管理層發言
Good morning, everyone. Welcome to our Q4 2025 earnings call. With us today is our CEO, Scott Smith; CFO, Theodora Mistras; Chief R&D Officer, Philippe Martin; and Chief Commercial Officer, Corinne Le Goff. During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2026 and various strategic initiatives. Those statements are subject to risks and uncertainties. We will also be referring to certain actual and projected non-GAAP financial measures. Please refer to today's slide presentation and our SEC filings for more information, including reconciliations for those non-GAAP measures to the most directly comparable GAAP measures. When discussing 2025 actual or reported results, we will be making certain comparisons to 2024 actual or reported results on a divestiture-adjusted operational basis, which excludes the impact of foreign currency rates and also excludes the proportionate results from the divestitures that closed in 2024 from the 2024 period. We may refer to those as changes on an operational basis. When comparing our 2025 actual or reported results to our expectations, we are making comparisons to our 2025 financial guidance. When discussing our expectations for 2026, we will be making certain comparisons to 2025 actual or reported results on an operational basis which excludes the impact of foreign currency rates. With that, I'll hand the call over to our CEO, Scott Smith.
Good morning, everyone. 2025 was a strong year for Viatris, and I'm very proud of what we have accomplished across all our strategic priorities. The result of all that great work is that we have positioned the company to enter a period of long-term sustainable growth beginning in 2026. Specifically for 2025, we drove strong commercial performance across our global portfolio, continued to stabilize the strength in our base business and delivered solid results, including $14.3 billion in total revenues representing approximately 2% growth versus '24, excluding the Indoor Impact and adjusted EBITDA of $4.2 billion. We advanced our pipeline, including five positive Phase III readouts, and made significant regulatory progress on multiple assets. Importantly, we also advanced both in armod and selatogrel on our Phase III trials with full enrollment for both programs expected in 2026. We prioritize capital return, with more than $1 billion in capital returned to shareholders through dividends and share repurchases. We targeted accretive regional business development, completing 60 regional transactions, including our acquisition of Aculys Pharma in Japan. For our Indore facility, we met with the FDA in November to review our progress and discuss potential timing for reinspection. That timing remains at the agency's discretion, but we'll be ready for reinspection this year. In the meantime, we've built operational redundancies in alternative supply sources. Finally, we just completed our enterprise-wide strategic review. As a result, we've identified opportunities from across our company to optimize our cost structure, improve our resource allocation and strengthen our operational efficiency. We are expecting to deliver approximately $650 million in gross cost savings over a three-year period. We plan to reinvest up to $250 million during that same period. We are creating this reinvestment capacity to invest in areas that enhance the growth profile and long-term competitiveness of the company, such as sharpening our commercial execution and go-to-market effectiveness, advancing our R&D and innovative audits, and continuing to build the capabilities we need to enable sustained success. In addition, we've identified three strategic imperatives that will shape our future. We will drive our base business by executing successful launches, focusing on supply chain continuity, evolving our generics portfolio over time towards more profitable, higher-margin products, and strengthening our established brand portfolio. We will fuel our innovative portfolio by advancing a pipeline of late-stage and in-market growth assets sourced both internally and externally, and we will modernize for sustainable growth by strengthening our technology, data, and talent capabilities to enable sustained success in a rapidly evolving health care environment. Together, we expect these actions to accelerate the transformation of Viatris into a more focused, efficient and future-ready organization and position the company to enter a period of sustained revenue and earnings growth beginning in 2026. There's been a lot of work over the last year and really over the last few years to get us to this point. A sincere thank you to the more than 30,000 employees of Viatris for your thoughtful and focused execution. Your contributions make a real difference for the company and for the approximately 1 billion patients we serve around the world every year. As we look to 2026, we expect another year of strong execution. Specifically, we will be very focused on delivering strong financial performance and driving commercial execution across our businesses, including the anticipated launches of our low-dose estrogen weekly patch in the U.S. and Effexor for generalized anxiety disorder in Japan while preparing for the launch of fast-acting meloxicam. From a pipeline perspective, we are hoping for regulatory decisions for six product candidates, including Effexor and Pitolisant in Japan, fast-acting meloxicam, low-dose estrogen weekly patch and resume for presbyopia in the U.S. In addition, we are expecting regulatory decisions for Inpefa in Australia and Canada. We are also expecting a number of meaningful Phase III data readouts this year and to reach full enrollment in several priority Phase III programs. From a capital perspective, we expect to generate robust cash flow in 2026, which will give us significant financial flexibility to continue with our balanced capital allocation approach. We have also reiterated our commitment to our dividend in 2026. At the same time, we are focused on building a portfolio of growth assets through business development and continued execution of our internal pipeline. From a business development perspective, we are targeting accretive high-growth end market assets. Finally, with the completion of our enterprise-wide strategic review, we will focus on evolving and modernizing our organization to strengthen our operating model and ensure sustained growth. We look forward to sharing more details at our investor event on March 19, including our long-term outlook for revenue and earnings growth and our portfolio strategy across generics, established, and innovative brands. We'll also provide a deep look at our R&D capabilities and key pipeline programs as well as our commercial strategy and how we are building the capabilities needed to execute upcoming launches. To summarize, we believe 2026 is shaping up to be a pivotal year for Viatris, one where strong execution, disciplined capital allocation, and the benefit of our strategic review will begin translating into sustained profitable growth and long-term value creation. Now I'll turn it over to Philippe.
