation of BBP programs across China into the back half of this year, and especially into next year? Number one. Number two, Symbicort, I know Advair opportunity did not necessarily play out versus your internal expectations. And it perhaps wasn't really a needle mover. In fact, one of the big droppers this quarter is your Wixela product. Why should Symbicort be different? And to what extent has the brand discounted on Symbicort already? Thank you very much.

Wixela has always been a very meaningful contributor. Even this quarter, it has been a very decent contributor to our projection or to our numbers. It's a very important product. We have met and exceeded every expectation we had around Wixela. And we expect to leverage what we have learned in the market to further leverage the same expertise to leverage this product. We are very much looking forward to bringing this product once the regulatory exclusivity expires. Everything is lined up. We anticipate launching this with 180-day first-to-file generic exclusivity unless, as we mentioned, subject to FDA's future determination of this issue when another ANDA filer becomes eligible for final approval. Now let me switch back to China. Four years of successful implementation of VPP, China has significantly improved the cost efficiency. Firstly, I will tell you, we don't have any more products to go through the VPP rounds at this point in time. We have gone multiple rounds. The market has evolved towards a segmentation of privately paid and government reimbursement paid. What we have done at our end is loaded up the pipeline. We have already 10 products under active review with the FDA. Sooner than later, this pipeline will start coming up and add to the growth. And over the last one, I was just there with our management team and Scott in China to review. I have nothing to say but great things, and our confidence in that business has been reconfirmed. Scott, do you want to add something?

Yes. And just thank you, Umer, for the question. I'd just add to what Rajiv said. My first international trip on behalf of Viatris was to China, and to meet the China team, and I was incredibly impressed by the leadership, by the strength of the leadership team, and the overall strength of the operating affiliate in China, a very strong, particularly commercial organization that we have there. As Rajiv noted, lots of products in the pipeline, and I'm really looking forward to the next step with our affiliate in China.

And our last question comes from Nathan Rich from Goldman Sachs.

Great. Thanks for the questions. One high-level and then one on the quarter. I guess, Scott, how are you thinking about the best way to prioritize the free cash flow that you're planning to reinvest in the business, either organically or to drive growth inorganically? And any thoughts on therapeutic areas that you think the company should focus on? And then on the quarter, the level of base business erosion was a little bit high relative to the full-year guidance. I think complex generics were called out as a soft spot. I guess could you maybe just talk about how this is expected to trend over the balance of the year? Thank you.

Thank you for the questions. And just relative to the business development strategy going forward, what was laid out in November, the areas we were going to focus on were gastrointestinal, dermatology, and, of course, eye care. I am very, very comfortable in all those areas. I've had significant experience, both in development and commercialization experience, in GI and dermatology. And again, I am very comfortable moving forward in those areas. I will say, however, though, we will also be opportunistic. If there's something, we are very open to something outside of these areas, if it fits our business dynamic and is right and will bring the right kind of value to the company. So, I'm very excited about the strategy going forward. Again, focus on eye care, dermatology, and GI, but opportunistic and open to other opportunities as they come in. If you take a look at the model of the type of acquisitions that we would like to make, take a look at the Oyster Point and Famy Life Sciences that were completed earlier in the year. Those are an excellent example of the execution of that strategy. We acquired a company with an approved asset, customer-facing organization, and we were able to marry it with the Famy development assets. So, I think that's a really good example of the type of deals that we'd like to do going forward.

Yes, and Nate, on the erosion, everything as we had expected, everything came from the complex generics category, as you noted, and largely driven by three products in North America. One was Restasis because we had almost exclusivity of the cases over last year over this period. We had additional competition come on Xulane, Amyl, and that's one second contributor. The third was Wixela where we have seen some hyper-competition there. So, I think these three products largely contributed to the erosion in North America in the complex generics category. But as we look forward, we are looking forward to, in fact, bringing the developed markets back to growth in the second half of the year.

I believe that was the last question, the end of the questions. And if so, I'd just like to take a moment to say thank you to everybody on the call here for your time and attention today. I want to say I am really proud of the strong operational and financial quarter we had in Q1, and there's a great start to the year. I really look forward to meeting and spending more time with all of you as we move forward in the future here. So, thank you very much.

This does conclude today's Viatris 2023 First Quarter Earnings Call and Webcast. Please disconnect your line at this time, and have a wonderful day.