Thank you, Scott. 2025 was an outstanding year from a research and development perspective. We achieved five positive Phase III readouts, advanced trial enrollment and delivered numerous regulatory milestones across multiple therapeutic areas, technologies, and regions. The strong momentum sets the foundation for what we aim to achieve this year. Our 2026 R&D priorities are to secure regulatory approval for six product candidates to progress our innovative portfolio, advance six Phase III development programs and continue to drive our generic pipeline and established brand portfolio, which together accounts for more than 100 new product approvals expected globally in 2026. At our upcoming investor event, we will share a comprehensive update on our pipeline. Today, I'll focus on high-level updates beginning with regulatory submissions. In Japan, we expect a regulatory decision for Effexor for the treatment of generalized anxiety disorder in March this year. If approved, this will be the first and only treatment for generalized anxiety disorder, which would represent an important medical milestone for approximately 8 million Japanese patients estimated to be affected by this condition. The Japanese health authority PMDA is also reviewing the two NDAs for pitolisant that we submitted last year. One for excessive daytime sleepiness associated with obstructive sleep apnea and the other associated with Narcolepsy Types 1 and 2. We anticipate regulatory decisions for both indications in the second half of 2026. Pitolisant has the potential to be a first-line noncontrolled treatment option for these indications in Japan. In the U.S., the FDA recently accepted our sNDA for Phentolamine Ophthalmic Solution for the treatment of presbyopia and has signed a PDUFA date of October 17, 2026. Phentolamine offers a physiological approach to treating presbyopia that relaxes the Iris dilator muscle to improve near vision without engaging the ciliary muscle, which helps preserve this function. Data from our VEGA3 pivotal trial will be presented at the American Society of Cataract Refractive Surgery Conference in April and at the Association for Research in Vision and Ophthalmology Conference in May. Regarding Norelgestromin weekly patch for contraception, the FDA accepted our NDA for review late last year, signing a PDUFA date of July 30, 2026. This patch addresses an important need for women seeking a reversible transdermal birth control option with lower estrogen exposure and potential best-in-class addition. Results from our Phase III study will be presented at the American College of Obstetricians and Gynecologists Conference in May. We remain excited about our fast-acting meloxicam for the treatment of moderate to severe pain, including postoperative pain, which has demonstrated in clinical trials a reduced need for opioid analgesics. We recently had a positive pre-NDA meeting with the FDA. Based on the outcome of this meeting, we anticipate submitting our NDA by the end of this month. With regards to sotagliflozin, we successfully submitted multiple filings last year and anticipate a regulatory decision from Australia and Canada later this year. Sotagliflozin is emerging as a best-in-class SGLT inhibitor, which we believe uniquely provides early benefit in reducing heart failure-related outcomes. Consistent with this dual SGLT1 and 2 inhibition, sotagliflozin is the first SGLT inhibitor to demonstrate a significant reduction in MI and stroke. Turning to brief updates on our Phase III development programs, beginning with cenerimod and SLE, the OPUS-2 study was rolled out last year, and I'm pleased to share that we recently put enrollment for the OPUS-1 study. This marks a significant milestone, reflecting the Viatris team's ability to execute on an ambitious recruitment strategy. Importantly, we enrolled a high proportion of patients with a high interferon signature. Recall that in our Phase II CARE study, this population demonstrated the greatest treatment effect. If successful, cenerimod has the potential to offer a differentiated oral treatment option for patients with SLE by targeting the S1P1 pathway with the goal of improving disease control while maintaining a favorable safety profile when given in combination with standard of care treatment. We are also advancing our cenerimod Phase III study in lupus nephritis, and our activity randomizing patients into the study. For selatogrel, a potential life-saving self-administered medicine for patients with a history of acute myocardial infarction or heart attacks, our enrollment rate in our Phase III trial has accelerated to approximately 1,200 patients per month, and we expect full enrollment by the end of this year. This enrollment for our Norelgestromin Weekly Patch is ongoing and is expected to be completed in the first half of this year. This product candidate complements our U.S. portfolio and pipeline. It is a project-only perceptive transdermal system designed for women with medical comorbidities, including those with a BMI of 30 or higher, and for those who prefer to avoid estrogen exposure with known safety risks. Moving to our Phase III study of Nefecon for the treatment of IgA nephropathy in Japan. We expect a top-line readout in the first half of this year. If successful, Nefecon has the potential to become a first-line disease-modifying therapy in Japan for IgA nephropathy. It is the first targeted release formulation designed to reduce the production of defective IgA1 at its source in the gut. IgA nephropathy remains a significant unmet medical need, particularly in Japan, where disease prevalence is high. Finally, we are advancing our Influvac High Dose Phase III program, which will present a strategic life cycle extension of our current Influvac vaccine in Europe. Influvac High Dose has the potential to offer patients, particularly those aged 60 and older, an enhanced immune response compared to the standard dose. The consistent execution of our pipeline over the past year demonstrates the rigor we are bringing to our development programs. I look forward to sharing more on March 19 about our R&D strategy and how we plan to accelerate innovation and increase the value we deliver to the business and to patients worldwide. Now I'll turn it over to Theodora.
Thank you, Philippe, and good morning, everyone. My remarks today will focus on the key highlights from our fourth quarter and full year 2025 results and our growth outlook for 2026, which we believe will be powered by continued commercial momentum and the anticipated benefits from our strategic review. Building on Scott's comments, we are proud of our team's strong performance in 2025. Our fourth quarter and full year results reflect disciplined execution across our diversified global business and, importantly, strong momentum as we exited the year. We reported total revenues for the fourth quarter of $3.7 billion, up 1% versus the prior year, excluding the Indore impact. This result was driven by strong commercial performance across key regions. In Greater China, growth was supported by demand in our cardiovascular portfolio. In Europe and emerging markets, growth was driven by the breadth and competitive strength of our portfolio. Moving to full year 2025 results, we delivered total revenues of $14.3 billion, in line with our expectations and up 2% versus the prior year, excluding the Indore impact. Adjusted EBITDA was $4.2 billion, reflecting solid operating performance, adjusted EPS of $2.35 per share, and free cash flow, excluding transaction-related costs, of $2.2 billion. Importantly, we prioritized capital return with over $1 billion returned to shareholders, including share buybacks and dividends. Turning now to our outlook for 2026. We expect to build on our positive momentum exiting 2025 and establish a clear baseline for sustainable growth. We are guiding to approximately 2% total revenue and adjusted EBITDA growth versus 2025. A key enabler of this growth is the company's strategic review which is expected to deliver approximately $650 million of gross cost savings or $400 million of net savings after reinvestment. These cost savings are expected to be evenly balanced between SG&A efficiencies and COGS optimization and phased over a three-year period, with full run rate benefits realized in 2029. Importantly, we plan to reinvest up to $250 million of these cost savings into areas we anticipate will drive our future growth. This includes strengthening our commercial execution for near-term launches, advancing our innovative assets, and building the capabilities required for success. We believe these efforts will not only strengthen our competitiveness but also support sustainable growth over the long term. Now here's what we expect to accomplish in 2026. We are very excited about the anticipated launches of Effexor, the low-dose estrogen weekly patch, and sotagliflozin. These are important strategic launches for us, and while they are not expected to be material top line drivers in 2026, we do anticipate them to be significant financial contributors over the longer term. Let me now walk you through the building blocks for our 2026 total revenues outlook. We are anticipating new product revenues of $450 million to $550 million, which are expected to contribute to strong segment performance. We expect net sales in developed markets to grow 2% versus 2025. In Europe, we expect growth of 4% year-over-year, benefiting from several tailwinds. First, we expect increased contributions from new product revenue, led by Apixaban and paliperidone. In addition, we anticipate continued growth in key markets such as France and Italy, including some supply recovery from Indore. Finally, we expect strong continued performance in some of our key brands like Creon and Brufen. North America is expected to be flat year-over-year as new product revenues, primarily from complex products, and ongoing strength from existing products such as Breyna, Estradiol TDS, and Xulane are expected to offset certain competitive impacts, including the Isosulfan Blue LOE. Turning to emerging markets, we expect to grow 6% year-over-year. This is primarily driven by expansion in key growth markets, including Turkey, Mexico, India, and Brazil, new product revenue contributions, and some supply recovery in our ARV business. These benefits are expected to more than offset pricing headwinds in certain Asian markets. As it relates to JANZ, we remain focused on returning the segment to growth. Our outlook for this year reflects expected impacts from government-driven price regulations in Japan and Australia as well as anticipated impacts from the midyear Dymista LOE in Japan. At the same time, we expect to launch important strategic products in 2026, including Effexor and Pitolisant to begin supporting future performance for this region. And lastly, in Greater China, we expect to deliver 3% year-over-year growth, driven primarily by our cardiovascular products that are sensitive to proactive patient choice. Our confidence in Greater China is the result of our ability to continue to maximize our well-established commercial presence across multiple channels. These include retail, private hospitals, and e-commerce where we have invested strategically over the past few years and are seeing continued growth, particularly for certain retail anti-products. Lastly, as mentioned in our press release, in mid-February, there was a fire at our oral solid dose manufacturing facility in Nashik, India. Manufacturing at the facility has been temporarily suspended, and we expect to resume operations beginning in April. We've considered the potential impact of this incident and the facility shutdown when formulating our 2026 financial guidance. Moving to the drivers of adjusted gross margin, adjusted EBITDA, and adjusted EPS. We expect gross margins to be modestly lower year-over-year, primarily due to anticipated losses of exclusivity and mix shift as supply recovers in our lower-margin ARV business. These headwinds are partially offset by favorable segment mix and higher-margin new product launches. Adjusted SG&A is expected to decline year-over-year as a percentage of sales, reflecting the net benefits from our strategic review. Adjusted R&D is expected to be flat versus the prior year as we continue to advance our innovative programs while maintaining disciplined cost management. Finally, in 2025, we benefited from approximately $40 million in TSA income related to divestitures, which will not recur in 2026. Moving to free cash flow, we continue to expect significant and durable cash generation in 2026. Our cash flow this year will be impacted by transaction-related and restructuring costs from our strategic review, but the underlying cash-generating profile of the business remains robust. We expect to be in a strong financial position in 2026 with over $2.5 billion of cash available for deployment. That includes our excess cash on hand and the net proceeds received to date from the Biocon monetization. This position provides flexibility to deliver on our balanced capital allocation framework. Our priorities for 2026 include targeting in-market accretive business development while remaining committed to shareholder returns. Our plans this year also include paying down a portion of our debt maturities to further strengthen our balance sheet and investment-grade financial profile while reducing leverage back to our 2.8 to 3.2x gross leverage range. Now a few comments regarding the pushes and pulls of our 2026 guidance. Total revenues are expected to be higher in the second half of the year, driven by normal product seasonality and the timing of anticipated new product launches. Operating expenses are expected to be more evenly phased between the first and second half of the year, reflecting the implementation of our strategic review and timing of investments. As a result, we expect adjusted EBITDA and adjusted EPS to be more heavily weighted towards the second half of the year. Finally, free cash flow is expected to be lower in the first half of the year. Also, the first quarter is expected to be the lowest quarter for total revenues and adjusted gross margins, driven by product seasonality and mix. Free cash flow is also anticipated to be the lowest in the first quarter, primarily due to the timing of working capital and one-time operating cash costs as well as transaction-related and restructuring costs and taxes. In summary, our 2026 outlook reflects continued momentum in the business, disciplined financial execution, and a strengthened cost structure that supports both reinvestment and shareholder returns. We are entering the year with a growing base, clear priorities, and the financial flexibility to execute. We look forward to hosting our investor event in New York City next month, where we plan to provide an update on the company's future outlook for growth. And with that, I'll hand it back to the operator to begin the Q&A.
分析師問答
And today's first question will come from Glen Santangelo with Barclays.
Yes. Just two quick ones for me. Scott, at a conference last month, you seemed to mention a path to mid-single-digit revenue growth. I fully understand that's not where we are today, but maybe I was just hoping you could give us a little bit more color on those six potential approvals this year, your confidence level in those, which may be most meaningful? And then maybe how that was layered into the guidance, if at all. And then I'll just ask my follow-up upfront. Theodora, I did want to talk about the strategic review. You mentioned the release of $650 million of savings with $250 million of reinvestment. So if we call it net $400 million of savings over the next three years, maybe for modeling purposes, if you could just sort of help us think about the timing of those savings across three years.
Thank you, Glen, for the question. Theodora will discuss the strategic review's cadence and timing. I want to express our satisfaction with the progress made and my confidence in delivering results from the enterprise-wide strategic review. Regarding our long-term path toward mid-single-digit growth over the next few years, I envision it starting with our base business, which Theodora mentioned is growing at 3% this year, similar to last year. In addition to that established growth, we have upcoming launches in 2026, including Effexor, Pitolisant, and Spydia in Japan, the latter of which we released at the end of last year and consider a significant new product for that market. Japan is crucial for us, and these launches in the CNS space will further enhance our position. In the U.S., we're planning to launch new products such as the low-dose estrogen weekly patch, a treatment for presbyopia, and possibly a fast-acting version of meloxicam. We expect to file for that soon, and depending on the review process, we may have a launch. Additionally, we have several data readouts scheduled for 2026 that could lead to launches in 2027 and beyond, including those for selatogrel and cenerimod, which we anticipate will yield results early in 2027, with potential for some data in 2026. Selatogrel is an event-driven study, so outcomes may vary. These near-term launches should contribute significantly as we look ahead to 2028, 2029, and 2030. Moreover, we have capital to invest in growth assets and strengthen our portfolio and pipeline. All these elements together give me great confidence that we can achieve mid-single-digit growth in the years to come.
And Glen, with respect to your question around the $400 million of savings, we do expect them to be phased over three years. The way to think about it is we anticipate roughly 30% in '26, an additional 30% in '27, and then the remaining approximately 40% in 2028. The sequencing really reflects the timing of how we think about workforce actions and other efficiencies as we fill them into the organization. But importantly, as those savings are phased in, they're expected to support our EBITDA growth and margin expansion over time.
The next question is from Umer Raffat with Evercore.
Maybe two here, if I may. First, on the cost cut announcement, the strategic review, could you break down for us the $650 million as it's broken down between COGS versus SG&A versus R&D? And if there's any CapEx associated to get to these, which is not sort of reflected in the $400 million versus $650 million? And then secondly, could you also remind us, what are you assuming for Indore bounce back in 2026? Is there any model in at all in the current EBITDA guidance or not? Because I know there was a $325 million headwind over the course of '25?
Let me just make a couple of comments, and then I'll pass it over to Theodora to give you some specifics. In terms of where the $650 million comes from, about 50% of that is coming from headcount reductions at this point in time. The other 50% is coming from COGS efficiencies, inventory management, and support structures, not a lot from R&D. There are some medical affairs and some streamlining things, but that's not a major area of focus for us in terms of cost cutting because we're moving forward to execute on a number of pipeline programs. So that's an area, I think, that we're focused on bringing in more assets and growing. There are some efficiencies there in the way we do it, but it's not an area of major cost savings, again, 50% of headcount reductions in the cost efficiency, inventory, and support structures, but I'll pass it over to Theodora to give some more detail.
I believe you addressed it from a cost savings viewpoint. You mentioned that the contributions are roughly evenly distributed between operating efficiencies and SG&A. I would suggest that the operating and cost efficiencies are slightly more weighted towards the latter part of the timeline due to the implementation schedule, which should give you a general idea. Regarding your question about Indore, we anticipate a little less than 1% of indoor recovery reflected in our top line. As a reminder, we have conducted significant work throughout the year to address Indore. A section of Indore related to lenalidomide was not expected to reappear in 2026. Therefore, when removing lenalidomide and considering all the efforts we've made over the year, we have managed and mitigated the effects, so it will not significantly affect our guidance for 2026.
Yes. I think it's all baked in as we stand. Again, we've requalified the plants and found alternate sources. So I don't expect any bounce up when the plant comes back online or bounce down if there's a delay in reinspection. We tried to remediate the full effects of anything that added to our impact last year.
The next question comes from Ash Verma with UBS.
Congrats on all the progress. So I just wanted to understand the levels of these restructuring charges versus the net savings you're realizing. So you're effectively spending $700 million to $850 million pretax charges or a $400 million net savings. Is this within a typical benchmark range for such cost-saving initiatives in the industry? And then secondly, on the fast-acting meloxicam, so yes, this can have a pretty broad set of physicians in that you can go after from primary care all the way to surgery settings, pain specialists, et cetera. What do you consider to be your initial focus, and where can it go from there?
You answer the question, and we'll have Doretta answer the first part, and Corinne will talk about fast-acting meloxicam segments.
Yes. Ash, let me break this up into two parts. The first piece is the one-time costs that are necessary to achieve the one-time savings, our current estimate. You can think about a general ballpark, over the lifetime of the program, about 1x our gross savings in order to achieve them. We estimate that it will be about $250 million this year, and that's what's baked into that $700 million number you quoted. There are two other components to that number that would be helpful to break out. Number one, we've talked about the fact that even though we realize the cash proceeds from both the divestitures as well as the Biocon proceeds as cash, when it comes to the taxes and other costs associated with those monetizations, they're reported as operational outflows. And so those are the two numbers. And so from the Biocon perspective, we received the $400 million of cash. We've included the $110 million of taxes associated with that in that $700 million. We still have about $320 million of divestiture-related cash costs and taxes that are included in that number. So it's really the three components you have to think about.
Regarding your question on fast-acting meloxicam, we recognize the significant opportunity for addressing acute pain, particularly moderate-to-severe acute pain. We are enthusiastic about the potential of meloxicam and its role in this market. To highlight the opportunity, there are approximately 80 million cases of acute pain annually in the U.S. Unfortunately, opioids remain commonly prescribed, making up about 50% of all prescriptions. Our strategy for entering this market centers on ensuring faster uptake of meloxicam. Therefore, we will focus on managing operative and post-operative acute pain instead of nonoperative pain. We plan to establish a specialty sales force to engage with physicians in their practices, including surgeons, orthopedic surgeons, dental surgeons, and podiatrists, among others. Additionally, we will explore potential partnerships to extend our reach as we advance the launch of this product.
And your next question will come from Les Sulewski with Truist.
Congrats on the progress. A couple for me. First on Japan. Can you quantify the regulatory pricing challenges you're seeing across the region? And you noted the Japanese coming to an inflection point. Do the Aculys assets and Effexor provide net growth for the region or more of an offset from erosion due to LOE facing there? And then on the cost savings side, can you quantify if the remaining costs are tied to discontinued operations or what percentage of the strategic review savings is essentially cleaning up the divestiture tail versus actual efficiency gain in the core business? And then essentially, as you realize the net savings, ultimately, do you have a kind of a long-term gross margin or EBITDA margin target for the business?
Thank you for your question. Japan is a very important market for us. Traditionally, it has been a challenging market for our company over the past few years. We face mandatory price reductions each year on our loss of exclusivity products, which comprise a significant part of our portfolio, resulting in downward pressure. Additionally, labor laws in Japan make it costly to adjust our personnel structure. Despite these challenges, we have a strong company and talented employees there. However, we have experienced declines in both revenue and EBITDA due to the structure of the Japanese market and the mandatory price cuts. Nonetheless, we have decided to invest in new assets in Japan, which we believe will help reverse the revenue and EBITDA decline and lead to growth starting in 2028 and beyond. The long-term outlook for Japan improves with developments such as Effexor GAD, the acquisition of Pitolisant, Spydia, and other upcoming pipeline projects. We are very optimistic about our position in Japan, and we are equipping our team with the necessary assets to drive growth as we move into 2028 and beyond.
Yes. I was just going to add one more impact affecting our Japan business this year. We do anticipate the loss of Amitiza midyear. Alongside the normal price decreases in that region, that is another factor that's impacting. You can see that in the trends. However, as Scott mentioned, longer term, we feel good about the trajectory of that business. With respect to the cost savings, we're not currently contemplating any significant divestitures or cuts to our business. As Scott mentioned, this is really about examining our infrastructure, how we're organized, reevaluating the business makeup post-divestitures, and making sure that we're set up for success going forward. It's not a material change to how we do business today.
You asked also about a little bit of cleanup that we're doing maybe around divestitures. So I think people ask me why now? Why did you do this exercise now? It was really important to do this exercise now, merging two companies five years ago, two very different companies, and then four major divestitures – biosimilars, women's health care, OTC, API. A lot of the people associated with those businesses went with the business, but there’s a back-end support structure to support those businesses, and we want to make sure that those people are oriented best as possible as we move the business dynamic forward. It was important for us to take a whole list at the company, do we have the right people in the right places to move forward? As Doretta alluded to, this isn't about divesting pieces of the company. This is about us getting more modern, leaner, and better able to execute on the base business today and the innovative portfolio as we move forward.
And the next question comes from Matt Dellatorre with Goldman Sachs.
Could you provide your latest expectations regarding the fast-acting meloxicam label, specifically how you anticipate opioid sparing will be presented? Will it be included in Section 14 like the clinical data, or do you expect it to be highlighted in the introductory section? Also, what feedback have you received from the FDA ahead of the upcoming submission? Additionally, what are your current thoughts on bringing in or in-licensing a more significant branded asset compared to smaller deals? How comfortable are you with pursuing earlier stage opportunities, such as Phase II, where the potential value is less certain? Which areas do you think this approach would be most beneficial?
Yes. Let me address the second question first, and then I'll pass it over to Philippe to discuss fast-acting meloxicam. We are focusing on acquiring in-market assets that contribute to immediate growth, rather than pursuing early pipeline opportunities. Our goal is to support the business today. We have developed an internal pipeline that will yield results over the coming years. We are prioritizing assets that can drive short-term growth over the next three to four years. Our emphasis is on opportunities that can have an immediate impact. Philippe, regarding fast-acting meloxicam?
Yes. So just to reiterate, we've had a pre-NDA meeting with the agency in January, and we just received the minutes of that meeting. We were waiting for those in order to file. The meeting was extremely positive; we were able to align on all points of discussion we had with the agency, and that's why we're filing tomorrow. In terms of label implications, I think this will remain a discussion with the agency. However, we have very strong data concerning opioid sparing, and we anticipate that language will be included in the label. Whether it is in the indication section or as part of the clinical section of the label, I think it is premature to determine that, but I don't think it really matters at the end of the day as long as it's captured in the label.
And your next question comes from Christopher Schott with JPMorgan.
I just want to come back maybe first to the longer-term growth algorithm. If I look at the 3% top line growth this year, or I guess my 2% adjusting for Indore recovery. Is that a good proxy to think about for underlying growth before we consider some of these bigger pipeline readouts in BD? I'm just trying to get a sense of like when you think about building up that mid-singles, is that just kind of like a business that can do 2 or 3 as stands and then we can kind of enhance that as these readouts come through? My second question, which is maybe elaborating a bit on the BD side, look the comments you just made, a U.S. branded asset could be a focus here. Can you just talk a little bit about the landscape for those? How big of an opportunity set is there? Are you seeing assets that are interesting in-market? Or is that one just kind of conceptual? I just want to get a sense of how broad of an opportunity set do you see for this?
Chris, let me start with the business development landscape. There are many assets available and a lot of interesting opportunities. We are exploring numerous options, focusing on finding the right assets at the right price that align with our goals. A year ago, there seemed to be limited activity in business development within the pharma industry, but that appears to be changing, with increased activity and momentum. This indicates a good time to enhance our pipeline. Business development is difficult to time precisely, as it relies on various factors such as pricing and asset availability, but we are seeing a significant number of appealing assets that we believe we could successfully manage. Regarding our growth strategy, I'm currently observing low single-digit growth in our core business. Excluding the one-time impact of Indore, we've experienced several quarters of consecutive growth, typically ranging from 1% to 2%, with this year seeing an increase to around 3%. We aim to maintain this foundation while investing in the right areas to support healthy growth and introduce opportunities with higher growth potential and better margins. This is our strategy for achieving sustainable growth and improving margins over the long term. We will provide more details during the Investor Day in March, and I don't want to jump ahead of our upcoming discussions. However, that's the framework for how we envision reaching our goals.
And the next question is from David Amsellem with Piper Sandler.
So I know you're going to be talking about R&D in a couple of weeks. So I did want to get some more detailed thoughts on how you feel about your internal R&D capabilities. You say you don't want to acquire pipeline assets; you're looking more at commercial stage assets. So just talk generally about your innovative capabilities internally and where you feel you're at, particularly as it relates to novel assets. That's number one. Number two is, can you just remind us where you are in your exclusivity runway or potential exclusivity runway for the meloxicam product? And then third question is just on contribution from new revenues this year. Is there any one product in particular that has an outsized impact on the $450 million to $550 million? Or is it spread around pretty evenly?
So, internal research and development capabilities, I feel very good about. From an innovative perspective, we've added some late development, and again, even though we're looking from a BD perspective, not necessarily to pipeline right now, but in-market assets, we're developing a number of things on our own internally. I believe we have very strong research and development. It's not really about R&D. There's not much research development. We've got a very strong late-stage development group led by Philippe. Maybe you want to talk a little bit about those capabilities.
We believe we have a strong group that can develop drugs from Phase I and IND filing type drugs like the MR146 we have for gene therapy in eye care, all the way to life cycle strategy for assets like Effexor. So we have the whole gamut of expertise from a development standpoint. We've shown that we know how to do it. We'll show you as part of the Investor Day details about all this and who we are. We also have a very strong medical affair structure that we are reorganizing as part of the enterprise-wide strategic review to focus more on the innovative portfolio than on the legacy portfolio. All the required expertise is there for us from a development standpoint.
Relative to meloxicam exclusivity, we'll get more into this as we get into the 19th and talk more specifically about meloxicam. It's being filed under 505(b)(2) route. There's exclusivity that comes with that. In addition, there's some uniqueness in the data, which we think we can add significant other more intellectual property protection around that asset. The way I look at it is I consider it to be a contributor into the 2030s from an exclusivity perspective in the market. We'll get more into that as we go and get more granular as we start to file some of this intellectual property and other things, but we have a very strong strategy to extend that exclusivity as long as we can. I think of it as a contributor into the early 2030s.
Just to answer your question around new product revenue, the $450 million to $550 million is really diversified, both in terms of products and geographies. Some of the contributors we're excited about include octreotide, iron ferric, and iron sucrose in Europe. We talked about Apixaban and paliperidone, but I would also call out that it is also relatively balanced between products that we have already approved and products that we expect approval for this year.
We are very excited about the launch of our new branded products. We mentioned them at a recent event at the end of the year for Japan. In the U.S., the low dose estrogen weekly patch will be introduced this year, and although it may not make a significant contribution in 2026, it will be an important growth factor in the years to come.
Your next question is from Jason Gerberry with Bank of America.
One for Doretta, I'm struggling a little bit with the '26 guidance relative to '25, right? So your EBITDA goes up about $150 million or so, it looks like that's largely on the cost restructuring dynamics, but you have plus $400 million in revenue versus prior year. It seems like none of that is dropping to the bottom line, but your gross margin degradation is only like 30 bps. So I was just wondering what I'm missing there. The enterprise review looks like about half is on the cost of goods side, if I understand that. So maybe if you can unpack that a little bit. Is that mainly like better procurement or reduced facility footprint types of cost? Just wondering what you guys will be doing differently versus, say, prior years to drive that cost of goods improvement.
With respect to your question on EBITDA, we've always talked about EBITDA stability. We feel good about the momentum and inflection point that our business has gone through. This year, we're really proud of where we are. Just to give you a flavor of some of the components. We did see a marginal decline in our gross margins. We've talked about the drivers of that, just given the mix, some of these LOEs and some of the recovery coming from our low-margin ARV product also crossing the $40 million of TSA income that we don't expect to recover this year on the back of that. I would characterize '26 really as a stabilization year, supported by the savings realization with structural expansion coming into view as the savings pop and some of our new products come into account.
Yes. And Jason, on the enterprise-wide strategic review, 50% is coming from headcount reduction, not from COGS efficiency; a much more minor piece is coming from COGS efficiency. I think you asked the question the other way around, but it's 50% from headcount reductions across the board and only a much smaller piece in terms of COGS efficiency.
And the next question comes from Dennis Ding with Jefferies.
I had one on the enterprise review, the $400 million net savings. I'm just wondering if there could be additional savings upside as you execute on this over the next one to three years, basically how realistic and or conservative is the $400 million in net savings? And then number two, specifically on meloxicam, what is your base case in terms of meloxicam activity in the U.S. on net revenue? What does a good launch look like to you? If you internally view the JOURNAVX launch as a good proxy for meloxicam.
A couple of comments, and then I'll ask Corinne to talk a little bit about the comparative launches in the acute pain space. The $400 million is a number we feel good about. We took our time in doing this and wanted to make sure that we can cement that within the organization. Could there be additional opportunities as time goes over the next few years? Sure. That's not something we're saying is going to happen. We also talked about the $250 million in reinvestments, up to that amount, depending on the progress of how things go. However, $400 million, I think, is the right number for you to think about and that we're very, very confident that we can deliver. In terms of meloxicam, a very important product for us, we want to be able to show a very strong launch. I believe and the team we're putting together to be able to launch it. We're looking at partner strategies. We're making sure that it's resourced properly to do well. It's important for us. In terms of launch metrics and what a good launch looks like in the U.S., it's a little hard these days with access concerns and other factors. We'll roll that out and talk more about that on the 19th for sure. However, if Corinne, you'd like to make any general comments.
Yes, taking very much. You mentioned one of the competitors in the field. Our plan is to launch meloxicam where we think we can have the greatest impact and faster. Part of this is linked to our pricing strategy; part is linked to how we are going to focus on targets that have the most patients in terms of acute pain management. JOURNAVX has been launching, and I think has a different time frame in mind. We have a different strategy. Our focus is on pickaxes, and we'll support these products that we can be successful with the launch.
And at this time, this concludes today's question-and-answer session. I would now like to turn the conference back over to Mr. Scott Smith, CEO, for any closing remarks.
Thank you very much. Let me just close with this. I think 2025 is very, very important or 2026, excuse me, 2025 is a great year. 2026 is a very important and pivotal year for us. Our base business is not only stable but it's growing. We continue to generate strong cash flow, which gives us financial flexibility, and we're expecting multiple launches and pipeline milestones this year. Our strategic review is complete; we are building a more focused, efficient, and future-ready company, and we are confident that we are at the beginning of a period of sustained revenue and earnings growth for the company. Thank you very much for your attention.
And this does conclude today's conference. Thank you for attending today's presentation, and you may now disconnect.